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Pakistan: Government Urged to Focus on SME Sector Development
Source: brecorder.com
Source Date: Sunday, December 05, 2010
Focus: Institution and HR Management
Country: Pakistan
Created: Dec 06, 2010

ISLAMABAD (December 05, 2010) : Small and Medium Enterprises (SME) sector should be supported through relaxation in taxes and financial assistance, said Mahfooz Elahi, President of Islamabad Chamber of Commerce and Industry (ICCI) while addressing the business community, here on Saturday.

Elahi said country's SMEs are still unable to achieve their maximum potential and are in a dire need of handholding and business support services. About SMEs, he said that these are a key to economic growth and have great significance in the development of economy. He further said SMEs are considered engine of economic growth in both the developed and developing countries. He added that in the industrial development of a country, importance of SME sector could not be neglected.

ICCI president said SMEs constitute nearly 90 percent of all the enterprises in Pakistan, employ 80 percent of non-agricultural labour force while their share in the annual GDP is approximately 40 percent. However, unlike large enterprises in the formal sector, a small and medium enterprise is constrained by financial and other resources, he said.

He observed that the current SME policy of Pakistan does not take into explicit account the heterogeneity of the sector and, thus, consists of broad recommendations for the entire SME sector. The empirical evidence suggests special need of micro, small and medium firms and ensuring their growth. Elahi said Pakistan's SMEs need to focus on development of new products, import replacements, export and other goods with growing demand. It would be appropriate to use scarce national resources for production of new products rather than duplicate lines of production that are being carried on, even with inefficiencies. Traditional products require adaptation and modifications in design and quality to meet the current demand trends, he added.

ICCI president opined that government's financial support is also needed for the purchase and lease of suitable machines for use of the micro enterprises. Small firms may be granted this facility to get these machines. In addition, these may be granted reduction of corporation and enterprise taxes and also exempted from stamp duty, property tax, local rates, etc same as it was practised in Japan and Korea for the promotion of SMEs, he maintained.

Elahi stressed that the real challenge of the government is to set SME policy in a way of processing a shift of from static to dynamic preoccupations. This is possible through technological change, which is also influenced by international trade, thus inviting firms to follow the "best practices".
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