Speedy approval of new SME Policy imperative to sustain economic growth
ISLAMABAD: The Federation of Pakistan Chambers of Commerce & Industry’s Businessmen Panel (BMP), raising serious concern over the delay in approval of “Small and Medium Enterprises Policy 2021”, has 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 economy.
FPCCI’s Businessmen Panel (BMP) Chairman Mian Anjum Nisar observed that the new policy is a very good start, yet few broad elements are also required to be added in the policy. We appreciate the government’s initiative to facilitate SME sector, announcing rules for earning and gains for small and medium enterprises in fourteenth schedule in the budget. But, he pointed out that the draft of the SME policy does not discuss the provincial tax mattes, Education cess, labor laws, EOAB, Social Security and several other regulatory authorities’ issues. Raising serious concern over the flaws in the proposed SME Policy, he stated that the new policy has not addressed all sectors of the economy, as the issues of withholding tax, returns, audits, fines, penalties and surcharges, Income Tax and Sales Tax Statements have not been discussed in the policy
He said that 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 SMEs, particularly export-oriented businesses. At first, the revamping of SMEDA should be one of the priorities by bringing in members from the private sector, which should be a lead organization for promotion of the SMEs. He said that in spite of government tall claims of giving priority to small businesses the approval of new SME policy is being delayed, restraining the GDP growth, which is inevitable in achieving sustainable and robust economic progress. Moreover, financing of SMEs from the formal sector is very low, as 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 SME sector by including the emerging corporate sector as well as the upper medium sector. Irfan Iqbal Sheikh, who is also LCCI former president, said 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 modernizing but also in setting up import substitution industries. He said that the importance of SME sector can be gauged from its contribution to the leading and emerging economies of the world. He pointed out that countries like Japan, China, Brazil, India, Malaysia and Sri Lanka relied heavily on SME development for economic growth.
Appreciating the ministry to allot land to the SMEs on rental lease model in the Special Economic Zones, Irfan Iqbal Sheikh called for a specialised lending scheme for the garment sector and information technology-enabled services within the purview of SME policy.
Mian Anjum Nisar pointed out that the government should focus on enhancing credit financing for the SMEs filing tax returns as well as increasing credit limit for the enterprises having collateral assets for the expansion of existing business.
FPCCI former president said that the new policy should focus on enlargement of micro-financing and venture investment for the SMEs, with the help of international donors. The BMP is hopeful 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 finalize the new SME policy according to the prime minister’s vision to promote cross-sector small businesses across the country.
He added that the SME sector contributed 40% to the gross domestic product (GDP) of Pakistan and provided employment to a massive chunk of non-agricultural labour force. He stressed the need for prioritizing the Credit Guarantee Scheme for the SME sector and synchronizing it with priority sectors through initial seed money from the government.
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