KARACHI, Jan 15: The federal finance minister, Shaukat Aziz on Tuesday urged banks to re-design their products to cater to the growing demands of small and medium enterprises in the country.

Giving his key note address at a seminar on: “Challenges and Potential of Small and Medium Enterprises,” organized by the Habib Bank Limited, the minister said that banks have confined their operations to corporate lending and by and large have ignored small and medium enterprises (SMEs).

He said the small and medium enterprises are the key drivers of growth in all countries of the world be they the developed countries like the US and Germany or developing countries like Malaysia.

The government is, therefore, taking appropriate steps to provide an environment in which the SMEs should grow, and he mentioned of the deregulation process now under way. “We are trying to minimize the number of official agencies that regulate SMEs,” he said.

Another major step is the setting up of an SME Bank created after the merger of SBFC and RDFC. He said that SME bank is being run on entirely professional lines offering financial assistance to the small and medium entrepreneurs.

He announced that a micro credit bank in private sector is also starting operations very soon to offer financial assistance to the SMEs.

The minister made a specific reference to the sport industries in Sialkot and fan industries in Gujranwala and Gujrat, which have taken up aggressive marketing and earned good results.

He said that government has now taken up long-term policies, which are transparent and available to all those who want to know through Website. He said that the government now frames policies budget to budget and has even given three years projection.

“Business environment is much more hospitable and predictable than before,” he made his point.

Earlier, the President of HBL, Zakir Mahmood, said that his bank has created a special division to assist the small enterprises. This financial assistance, he said, is being offered through 21 HBL branches in Karachi, Faisalabad, Sialkot and Lahore.

The Chief Executive Officer of Small and Medium Enterprises Development Authority (Smeda) Iqbal Mustafa, the Chairman, Pakistan Tanners Association Masood Ahmad Sheikh, Chairman Export Promotion Bureau and a specialist of ADB Rainer Hartel spoke in the working session of the seminar.

APP adds: The CEO of Smeda said that research and development (R&D) is actually not the job of SMEs, and it should be left for big corporations or multinational companies.

Likewise, he said market research can be undertaken by various organizations like chambers, universities, associations and Smeda.

He said in all over the world, most of SMEs are sub- contractors and they collaborate with large scale manufacturers.

The Smeda has undertaken work in collaboration with various chambers and organizations in NWFP, Punjab and Sindh.

Smeda and Asian Development Bank (ADB) have become partners in a long-term project (around $150 to 200 million) for SME development.

Speaking on the occasion, the Chairman, Pakistan Tanners Association (PTA) Masood Shaikh said that Pakistan’s last year’s export of leather and leather products was less than $700 million, which constitutes one-third finished leather and two- third leather products.

After the events of September 11, 2001 the future of the leather products exports is dismal, as the leather garments export has already shrunk to less than half, which is 50 per cent of the total leather exports from Pakistan.

“We need to invest in research...quality data and qualitative analysis of data, quality product through qualified human resource and quality sourcing of raw material supply chain,” he remarked.

Speaking on the occasion, the Financial Sector Specialist, ADB, Rainer Hartel said that SMEs have a large potential for employment and growth in Pakistan.

He said ADB has designed the technical assistance to maximize consultation with stakeholder of the government and the private sector.

The ADB is committed to development of Pakistan’s SME, he said adding that currently ADB support one on- going operation to facilitate SME access to trade financing or SME Trade Enhancement Finance Programme (SMETEF), he added.

The ADB is preparing a second operation which intends to address the policy environment, the support of market based financial and business services and development of service institutions for SME, he said.