Ayesha Mudassar

The Pakistan government needs to facilitate the development of small and medium-sized enterprises to fully realise their potential and boost economic growth, said a senior official. Farhan Aziz Khawaja, Chief Executive Officer (CEO) of Small and Medium Enterprises Development Authority (SMEDA),said while talking to WealthPKthat SMEsare instrumental in generating employment, reducing poverty, promoting local development, and fostering economic growth. “These enterprises power the supply and distribution chains of key industries and contribute around 40% to the country’s GDP,” he said. However, these businesses are facing anarray of issuesincluding lack of capital, loans with high-interest rates, unavailability of modern technology, and low investment opportunities. A recent study by the Competition Commission of Pakistan (CCP) identified access to finance as a significant impediment hindering the development of SMEs.

According to the study, 93% of the SMEs found it cumbersome to avail facilities from banks, and 80% had not availed bank financing. Khawaja pointed out that meaningful reforms will surely drive the country’s economic progress. These might include reduction in taxes, simplification of administrative licencing procedures and commercial registration system. “Thesereforms will expand the demand for Pakistani products, stabilise prices of raw material, improve the confidence of market players, and enhance exports,” he added. Lahore Chamber of Commerce and Industry (LCCI) President Kashif Anwar said that SMEs were a noteworthy driver of employment, poverty alleviation, sustainable industrialisation, and economic advancement across the world. He stressed the need to shift attention to the SMEs sector, which accounts for over 90% of industries in Pakistan.

“Taking cue from the accomplishments of China, Vietnam and Bangladesh, Pakistan should gradually reduce import tariffs, simplify customs procedures, and embrace technology,” the LCCI president suggested. These countries have implemented reforms to simplify customs procedures and reduce bureaucratic hurdles. They have also focused on aligning its standards and certifications with international norms, enabling the SMEs to meet global requirements. Recognising the vital role of SMEs for the economy, the World Economic Forum’s report “Data Unleashed: Empowering SMEs for Innovation and Success” has recommend the advancement of digital transformation, provision of targeted incentives, and implementation of prudent trade policies. “By nurturing these enterprises, a strong foundation for sustainable economic growth can be laid down,” the report pointed out.

Credit: INP-WealthPk