The major impediments hindering growth of SMEs in Pakistan includes limited access to finance, low based technology, less access to market and non conducive policy and regulations.
This was stated by Alamgir Chaudhry, the CEO Small and Medium Entrprises Development Authority. Speaking at a workshop organized for Lahore Economic Journalists Association, he said SME sector is a proven engine of growth for employments. Muhammad Riaz Chaudhry, President LEJA headed the group of economic reporters that attended the workshop.
Countries like Japan, Singapore, Korea, China and Malaysia are the known success stories of alleviating poverty through SME development, he revealed.
He said SME sector is also backbone of economy in Pakistan with 3.2 million SMEs in the formal sector and presence of innumerable SMEs in the informal sector. According to the SECP record 96 percent of the registered companies are of the sole proprietorship category, which also shows that majority of the business concerns in Pakistan are SMEs. As per available data, 65 percent of the total SMEs in Pakistan are situated in Punjab, 18 percent in Sindh, 14 percent in Khyber Pakhtoon-khawa, 2 percent in Baluchistan and 0.6 percent in Islamabad.
SMEs have over 40 percent share in our $240 billion GDP he said adding that 46.46 percent of our exports and surprisingly provide 80 percent of the total employment. He cost of job creation in SME is very low being Rs70000 per job in a garment unit of about 200 workers while in large scale spinning unit it is about Rs. 1.1 million. He said SMEs grow at an average rate of 8 percent as compared to the large industry, whose growth rate is 5 percent per anum. He said SMEDA, is currently operating with just 95 employees out of the 195 approved head count and the per capita investment to be made by government on it is US $ 0, 01 only which is perhaps the lowest in the world.
SMEDA a has chalked out a plan to generate 10m new jobs by establishing 270000 new SMEs. It will increase the GDP by about $ 120 billion in GDP, claimed. He said SMEDA has so far entertained 66,000 walk-ins at RBCs apart from developing 193 pre-feasibility studies of various sectors, 285 tailor-made business plans and 1800 training programs held with 88000 total participants in 75 cities of the country.
He said SMEDA’s Industry Support Cell has helped around 495 SME units through foreign consultants especially arrived through Japan International Cooperation Agency (JICA).
Out of 495, over 331 units were helped in productivity improvement, 148 were made energy efficiency and 16 were enriched with Green Productivity.
In Khyber Pakhtoonkhwa about $ 830 million have been disbursed so far among 1052 local SMEs for rehabilitation, up-gradation and business development services. The project also created employments for 2500 workers. The multi donor fund for this purpose is jointly managed by SMEDA and the World Bank.