EXECUTIVE SUMMARY

In the growth and progress of any country, its small scale sector is of equal
importance as of other large scale sectors because a country cannot progress in its true
sense unless its small scale sectors progress. Be it a developed country like Japan and
USA or a developing country like Thailand and Pakistan, they form the backbone of the
economy. A dynamic and vibrant SME sector plays a key role in successful economic
growth of the countries.

The developmental role of SMEs has been highly recognized. They provide most
of the employment opportunities for the general public of the country and as a result, they
prosper in these conditions. SMEs allow a homogeneous geographic development
throughout the length and breadth of a country because of the fact that the development is
done at a micro level due to the initiative taken by the general public. This has a positive
effect on the GDP level and the employment conditions in the country.

The contribution of SMEs in GDP of Pakistan is mere 15 percent. Yet, they

employ more than 60 percent of non-agricultural workforce. So there is great room for
improvement. The Government of Pakistan, realizing the potential of SMEs has very
rightly turned its attention toward the uplift of this sector. The formation of SMEDA
(Small and Medium Enterprises Development Authority) and SME Bank are a step in
right direction. Furthermore, the State Bank of Pakistan has instructed all the commercial
banks to establish a SME counter in their premises. This will have a positive effect on the
sector as a whole.

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 CONTETNTS

SMALL AND MEDIUM ENTERPRISES

Small and medium enterprises (SMEs) are one of the principal driving forces in
economic development. They stimulate private ownership and entrepreneurial skills, they are
flexible and can adapt quickly to changing market demand and supply situations, they generate
employment, help diversify economic activity and make a significant contribution to exports and
trade.

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 Small and medium enterprises (SMEs) have played an important role in boosting up
economies of the developing countries and particularly in recent times the success of the South
East Asian countries is indebted to this very sector.

SMEs account for almost 90 percent of privately-owned businesses and bulk of

employment all over the globe. Experience has shown that neglect of this sector is bound to keep
that country below its potential growth level.

The SME sector covers all types of businesses, but it is the common profile of service
and manufacturing business concerns. Reason being the large-scale manufacturing sector is
unable to cater to all demands of goods and services and depends largely on sub-contracting
arrangements with smaller business units.

If viewed in global scenario, SMEs are found to generate 80 per cent of total industrial
employment, contributing 30 per cent to GDP and adding to export earnings to the extent of
1/4th of total industrial sector contribution.

The globalization and trade liberalization, which is a favored move on the part of the
developed countries has increased the competition for SME sector in all the developing
countries, particularly in Asian countries, and is bound to further widen the gap between rich and
poor nations. Thus it is imperative for economic survival of Asian countries that they review
their national economic policies. They must boost up their economic competitiveness, for which
strength of the indigenous SME sector is one of the most forceful parameters.

Though Japan has reached the most developed status, its SMEs continue to play a major
role in boosting export of products specially relating to computers, its parts and those products
which involve latest technology and are skill intensive.

China is rapidly emerging as a powerful nation. The SME sector with the full backing of
the government has been the main contributing factor for excellent performance of its economy.
Resultantly, China is in a very comfortable position to face the challenges of globalization and in
fact now poses as economic giant for developed countries. Thus the experience of China in the
SME sector is of immense interest for all developing countries in relation to their fears regarding
World Trade Organization (WTO) regime bringing onslaught of innumerable economic
disadvantages for them for quite a long time. Developing countries are trying to replicate China,
not only with regard to its policy towards the SME sector but are also keen in forging actual
business and trade links with SMEs in China.

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 In most of South East Asian parts the SME sector has been neglected and discriminated
against in terms of government attention and access to credit, management, marketing expertise
and latest technology. This is particularly the case with Pakistan where although economy is in
transition but still large - scale sector continues to assume the major role in economic
development. In fact in transition economies private sector development must have focus on
SMEs to allow these enterprises to grow into medium and large scale entities and take over the
functions of state owned enterprises.

There is no single, uniformly acceptable definition of a small firm. Firms differ in their
levels of capitalization, sales and employment. Hence, definitions that employ measures of size
(number of employees, turnover, profitability, net worth etc) when applied to one sector could
lead to all firms being classified as small, while the same size definition when applied to a
different sector would lead to a different results. The first attempt to overcome this definition
problem was by Bolton Committee (1971) when they formulated “economic” and “statistical”
definition. Presented in the following table is a summary of alternative definitions.

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 TABLE : ALTERNATIVE DEFINITIONS OF SME’s

World Bank since 1996
Grinde et al. (1989:9-10)
USAID in the 1990s
Firms with fixed assets (excluding land) less
than US$ 250,000 in value is a small scale
enterprise.
Small scale enterprises are firms with less than
or equal to 25 permanent members and with
fixed assets (excluding land) worth upto US$
50,000.
Firms with less than 50 employees and atleast
half the output is sold.

UNIDOs definition for Developing Large Firms with 100+ workers.

countries Medium Firms with 20-99 workers
Small Firms with 5-19 workers
Micro Firms with less than 5 workers
UNIDOs definition for Industrialized Large Firms with 500+ workers
countries Medium Firms with 100-499 workers
Small Firms with < 9 workers
From the various definitions above, it can be said that there is no unique definition for a
Small and medium scale enterprise. In a study carried out by International Labor Organization
(ILO), more than 50 definitions were identified in 75 different countries, with considerable
ambiguity in the terminology used. The enormous variety of criteria applied includes size of
workforce or capital, form of management or ownership, production techniques, volume of sales,
client numbers, levels of energy consumption etc.

DEFINITION OF SME’s IN SOME ASIAN COUNTRIES

The countries with such definitions are also the countries that have seen a faster growth
of the SME sector. It appears the more precise the definition, the more effective has been the
transaction of policies intended to benefit the sector into actual results. In countries where no

5
definition exists, the enterprises feel they are in a disadvantageous position and empathetic in
their demand for such a definition. In some cases, the definition seems to lend itself to differing
interpretations, thus opening up the scene for disputes and dissatisfaction.

Given below are SME definitions in use by some Asian Countries:

CHINA

Following the planned economic system over a relatively long period, China has classified
enterprises into large, medium and small enterprises based on production capacity and size of
fixed assets. Different criteria have been set in accordance with the characteristics of different
sectors, whereas there is no strict requirement regarding the employment and sales volume of
each enterprise. Those factors constitute the major difference between China and western
countries, at present China is still using the criteria set by their State Economic and Trade
Commission in 1998 to classify enterprises and there are no clear and unified criteria for
enterprises of other types.

TABLE: SECTOR-SPECIFIC SME DEFINITIONS IN CHINA

Industrial Sector :
300 - 2000 employees 30 -300 M Yuan in sales 40-400 M Yuan Asset size
Small Enterprises

Medium Enterprises >2000 employees >300 M Yuan in sales >400 M Yuan Asset size

Construction :
600 - 3000 employees 30 -300 M Yuan in sales 40-400 M Yuan Asset size
Small Enterprises

Medium Enterprises >3000 employees >300 M Yuan in sales >400 M Yuan Asset size

Wholesale :
100 - 200 employees 30 -300 M Yuan in sales
Small Enterprises

Medium Enterprises >200 employees >300 M Yuan in sales

Retail :
100 - 500 employees 10 -150 M Yuan in sales
Small Enterprises

Medium Enterprises >500 employees >150 M Yuan in sales

Transportation :
>500 employees >30 M Yuan in sales
Small and Medium Enterprises

Posts : >400 employees >30 M Yuan in sales

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 Small and Medium Enterprises

Hotels and restaurants :

>400 employees >30 M Yuan in sales
Small and Medium Enterprises

INDIA
The definition used by the Indian authorities is based on the level of investment in plant,
machinery or other fixed assets whether held on an ownership, lease or hire purchase basis. It
seeks to keep in view the socio economic environment in India, where capital is scarce and labor
is abundant. However, a definition exist only for tiny and small units, medium sized enterprises
are not defined either technically or legally.

Industrial undertaking in which the investment in fixed assets in plant and machinery,
excluding land and building, whether held on ownership terms or on lease or on hire purchase,
does not exceed Rs. 1 Crore.

An industrial undertaking which is engaged or is proposed to be engaged in the

manufacture or production of parts, components, sub-assemblies, tooling or intermediates, or the
rendering of services and undertaking supplies or proposes to supply or renders not more than
fifty percent of its production or services, as the case may be, to one or more other industrial
undertakings and whose investment in fixed assets in plant and machinery, whether held on
ownership terms or on lease or on hire purchase, does not exceed rupees one crore.

All Small Scale units wherein investment on plant and machinery (excluding land and
building) upto Rs. 25 lakhs are classified as tiny industries.All small scale units which exports
more than 50 percent of their output is classified as Export Oriented Units. Industrial related
service/business enterprises with investment on plant and machinery upto Rs. 10 lakhs excluding
land and building is registered under Small Scale Service Business Enterprises (SSSBE).

ROLE OF SME’s IN ECONOMY

Due to fast developing modern technologies and production scales, the small and medium
enterprises have become very critical for economic growth. This sector is now very important for
those nations whose desire is to be prosperous as it is the starting point of industrial
development. Large Scale Enterprises (LSEs) of today were SMEs in the past and SMEs of today
would be LSEs of tomorrow. This rule holds good for all countries of the world.
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 The SMEs in the developing countries are both large and growing. Considering its
potential in generating employment opportunities; the government should promote the SMEs by
enhancing availability of formal credit, imparting education and training to increase productivity
and augment earnings of the informal workforce.

More emphasis should be placed on the development of working skills than on

entrepreneurship, priority should be given to the provision of basic education which makes the
acquisition of vocational training easier and also enhances the mobility and flexibility of
workers.

Governments all over the world including Pakistan have recognized the important role of
the informal sector in the economy. One of the major components of informal sector is SMEs
which is regarded as the breeding ground for new entrepreneurs and instruments of employment
promotion. There are various advantages of SMEs.

The experience around the world suggests that SMEs have played an important role in
industrialization of the country. For example, Japan’s industrialization in the 19th century and
East Asian miracle of the 20th century are typical examples of the role the SMEs have played on
that part of the world.

SIGNIFICANCE OF SME’s
SMEs are considered the engine of economic growth in both developed and developing
countries as they:

 Provides low cost employment since the unit cost of persons employed is lower for SMEs
than for large sized units.

 Assists in regional and local development since SMEs accelerate rural industrialization by
linking it with more organized urban sector.

 Help achieve fair and equitable distribution of wealth by regional dispersion of economic
activities.

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 Contribute significantly to export revenues because of the low cost labour intensive nature
of its products.

 Have a positive effect on the trade balance since SMEs generally use indigenous raw
materials, reducing dependence on imported machinery, raw material or labour.

 Assist in fostering self-help and entrepreneurial culture by bringing together skills and
capital through various lending and skill enhancement schemes.

 Impart the resilience to withstand economic upheavals and maintain a reasonable growth
rate since being indigenous is the key to sustainability and self-sufficiency.

 Firms with sales less than $1 million spend 2x - 3x more on R&D per $ of sales than the
average. And result is SMEs’ producing 55 percent more innovations than LSEs’.

 Converts the raw material within the country into semi-finished items and later pass it on
the LSEs that have capital, skill and equipment to process these into finished goods.

 Provide rural people an opportunity for income generation and personal growth since they
can work at home. This helps to achieve fair and equitable distribution of wealth by
creating nationwide non-discriminatory job opportunities.

 Attracts direct foreign investment since multinationals and big conglomerates have started
to outsource from countries with strong SME sectors. The low labour cost makes
production of semi finished goods very economical for large concerns operating in
international markets.

 The SMEs act as engines through which the growth objectives of developing countries can
be achieved.

ADVANTAGES OF SME’s
The advantages of SMEs in an economy, be it labour intensive or otherwise are manifold.
Therefore, the development of small and medium industries in any country has specific effects
on the balanced and dynamic growth of a country. It has a number of advantages over large scale
industries. Some of these are mentioned below:

 It generates more jobs per unit of capital and is more capital efficient.

 Similarly it is also strongly integrated into the domestic economy.

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 Small industries use a high percentage of local raw materials. Most of local consumable
products are produced by small scale industries. It taps the resources at the grass root
levels.

 The promotion of Small and medium industries induces rapid growth of large scale
manufacturing in the long run.

 SMEs not only create employment opportunity for the entrepreneurs, but also to his/her
family members and associates.

 It also generates cheaper goods and services to the general population which attempts to
break the cycle of the ever increasing price hikes. The increased employment and the
goods/services produced has a positive effect on the GNP of a country. This becomes a
catalyst in breaking the poverty cycle.

 The small businesses are remarkably flexible because they operate near the customer,
thus it has the ability to adapt according to the ever changing needs of the customer.

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 SME’s IN PAKISTAN
The SME sector, especially in the sub-continent has mostly been neglected and
discriminated against in terms of government attention and access to credit, management,
marketing expertise and latest technology. This is particularly the case with Pakistan where
although economy is in transition but still large - scale sector continues to assume the major role
in economic development. In fact in transition economies private sector development must have
focus on SMEs to allow these enterprises to grow into medium and large scale entities and take
over the functions of state owned enterprises.

SMEs are considered as the engine of growth for developing countries like Pakistan. It is
vital that these enterprises are encouraged so as to enhance the economic growth and to increase
the economic activity in the country.

In Pakistan, SMEs' contribution to GDP is only 15 percent, yet they employ 60 per cent of
the industrial labour force. To some extent these small and medium size industrial entities have
contributed towards making fair distribution of national income and creating employment
opportunities by forging links between more organized sector in urban with rural sector. In a way
this ensures employment of rural population in industrial sector. Furthermore, the growth of the
country's exports of value added goods, achieved in recent years is indebted to low cost and
labour intensive products manufactured by SMEs. Direct and indirect contribution of SMEs to
total exports is almost 50 per cent.

SMALL AND MEDIUM ENTERPRISE SECTOR OF PAKISTAN

A majority of the SMEs operating in Pakistan are in the trade and services sector with a
contribution of 51 percent and 34 percent respectively with the manufacturing sector having 15
percent of the SMEs. A breakup of this sector is shown below:

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 Breakup of SME Sector of Pakistan

Manufacturing
15%

Trade
51%

Services
34%

Although no accurate data is yet available, it is estimated that there are approximately
around 3.8 million SMEs in Pakistan which constitute almost 90 percent of all businesses, which:
provide employment to over 80 percent of the labour force (since artisans, workshops, household
units, craft industries, vendors and agro-based businesses that cluster around townships and
population centres have a tremendous capacity to provide employment).

The different categories of businesses based on the number of people employed are given
below:

Micro Scale Enterprises: Less than 10 people employed

Productive Assets limit of Rs. 2 million
Small Scale: Between 10 to 35 people employed
Productive Assets limit of Rs. 20 million
Medium Scale: Between 36 to 99 people employed
Productive Assets limit of Rs. 40 million

State Bank of Pakistan(SBP) DEFINITION OF SME

SME (Small and Medium Enterprise) refers to an entity, ideally not a public limited
company, which does not employee more than 250 persons (if it is manufacturing concern) and
50 persons (if it is trading / service concern) and also fulfills the following criteria of either ‘a’
and ‘c’ or ‘b’ and ‘c’ as relevant:

(a) A trading / service concern with total assets at cost excluding land and buildings up to Rs 50
million.

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(b) A manufacturing concern with total assets at cost excluding land and building up to Rs 100
million.

(c) Any concern (trading, service or manufacturing) with net sales not exceeding Rs 300 million
as per latest financial statements.

Small and Medium Enterprise Development Authority DEFINITION OF

SME’s
SMEDA defines micro, small and medium enterprises as:

1. Micro enterprises

a. Less than 10 people

b. Productive assets limit of Rs. 2 million

2. Small enterprises

a. Between 10-35 people

b. Productive assets limit of Rs. 20 million

3. Medium Enterprises

a. Between 36-99 people

b. Productive assets limit of Rs. 40 million

ORGANIZATIONS WORKING FOR UPLIFT OF SME’s

There are many different organizations working for the uplift of Small and Medium Enterprises
in the country. These organizations are mostly Government based.

SMALL AND MEDIUM ENTERPRISES DEVELOPMENT AUTHORITY

The Small and Medium Enterprises Development Authority (SMEDA) was established in 1998
under the Ministry of Industries and Production in order to foster the development of SME in the
economy and was expected to take a key role in this process. Its functions include, inter alia, the
facilitation on policy making and the provision of overall planning, programming, research and
evaluation of matters related to SME in Pakistan; monitoring and evaluation; encouraging and
facilitating development of SME and to protect their interests. Its functions are:

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1. Facilitation on policy making and provision of overall planning

2. Programming, research and evaluation of matters related to SMEs in Pakistan

3. Monitoring and evaluation; encouraging and facilitating the development of SME and to
protect their interests.

In the industrial development of a country, the importance of the SME sector cannot be
overemphasized because:

1. SMEs constitute nearly 90 percent of all enterprises in Pakistan.

2. They employ 80 percent of non-agriculture labour force

3. Their share in the annual GDP is approx. 40 percent.

Historically, the GoP has not distinguished between large and small enterprises in
industry or trade. Industrial and commerce policies have been uniform for all scales of
enterprises. As a consequence of which specific needs of Small and Medium Enterprises could
not be addresses. SMEDA is creating a SME focus within the Government for this crucial sector
of the economy which provides low cost employment opportunities and helps the economy in
two valuable ways:

 Boosting exports

 Poverty reduction

However, unlike large enterprises in the formal sector, a small and medium enterprise is
constrained by financial and other resources. This inherent characteristic of an SME makes it
imperative that there should be a mechanism through which it may get support in different
functions of business including technical upgradation, marketing, financial and human resource
training & development.

In Pakistan SMEDA is the flagship organization of Pakistan which is providing the

necessary services to help SMEs overcome the weaknesses that are endogenous to their very
nature. It is an autonomous body working under the umbrella of the Ministry of Industries &
Production and contributes towards the growth and development of SMEs in Pakistan through:

1. The creation of a conducive and enabling regulatory environment.

2. Development of industrial clusters.

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 3. The provision of Business Development Services to SMEs in all areas of business
management

One of the first exercises SMEDA conducted was determining the definition of SMEs.
Local research showed that there were varying numbers of definitions in use by different
organizations. Thus SMEDA first of all developed a uniform definition of SMEs that would be
acceptable to all concerned.

In Pakistan, SMEDA has defined SMEs in terms of employment generated as well as

investment in productive assets. SMEDA’s definition of SMEs is primarily based on the number
of personnel employed in the enterprise. The secondary criteria for classification of the SMEs, is
the value of productive assets employed the enterprise. Adhering to a clear mandate and a logical
path to achieve quantitatively verifiable targets SMEDA:

1. Removes all regulatory retardants in the shortest possible time

2. Assist SMEs with…

a. Technical upgradation

b. Technical support, especially in export markets

c. Human resource development through training & organization structure

development.

1. Access to formal capital comprehensive analyses of international trends

2. National policies and other macroeconomic factors affecting SMEs in Pakistan for a gradual
progress towards the creation of favorable business environment for its key clients – the SMEs of
Pakistan.

3. At the same time, they also interact with the SMEs working in industrial sectors such as agriculture,
fisheries, textiles, handloom, weaving, transport, leather, marble & granite, carpets and light
engineering. This interaction takes place at the individual as well as collective level to provide
proactive and responsible financial, technical, management and marketing services to the SMEs.

At the collective level, SMEDA addresses the problems and needs of SMEs in the form
of an industrial cluster – a concentration of largely homogenous enterprises within a certain
geographical area. SMEDA interacts with the stakeholders operating in such clusters on a regular
basis and collects fist hand information about their problems and needs. During this interaction,

15
 the issues are prioritized and the important problems are selected for detailed working through
which the projects/ programs are identified.

SME support through cluster development program is provided on two fronts:

1. Regulations and policy level support.

2. Institutional & networking support.

At the institutional level, SMEDA provides support to SMEs

 By creating networking amongst the concerned stakeholders.

 By directly starting development projects in the clusters. Such projects may include establishing
a training institute, building a common facility centre, building a model plant with state-of-the-
art technology for SMEs to emulate through reverse engineering. These projects also include
upgrading technology in a particular industrial sector and starting a program lending scheme for
this purpose in collaboration with the financial institutions.

ECONOMIC IMPORTANCE
Apparently the government of Pakistan has got convinced that without appropriate
initiatives on her part this sector cannot be expected to play its due role in the advancement of
industrialization of the country.

Reportedly the Asian Development Bank and some other international agencies are
prepared to offer meaningful help to pave the way for SME of Pakistan to come out of its hole.

The history of SMEs of other Asian countries has shown that small scale units cannot
compete with the large size companies for reasons of meager resources i.e. technology, finance,
skills, management. Even when confined to work as subcontractors they have to undercut each
other to secure access to business opportunities, compromising thereby their viability abinitio.

Other Asian economics have learnt from the Japanese success, followed suit and
registered significant improvement in their industries which are predominantly small and
medium enterprises. Pakistan is presently on the look out for remedial measures for its SME
sector.

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 ANALYSIS

EFFECTS OF WTO ON SME

Most of the businesses in Pakistan, especially in the textile sector are worried that they
will be at a disadvantage if WTO is introduced in Pakistan. They do not realize that it is not just
about the textile sector alone, there is a lot more to do than that. What most people don’t realize
in Pakistan is that the buyers are going to dictate their own terms on the compliance issues and
matters relating to labour, employment etc. For instance, it is going to be the buyers who’d
determine how many toilets a factory needs to have for its workforce. SMEs were going to suffer
directly because of the tariff and non-tariff walls that the importing countries are seeking to build
in the post WTO era (to protect their own commercial interests). SMEs could never fulfill the
compliance requirements of their buyers for being very costly. “If a company is making five
products, it will be required to obtain as many echo labels for them, causing it Rs. 2.5 million
annually”. The US security concerns required proper security arrangements both at the factory
premises as well as at the time of loading and unloading of consignments for that country. The
costs are too big for the SMEs to bear. It is due to lack of awareness and smaller size of the
businesses. Even if somebody wants to do something in this respect, he cannot because of the
very high costs involved. Most of the difficulties would be faced by the textile sector that
contributed more that 65 percent of the country’s total exports. Other sectors, like automobiles,
would not feel much impact of the walls being erected by the buyers because they were not much
into exports. The farmers would have to improve the quality of the products as well as its
packaging if they want to compete in the international markets.

What are the implications of this back loading and how far our textile industry is geared
to face the open competition environment after WTO is imposed. Some facts are indicated here
to facilitate serious analysis issues involved.

1. Historically, the country’s textile sector has enjoyed high protection and for longer
periods than necessary. In the absence of genuine competition, the quality improvement
and value addition were seldom accorded a serious consideration. The industry flourished
primarily at the cost of consumers of captive domestic markets.

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2. The restrictive regimes indirectly protect inefficient and weak producers by assuring
market share in the importing countries. Pakistan’s quota management policies were also
not used as an instrument of value addition. The cardinal principals are these policies has
been the linkage of quota entitlement of the exporters with quantities shipped irrespective
of the quality of product. In order not to lost quota entitlement, the manufacturers /
exporters generally accorded priority to quantity rather than quality. The quota
manipulation by the vested interests also encouraged rent seeking tendency in the
industry.

3. Cotton yarn and fabrics have the largest manufacturing base. During the last few years,
the segments of knitwear, bed linen, towels and selected items of ready made garments
have shown an appreciable rising trend in exports. However Pakistan’s textile sector is
relatively weak in synthetic fiber products, women garments and fancy apparels. The
impact of full integration is likely to hit these segments hard. Also no adjustment period
is available to the industry and the sudden switch from restricted to free environment
would certainly add to the adjustment difficulties of un-prepared units. Pakistan must
take stock of the emerging situation and devise appropriate strategy to minimize negative
effects on our exports of this switch-over from protected to open market environment.

PERFORMANCE OF SME BANK

The SME Bank was launched in year 2001 to support and develop SME sector in
Pakistan by providing the necessary financial assistance and business support services on a
sustainable basis and to enable the SME sector to contribute to economic development through
value addition and exports; promote entrepreneurship; and create employment opportunities.

Undergoing a restructuring program has brought about a turnaround in the financial

position of the bank. Profit after tax for the year 2004 is almost 14 times higher as compared to
the year 2003. SME Bank, as a DFI, declared an after tax profit of Rs. 486 million for 2004 as
compared to Rs. 59 million in 2003 which also resulted in an improved credit rating. Based on
the latest credit rating issued by JCR-VIS Credit Rating Company Limited, credit rating of the
SME Bank was BBB in the long term, with a “stable” outlook from previous BB+, and A2 in the
short term, which has been upgraded from A3. JCR-VIS Credit Rating Company has upgraded

18
medium to long term and short term rating of SME Leasing Limited from BBB to BBB+ and
from A-3 to A-2 respectively.

The paid up capital of the bank has been increased to Rs.1.1 Billion. The bank has paid
Rs. 3.393 Billion to SBP against its liability and adjusted another Rs.3.3 Billion receivable from
it. The remaining liability is to be liquidated by 2006. The bank has also successfully
implemented a voluntary staff separation scheme as part of the restructuring, under which about
700 employees have been voluntarily severed. A branch rationalization program has also been
implemented resulting in substantial savings annually. This bank has been in profit since its
inception has taken these steps to prepare for privatization by the end of June 2006.

To optimize the organization's operations, the Recovery Operations Division has

outsourced the part of recovery operation of the areas where no bank's branch exist. It is
expected that this decision will reduce the Recovery operations cost considerably.

FINANCIAL RATIOS

Table:
2003 2004 ROA and ROE of SME Bank
ROA 5.897 6.46

ROE 84.72 37.67

RETURN ON ASSETS

Return on assets measures a company’s earnings in relation to all of the resources it had at
its disposal the shareholders’ capital plus short and long-term borrowed funds. Thus, it is the
most stringent and excessive test of return to shareholders.

The ROA in the case of SME Bank was the favourable for both the years. An ROA of
6.46 percent of year 2004 is considered satisfactory; this shows that the company (bank) is

19
efficiently utilizing its available resources. This happened due to a considerable decrease in the
amount of asset-base.

ROA

6.6
6.4
6.2
ROA
6
5.8
5.6
2003 2004

RETURN ON EQUITY

One of the most important profitability metrics is return on equity. Return on equity
reveals how much profit a company earned in comparison to the total amount of shareholder
equity found on the balance sheet. Shareholder equity is a creation of accounting that represents
the assets created by the retained earnings of the business and the paid-in capital of the owners.
Upon analysis it is revealed that the ROE decreased in 2004 to 37.67 percent from 84.72 percent
in 2003. But this is due to the fact that major restructuring was being done in the bank.

ROE

100
80
60
ROE
40
20
0
2003 2004

ADMINISTRATIVE COSTS

The SME Bank significantly improved its performance during the period, which is
depicted in the decrease in the administrative costs as a percentage of annual average total assets.
This was attributed to the restructuring effort pursued by the bank, due to which the assets as
well as administrative expenses both decreased. However, the administrative costs as a

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percentage of annual average loan portfolios for SME Bank increased during the same period,
which was attributed to a decrease in the SME lending in 2004. The loans for the SME sector
disbursed by the SME Bank decreased from Rs. 1,094 million in 2003 to Rs. 1,059 million in
2004. This was mainly attributed to the low lending and higher recovery rates.

Table: Administrative Costs

Administrative and operating costs as a 2003 2004

percentage of

Annual average total assets 5.36 5.17

Annual average loan portfolio 34.12 39.99

BASIC SITUATION OF SME AND THEIR SUPPORT STRUCTURES

CURRENT STATUS OF SME

It is fair to say that our economy is an economy of SME. The significant role of SME is
clearly indicated by research and statistics. Enterprises employing up to 99 persons constitute
about 90 percent of all private enterprises in the industrial sector and SME employ some 78
percent of non-agriculture labour force. They contribute over 30 percent to GDP, PKR 140
billion to exports, and 25 percent of manufacturing export earnings besides sharing 35 percent in
manufacturing value added.

Stability of policy is a necessary condition for achieving and sustaining high levels of
economic development. The stability in the economy can be ensured by a desirable mix of
various other policies.

In Pakistan, policies in the past have given a general perspective, direction and defining
broad parameters of activity within the macroeconomic framework. However, efforts have
remained limited focusing on the large enterprises, neglecting SME which are at the heart of our

21
economy. For example, institutions established to facilitate business activity, like Board of
Investment (BOI), Export Promotion Bureau (EPB), Central Board of Revenue (CBR), to name a
few, have been concentrating their efforts on large scale industry. The adverse influences of legal
environment affect all economic agents. The evidence suggests small firms are discriminated
against relatively large firms. And while large enterprises and established holding structures
possess the necessary economic and human resource potential to cope with and overcome these
difficulties, SME, due to their size and the resulting peculiarities, are far less capable of adjusting
and carrying on successful business. While spared direct statutory or administrative
discrimination, SME remain subject to unequal treatment, which distorts the competitive
environment for business. The economic significance of this bias is apparent. Such an
environment does not cater well to innovative activities which come from newly founded, small
firms, and the new job creation potential of the economy is thus constrained while the informal
sector tends to grow.

Our SMEs suffer from a variety of weaknesses which have constrained their ability to
adjust to the economic liberalization measures introduced by the Government of Pakistan and to
take full advantage of rapidly expanding markets of the world. But SME importance and
contribution in the economic activity suggests that there is a significant potential to enhance their
growth through appropriate regulations and promotion.

More recently, the importance of SME has been realized, with the Government’s efforts
focusing on the hitherto neglected informal sector. The reason behind the increased stress on the
SME sector is that SME promote entrepreneurial culture, create a wider base for employment
generation and are a primary vehicle for poverty eradication.

GOVERNMENT SOCIO-ECONOMIC STRATEGIES AND SME

SME are a distinct pillar of the economy that needs to be given due attention. It requires
specific policy and regulatory space to turn SME into an effective tool for driving the economy
and increasingly contribute to economic growth and employment.

The Government of Pakistan has developed a number of strategies for socio-economic

development.

• Poverty Reduction Strategy Paper (PRSP)

• Micro Finance Sector Development Program

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• SME Sector Development Program

• Education Sector Reforms 2001-05

• Reform of financial sector

• Reforms in Tax Administration

While SME are being mentioned in some of these important socioeconomic strategies
and policy documents, including even very specific measures for their promotion, these
measures are not sufficiently specified and prioritized for us to be able to speak of any
coherent SME policy or approach. The SME Sector Development Program seeks to
improve this situation by inviting all concerned stakeholders to draft Pakistan's future
SME policy. Although SME policy is a sector-specific policy, it should be noted that the
task of formulation is not a simple exercise. SME are a cornerstone of our economy.
Many changes in existing legislation may have direct or indirect effects on SME, e.g. in
labor law, financial law, export regulations, banking system regulations, tax regulation
etc. SME promotion therefore comes close to a cross-cutting issue. Furthermore, the
environment for SME is constantly changing, in particular with an increased exposure to
world markets due to the opening up of the economy. Therefore, SME policy within a
socioeconomic development strategy cannot be a one-off exercise. Only a process of
regular review linked with predictable behavior by all stakeholders will ensure successful
outcomes in the long run.

COORDINATION AND INSTITUTIONAL SUPPORT

The role of government as a facilitator of business and its interaction with business
support institutions is imperative for the establishment of a mutually beneficial relationship for
the growth of the sector. SME promotion is an important issue for many government
departments and central offices. For example, the Ministry of Labor plays an important role in
shaping the labor market policy of the state. Similarly, in order to gather information on the
health of the SME population the role of Federal Bureau of Statistics, the Ministry of Finance,
and planning division is pivotal. Other ministries and divisions such as Ministry of Finance,
Ministry of Commerce, Planning Division, Ministry of Food, Agriculture and Live Stock,
Ministry of Environment, Ministry of Local Government and Rural Development, and the
Ministry of Science & Technology also influence the situation of our SME. Provincial and local
governments also take their share in responsibility.

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 However, there is an existing lack of coordination and regular information exchange
mechanism among institutions which constrains their collective ability to deliver in the SME
development process. As a result of the Governments more recent efforts, two institutions Small
and Medium Enterprise Development Authority (SMEDA) and SME Bank were created.

The responsibility for facilitating SME policy development now lies with SMEDA which
is attached to the Ministry of Industry and Production (MoIP). SMEDA is responsible for
creation and coordination of Government policy for the SME sector. Parliament, naturally, is
responsible for monitoring policy and its implementation. One of the major reasons for the lack
of coordination is that SMEDA has not been provided with a formal mechanism to initiate,
coordinate, monitor, and evaluate initiatives undertaken for SME development which fall outside
of its own scope of activities. Therefore, cross-departmental and stakeholder consultations,
resulting in the preparation of our national SME policy are our key to success.

Regular information exchange mechanism and networking needs to be developed

amongst our public and private sector institutions. There is a strong need to devise such an
information exchange mechanism and redefine the role of institutions, specifying their functions
in order to avoid duplication of efforts and allowing the best-possible usage of resources.

Under the SME Sector Development Program it is expected that SMEDA

i. prepares Government documents on policy regarding SME

ii. drafts relevant laws and regulations

To form a collective view of all stakeholders, the SME Task Force has been established
at the MoIP. SMEDA will serve as the secretariat. A network of institutions stimulating the
growth of SME is being proposed. The institutions in this network cover all stakeholders
involved in SME promotion: Regional Development Agencies, Business Support Centers,
Chambers of Commerce, as well as other organizations which are established as an initiative of
local communities, etc.

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 Issues in Small and Medium Enterprises Development
Seven government institutions directly linked with the development and working of small
and medium enterprises maintains different definitions for SMEs. These versions not only vary
in weight age and size but also on assets of these enterprises.

As a result of variation in definitions which are normally used for attaining qualifications
and approval of facilities from an institutions most of the SMEs die out much before gaining
strength to survive. The situation does not reflect so well on the government that has lately been
emphasizing the role that SMEs can play in generating employment and expediting the growth in
the country.

It is an accepted fact that SMEs' ratio of bank loans default is the lowest and they
generate more employment as compared to capital intensive large-scale units. When SMEs
operate in clusters they transform into vendors and provide support to larger industrial units.
Even Small and Medium Enterprise Development Authority (SMEDA) and SME Bank -
institutions directly involved in the development and promotion of SMEs perceive them
differently.

The SMEDA's definition for small enterprises: "10-35 employees or productive assets of
Rs2 to Rs20 million. And for medium enterprises it says that 36 to 99 employees or productive
assets of Rs20 to Rs40 million should be the criterion for an enterprise to qualify."
Against this the SME Bank which has been given a task to arrange finances for the SMEs
defines as: "A SME should have assets of Rs20 million and for medium size unit total assets of
Rs100 million. The bank does not consider the number of employees in the SMEs.
Yet another flabbergasting definition is of the Sindh and Punjab industries departments. Though
both the departments have fixed the capital investment up to Rs10 million but the Sindh
Industries Department has included the cost of land and building in this amount.
The Punjab Industries Department, however excluded the cost of land from the fixed capital

25
investment of Rs10 million. Furthermore, they have not given separate definition for small and
medium enterprises.

The Punjab Small Industries Corporation while giving a combined definition for the
small and medium enterprises has fixed investment up to Rs20 million excluding land and
building cost.

The Federal Bureau of Statistics also gave combined definition for the SMEs and says
"an enterprise with less than 10 employees qualifies as an SME." However, the State Bank of
Pakistan (SBP) under SME Prudential Regulation come up with better and more pragmatic
qualifying definition for the SMEs. Some of the major issues are:-

1. Literacy
The evidence reveals that SME find it extremely difficult to grow because of their inability to
delegate to soundly trained staff. The day, the small businessman feels comfortable to delegate,
SME start progressing.

The low literacy level also determines the potential of our labor force. Higher literacy rates
are essential to enhance the quality of production can be enhanced by multiple factors which is
what we need to be able to effectively compete in the international economy which is being
extended to our local markets by the effects of opening up and WTO accession.

2. Law and Order

Law and order situation in Pakistan has always been regarded as worrisome. One survey
reports that one in five respondents report that the business was the target of at least one crime
during 2002. Another assessment suggests that businesses in NWFP spend 4.5 percent, Sindh
and Punjab 1-2 percent of their revenue on security. One in four SME consider law and order to
be a severe problem.

Law and order problems weaken property rights and as a result weaken the investors’
decision to invest. These problems are clearly linked to the manner in which the law enforcement
and criminal justice system functions. The high time cost involved in seeking legal recourse
together with lack of access to both effective informal and formal enforcement mechanisms,
increase the costs associated with contract enforcement.
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 3. Intellectual Property Rights
Intellectual Property Rights (IPR) is a vital issue that needs to be looked into. It has been
observed that many developing countries, with the help of a change in their IP systems and laws,
are able to attract Foreign Direct Investment (FDI) in the Research and Development (R&D)
especially in the industrial and scientific field. Therefore, promotion and protection of
intellectual property spurs economic growth, creates new jobs and industries, enhancing the
quality and enjoyment of life. Another benefit for Pakistan in properly adopting IPR culture is
that it will protect the indigenous products such as rice, kinno, traditional knowledge, pottery etc.
The owner of IPRs has the most valuable assets which can be utilized in commercial
transactions, whether IP licenses, joint ventures, manufacturing, purchase or distribution
agreements, or mergers and acquisitions. Licenses to use patents, trademarks and copyrights, are
often combined with transfer of know how in the form of training and are increasingly an
important term in such transactions.

4. Infrastructure
Basic physical infrastructure is a prerequisite to growth and development. Power outages and
access to connections are considered an irritant which significantly affects the productivity of
firms in Pakistan. It is estimated that a typical business in Pakistan loses 5.6 percent in annual
sales revenue due to just this single factor. Differences associated with firm size recognize that
smaller firms are relatively hard hit in comparison with the larger ones because of inability to
arrange alternate power source such as private power generators. High rates of power, the poor
quality of delivery and its reliability are the serious concerns of SME.

Similarly, access to telecommunication facilities and transport also serve as a detriment to

smooth growth and transition of smaller firms to larger ones. The chief problem in the provision
of telecom services is the shortage of new fixed line connections, which currently stand at a mere
0.5–0.6 million a year for the whole country. Pakistan could also save up to 16.5 percent of the
value of exports by improving its trade and transport logistics systems. Inefficiency in transport
alone is estimated to cost the economy Rs. 320 billion a year. The concentration of power,
telecommunication, and transport services, except for road transport, in the public sector has
been regarded as the major concern. Evidence suggests that Pakistan’s state-controlled and
concentrated structure of infrastructure delivery is highly inefficient.

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 BUSINESS ENVIRONMENT
The large size of the SME sector limits the ability of Government and business support
institutions to achieve complete coverage by support programs. This is a fundamental reality in
most countries of the world and it is why policy framework and regulatory measures are of
tremendous importance when SME promotion is concerned. It is agreed that much more can be
achieved only by appropriate policy tools and regulations than with support programs. Likewise,
SME development is hampered more by inappropriate regulations than compensated by means of
appropriate support programs. Most of the developed nations therefore have mechanisms in
place to revert the biases against small firms. For instance, the United Kingdom introduced the
“Think Small First” initiative which requires all Government organizations to assess the impact
of their actions on small business prior to implementation. Furthermore, participation of small
business in government procurement is being facilitated as a matter of routine. The result of such
policies is that (unfortunate) surprises to small firms are less frequent. It is made sure that
businesses potentially affected are consulted and informed of any forthcoming policy shifts so as
to avoid negative impacts. They are also allowed an adequate grace period for the adjustment of
economic activity and there is no retroactivity of new regulations. Besides this, special attention
is paid to minimizing the room for bureaucratic discretion while developing policy rules or
procedures.

RELATIONSHIP BETWEEN GOVERNMENT AND SME

The relationship between Government and SME seems to be fundamentally flawed. In
many cases this extends also to other large organizations and their interaction with smaller
clients as SME. Our compulsion of centralized control stems from the fear of the regulator to be
misled by the opportunistic profit-seeking entrepreneur. And our administration practice is
characterized by rent-seeking bureaucrats who, given the low level of their pay, take advantage
of the semi-literate entrepreneur. Of course, we all know there are also many dedicated and
honest professionals on both sides. But the fact of the matter remains that there are severe
attitude problems in the relationship between the two sides. The only way to break this

28
discouraging situation is to face the problem squarely and seek solutions in a positive spirit and
entertain systematic dialogue between the two sides.

The present divide is, among others, reflected in a language gap. Part of the concern for
local business people is the inadequate business facilitation process in the local language which
includes laws, regulations and business support material available in the English language only.

As a starting point, we propose to consider the increased usage of Urdu in our written
documentation, in our official deliberations and communications. This Issues Paper will be
translated to Urdu and circulated so as to enable a debate with all of Pakistan's interested SME.
Eventually, we should expect the SME policy we are going to develop to be published in Urdu as
well, and to regularly report about the achievements under this policy in Urdu to the policy's
clients, our nation's SME.

A second point is how we may increase the share of SME participating in the provision of
goods and services to the public sector, as it is common practice in many countries. A typical
SME in Pakistan caters to the domestic private sector. It is noted that fewer than 4 percent are
supplying to the government sector. Some of the issues are related to tough bargaining price (36
percent) and supplies on credit (34 percent) and other are related to absence of rules on how to
the public sector should increase its procurement from SME. Further points may possibly emerge
from the dialogue.

CONCLUSIONS AND RECOMMENDATIONS

ESTABLISHING A COMMON DEFINITION OF SME’s
The SME sector is of Pakistan has high potential and can take the country into even
higher prosperity. But one of the main problems hampering the sector is lack of common
definition. The Government has taken many steps for the promotion of SMEs by establishing
many organizations which work for SMEs. But the problem is that each organization defines
SMEs in their own terms. This creates unnecessary problems for the entrepreneurs who find it
difficult in approaching the organizations for the solutions of their problems.

The government should advise its organizations to agree on a uniform definition which
should be applicable in the length and breadth of the country. This will solve the problems of the
entrepreneurs who are mostly confused about the status of their businesses.

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 STREAMLINING THE FISCAL POLICY
Pakistan’s fiscal policy exclusively focuses on encouraging the larger sector and does not
take into the interests of the SMEs. Following measures could be introduced to address these
inherent policy biases against SMEs.

 The important policy needs to be made completely uniform and import duties need to be
fully rationalized.

 Effective measures should be introduced to check smuggling.

 All concessions to large companies should be phased out to promote and equitable
competition.

 SMEs need support in getting organized through trade associations at local level.
Through these bodies, information and support to SMEs can be disseminated.

 Interaction between SMEs and Chambers of Commerce and Industries should be

promoted.

PROMOTION OF LINKAGE AMONG FIRMS

Large firms are increasingly relying on smaller enterprises and workshops to supply them
with goods and services that were, in earlier times, produced in-house. Therefore, there are new
and increasing opportunities for small companies to act as sub-contractors.

In Pakistan, a balanced growth strategy for the development of industrial sector should be
implemented. According to this strategy, the industrial sector grows through the backward and
forward linkages between the industrial linkages between the industrial units of different sizes
and among industries of same size. Therefore, through this linkage, large enterprises can enable
small firms to enter into large markets both domestically and internationally.

This model requires:

1. Small firms to focus on their core competency and try to excel in it.

2. These firms should organize themselves and forge strong links among themselves.

Also, with these linkages, large firms can provide technical and support for their partner
small firms. These linkages, would serve to enable small firms to evolve into excellent modern
enterprises competing in local and international markets. An excellent example of this model is
the IT firms.

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SMEDA should take the following actions to promote the effective linkages:

1. The establishment and production of industrial sub-contracting exchange schemes, which

would facilitate market linkage between manufacturers, exporters and industrial
subcontractors.

2. Identification of suitable SMEs in the specified fields of activity which should then be
introduced to large firms including MNCs by arranging matchmaking sessions for further
cooperation.

3. Pilot testing if the “Balanced Growth Strategy” in a specified sector should be carried
out. This pilot project should be closely monitored and evaluated for replication in other
sectors later on.

4. SME associations, groups and other trade associations should be strengthened and
activated.

EASY ACCESSIBILITY TO FINANCE

While capital is not the only factor that allows for the growth and creation of enterprises,
it is infact the most vital, for without it, creativity, drive and innovation cannot be transformed
into material actions. Unfortunately in Pakistan, just like any other developing country, the
indifference, unwillingness and the inability of most formal banks to become involved in
providing credits to small businesses in predetermined. The reasons behind this lack of credit
availability are high transaction costs, risks, lack of collateral just to name a few.

Some of the actions are recommended for this purpose:

1. In addition to monitoring banks’ compliance with the mandatory allocation of credit

resources, certain innovative schemes can also be developed to increase SMEs access to
financing.

2. Empirical evidence suggests that the rates of default of SMEs are far less than those of
large organizations, so the risk of default is much less. Thus the central bank should
encourage commercial banks to extend credit to small businesses on more favorable
terms.

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3. Another major area of concern is the period of disbursement which is certainly hurting
the growth of small enterprises. Prospective borrowers are prepared to pay a higher
interest rate if their applications are appraised and loan is disbursed quickly. Loans which
take more time to be disbursed are of little use to the entrepreneur who wants to exploit
the business opportunity.

STRENGTHENING THE HUMAN RESOURCE DEVELOPMENT OF SME’s

The ability of entrepreneurs to combine resources effectively depends in part on an
educational policy that emphasizes on practical business skills such as accounting, finance and
personal management.

One of the main factors in business is the availability of credit which should be made
available to those who have passed through training programs on how to effectively manage their
enterprises.

However, he integrated approach has been advocated by organizations such as ILO,

UNIDO, World Bank, USAID and has the most successful rate of implementation.

Therefore following actions are recommended for this purpose:

1. Advocacy for improved basic education at the primary and secondary levels.

2. The official policy should be clearly democratic and specify the role of SMEs in the
proposed committees responsible for designing the training programs at the institutional
level. These committees would deliver the desired results with proper representation of
SMEs.

3. The development of Human Resource Development in specific industries must be

identified. Linkages should be established between training and credit programs so that
the SMEs are in a position to invest in the upgradation of skills.

4. Specific economic zones must provide facilities and resources for skills training for
SMEs in their respective zones.

5. SMEs need to be promoted at all levels so that they have the capacity to influence
decisions regarding orientation and structure of formal training. Based on national and
international experiences, the resource bank of training materials and teaching aids needs

32
 to be established which would provide useful input to innovative approach towards
training.

6. The training should be relevant to the environment in which the trainers have to operate
and should only be given to people who can genuinely learn from it.

BOLSTER THE TECHNOLOGY TRANSFER AND R&D INITIATIVES

One of the major challenges faced by Pakistani SMEs is in the area of technology
acquisition and development. This requires information and advice in areas such as the process
of production, selection of machinery and technical collaboration available both domestically
and internationally.

Furthermore, Pakistani SMEs must be equally competent at adapting to imported

technologies and products. It is likewise important to recognize that the key short-run strategies
for technologically developed countries concentrate on the development of technologies that are
best suited to local markets and conditions.

The recommendations for this purpose are:

I. Establish pilot enterprises at village / township level for the purpose of demonstrating the
feasibility of production and management processes as well as product design and quality
control techniques.

II. Train young and enthusiastic people living in both urban and rural areas in the use of
modern technologies for a local application.

EFFECTIVE ROLE OF GOVERNMENT INSTITUTIONS

Closely related to the criticism regarding the performance of government agencies has
been the widespread belief that many institutions, supposedly supporting SMEs are inadequately
tuned to the day-to-day needs of their centers.

There is no real contention on the view that government policies in Pakistan have not
been favorable to small enterprises. Infact, some even go to the extent that these policies are
biased against the small businesses e.g.

 The banking sector has been criticized for not geared in helping small firms

 The cost of capital is very high.

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 Utility connections take months resulting delays in production in financial difficulty right from
the start.

 There are almost 35 tax collecting agencies at different levels.

STREAMLINING PRIVATE SECTOR ORGANIZATIONS

The organizations that can become actively engaged in providing services for SMEs are
the following:

I. FOUNDATIONS:

Usually NGOs are set-up by the larger organizations or by the business community or by
wealthy individuals with the aim of helping out small or weaker business units.

II. MEMBERSHIP ORGANIZATIONS:

Associations, federations, enterprises, business organizations, chamber of commerce come into

this domain. These organizations can also be referred to as self-help or representative bodies.

Therefore SMEDA should prepare a framework for the formation of “Small and Medium
Enterprise Association” both at the national and regional levels. SMEDA can pursue an option
of obligatory membership for all the SMEs or it can decide not to impose a statutory obligation.
The following are a source of finance for associations etc

 Membership fees

 Fees from activities undertaken by organizations

 Government subsidies

 Support from large businesses / foundations.

 Help from external donors.

I. PROPER UTILIZATION OF MEDIA:

Media is a very strong medium of information and the Government can take advantage of this
medium by helping promote SMEs and highlighting the benefits of entrepreneurship. The

34
government can buy airtime from private television channels like Geo TV and ARY TV and can
also advertise in PTV, which is a state run enterprise.

II. FEMALE PARTICIPATION:

Women constitute more than 50 percent of our population and their participation in the uplift of
national economy is vital for the country. SMEs provide a perfect staging ground for women to
showcase their talents. Many programs can be organized in this context like spotlighting the
“success stories” of women entrepreneurs in certain business areas focusing mainly on the direct
economic benefits extended to them.

BIBLIOGRAPHY
 http://en.wikipedia.org/wiki/Pakistan

 www.statpak.gov.pk/depts/fbs/ publications/pocket_book2003/chapter05.pdf

 http://www.immigration-usa.com/wfb2004/pakistan/pakistan_people.html

 http://www.sbp.org.pk/publications/prudential/index.htm

 http://www.ifc.org

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 http://www.smebank.org

 http://www.smeda.org.pk

 Census of Establishments-1998

 Economic Survey of Pakistan 2004-05

 SME Bank Limited – Annual Report 2004

 http://wwwo.worldbank.org/gender/info/pakist.htm

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 Acknowledgement

The report on “Emergence of Small and Medium Enterprises - Exports” has been given
to me as part of the Seminar on International Business Environment in 2nd Semester of
Master of Business Administration (MBA).
I have tried my best to present this information as clearly as possible using basic terms
that I hope will be comprehended by the widest spectrum of researchers, analysts and
students for further studies.
The successful completion of any project requires guidance and help from number of
people. This project report could not have been completed without the guidance of Prof.Uttam
Shukla .

In the end, I would also like to thank all faculty members and all those whose names are
not mentioned above and who have indirectly helped me in various ways in successfully carrying
out the project.

AMANP
REET SINGH

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