SME is one of the leading sectors which contributes significantly to the country’s industrialisation and its exports. Globalisation can further nourish the SME economy.
At present, SME sector constitutes over 90 per cent of the business and is responsible for more than 78 per cent of the total employment. There are nearly 3.2 million small business enterprises which contribute over 30 per cent to the GDP. However, the environment for the growth of SMEs is not so conducive.
According to a survey, Pakistan can save up to 16.5 per cent of the value of exports by improving its trade and transport logistics systems for SME,s where as the inefficiency in transport alone is estimated to cost the economy Rs320 billion a year.
Another research revealed that 67 per cent of enterprises maintain that tax regulations are most problematic while 28 per cent of small businesses feet that taxes are too high. About 69 per cent of firms, whose size of assets was less than Rs1 million, were worst hit by tax-related problems.
Due to their size and small-scale commercial activities, many of the SMEs complain that they feel unable to adjust and carry on their business successfully in the international market in presence of multinational companies. But the fact remains that many SMEs do succeed in accessing to all sorts of material and markets. What they need is to keep themselves informed about the changes in the world because lowering of customs barriers and other developments enhance their export possibilities.
Like wise, the factors like cost burden, working ability deficiencies, marketing weaknesses can be reduced to the minimum extent by creating a conducive and vigilant regulatory environment.
Banks and other financial institutions need to step up their lending to the SMEs.
At present, 57 per cent of new investment for SMEs and 67 per cent of working capital finance come from internal finance or retained earnings and only about seven per cent of funds for investment or working capital come from banks or other financial institutions. These banks and financial institutions find SMEs unattractive due to high transaction costs, inability to meet tangible collateral requirement and non-availability of proper infrastructure.
In this situation, there is a need to speed up implementation, up-gradation and monitoring of SME policies. The sector should be provided with transport facilities, well developed infrastructure, technical assistance, improvement in areas like interest rates, and other business essentials to boost exports.
SME is one of the leading sectors which contributes significantly to the country’s industrialisation and its exports. Globalisation can further nourish the SME economy.
