SME-friendly policies urged for fast track economic recovery

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Islamabad—The Union of Small and Medium Enterprises (UNISAME) invited the attention of the Federal Finance Minister Ishaq Dar to the proposals submitted to his ministry for putting the economy on fast track recovery through SME friendly policies by adopting modern banking, leasing, insurance and logistics.
President UNISAME Zulfikar Thaver said the SME sector is the majority sector and unless the policy makers focus on the primary, secondary and the services sectors the growth of the economy will not take place as targeted. The government cannot afford to neglect the micro and SME sectors.
UNISAME has submitted long term and short term measures and high impact steps for making the SMEs competitive, efficient and growth oriented.
He appreciated the efforts of the State Bank of Pakistan (SBP) to make finance affordable but regretted that it is not accessible. To make it accessible the sector needs an SME specific bank with country wide branches and also the commercial banks need to take interest in the SME sector. The commercial banks are inclined to park their funds in government treasury bills rather than focus on private sector.
It is very important that the banks are made comfortable to finance the SMEs and for this SME Credit Guarantee Insurance insurance institutions needs to be strengthened. The sector is awaiting the much talked about and promised Exim Bank and UNISAME has urged the SBP to expedite the establishment of the Exim Bank promptly to facilitate international trade.
Thaver said the banks are not inclined to finance exports to third world countries and letter of credits (L/C) of opening banks of low ratings. Secondly the banks are demanding 100% margin for import L/Cs.
The small entrepreneur is not accommodated by the commercial banks and it is therefore proposed to enhance the credit limits of the micro finance banks from Rs 500,000 to Rs one million to enable them finance the small businesses who are deprived of finance facilities.
The sector also needs modern logistics concept which includes transportation, insurance cover for goods in transit, warehousing with collateral management, risk management , modern banking , leasing and insurance expertise to facilitate, support and make finance accessible for the SMEs. Commercial property leasing and pay as you earn schemes are the need of the hour.
He pointed out that the country is importing many items which are or could be manufactured in Pakistan and it is painful to note and see the imports of confectionery, stationery, furniture, clothing, jewellery, cosmetics, electrical goods, light engineering goods, footwear, food items and butter, cheese, jam and jellies although all are manufactured in Pakistan. The government must promote the setting up of industries for import substitution items and exempt them from taxes, duties and levies. There is need for transfer of technology and collaboration especially with China under the China/Pakistan agreement.
UNISAME urged the government to give the status of SME Chamber of Commerce and Industry to the union and facilitate it to work more for the benefit of the sector under SMEDA and house the chamber offices in all district offices of SMEDA to work jointly for the promotion and development of the sector.
UNISAME has proposed subsidized finance for alternate energy devices and also 0% duty on imports of equipment and devices.
The proposal also included the setting up of industrial estates for SMEs and providing land at concession on pay as you earn basis.
The cost of doing business and ease of doing business was also highlighted in the proposal.
The strengthening of the Small and Medium Enterprise Development Authority (SMEDA), the sharpening of the Trade Development Authority of Pakistan (TDAP) and the out reach of the Pakistan Council of Scientific and Industrial Research (PCSIR) were also demanded.
The Engineering Development Board (EDB) also needs to do more for the sector. All these institutions need to gear up for high impact results.
The TDAP is required to lend marketing support to the SMEs and it is very essential that an SME Gallery is set up under an SME Export House.
SMEDA needs to work from grass root level in the primary, secondary and tertiary sectors. PCSIR and EDB need to promote new industries and upgrade and modernize the existing units.
The Union has urged Alamgir Chaudhry chief executive officer (CEO) of SMEDA to take up the issues and requirements of the sector with the finance ministry on priority basis and express the urgency in implementation of the SME friendly policies.—NNI

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