LAHORE, JAN 28 /DNA/ – While seeking the industry status the Disposable Food Packaging Association (DFPA) has said the disposable food packaging is one of the major and very important sectors of the country and the government should grant industry status to it in order to reap maximum benefits and employment generation.

Talking to media here at a function, the DFPA President Ahsan Shahid stressed that the disposable food packaging sector has been holding significant importance in all industries.

Elaborating, he said that the widespread popularity of online businesses and e-commerce had increased the importance and value of this sector further. The disposable food packaging is the first choice for many product and service businesses due to their efficiency, durability and dependability, he remarked.

Ahsan Shahid observed that the small and medium enterprise (SME) sector was the backbone of the economy and it contributed immensely to uplifting the industries and creating employment opportunities. The SME sector only requires exposure to export its products and once it is achieved, Pakistan’s balance of trade will improve, he added.

The DFPA president said that the process to finance is a significant barrier to SME growth, as highlighted in a study conducted by the Competition Commission of Pakistan. The study reveals that despite policy measures aimed at increasing financing to 17%, the SME sector in Pakistan only receives 6-7% of private sector financing. In comparison, SMEs in Bangladesh receive 25% financing, and in India, it’s 18%. The findings are based on data from 50 Financial Institutions (FIs), 18 focused group discussions, and 362 SMEs across 11 cities, as well as a seminar on women entrepreneurs.

The study also identifies issues with the SME definition based on annual turnover criteria. The lack of differentiation between Small Enterprises (SE) and micro-enterprises’ annual turnover, along with the wide benchmark for Medium Enterprises (ME), creates challenges. These thresholds can hinder access to finance for SMEs. To enhance access to finance, it is recommended to rationalize the SME definition by considering annual turnovers more effectively.

Ahsan Shahid emphasized the importance of SMEs for Pakistan’s destiny and suggested measures to promote and support the sector. These measures include educating SMEs about new technologies, facilitating modernization and unit replacement, providing law and order and protection, improving infrastructure, addressing the energy crisis, establishing industrial estates and Special Economic Zones (SEZs), adopting fair taxation policies, and creating dedicated institutions and integrated efforts among various stakeholders.

The study also found that 93% of SMEs found it cumbersome to avail financing facilities from banks, and 80% had not utilized bank financing. Recommendations include allocating separate lending targets for SE and ME, setting sector-specific targets, introducing standardised pricing of insurance and evaluation reports, encouraging public sector commercial banks to lead in SME financing, and greater engagement of small chambers of commerce.