Businessmen concerned over delay in SME Policy

KARACHI: The Businessmen Panel of the Federation of Pakistan Chambers of Commerce and Industry (FPCCI) has expressed concern over the delay in the approval of “Small and Medium Enterprises Policy 2021” and stressed the need for speeding up the process of approving the new SME Policy after removing its flaws with a view to address all sectors of the economy, a statement said on Saturday.

FPCCI’s Businessmen Panel (BMP) chairman Mian Anjum Nisar said that the new policy is a very good start, yet a few broad elements are also required to be added in the policy.

“We appreciate the government’s initiative to facilitate the SME sector, announcing rules for earning and gains for the small and medium enterprises in the 14th schedule in the budget,” he said.

But, he said the draft of the SME Policy does not discuss the provincial tax mattes, education cess, labour laws, EOBI, social security and several other regulatory authorities’ issues.

Raising serious concerns over the flaws in the proposed SME Policy, Nisar said that the new policy has not addressed all the sectors of the economy, as the issues of withholding tax, returns, audits, fines, penalties and surcharges, income and sales tax statements have not been discussed in the policy.

The development of Small and Medium Enterprises is imperative for sustainable economic growth and the government should ensure speedy work on the policy for cross-sector development of the SMEs, particularly export-oriented businesses.

At first, the revamping of Small and Medium Enterprises Development Authority (Smeda) should be one of the priorities by bringing in members from the private sector, which should be a lead organisation for the promotion of the SMEs.

Despite government’s tall claims of giving priority to small businesses, the approval of the new SME Policy is being delayed, restraining the GDP growth, which is inevitable in achieving sustainable and robust economic progress.

Moreover, financing of the SMEs from the formal sector is very low, as, at present, only 170,000 of 5.2 million SMEs are given loans by the formal sector, which should be increased to Rs3 million loans in the next couple of years.

BMP presidential candidate for the FPCCI elections Irfan Iqbal Sheikh requested the policymakers to support and encourage the emerging corporate sector and called for serious consideration to exploit its potential.

He appreciated the State Bank of Pakistan for widening the definition of the SME sector by including the emerging corporate sector, as well as the upper medium sector.

Sheikh, who is also the former president of the Lahore Chamber of Commerce and Industry (LCCI), said that the businessmen were positive that if the emerging corporate sector was supported and given the opportunity to progress, it would tap its potential and engage itself not only in modernising but also in setting up import substitution industries.

The importance of the SME sector can be gauged from its contribution to the leading and emerging economies of the world.

He said countries like Japan, China, Brazil, India, Malaysia and Sri Lanka relied heavily on the SME development for economic growth.

Appreciating the ministry to allot land to the SMEs on rental lease model in the Special Economic Zones, Sheikh called for a specialised lending scheme for the garment sector and information technology-enabled services within the purview of the SME Policy.

Mian Anjum Nisar said that the government should focus on enhancing credit financing for the SMEs filing tax returns, as well as increasing the credit limit for the enterprises having collateral assets for the expansion of the existing business.

The FPCCI former president said the new policy should focus on enlargement of micro-financing and venture investment for the SMEs, with the help of the international donors.

The BMP expressed the hope that the proposed SME Policy will outline incentives for women-oriented businesses, reducing gender gap in financial inclusion and mainstreaming the role of women in the economy.

The BMP chairman asked the relevant provincial departments to finalise the new SME Policy according to the prime minister’s vision to promote cross-sector small businesses across the country.

The SME sector contributed 40 per cent to the gross domestic product (GDP) of Pakistan and provided employment to a massive chunk of the non-agricultural labour force.

He stressed the need for prioritising the Credit Guarantee Scheme for the SME sector and synchronising it with priority sectors through initial seed money from the government.

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