REQUIRED POLICY REFORMS FOR STRENGTHENING SME SECTOR

Group members: Abir Ahmed Ammar Kamran Aruba Ilyas Hasan Ashraf Saad Ullah Talha Ali

Programs launched to support the SMEs

Supporting institutions and industrial estates Export processing zones Technology upgrade fund Non-governmental support. Such as National Rural Support Program Punjab Rural Support Program (PRSP)

SMEs and Economic efficiency

Small firms are generally inefficient and have to be made efficient through proper policy support and guidance. Small-large links can help SMEs to gain economic efficiency. For example a small firm can produce raw materials for a large firm and vice versa. Small large links are not developed automatically but have to be developed by the government. Training programmers, import licensing for import of technology and raw materials and concessional monetary and fiscal policy favored large industry directly and small industry indirectly

SMEDA

An important national institution which focused on few sectors with significant growth potential for example furniture, gems and jewelry and sports goods. It is committed to the provision of 6 critical services needed by SMEs, namely business regulations; fiscal concessions; trade rules, labor laws incentives support, (i.e. HRD, technology and marketing).

Promoting Entrepreneurship

Training in Industrial management for ensuring efficient handling of enterprises Helping small firms be prepared for meeting quality standards Promotion of production channels between small and large firms to maximize the technical gains to the earlier

Modernization

Modernizations should be undertaken without affecting the Employment Focus should be on developing new products rather than duplicating old ones Industry should be located outside city so that entire labour force is involved

Urban growth

Realize growth potential of centers and promote them to urban growth points Access to services should be provided which ease growth

Access to Institutional Finance

Large firms take up a large chunk of the finance available leaving SMEs in the dark Policies ensuring proper development of available finance to SMEs should be undertaken Banks should promote credit giving to SMEs with low interest rate and little collateral

Supply of Material

Scarce raw materials and imported raw materials are regulated in Pakistan. Many of such items are very essential for small businesses , hence they are sold and purchased in black market. Government should make a body that alters such regulations for SMEs . Introduce initiatives like removal of tariff and non tariff barriers.

Labor Laws

Labor laws in Pakistan include: social security , old age benefits and minimum wage. SMEs due to their small level of production are not able to comprehend with these. The government should ensure lesser and simpler regulations which can be easily implemented and monitored Introduce an inspection policy. Ensuring less interference, labor rights protected and growth of SMEs.

Tax Laws

Tax laws and legal requirements discourage SMEs to grow. Government should introduce One window facilities to spur production activity . Government should provide micro finance for purchase of machinery etc Give exemptions on property tax , stamp duty etc as it was done in Japan and Korea.

Global Challenges

Government intervention Removal of subsidies Reduction in tariffs

Export duties

Measure that can be taken:

Use of Collective efficiency External economies-market for labor, input, services, technology. International Alliances and Ventures

Technology and R & D

Science and technology affecting development

Infrastructure

Access to foreign technologies

Technology and R & D

Technology can help solve many challenges. Assimilation and Production of technology Limitation removed: Acquisition of appropriate technologies Training of optional use of technologies Dissemination of technology Up gradation of skills to match better technology Establishment of basic technical laboratories for the support of SME industries.

Gender and SMEs

Women-owned SMEs are: highly volatile, household based, low-return urban activities Activities are concentrated in sub-sectors Women tend to have dual responsibilities Women are more risk-averse

Intellectual Property Rights

Absence OF IPRs discourages foreign and domestic investments in new areas. Revising IPR laws would bring in conformity with international standards and give protection to domestic and foreign producers

Analysis

Lack of attention to develop:

Energy
IT

(Renewable energy: Solar and Wind)

Educational reforms required; Attractive tax reforms; Attract foreigners to start SMEs in Pakistan; Change in attitude towards entrepreneurship.

Thank You!