OIC countries can benefit a lot from the rich experience of Pakistan's dynamic SMEs sector

Mar 08 - 14, 2004



The preparation is underway for holding third meeting of Organization of Islamic Conference (OIC) Task Force on SMEs and the related Investment Seminar as well as organizing an exhibition in Lahore on March 16-18 2004. The event is jointly organized by Islamic Chamber of Commerce & Industry, Islamic Development Bank, Ministry of Industries & Production, Government of Pakistan and Small & Medium Enterprise Development Authority (SMEDA). On the proposal of SMEDA, an Investment Seminar in conjunction with the third OIC Task Force meeting will be held to provide a platform to the participants to identify business and collaboration opportunities in SMEs clusters in Pakistan.

The international economic scene is rapidly changing, creating new dynamics of enterprise development and competition. These forces are radically altering the organization of enterprises as well as the organization of production, marketing and distribution of goods and services, both in domestic and foreign markets. In this context, the SMEs operating in Muslim countries need upgrading of their technological capabilities, They will have to achieve competitiveness, through establishing efficient distribution networks, speedy delivery system and a deeper knowledge of technology supplies, competitors and customers needs.

Manufacturing SMEs play an important role in the country's economy by producing a wide range of consumer goods and providing employment. They also account for a substantial proportion of manufacturing output and make a major contribution to the country's balance of payments. While SMEs have been traditionally filling a crucial gap in the socio-economic development pattern of developing countries, yet their performance continues to be constrained by a number of factors. These include absence of many crucial support mechanisms, an adequate policy and regulatory framework, shortages and lack of access to capital, obsolete technology, low productivity, inefficient quality control, lack of management and marketing skills.

Individually, SMEs are often unable to capture market opportunities, which require large production quantities, homogenous standards and regular supply. They also experience difficulties in achieving economies of scale in the purchase of inputs. Small size also constitute a significant hindrance to the internationalization of functions. Furthermore, small scale also prevents the achievement of specialized and effective internal division of labour. Finally because of the continuous and fierce struggle to preserve their narrow profit margins, small-scale entrepreneurs in developing countries are often locked in their routines and unable to introduce innovative improvements to their products and processes and lack beyond the boundaries of their firms to capture new market opportunities.

Through networking individual SMEs can address the problems related to their size and improve their competitive positions. On account of the common problems they all share, small enterprises are in the best position to help each other. Through horizontal cooperation, enterprises can collectively achieve economies of scale beyond the reach of individual small firms. Through vertical cooperation, enterprises can specialize on their core business and give way to an external division of labour. Lastly, networking among enterprises, institutions providing business development services, and policy makers can help to shape a shared local development visions and give strength to collective actions to enhance entrepreneurial strategies.



SMEs play an important role in Pakistan's economy. The entire small-scale industries are in the private sector. These, in fact, provide the base for industrial development and economic growth of the country. SMEs sector in Pakistan have a substantial share in the exports of textiles, garments, carpets, leather, surgical instruments, fisheries, agricultural products, live stock, automobile parts, sports and light engineering goods.

The objective of organizing this seminar and exhibition in Pakistan is that other OIC countries can benefit a lot from the rich experience of Pakistan's dynamic SMEs sector. Some of the beneficial experiences of this promising sector could be transferred to other OIC countries by providing assistance in various areas. These include, advisory services for the SMEs, R&D facilities, financial and educational services, enhancing technology services, strengthening markets and association in order to improve SMEs technology, enhancing clean technology performance by SMEs, development of agro-based industries.

It is in deed an outstanding effort of Islamic Chamber of Commerce & Industry to provide a platform for the support of SMEs in Member Countries in general and least developed countries in particular. The representatives from member countries as well as those belonging to OIC institutions and international organizations are expected to attend the seminar. The papers presented at the seminar will also be contributed to the OIC Secretariat.