Industrialists and analysts have urged the government to help enhance the growth and development of small and medium enterprises (SMEs), with a particular focus on the auto parts industry, aimed at creating a more robust and dynamic economic landscape.
Presenting budget proposals for fiscal year 2024-25, they called for putting a complete ban on the import of used vehicles to promote the struggling local auto industry.
Those who presented the proposals include eminent expert in the auto parts sector and Mehran Commercial Enterprises Director Export Mashood Khan, auto sector analyst Muhammad Sabir Sheikh and a couple of entrepreneurs running SMEs in the industrial zones of Karachi.
The SME sector is the backbone of any economy which generates numerous jobs and helps industries and locals get products at cheaper rates.
Many SMEs need a one-window solution and facilitating initiatives like streamlined registration, tax payment, business development, productivity enhancement, access to subsidies, design and development, market research and abolition of Federal Board of Revenue (FBR) audits.
As the SMEs were in urgent need of capital, policy initiatives should be taken to facilitate easy access to bank financing, they stressed.
The SMEs that had taken loans in the past five years were encountering significant challenges in the face of an economic downturn post-Covid-19 and they should get immediate relief.
The experts called on the State Bank of Pakistan to refrain from imposing Karachi Inter-bank Offered Rate (Kibor) on financing acquired by the SMEs and request private sector banks to slash borrowing costs.
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Banks should be encouraged to reschedule and settle the existing loan liabilities, providing small businesses with an opportunity to survive and recover during the current challenging times.
They called for providing specialised loans for SMEs in the auto parts manufacturing sector at a highly subsidised rate of 1%. For the development of Special Economic Zones across Pakistan, the government must allocate 100 acres of land for setting up a clustre of 100 SMEs with flexible land area options and easy payment installments for a piece of land.
Among their proposals, the experts stressed that all government tender suppliers/contractors should purchase at least 5% of their business orders from the SMEs. It would be good to organise the first international franchise exhibition with the support of the Small and Medium Enterprises Development Authority (Smeda) to promote interaction between Pakistani entrepreneurs and their foreign counterparts.
Facilitating the low-cost participation of SMEs in the upcoming international trade fairs and exhibitions would be encouraging, they said and emphasised the importance of including the stakeholders of the SME sector in government boards, which would be a pragmatic approach to help develop the sector.
They proposed that the Engineering Development Board (EDB) must constitute a high-level committee with a view to fostering vendor groups to promote increased local production of auto parts.
Published in The Express Tribune, May 24th, 2024.
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