KARACHI, Aug 30: The Asian Development Bank (ADB) would suggest to the government to privatize the SME Bank and convert it into a scheduled bank to make it more efficient and result-oriented.
This was stated by the leader of a visiting ADB evaluation mission on SMEs, Mr Richard Simpson, at a luncheon meeting organized by the Union of Small & Medium Enterprises (Unisame), at a local gymkhana on Saturday.
He said his mission would suggest to the government to convert the SME Bank from a development finance institution into a scheduled bank to make it more viable and effective.
The mission leader also expressed his disappointment over the working of Pakistan Export Finance Guarantee Agency (PEFGA) in which the ADB has 20 per cent shareholding.
He said the main cause of poor performance of the PEFGA was the non-cooperation of the shareholding banks in the agency who did not accept the exporters documents honoured by the PEFGA.
Richard Simpson, a senior evaluation specialist of the ADB, briefed the members of the Unisame about the bank’s operations in the SME sector in other countries.
He said the bank had done a lot of work in private sector SMEs of Indonesia, Sri Lanka, Bangladesh and was presently working in Vietnam. He further said that the main objective of his mission’s visit was to evaluate ground situation vis-a-vis SMEs.
During their stay, he said they would be holding meetings with commercial banks, State Bank and PEFGA officials. Simpson said his mission would also visit Lahore and Islamabad to hold talks with policy makers.
He said that the ADB was providing credit line to the SME Bank for the capacity building and growth of SMEs, therefore, it would suggest to the government to privatize the bank for achieving better results.
Peter Van Diermen ADB’s consultant and expert on SMEs speaking on the occasion said that the bank had rich experience in SMEs sector as it worked in many other countries.
He said the ADB would like to use its international experience and exposure in Pakistan by blending it with local ground realities and situation to get best results for the progress and growth of the SME sector.
He asked the participants to give maximum information and also highlight problems confronting SME sector so that the ADB team could reach to correct conclusion. He assured that a copy of their report would be given to the Unisame.
The convener, Unisame, Zulfikar Thaver, briefly highlighted the aim and objectives of the union and said that their last three years efforts had produced some results. He said primarily his union had succeeded in making the government to realize the importance and the role the SMEs play in the economic development of a country.
However, he said that the sector was confronted with a number of problems, which were retarding its growth, and if these irritants were removed the SME sector would be in a position to play a major role in the economic growth of the country.
The Chairman, Unisame, Mahmood Ghaffar said that basically the SMEs did not have easy access to the much finances required for their development and growth. He said whereas banks ask for collateral which was not possible for the SMEs to provide the leasing companies demand for equity.
He said ways and means should be looked into for removing such traditional way of banking which retard the growth and progress of commercial or industrial establishment. Ghaffar said presently in the world, banks provide finance on a committed export documents but in Pakistan this was still not possible.
Wasi Hassan suggested that the ADB should involve third non-commercial institute for the disbursement of its credit line to the SMEs. He said such experiments have succeeded in other countries and also gave excellent results with higher rate of recovery.
He said that the SME clusters should be established and the government should allocate land in various cities. Similarly, he said that there should be separate regulatory body such as SME Bureau of Registration.