Driver of growth: SMEs’ development on the backburner
SMEDA CEO laments state of affairs, wants govt’s attention
SMEDA CEO laments state of affairs, wants govt’s attention. CREATIVE COMMONS
LAHORE:
Small and medium enterprises (SME) are considered to be drivers of economic growth, but the sector in Pakistan is struggling to deliver results.
Small and Medium Enterprises Development Authority (Smeda) Chief Executive Officer Muhammad Alamgir Chaudhry says the hurdles to the sector’s growth needed to be removed.
“There are many hurdles to SMEs’ growth in Pakistan including scanty platforms to raise equity, lack of research, limited access to market and government’s apathy,” said Chaudhry.
Speaking at a workshop organised for the Lahore Economic Journalists Association, he said that the SME sector is a proven engine of growth for employment as he cited the examples of Japan, Singapore and Malaysia.
With 3.2 million SMEs in the formal sector and innumerable in the informal one, it constitutes a significant portion of Pakistan’s economy. Around 65% of the total SMEs in Pakistan are located in Punjab, 18% in Sindh, 14% in Khyber-Pakhtunkhwa (K-P), 2% in Balochistan and 0.6% in Islamabad.
“SMEs have over 40% share in our GDP,” Chaudhry said. “They cover 46.46% of our exports and provide 80% of the total employment. The cost of job creation in a SME is Rs70,000 per job in a garment unit of about 200 workers, while in a large-scale spinning unit the cost is Rs1.1 million per job.
“SMEs grow at an average rate of 8% as compared to the large industry, where the growth rate is 5%.
“Smeda is currently operating with just 95 employees out of the 195 approved head count.” Elaborating the government’s lack of initiative towards SMEs, Chaudhry pointed out that Pakistan spends $0.01 per SME, while India spends $0.09 and Turkey $0.53.
Chaudhry, however, said that a plan had been developed to help the sector.
“Smeda has chalked out a plan to generate 10 million new jobs by establishing 270,000 new SMEs. This will increase GDP by about $120 billion.”
Chaudhry said that the Industry Support Cell has helped around 495 SMEs through foreign consultants in collaboration with the Japan International Cooperation Agency.
In K-P, around $830 million have been disbursed among 1,052 local SMEs for rehabilitation, up-gradation and business development services, the official added.
Published in The Express Tribune, August 13th, 2015.
Small and medium enterprises (SME) are considered to be drivers of economic growth, but the sector in Pakistan is struggling to deliver results.
Small and Medium Enterprises Development Authority (Smeda) Chief Executive Officer Muhammad Alamgir Chaudhry says the hurdles to the sector’s growth needed to be removed.
“There are many hurdles to SMEs’ growth in Pakistan including scanty platforms to raise equity, lack of research, limited access to market and government’s apathy,” said Chaudhry.
Speaking at a workshop organised for the Lahore Economic Journalists Association, he said that the SME sector is a proven engine of growth for employment as he cited the examples of Japan, Singapore and Malaysia.
With 3.2 million SMEs in the formal sector and innumerable in the informal one, it constitutes a significant portion of Pakistan’s economy. Around 65% of the total SMEs in Pakistan are located in Punjab, 18% in Sindh, 14% in Khyber-Pakhtunkhwa (K-P), 2% in Balochistan and 0.6% in Islamabad.
“SMEs have over 40% share in our GDP,” Chaudhry said. “They cover 46.46% of our exports and provide 80% of the total employment. The cost of job creation in a SME is Rs70,000 per job in a garment unit of about 200 workers, while in a large-scale spinning unit the cost is Rs1.1 million per job.
“SMEs grow at an average rate of 8% as compared to the large industry, where the growth rate is 5%.
“Smeda is currently operating with just 95 employees out of the 195 approved head count.” Elaborating the government’s lack of initiative towards SMEs, Chaudhry pointed out that Pakistan spends $0.01 per SME, while India spends $0.09 and Turkey $0.53.
Chaudhry, however, said that a plan had been developed to help the sector.
“Smeda has chalked out a plan to generate 10 million new jobs by establishing 270,000 new SMEs. This will increase GDP by about $120 billion.”
Chaudhry said that the Industry Support Cell has helped around 495 SMEs through foreign consultants in collaboration with the Japan International Cooperation Agency.
In K-P, around $830 million have been disbursed among 1,052 local SMEs for rehabilitation, up-gradation and business development services, the official added.
Published in The Express Tribune, August 13th, 2015.