The United Business Group (UBG) of FPCCI on Sunday said revival of Small and Medium Enterprises (SMEs) should be preferred to boost exports and generate employment. The government is focusing too much on mega projects and privatisation while paying little attention to the troubled SME sector, Abdul Rauf Alam, Chairman North Zone UBG and presidential candidate for FPCCI said.
Demanding incentives for SME sector, he said that Rs 350 billion sector having 30 percent share in the GDP, 30 percent share in exports and employing millions cannot be ignored.
The UBG will push for SME growth after FPCCI elections later this month, he said, adding that among 3.5 million SMEs in Pakistan, 65 percent are located in Punjab while slightly over 2 percent are in Balochistan which can be balanced through interventions.
Rauf Alam said that law and order, energy crisis, lack of regulatory support, incoherent laws, deficiency of market information and skilled labour and want of finances are the main reasons behind lack lustre performance of the SME sector.
The SBP had pushed banks to boost SME financing which increased by 20 percent to 299 billion of which loans worth Rs 91 billion or 30 percent got infected, he said.
Defaults compelled lenders to rethink SME financing as default ratio of corporate sector stands at 13 percent while 12.4 percent of agri loans get infected, according to available data.
He noted that textile and garments sector has emerged as biggest defaulter which failed on 50 percent of its financial obligations.
He also called for reviving textile and garments sectors which is steadily going down in competition with China, India, Bangladesh and Vietnam while the spinning capacity of country has declined by 30 percent, enough to catch the attention of policymakers.