National SME policy, a game changer for SME growth
Prime Minister Imran Khan announced the largest support package for SMEs while launching the National SME Policy-2021 the other day.
The Policy has been formulated by four-year extensive efforts of SMEDA working under the leadership of the MOIP with technical assistance of USAID. The National SME Policy has established a short-term and a medium-to long-term policy framework with an effective implementation mechanism that clearly delineates the roles and responsibilities of government agencies.
The PM has assured to personally monitor implementation of the Policy hoping that the policy would prove to be a game changer in growth of SME sector in Pakistan.
The policy has introduced historical incentives relating to access to finance, simplified regulations, ease in payment of taxes at a lowered rate, land allocation for SMEs, business facilitation, through a reinvigorated SMEDA, share in public procurement and international market access through e-commerce.
The policy has offered a unique financial scheme “SAAF Collateral-Free Financing” for Small and Medium-Sized Enterprises, which has never been offered in the past.
Further, the policy is providing a No-NoC, Self-Declaration, E-Inspection and Time-Bound Approval Regime for SMEs. SME taxation is also being reduced, tax harassment is being eliminated, and tax returns are being streamlined.
SME Certification Support Programme is being launched for handholding of SMEs through SMEDA.
Special quotas for SME’s in the Rachna and Bin Qasim Industrial Estates have also been earmarked besides increasing the access of SMEs to trade shows, trade delegations, e-commerce awareness, education, and facilitation.
SMEDA E-Commerce Support Program (SME Commerce): SME Matching Grants, Online Training Registration Portal, Virtual SME Helpdesk, SME Helpline, 250+ Project Feasibilities, are also being made available to the SME’s through SMEDA.
SME Business Plan Competitions would be held at the university and district levels, progressing to the provincial and federal levels as well to create a business culture in the youth.
Once a year, a ceremony will be held at national level, and selected projects will get up to 80% matching grants from the government, he added. It is true that first time in the country, we have a single agreed definition of SMEs that will be adopted by all organizations.
This will enable the government to track and monitor progress and wherever there is slackness in facilitating businesses, the authorities will take those organizations and individuals to task.
The PM has warned that nobody would now be allowed to hinder the SMEs activities meant for jobs and export promotion in the country.
Pakistan has a long journey ahead and the SME Policy is a first step to enable small and medium businesses to flourish.
More work will be required to increase the efficiency of small and medium-sized enterprises in order to connect them to local, regional and global value chains. SMEDA will have to assume this specialized role while continuing to serve Pakistan’s broader SME community”.
Pakistani entrepreneurs also need to seize the opportunities provided by the National SME Policy to assist them in realizing their dreams and get registered with SMEDA to have a one-stop facilitation point for all required facilities and incentives announced in the SME Policy.
It has also happened first time in the history that a fund of Rs.30 billion is being allocated for development of SMEs. SMEDA would manage the Fund in the best possible way to develop SMEs in the country.
A section 42 company has been proposed to manage this Fund in a transparent and effective manner.
As per advice of the PM, Ministry of Industries & Production will have to create additional forums for interaction between public and private sector representatives to address shared concerns, examine potential for SME growth and ensure that entrepreneurs’ voices are heard.
Federal Minister for Industries and Production Makhdoom Khusro Bakhtiar, in his address at launching ceremony of the SME Policy, informed that business regulations stifling SME growth are being removed.
So far we have undertaken over 70 reforms that are benefitting our SMEs. SME Policy has reduced the rates of taxation for manufacturing SMEs that have an annual sales turnover of PKR 100 million by 87%.
For manufacturing SMEs that have an annual turnover between 100 to 250 Million the tax rate have also been brought down to the minimum possible level and the SMEs that opt for this regime would not be audited.
Another important initiative of the policy is the provision of lands for SMEs. The cost of land is so steep that an ordinary small sized business is unable to first purchase and then set up business.
To address this issue, the Ministry of Industries & Production has allocated 100 acres each in Bin Qasim Industrial Estate Karachi and Rachna Industrial Estate Lahore for SMEs, where the land will be made available to SMEs on a lease-based model on smaller sized plot.
SMEDA, under the supervision of Ministry of Industries and Production has played key role in consultation with USAID’s technical support to formulate this policy and the Minister MOUP has duly appreciated SMEDA services in sustainable growth of SMEs.
He has assured to strengthen SMEDA further to come up to aspirations of SMEs and meet the development goals set in the SME policy.
At the same time SMEDA, to look after the SME Policy implementation process, should be given representation in Boards and Committees of all provincial and federal organizations related to SME financing, training and development.
—The writer is contributing columnist.
