Академический Документы
Профессиональный Документы
Культура Документы
Submitted to: Sir Imran Ali Submitted by: Ali Zahid Kashif Aslam MBE-SP08-003 MB
E-SP08-028
COMSATS Institutes of Information Technology M.A.Jinnah Campus Lahore. Departmen
t of Management Sciences.
Introduction
Developing a group of diverse and competitive small and medium enterprises (SMEs
) is a central theme towards achieving sustainable economic growth. SMEs are cru
cial to the economic growth process and play an important role in the country’s ov
erall production network. Some advanced economies have succeeded because SMEs fo
rm a fundamental part of the economy, comprising over 98% of total establishment
s and contributing to over 65% of employment as well as over 50% of the gross do
mestic product. Although the numbers might be lower in Pakistan, SMEs have the p
otential to contribute substantially to the economy and can provide a strong fou
ndation for the growth of new industries as well as strengthening existing ones,
for Pakistan’s future development.
Definition of SMEs
1. SMEDA Definition Small & Medium Enterprises are defined as follows, as approv
ed in SME Policy 2007.
Enterprise Category Small & Medium Enterprise (SME) Employment Size (a) Up to 25
0 Paid Up Capital (b) Up to Rs. 25 Million Annual Sales (c) Up to Rs. 250 Millio
n
2. State Bank of Pakistan According to State Bank of Pakistan, SMEs are organiza
tions which Fulfills one of the following criteria: A trade / services concern w
ith total assets at cost excluding land and buildings up to Rs 50 million. A man
ufacturing concern with total assets at cost excluding land and building up to R
s 100 million. Any concern (trade, services or manufacturing) with net sales not
exceeding Rs 300 million as per latest financial statements.
Importance of SMEs
The ideology behind the promotion of SMEs comes from the perceived failure of la
rge enterprises in creating adequate productive jobs to absorb a significant sha
re of the rapidly growing labor force in many developing countries. This percept
ion inspired emphasis on the development of small industries by stressing benefi
ts such as income generation, dispersal of economic activities to small towns an
d rural areas, and mobilization of entrepreneurial talents. Following are some p
oints which will reveal the importance of SMEs. SMEs are more labor-intensive th
an large enterprises. SMEs are as efficient as LEs or more efficient than large
enterprises. SMEs are more equitable in distributing the income they generate th
an large enterprises. SMEs are more likely to play a higher role in rural develo
pment than large enterprises. The significance of SMEs is associated primarily w
ith their role in stimulating economic growth. SMEs create employment opportunit
ies as they are labor-intensive. SMEs enhance regional development. Create more
equitable income distribution. SMEs play a complementary role in relation to lar
ger firms--as suppliers and distributors. SMEs serve as a training ground for de
veloping the skills of workers and entrepreneurs. The presence of SMEs curbs the
monopoly power of larger firms. A country can reduce its vulnerability to finan
cial crises by strengthening its SMEs. SME’s are the backbone of a national econom
y, particularly in developing countries. SME provide the platform for small & me
dium entrepreneurs to work as an arm taking of economic and social indicators of
a country.
Objectives of SMEs
Following are some broad objectives of SMEs. Economic Growth Economic Developmen
t Poverty Reduction Employment Social and economic sustainability
Characteristics of SMEs
Following are some common characteristics of SMEs. Owner is the manager & few em
ployees Owned & operated independently Relatively small investment, production,
sales, dealings etc. Inadequate efficiency of business operations. No relationsh
ip with other firms or parties for Investment, Management, finance, tax
Statistical facts regarding SMEs
1. ACCORDING TO THE ECONOMIC CENSUS OF PAKISTAN Sales below Rs.0.5M Sales below
Rs.1.0M SMEs less than 5 Year old Survive beyond 25 years Business enterprises n
ation-wide SMEs Household Units 84% 93% 19% 4% 3.2M 2.96M 0.18M
2. Province wise Distribution of SMEs Name of Area Pakistan Punjab Sindh Khyber
Pakhtunkhwa Baluchistan SME Units 2.96 Million 65% 18% 14% 3%
3. Distribution of SMEs According to the No. of Employees Total SMEs units SMEs
employing 1-5 Persons SMEs employing 6-10 Persons SMEs employing 11-50 Persons S
MEs employing over 50 Persons 2.96 million (100%) 2.85 million (96.6%) 79,000 (2
.67%) 26,000(0.87%) 1617(0.054%)
4. Economic Contribution of SMEs Employment GDP Value Addition Exports 78% 40% 3
5% 25%
5. SMEs Share in Sub-Sector Sub-sectors Cotton Weaving Other Textiles Metal Prod
ucts Carpets Art Silk Grain Milling Jewelry Wood & Furniture Others Percentage S
hare of SMEs 13% 6% 7% 4% 5% 16% 4% 10% 35%
Barriers to SMEs Growth
SMEs are facing various barriers in the way of their growth and development. Fol
lowing are some main barriers SMEs are facing these days. Govt. & SME
n Taxation Finance Labor Legislation Human Resource Development Technology Marke
t & Industry Information Lack of Infrastructure Environmental issues & complianc
e Social compliance issues Intellectual Property Rights
Small and Medium enterprise development Authority (SMEDA)
Premier institution of the Govt. of Pakistan under Ministry of Industries and Pr
oduction, SMEDA was established in October 1998 to take on the challenge of deve
loping Small & Medium Enterprises (SMEs) in Pakistan. With a futuristic approach
and professional management structure it has focus on providing an enabling env
ironment and business development services to small and medium enterprises. SMED
A is not only an SME policy-advisory body for the government of Pakistan but als
o facilitates other stakeholders in addressing their SME development agendas.
SMEDA Vision
Growth of globally competitive SME sector through a conducive and facilitating e
nvironment and support services as an engine of growth and sustainability to nat
ional economy.
Mission Statement
To function as the promoter & facilitator of SME sector in Pakistan by creating
a conducive and facilitating environment as well as providing and facilitating s
ervice delivery to SMEs for enhancing their capacities and competitiveness.
SMEDA Objectives
1. Formulate Policy to encourage the growth of SMEs in the country and to advise
the Government on fiscal and monetary issues related to SMEs. 2. Facilitation o
f Business Development Services to SMEs. 3. Facilitate the development and stren
gthening of SME representative body’s associations/chambers. 4. Set up and manage
a service provider’s database including machinery and supplier for SMEs. 5. Conduc
ting sector studies and analysis for sector development strategies.
6. Facilitation of SMEs in securing financing. 7. Strengthening of SMEs by condu
cting and facilitating seminars, workshops and training programs. 8. Donor assis
tances for SME development of SMEs through programs and projects. 9. Assist SMEs
in getting international certifications (such as UL, CE, DIN, JIS, ASME, KS, et
c.) for their products and processes. 10.Identification of service opportunities
on the basis of supply/demand gap.
SMEDA Services
SMEDA is currently offering following services to promote regulate and enhance S
MEs in Pakistan. Consultant Services Training Services Business Plan Divisi
nancial Services Information Resource Centre (IRC) Intellectual Property for Bus
iness Success Legal Services Policy and planning
1. Training services SMEDA organizes training programs, seminars, workshops and
conferences of short duration in major cities across the country for raising awa
reness and capacity building of SMEs. These need based training programs are aff
ordable, appropriate and innovative. These programs are aimed at improving knowl
edge, skills and competencies in the technical, marketing, financial, compliance
, policy, regulatory, legal, and commercial and other important functions. These
programs help to improve major performance indicators such as productivity, qua
lity, competitiveness and sustainability etc. The results include improvement in
export potential, investment promotion, business transparency, human resource d
evelopment, managerial capacity
building etc. These programs help decreasing the level of SME mortality and incr
easing efficiency. 2. Business Plan Division Business Plan development services
is one of the key services provided to enable existing as well as potential inve
stors to make well researched and informed investment decisions. 3. Financial se
rvices Financial Services Group (FSG) is one of the support units of SMEDA. As t
he name suggests, FSG is responsible for all financial consulting and advisory s
ervices that SMEs may require. As for all the support functions, FSG caters to b
oth internal sector teams as well as any external walk-in SMEs. In addition to s
uch consulting services, FSG also acts as coordinator of government schemes, whi
ch involve financial institutions. 4. Information Resource Centre (IRC) SMEDA In
formation Resource Centre (IRC) has been established to cater to the information
needs of SMEs and stakeholders from both the public and private sectors. IRC ma
intains a collection of more than 3400 books and CD-ROMs/DVDs besides subscribin
g leading newspapers and more than 20 journals of international repute on divers
e business sections and related fields. A number of full text online journals ar
e also available for SMEs and researchers on different fields of knowledge. IRC
collection consists of databases, directories, reports, yearbooks, annual report
s, and loose-leaf material that are available for easy retrieval through latest
library management tools. Hard format of training programs conducted by SMEDA ar
e also available in IRC. SMEDA IRC collection is increasing by an aggregate 10 %
every year. 5. Policy and planning Policy & Planning Division of SMEDA has dual
focus internal & external. It plays a key role in devising and coordinating pol
icies, action plans and strategies for SMEDA operations. On the other hand it ha
s a mandate to carry out research, communicate with stakeholders and advocate po
licies with
different tiers of the government with an ultimate objective of creating a condu
ctive business environment for SMEs in Pakistan. P&P is the hub of policy and re
gulatory research that provides SME specific policy input to all tiers of govern
ment, government agencies and institutions, SME associations, industrial cluster
s and individual entrepreneurs. 6. Intellectual Property for Business Success In
tellectual Properties (IPs) are intellectual assets that are intangible such as
knowledge, creativity and inventiveness. Intellectual property in its essence is
that information which has economic value when put into use in the marketplace.
The rationale of protection also rests on the premise that both forms of assets
(tangible & intangible) have potential of wealth creation. IPs generally falls
into two categories; industrial property and copyrights. The rights of invention
s, industrial designs, trademarks, integrated circuits and geographical indicati
on are protected under industrial property while the copyrights include literary
work such as novels, poems, plays, films and also artistic works etc. 7. Legal
services We add value to the business of Small and Medium Entrepreneurs (SMEs) t
hrough facilitation in: