The Federation of Pakistan Chambers of Commerce and Industry (FPCCI) held an interactive session on “SMEs Sector in Pakistan: Contribution, Challenges and Prospects” which was presided by Mr. Aamer Ata Bajwa, Senior Vice President, FPCCI.
In his remarks, Mr. Aamer Ata Bajwa, Sr. Vice President expressed his concern over the low and insignificant level of financing to SMEs resultantly lower contribution in the economic and social development, employment generation and poverty alleviation of country.
While quoting the examples of other countries he added that SMEs are dominating in China, Taiwan, Singapore, Hong Kong and Korea and contributing more than 80 percent in their development. These countries have achieved the status of industrial advanced countries on the basis of development of SMEs sector. Pakistan should learn from the experience of these countries and formulate SMEs driven policies, he stated. He also highlighted the issues related to unawareness of banks regarding SMEs financing, hidden charges, Non Performing Loans to SMEs etc.
While briefly highlighting the activities of his Committee, Mr. Rehmatullah Javed, Chairman of FPCCI Standing Committee on SMEs emphasized on the capacity building of SMES as CPEC projects also offered huge opportunities for SMEs. He added that it is worrisome that 95 percent of enterprises are SMEs in Pakistan while only seven to eight percent credit financing of private sectors are given to SMEs sector and most of the credit are given to corporate sector. He stated that SMEs contribute in the GDP of Pakistan over 40 percent and in exports earning by 25 percent and employs 80 percent of non-agriculture labor force. He elaborated that in Pakistan the banks are generally reluctant to give loans to SMEs sector due to high risk and transaction cost and 95 percent SMEs loans are given on collateral basis and commercial banks lack effective credit models to finance SMEs. He indicated that without financing and other facilities it is difficult for SMEs to modernize, innovate and expand themselves. He suggested establishment of SMEs cluster in rural areas of all provinces, establishment of research centers for SMEs, technological parks and skill development programs.
The interactive session was attended by the representatives of State Bank of Pakistan, Board of Investment, SMEDA, First Women Bank Pvt. Limited, Pak-Brunei Investment Company etc. During the session, they stated that SMEDA has started holding of financial expo in order to reduce the barriers and gap between banks and SMEs. Moreover, the representatives focused on the energy audit of the SMEs as most of the SMEs are inefficient and unaware about their production capacity. Keeping in view of the potential of SMEs, they also suggested resolving the problems of SMEs related to cost-competitiveness, quality competitiveness, marketing, networking, product diversification, starting a business, business plan, legal issues, financial management, time management etc. The meeting suggested for the improvement in business development skills of SMEs and holding of awareness sessions between the banks and SMEs. Moreover, the exports of SMEs also need market facilitations. The representative highlighted various areas of Sindh, KPK and Baluchistan for the developments of SMEs related to Marble, Coal, Mango plump, gems and jewellery, handicrafts, leather and agro-based products.