SMEs crucial for boosting export chain

Experts urge increased bank financing, tech adoption to empower SMEs

LAHORE:

Small and medium enterprises (SMEs) play an important role in Pakistan's economy, serving as an integral part of the supply chain for key export industries such as textiles, food processing, and engineering. This was stated by Pakistan Furniture Council Chief Executive Officer Mian Kashif Ashfaq during a meeting with a delegation of industrialists, led by Coordinator to the Minister of State and Federal Tax Ombudsman Muhammad Farhan Munir Arain.

Ashfaq highlighted that manufacturing-based SMEs receive only 5.3% of banks' lending to the entire manufacturing sector and a nominal 11.5% in the construction sector. He stressed that these figures must increase significantly to boost exports and productivity, aligning Pakistan with countries like the US and other Western nations. Manufacturing and construction are among the largest job-creating sectors in the country, he noted.

He explained that while the expansion of e-commerce and IT-enabled services (IT-ES) has potential, it will only lead to sustainable economic growth if accompanied by simultaneous growth in the manufacturing sector. "Promoting manufacturing-based SMEs is a must," he said, warning that failure to do so could drive the manufacturing industry toward trading, leaving a critical gap in the supply chain of key industries.

He underscored the importance of adopting ultra-modern technology to improve product quality and meet international standards. Citing figures from Small and Medium Enterprises Development Authority (SMEDA), he said SMEs contribute 40% to GDP and 25% to export revenue, which needs to be significantly enhanced following the models of countries like France, Italy, Japan, China, and the UK.

Delegation leader Muhammad Farhan Munir echoed these concerns, stating that SMEs linked to vital sectors must not be deprived of adequate bank financing. He warned that neglecting SMEs could worsen the unemployment crisis. Munir urged the SBP to ease financing conditions further, addressing issues such as insufficient collateral and high borrowing costs.