Farzana Rubab

The small and medium enterprises (SMEs) contribute significantly to the gross domestic product of Pakistan, helping the government create jobs and earn foreign exchange on exports.

With 5.2 million SMEs making up over 99% of all businesses in Pakistan, SMEs are considered the backbone of the country's economy.

In December 2021, the federal government approved a comprehensive SME policy to increase incentives to support the growth of small and medium-sized businesses.

An official of the Small and Medium Enterprises Development Authority (Smeda) told WealthPK that SMEs can considerably contribute to strengthening Pakistan’s industrial base.

“There are key incentives given in this policy, including lowered tax regime, access to credit and regulatory ease to help promote the SME sector,” the official said.

“The policy has withdrawn the condition of obtaining the no-objection certificate for launching a low-risk business enterprise. Medium and high-risk SMEs will be issued a time-bound NOC in fewer than 30 days,” the Smeda official explained.

“The policy provides for specific tax breaks for profitable firms.” In order to foster more participation in firms, she said, women entrepreneurs will receive specific tax exemptions.

“For SMEs, 4,200 acres (19,500 plots) in industrial estates have been set aside, which can be gotten on payment of easy instalments. To give SMEs utilities-ready infrastructure, plug-and-play infrastructure will be created,” the official maintained.

The official said Pakistan's SMEs, especially those in the engineering sector, have not been able to adequately contribute to the country's exports because of barriers to accessing technology. She asserted that SMEs required quick improvement in access to technology.

She said the government has set aside Rs30 billion for Smeda to build SME zones in Wazirabad, Gujranwala and the Gujarat triangle in Punjab.

The Smeda official pointed out that the State Bank of Pakistan has participated in a number of initiatives to promote the business community. The SBP's concessionary refinance programmes for various industries, Asaan Finance, and the modernisation of banking systems are a few important initiatives in this regard, she said.

According to the World Bank, in emerging economies, SMEs make up 40% of the GDP. They are projected to create 600 million jobs by 2030 to accommodate the expanding global workforce, making the development of SMEs a top priority for many governments around the world.

According to researchers, in contrast to India's $109 million, Korea's $3.49 billion, Malaysia's $2.22 billion, and Thailand's $122 million, Pakistan only spent $1.74 million on development of SMEs.

Pakistan was ranked 108th in the “Doing Business (DB) Rank” in 2020, up from 147th place out of 190 countries in 2018. Over the past three years, Pakistan's standing has gradually improved.

Credit : Independent News Pakistan-WealthPk