Small units want all-inclusive SME policy

UNISAME says some important aspects have been omitted from policy draft

Usman Hanif March 06, 2020
Small-scale manufacturing does better than large-scale.

KARACHI: To promote the role of small and medium enterprises (SMEs) in mainstream economic development, Pakistan is expected to float an SME-centric policy.

However, traders are of the view that the bureaucracy has removed some major articles from the original draft of the policy document, which could have benefitted the SMEs immensely.

“It has been two years since work began on the SME policy,” said Union of Small and Medium Enterprises (Unisame) President Zulfikar Thaver. “We invite the attention of Prime Minister Imran Khan to the draft of SME Policy 2020, sent to the cabinet for approval, and urge him to make sure it is comprehensive and all-inclusive for SME promotion and development.”

In a statement on Thursday, he highlighted that Pakistan had around seven million SMEs, adding that the government had constituted an advisory committee to work on the SME policy with the help of USAID and the policy was almost finalised.

However, he said, some important aspects had been omitted from the document.

Since the policy was going through the approval process, some crucial steps should be taken like that the Small and Medium Enterprises Development Authority (Smeda) needed to be placed directly under the prime minister rather than under an adviser or a minister, he stressed.

Thaver pointed out that SME authorities, throughout the world, were under the control of the head of government.

“By heading the authority, the PM will assign matters pertaining to the SMEs to a secretary and there will be swift decision-making when the bureaucracy knows that the premier is involved in the matter,” he said.

“Secondly, the sector needs an SME ombudsman like ombudsmen of banking, insurance, tax and others,” said Thaver. “Tax authorities and other government officials harass SME owners and  the ombudsman can deal with them.”

Moreover, he underscored the need for an SME development fund with sufficient portfolio, which would directly focus on the issues of SMEs.

He added that small farmers could not be ignored and had to be included in the SME fold as they were generating income and providing raw material for the supply chain.

He demanded the creation of a value addition bureau in the SME sector, which would make sector participants aware of new practices and market them globally by connecting them with the outside world. He added that earlier businesses with a turnover of Rs800 million per year were considered SMEs. “Now, the definition has changed to businesses making Rs600 million per year,” he said. “However, the rupee was devalued by 35% in 2019, hence, a firm with annual turnover of Rs1 billion should be considered an SME.”

Unisame urged the Cabinet Division to ensure that no aspect of SME promotion was left out or overlooked and to make the SME policy comprehensive before placing it for cabinet’s approval.

A high-ranking official of Smeda, on condition of anonymity, said the proposal of prime minister heading the SME authority had been sent to the premier, but added that he was not aware of any changes to the policy draft.

“All the other conditions which were discussed will remain the same in the final policy and no stakeholder will be sidestepped,” he said. 

Published in The Express Tribune, March 6th, 2020.

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