SME SECTOR VITAL FOR POVERTY ALLEVIATION, JOB CREATION

KANWAL SALEEM, Lahore
Oct 08 - 21, 2007

Small and Medium Enterprise sector can play an important role in eradication of poverty and creation of job opportunities in the country. According to analysts, the SME sector has 30 per cent share in the GDP, 25 per cent in exports and 35 per cent share in value added manufacturing. This sector can be an important instrument in enhancing the per capita income of the country. Necessary steps on the part of the government can enhance production of this sector.

Realising the importance of this sector, the government recently launched the first-ever SME Policy of the country along with an implementation plan of worth Rs.13, 128.60 million. A number of unique initiatives were being taken under implementation process of the SME Policy, which include establishment of a Credit Guarantee Agency for SMEs with a fund of Rs.3000 million, an SME Subcontracting Exchange at a cost of Rs.26.09 million, an SME Development Institute by spending Rs.115.66 million, an SME Export House costing Rs.156.89 million and creation of an SME Promotion Council with a fund of Rs.143.72 million. Whereas, a Business Support Fund and an SME Competitiveness Support were already in operation as an initial phase of the SME Policy implementation.

Objectives as narrated by the government is to promote SME sector through public-private partnership, poverty eradication, creating maximum job opportunities and enhancing exports. Nevertheless, real test of this incentive loaded policy would be the implementation in letter and spirit. As per the Minister of Industries, Jehangir Khan Tareen, to ensure proper implementation on the SME Policy, a permanent mechanism of monitoring had been developed in the form of National Committee on SMEs along with the four provincial Committees on SMEs. In this respect a fund of Rs.25.82 million has been approved by the government for Policy Implementation, Monitoring and Evaluation Unit, he added. He was confident that the SME Policy would provide a conducive and hassle-free business environment for SMEs that will ultimately create a long lasting entrepreneurial culture in the country by facilitating SMEs' access to the formal resources of Credit, Technology and HR.

The Minister hoped that SME Policy would increase share of manufacturing small enterprises from 5.5 per cent to 7 per cent, while decreasing the threshold and density of regulations and thereby reducing the cost of doing business in the country.

According to Small and Medium Enterprise Development Authority (SMEDA) Chief Executive Officer Shahid Rashid the implementation on the first-ever SME Policy of Pakistan has been ensured through an in-built mechanism to monitor and adjust, to be protected by an SME Act, which has been drafted and submitted to the Ministry of Industries, Production and Special Initiatives for approval from Federal Cabinet.

Addressing a Media Workshop on SME Policy jointly organised by SMEDA and the Lahore Economic Journalists Association (LEJA), Shahid Rashid said a national committee on SME (NCSME) had been formed as an apex body for monitoring implementation of the policy. The Minster for Industries, Production and Special initiatives shall chair the semi-annual meetings of the NCSME to review the implementation of SME Policy and decide which shape specific measures for enterprise development will take and how existing measures need to be adjusted in line with developments and in the interest of continuous improvement. The Committee will, in fact, serve as a mechanism to improve coordination between different stakeholders and resolve differences existing between them, he said, adding that SMEDA would act as secretariat to NCSME.

Members of the Executive Committee on NCSME are; Minister for Industries, Production and Special Initiatives, Minster of State for Finance, Minster of State for Economic Affairs, Deputy Chairman Planning Commission, Provincial Ministers for Industries, Governor of the State Bank Pakistan, Federal Secretaries of Commerce, Statistics, Education, Science and Technology, Women Development, Labor, Manpower and Overseas Pakistanis, President of FPCCI, Presidents of Karachi, Lahore, Sarhad and Quetta Chamber of commerce & Industry and Presidents of small and medium enterprise Business Membership

Organizations (BMOs). The other members appointed from the private sector in NCSME include Zulfiqar Thaver, Chairman UNISAME, Ali A. Raza, Chairman PASME, Zeenat Saeed-Tanees, Seema Aziz, Executive Director, Sefam Industries, Dr. Shahida Jaffrey, Vice Chancellor, Sardar Bahadur Khan Women University, Quetta, Nouman Idris Butt, Chief Executive Capital Sports, Sialkot and Adeel Rauf, Chief Executive, Khyber Match Company, Peshawar. Shahid Rashid further said that apart from the NCSME, four Provincial Committees on Small and Medium Enterprises (PCSMEs) had also been formed. Chief Executive of each Province will chair the meetings of the PCSME periodically to support the NCSME by assembling expertise from all fields as necessary in order to prepare, develop and improve SME Policy. SMEDA Provincial offices will function as the Secretariat to each of the Provincial Committees, CEO SMEDA added.

He further informed that a Business Support Fund (BSF) and a Competitiveness Support Fund (CSF) recommended in the SME Policy were already their in place with the money required for their operation. He expressed confidence that rest of the projects proposed in the policy would be completed as per the timeline set in the implementation Plan. These projects include establishment of a Credit Guarantee Agency for SMEs with a fund of Rs.3000 million, an SME Subcontracting Exchange at a cost of Rs.26.09 million, an SME Development Institute by spending Rs.115.66 million, an SME Export House costing Rs.156.89 million and creation of an SME Promotion Council with a fund of Rs.143.72 million.