SMEs demand govt support

Appeal for policy reform, streamlined operations to tackle challenges in Karachi

KARACHI:

The country’s economy is in dire straits, and a sustained recovery depends on a robust Small and Medium-sized Enterprises (SMEs) sector, according to entrepreneurs who have urged the government to allow SMEs to support one another and strengthen the backbone of the national economy for the broader benefit of the public.

In Karachi alone, two of seven prominent SME zones—the North Karachi Association of Trade and Industry (NKATI) and the Federal B Area Association of Trade and Industries (FBATI) —are under severe financial pressure.

These zones, along with small industrial estates in other Sindh districts like Hyderabad, Larkana, Shaheed Benazirabad, Badin and other districts are wrestling with exorbitant business costs, high energy tariffs, skyrocketing rents, tanker water charges, inflated logistics costs, a crumbling road and sewerage infrastructure, unending inflation, and the unsustainable burden of Independent Power Producers (IPPs). In addition, these businesses face unbearable corruption and demands for bribes from 67 different government departments.

The entrepreneurs have called upon the government to form a full-fledged mechanism such as the one-window operation for all small enterprises to address the bureaucratic obstacles hindering industrial growth, particularly as these departments are accused of demanding bribes and kickbacks, an unsustainable practice given the current economic challenges.

The SME sector has historically played a crucial role in the country’s economic, industrial, and social development, creating new job opportunities and accounting for more than two-thirds of jobs globally. Despite being the backbone of the economy, SMEs face various challenges, including tough working conditions, informality, productivity issues, and low wages.

FBATI President Sheikh Muhammad Tehseen highlighted the challenges facing the stability of small and medium-sized businesses in Karachi, noting that high utility costs for electricity, gas, and water, coupled with high interest rates, are cutting deeply into the earnings of businesses that rely on financing schemes.

In addition to these issues, business owners and their workers must contend with a lack of basic infrastructure, such as a poor road network, water shortages, and non-functional street lights, that make it difficult to conduct business in Pakistan’s main commercial and export hub.

Moreover, street crime poses a continuous threat to the lives and assets of both business owners and their employees in industrial areas. These issues are slowing worker productivity and disrupting the cycle of economic activities, added Tehseen.

Currently, businesses are facing yet another challenge in the form of widespread viral outbreaks, such as chikungunya, dengue, and malaria, which have impacted the health of a large portion of the workforce. This development poses a unique challenge for exporters and business owners trying to maintain their operations under already difficult circumstances.

Hyderabad Chamber of Commerce and Industry (HCCI) President Adeel Siddiqui expressed frustration over the lack of comprehensive policies for SMEs in the 77 years since Pakistan’s independence. “It really is a shame,” he said.

Adeel criticised the government’s disproportionate focus on the textile sector, which has failed to exceed $25 billion in exports over the past decade. “Why aren’t the long-neglected SMEs receiving the support, incentives, and affordable loans needed to foster growth?” he questioned, calling for policymakers to prioritise SMEs despite existing obstacles.

Siddiqui also expressed concern over the Sindh Environment Protection Agency’s (SEPA) requirements for SMEs to install sewage treatment plants, which is particularly difficult given the severe water shortage in these regions.

Small industries already have to purchase water due to the Water and Sanitation Agency’s (WASA) failure to provide a reliable supply in Hyderabad. “How can small businesses afford to pay for water tankers and set up sewage treatment plants, especially when operating on a limited budget?” Siddiqui asked.

Additionally, he called for an increase in the government’s youth loan scheme from Rs7.5 million to Rs15 million to provide young entrepreneurs with the capital they need to launch viable businesses.