KARACHI, Dec 31: The unorganized sector — small and medium enterprises and cottage industry — see a robust and consolidated growth and expansion in 2003.
The military government has achieved macroeconomic stability, which is reflected in lowering of fiscal deficit, increase in tax collection, build up foreign exchange reserves to over nine billion dollars, exchange rate stability, lower inflation etc. This development has not benefited the organized sector but has made a positive impact on the informal sector.
The cottage industry, which has been neglected for several decades, has finally got the attention of Musharraf government which had not only recognized it as engine of economic growth but also developed a system and basic structure for the sustained growth of this sector, thus putting the overall economy on the right track.
“We are now highly optimistic about the future growth of cottage industry and SMEs as the Musharraf-led economic team has provided a system and basic structure,” Chairman, Pakistan Small Chamber of Commerce & Cottage Industry (PSCCI), Bashir Miandad said. “The Jamali government should now divert its attention towards the development of the SMEs and cottage industry as it can be very helpful in overcoming unemployment situation,” he said.
He said that the economic policies of the previous government would definitely lead to organization of this sector besides resulting in reduction in poverty, generate self-employment and ultimately rise in exports. “I think the country will easily achieve the $10.2 billion export target”, he added.
Expressing his dissatisfaction over the performance of SME Bank, Bashir Miandad said the tough and cumbersome conditions for obtaining loans from the bank are the main irritants for the expansion of the sector.
He asked the government to direct the bank to make its credit policy more attractive and rationale so that SMEs and new entrants can avail credits on easy terms and conditions.
When contacted to SME Bank in Islamabad over the issue, Credit Officer, Kiran Afzal refused to give details. Meanwhile, an official in a SME Bank in Karachi said that the bank has to follow certain rules and regulations for extending credits to the sector. However, he did not give any details of loans, extended by the bank, since its inception.
PSCCI chief looked unsatisfied over the performance of the Small and Medium Enterprise Development Authority (Smeda), citing red-tapism. He urged the government to induct people from private sector in the Authority so that it could deliver good to the sector in real.
To regulate small businesses and industries, he floated an idea of setting up of a Small Traders Authority at the federal level and Small Chambers of Commerce and Industries at the provincial level.
He said the cost of utilities — power, gas and water — is very high, rendering our products and goods uncompetitive in the world markets. He added that Pakistani Embassies abroad should now be directed to play their active role in exploring new markets for the local goods.
Convener, Union of Small and Medium Enterprises (UNISAME), Zulfiqar Thaver, also paints a rosy picture for SMEs in 2003. He stressed the need for setting up of new industrial zones which would not only lead to documentation of the sector but would also help in attracting foreign investment.
“SMEs are currently involved in production of export-oriented items and contribute over three billion dollars of the total exports of the country,” he claimed.
The contribution of these SMEs could be increased by making a shift from low value-added to higher value-added or finished goods. “These finished goods can fetch a better price in the global market, with comparatively lower cost incurred in the process of value addition,” he added.
Thaver said the main problem is that these SMEs are scattered and fragmented and no proper data about them is available. The Jamali government focus should now be on organization of this sector. “For better performance, these SMEs also need vocational guidance and collateral-free financing”, he added.