Government should focus on SME development in Pakistan – Mahfooz Elahi

  • December 04, 2010
SMEs are considered the engine of economic growth in both developed and developing countries. SME sector is one of the four major drivers of growth. Pakistan's SMEs are still unable to achieve their maximum potential and are in dire need of ‘hand-holding' and business support services, Mahfooz Elahi has said, while addressing a business community at Islamabad Chamber of Commerce & Industry.

He said that in the industrial development of a country the importance of the SME sector cannot be neglected. SMEs constitute nearly 90% of all the enterprises in Pakistan, employ 80% of the non-agricultural labor force and their share in the annual GDP is 40%, approximately. However, unlike large enterprises in the formal sector, a small and medium enterprise is constrained by financial and other resources.

The President said that the current SME policy of Pakistan does not take into explicit account the heterogeneity of the sector and, thus, consists of broad recommendations for the entire SME sector. The empirical evidence special needs of micro, small and medium firms in view for ensuring higher growth of firms of different sizes.

Mahfooz Elahi said that SME sector should be supported through relaxation in taxes and financial assistances. He said that SME development is the key to economic growth and has great significance in the development of economy.

He said that Pakistan’s SMEs need to focus development of new products, Import replacements, exports goods and goods with growing demand. It would be appropriate to put the scarce national resources, in particular, capital to use for the production of new products rather than duplicate lines of production that  are being carried on, even with inefficiencies. Traditional products require adaptation and modifications in design and quality to meet the current demand trends.

The President said that Government financial support is also needed for the purchase and lease of suitable machines for use of the micro enterprises. Small firms may be granted this facility to get these machines.  In addition, small firms may be granted reduction of Corporation and Enterprise taxes, and also exempted from stamp duty, property tax, local rates, etc. same as it was practiced in Japan and Korea for the promotion of SMEs.

Mahfooz Elahi said that the real challenge of Government is to set SME policy in a way of processing a shift of SMEs from static to dynamic preoccupations. This is possible through technological change which is also influenced by international trade, thus inviting firms to follow the “best practices”.