Karachi, October 02, 2018 (PPI-OT): The Research and Policy Division of Federation of Pakistan Chambers of Commerce and Industry (FPCCI) organized Roundtable on National SME Policy at FPCCI Head Office Karachi, Capital Office Islamabad and Regional Office Lahore through Video conferencing. The aim of this roundtable was to identify the issues related SMEs policy that hampering the SMEs in Pakistan.
The session was graced by Mr. Iftikhar Ali Malik, Sr. Vice President SAARC-CCI and attended by Office Bearers of FPCCI, Presidents of Small Chambers of Commerce and Industry of Faisalabad, Islamabad, Gilgit, Jhang, Quetta and Peshawar, Trade Bodies of FPCCI, Chairman of FPCCI Standing Committee on SMEs, Representatives of SMEDA, SME Bank, Innovative Capital Development Forum, State Bank of Pakistan, Association of Management Development Institute, stakeholders, academia etc.
In welcome address, Chaudhary Javed Iqbal, Acting President FPCCI highlighted the issues of SMEs like access to finance, high cost of doing business, low value addition, technological advancement, complicated tax system etc. He suggested holding of training sessions in different cities of Pakistan, fixed tax system, SMEs access to international market, participation in international exhibitions, coordination among enterprises, establishment of SMEs zones at district level etc.
Mr. Iftikhar Ali Malik, Sr. Vice President SAARC-CCI stated that all the big industrialist is product of SMEs and without promotion of SMEs, our country can’t achieve the status of development. He highlighted the journey of his industry from SMEs to large industrial unit and suggested restriction on imported product, subsidy on gas and electricity to SMEs, motivation to young entrepreneurship, establishment of small workshops, small industrial development complex and agriculture workshops for hybrid and improvement in agriculture yield etc.
Mr. Shafique Anjum, Vice President FPCCI (representing small chamber of commerce and industry) highlighted the issues related to high mark-up rate of commercial banks on SMEs and taxes on SMEs, smuggling, lack of financing to storage capacity. He also underlined the examples of South East Asian countries like Taiwan, Singapore, Japan, Vietnam, and Malaysia whose development is purely based on SMEs.
He added that SME and microfinance bank and SMEDA should play their due role in promotion of SMEs and suggested SMEDA to update all the feasibility studies which are available of their website. Syeda Saeeda Bano Vice President FPCCI underlined the issues of women entrepreneurs whose are working under micro business environment and facing issues related to finance and skills development. She suggested establishment of vocational institutes/centers, business development centers and incubation centers for new entrepreneurs.
Mr. Rehmatullah Javed Chairman FPCCI Standing Committee on SMEs said that SMEDA is the only organization that is working for SMEs and has failed to produce conducive SMEs policy. SMEDA should hire more people from private sector on its Board for policy advocacy and hold the meetings of Board of Directors regularly. He indicated that without financing and other facilities it is difficult for SMEs to modernize innovate and expand themselves. He suggested the establishment of SMEs clusters in all provinces, research centers for SMEs, technological parks and skill development programs.
Dr. Mirza Ikhtiar Baig, Chairman FPCCI Standing Committee on Banking, Credit and Finance emphasized to consider SMEs as professional and exports oriented industry and suggested incentives for small industries. He stated that the SME Policy 2007 was not implemented properly and nor the data of SMEs available for review the progress. He suggested linking the SME with Vendor industry for buy back arrangements.
He underlined the example of automobile industry and suggested vendor industry for livestock, dairy, fishery, leather and textile spinning machines parts which Pakistan is imported from China. He also suggested one village and one product model for rural areas on the basis on geographical indication which is successful in Thailand. He also highlighted SBP prudential regulations for SMEs whereon he will hold session in next month.
The representatives of SMEDA appreciated the efforts of FPCCI for SMEs and informed that they have constituted National Steering Committee on SMEs which includes the Presidents of various chambers for revise the SMEs policy. Moreover, they have hired the team of economist from LUMS who has started visits to various clusters and held meetings with stakeholders for identifying the issues of SMEs. The role of SMEDA has changed after provincial devolution and 18th amendment which created problem in implementation of SME policy 2007. SMEDA agreed that after drafting of new SME policy they will arrange sessions with FPCCI and other small chambers.
Mr. Muhammad Azam, Joint Director State Bank of Pakistan (SBP) highlighted the lack of awareness about finance to SMEs. SBP generally gave SMEs finance targets to commercial banks which were achieved in 2016 and 2017. SBP highlighted revision of SMEs policy many times particularly single and uniform SME definition and other facilities because SME 2007 policy covered only 4 areas while SBP has identified many areas which need to be addressed in SME policy like location, idea refinement, incubation enter, dealing permit, property registration, getting credit, electricity and utility etc.
The finance to SMEs is on the basis of risk and SBP has fixed it upto 2 percent while commercial banks upto 4 percent. He informed that SBP will announce policy through which movable asset will use as collateral for SMEs. The representative of SME Bank also highlighted the policies of SME bank and informed that the small industries generally misuse the funds on the name of research and development. He also suggested Islamic equity funds to SMEs and asked to stakeholders to suggest the government for enhancement of SME Bank operation remote area. Mrs. Mamuna Zari, Association of Management Development Institute of Pakistan also suggested involvement of universities to provide training of entrepreneurship. She suggested easy paisa and mobile money for easy access of finance.
The Presidents of Small Chambers of Commerce and Industry of Faisalabad, Islamabad, Gilgit, Jhang, Quetta and Peshawar elaborated that in Pakistan the banks are generally reluctant to give loans to SMEs sector due to high risk and transaction cost and 95 percent SMEs loans are given on collateral basis and commercial banks lack effective credit models to finance SMEs. They suggested the creating of SMEs zone adjunct to CPEC projects, documentation of SMEs, resolving the problems of SMEs related to cost-competitiveness, quality competitiveness, marketing, networking, product diversification, starting a business, business plan, legal issues etc.
They also highlighted the issues related to SMEs financing, penalties of Federal Board of Revenue (FBR), hidden charges, Non-Performing Loans to SMEs. They suggested involvement of academia in SMEs promotion and establishment of incubation centers, holding of awareness sessions with the involvement of SBP and SME banks and market facilitation to SMEs for exports. The representative highlighted various areas of Sindh, KPK and Baluchistan for the developments of SMEs clusters related to Marble, Coal, Mango plump, gems and jewellery, livestock, handicrafts, leather and agro-based products and suggested to improve the packaging of exportable products. They also suggested exemption of SMEs from the audit of FBR.
For more information, contact:
Secretary General
Federation of Pakistan Chambers of Commerce and Industry (FPCCI)
B-1, Federation House, Main Clifton Road,
Shahra-e-Firdousi, Karachi-75600, Pakistan
Tel: +92-21-35873691, 93-94
Fax: +92-21-35874332
Email: info@fpcci.com.pk
URL: www.fpcci.com.pk