KARACHI: The Research and Policy Division of Federation of Pakistan Chambers of Commerce and Industry (FPCCI) organized an Interactive Session on Draft National SME Policy
Engr. Daroo Khan Achakzai President FPCCI highlighted the issues of SMEs to include such as access to finance, high cost of doing business, low value addition, technological advancement, complicated tax system etc.
He also shared the success experience of SMEs of Japan, Korea, Taiwan, China etc. He further suggested easy and favorable discounted rate access of finance to SMEs, establishment of SMEs zones and clusters etc.
Engr M. A. Jabbar Convener FPCCI Standing Committee on R&D on the invitation of President FPCCI made detailed presentation on draft National SME Policy and also deliberated the circumstances surrounding the whole issue from the beginning of inception of SME policy and its support by public sector from way back 2007.
He suggested that the draft policy on SME requires to be thoroughly analyzed as to its working implementation tools in view of present existing difficult coordination amongst Federal Ministries and even between federation and provinces.
During the session, the participants discussed in details the contents of draft National SMEs Policy and suggested the government to provide business conducive environment with simplification of registration process and favorable trade and tax policy.
The participants also urged the government to have safeguards during the post privatization of SME bank in order to have the due role of the bank in affecting the progress of SMEs. The participants also showed their reservations on various definitions of SME being proposed and discussed.
They suggested that a single definition requires to be notified and preferably with higher business turnovers in order to keep accommodating the SMEs in proportion to their business growth in terms of growing sales turnovers with passage of time.
Moreover, the SBP should include all sectors in SMEs Financing instead of present restricted to 8-9 sectors and all the banks should consider financing on cash flow basis instead of collateral basis. The participants also put a thrust on preferring financing for local production units and SBP may give some guidelines to commercial bank for setting the targets for their regions and zones in respect of financing SMEs.
The participants also indicated that the financing from Non-Bank Financial Institutions and Modarbas be also included in SBP Policy of SMEs Financing. The participants also suggested establishment of business centers in all cities and organization for capacity building program for SMEs entrepreneurships.
The participants also urged the establishment of SMEs cluster in Pakistan as at present there are only 25 clusters in Pakistan while in Bangladesh, there are 200 clusters and 3000 more clusters exist in India.
The participants indicated that in Pakistan the banks are generally reluctant to give loans to SMEs sector due to elevated risk. Most of the loans in major are given on collateral basis to SMEs and commercial banks lack due interest in developing of required effective credit models to finance SMEs.
The participants further suggested the involvement of academia in SMEs promotion and establishment of incubation centers, holding of awareness sessions with the involvement of SBP and SME banks and market facilitation to SMEs for domestic manufacturing and exports.
The capacity and capability gaps in institutions addressing the issues confronted with in promoting the SMEs were also discussed in details and recommendations were made that the structural weaknesses in the institutions be removed in order to be close to professional approaches in developing a workable policy for SMEs to work with under continued audit of the performance of SME policy for invoking interventions where deem appropriate and necessary.