SME have played an important role in the economic development of every country.
Small and Medium Enterprises have played an important role in the economic development of every country.
Excellencies, respectable officials from the federal and provincial governments, esteemed members from the Chambers of Commerce and Industries and trade associations, Ladies and Gentlemen. Small and Medium Enterprises have played an important role in the economic development of every country.
Assalam-o-Alaikum, and perfect morning to you all. Today I am honored to be invited as a Special Guest for this important webinar on SME Development in Pakistan, hosted by USAID Small and Medium Enterprise Activity (SMEA).
Small and Medium Enterprises have played an important role in the economic development of every country, and these have also served as 1 of the vast drivers of economic change.
SME Sector contains the immense potential to generate employment, alleviate poverty and integrate into global value chains. Hence, the sector has created prosperity, fostering development and achieving growth trajectory through positive spillovers on the other sections of the economy.
Whether developed or developing, no country has achieved sustainable and inclusive economic growth without a dynamic and thriving Small Medium Enterprises sector. In Pak, the story has been no different.
According to the SME Development Authority estimates, SMEs constitute nearly 90% of all enterprises in Pakistan, employ 80% of the non-agricultural labor force, and their share in the yearly GDP is about 40%.
The government of Pakistan has remained instrumental in supporting SMEs through various measures during the Covid-19 Pandemic.
To ensure continuity of their operations and sustainability and for this, in a well-coordinated and structured manner, the Govt opened up the businesses under strict Covid SOPs during 2020 besides reducing SBP’s policy rate to a single digit, deferring payment of mark-up on loans and making it convenient for the SMEs to maintain their liquidity through various financing schemes.
Despite these measures, it is understood that much is required to be done to ensure sustainability and resilience of the Small Medium Enterprises Sector, considering its valuable contribution to the economic development of the country and its potential to take the economy towards inclusive and sustainable growth. And this requires appropriate and long-term policy interventions with appropriate implementation mechanisms with a particular focus on the SME sector.
Today’s webinar is a good opportunity to flash the importance of the SME sector in the country’s economic growth and social uplift, which surely would highlight various cross-cutting issues and challenges that impede the growth of the Small Medium Enterprises sector and restrict its true potential.
The over-regulated business environment, complexities in technological and human resource development, weak linkages with local and global value chains, access to finance, difficulties in doing business, and other issues may also be highlighted to develop a fair understanding of challenges faced by the SME Sector and developing a way forward for the sector and policymakers to take necessary measures.
Regarding specific interventions from the Ministry of Industries and Production, the Ministry has been actively collaborating with the SMEA Project to develop and roll out the much-awaited SME Policy.
The policy proposes SME focused initiatives for augmenting access to finance, developing a skilled and productive workforce, simplifying tax regime, increased participation in public procurement, setting up regulatory sandboxes, promotion of accelerators and incubators, and providing incentives such as matching grants, especially to the IT start-ups for establishing online market places.
The policy further adopts a targeted approach by encouraging educational institutions to formulate rules and procedures for effective protection and commercialization of innovations originating from the lab and research work with effective protection through the National Intellectual Property regime.
These measures would largely take care of market risks and failures arising out of externalities and asymmetric information.
I am sure that once the policy fully rolls out, it would create synergies between the SME sector and institutions operating in the country to make the sector vibrant, performing, and progressing. On this occasion, I would specifically like to commend the efforts and support of USAID SMEA for having created awareness on the issues and challenges faced by the SME Sector and suggesting policy and implementation related interventions that would go a long way in addressing systemic flaws and capacity related constraints, both in the public and private sector domains.
Most of the policy reforms at the provincial and federal levels are underway with the help of the USAID SMEA project, and I am sure that by the time the project reaches its closure, its core objective would have surely been achieved.
Excellencies, Ladies, and Gentlemen! on this note, I would like to thank you all for allowing me to express my point of view.
I am sure that the subsequent deliberations and panel discussions would be meaningful and shall focus on discussing core issues relating to the SME Sector and arriving at viable and workable proposals. Thank you.
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