Small and Medium Enterprise Development Authority (Smeda) Provincial Chief Muhammad Alamgir Chaudhry said the process for development of Small and Medium Enterprise (SME) Policy was likely to be completed by May, which would be submitted to the federal cabinet for final approval. Addressing a presentation at Faisalabad Chamber of Commerce and Industry (FCCI), he said the Government of Pakistan has negotiated a loan with the Asian Development Bank (ADB) under the SME Sector Development Program (SDP) for the development of a comprehensive SME Policy.
Giving the details, he said the Ministry of Industries and Production was formulating the first SME Development Policy of Pakistan. A National Task Force comprising private and public-sector members and concerned stakeholders had already been constituted, he said.
The task force had broadly classified the SMEs issues in four areas: (i) Improvement in business environment, (ii) Availability of finance and related services, (iii) Access to other business development resources and services and (iv) SME definition, feedback, monitoring and evaluation system, he added.
Smeda chief Muhammad Alamgir invited the business community to share views/suggestions and to participate in the National Development Process for the First SME Policy Development.
He added the promotion of the SMEs sought to enhance the competitiveness of the economy and generate additional employment. The SMEs normally have a disadvantage of size compared with large enterprises. The rationale for government to assist the SMEs in a market economy was that it was inefficient to have them go bankrupt when demand-driven, well-targeted assistance may assist them in overcoming their size-related difficulties.
Provincial chief mentioned that our economy was an economy of the SME, adding the significant role of the SME was clearly indicated by various statistics. According to more recent estimates there were some 3.2 million business enterprises in Pakistan, he said and added the enterprises were employing up to 99 persons constitute over 95 percent of all private enterprises in the industrial sector and the SME employed some 78 percent of non-agriculture labour force.
They contributed over 30 percent to gross domestic products (GDP), Rs 140 billion to exports, and 25 percent of manufacturing export earnings besides sharing 35 percent in manufacturing value-added, he disclosed.
He said despite previous efforts, the SME sector had not received due priority on account of segregated efforts and non-consolidation of programmes to achieve well-targeted results. To move forward, we needed to develop a common vision for the SMEs to be real engine of growth, he said adding our vision also needed to be achievable so we might find motivation in implementing phase.
Smeda presenter Mukash Kumar and consultant Saeed Anwar stated the implementing changes required for the formulation of a policy for SME development and assigning specific responsibilities for its implementation and continuous improvement.
The government had constituted the SME Task Force of the Ministry of Industries and Production, which was to define the basic elements of our SME policy. As there were many crosscutting issues to be addressed, the SME Task Force was composed of diverse sectors and levels of government and included major stakeholders of the private sector and SME in particular. Where the SME Task Force deemed it necessary or useful, it may invite specific organisations or individuals to assist its work and also co-opt further members.
They said the Smeda was established in 1998 under the Ministry of Industries and Production to foster the SME development in the economy and was expected to take a key role in this process.
Its functions included, inter alia, the facilitation on policy making and the provision of overall planning, programming, research and evaluation of matters related to SME in Pakistan; monitoring and evaluation; encouraging and facilitating development of SME and to protect their interests.
For the SME Task Force to be able to work effectively, four Working Committees have been set-up to carry out technical analyses and deliberate the findings.
THE PROPOSED WORKING COMMITTEES WILL ADDRESS THE FOLLOWING CORE ISSUES:
-- Creating a favourable business environment for the SME in Pakistan's economy and eliminating unnecessary obstacles.
-- Increasing SMEs' access to formal finance including equity financing while addressing the question of "lacking documentation" and banks' technical capabilities and improving SMEs' capacity to become bankable.
-- Improving the delivery mechanisms for assistance and the access to resources for SME in Pakistan, inter alia, business development services, qualified human resources, and technology, so as to improve their productivity and capacity for employment generation.
-- Establishing appropriate and harmonised definitions for Pakistan of what are to be considered micro, small, medium and large enterprises. Furthermore, the establishment of a sound mechanism by which their development of the SME sector and the effectiveness of the assistance provided to the SME can be monitored.
Speakers stated the broader objectives to be achieved by this policy exercise would be; across the board recognition for SMEs as a sector requiring separate policy and regulatory space, define SMEs that qualify for support, propose counterbalancing measures to eliminate disadvantage of size, remove unnecessary regulatory burden, institute SME support mechanism in both public and private sectors, improve support delivery mechanisms and establish policy evaluation and review systems. The participation of stakeholders will be the cornerstone of the policy development process.
Earlier, FCCI Senior Vice President Tahir Mehmood Sheikh presented welcome address while FCCI Senior Executive Member Mirza Hidayat Ullah, Standing Committee of Small Traders and SMEs Chairman Sheikh Muhammad Saleem Sana, Standing Committee of Gems and jewellery Chairman Muhammad Ali Rana, Haji Bashir Ahmad Shouq, Haji Anwar Hussain, Nighat Ashfaq participated in question and answer session.