ISLAMABAD, May 23: The government has decided to introduce a new programme in the budget for 2005-06 to offer a special funding for the establishment of small and medium enterprises (SMEs) aimed at creating a sizable job opportunities in the country. The programme is based on the pattern of the United States, the European Union and Japan.

Officials told Dawn that initially Rs3 billion would be made available from the Public Sector Development Programme (PSDP) of 2005-06 to initiate the programme. Later, more funds will be offered for which negotiations are currently being held with the European Union, the USAID programme and a couple of other bilateral donors.

The decision was taken to create the Pakistan Enterprise Competitiveness Support Fund (CSF) in the new budget with the financial assistance of international and bilateral donors. The objective is to effectively promote SMEs by providing funds and new technologies to increase the overall growth and find new export markets for country’s products.

The United States, the EU and Japan, the officials said, had agreed to extend necessary technical support to help establish new SMEs to ensure improved quality of products, reduced cost, higher environmental standards and faster and better product development as well as adaptation to meet and even anticipate domestic, regional and global consumer demand on a more competitive basis.

“Pakistan needs to follow China, Malaysia, Thailand and India to develop its SMEs on modern lines to make the country a competitive market player through continued institutional reforms,” a source said.

The government plans to achieve following objectives by undertaking the new programme: Increase the level of employment in small and medium sized enterprises; increase the performance of small and medium enterprises and their contribution to the GDP; develop subcontractors in the sector of small and medium enterprises for large manufacturers: extend the use of research and development results, patents, and know-how in enterprises; enhance the quality of industrial services to increase their impact on industrial production, creation of better jobs and overall development of manufacturing business in Pakistan; and enable Pakistani firms to compete effectively in the global market and thus increase exports of value-added products.

“The CSF will provide efficient and economical funding to the SME sector from the next financial year, leading to industrialization and economic development in Pakistan, which would eventually translate into high economic gains for the country,” another source said.

He said that SMEs provided an important and unique breeding ground for innovation and, in turn, for national competitiveness. “By establishing the appropriate framework conditions, SMEs will have great potential to serve as incubators to new ideas and exercising their ability to act quickly and more easily than large established companies.”

Pakistan now, he said, faced an urgent need to ensure competitiveness of its enterprises and promotion innovation to grow its economy and create conditions for the economic well being of its citizens in future. “Pakistan needs to strengthen the conditions and institutions that will allow its economy and society to respond to the challenges and opportunities of the global knowledge-based competitive economy,” he added.