Professional Documents
Culture Documents
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Table of Contents
Abbreviations Executive Summary Section I Introduction
Background Economic Rati onale/P erspective Small Business Promoti on: Historical Perspe ctive SME Developm ent Rece nt Ste ps by GoP 7 8 9 9 11 11 11 13 13 14 14 16 17 19 21 21 21 22 23 24 5
Abbreviations
BMO BDSPs BIP CBR CCIs CIB CFC EPZs EPZA EPB NCSMEs FBS FPCCI FIs GoP GDP HEC HRD ISIC ILP LUMS MEs MTDF MoC MoIP&SI MoI TT MoST PIM PRSP PAAPAM PCSMEs R&D Business Membershi p Organization Business Development Service Pr oviders Business Improve ment Prog ram Central Board of Reve nue Chamber of Comme rce & Industries Credit I nforma tion Bur eau Common Facility Center Export P roc essing Zones Export P roc essing Zones Authority Export P romotion Bur eau National Commi tte e on S mall & Medium Enter prises Federal Bureau of Statistics Federation of Pakistan Chambe r of Comme rce & Industry Financial Institutions Gover nment of Pakistan Gross Domestic Pr oduct Higher Education C ommission Human Resource Devel opment Inter national Standard I ndustrial Classification Industrial Links Program Lahore University of Ma nageme nt Scie nces Medium Enter prises Medium Ter m Developme nt Fra mework Ministry of Comme rce Ministry of Industries, Produc tion & Special Initiatives Ministry of Inf orma tion Tec hnology & Telecom Ministry of Science & Tec hnology Pakistan Institute of Ma nageme nt Poverty Reduction Stra tegy Paper Pakistan Association of Automotive Parts & Accessories Manufacture rs Provincial Committees on S mall & Medium Enter prises Research & Developme nt
Executive Summary
SME sector is the backbone of Pakistans economy. The signi fica nce of their r ole is clearly indicated by various statistics. According to more rec ent estimates there are appr oximately 3.2 million business enter pris es in Pakistan. Enterprises employ ing up to 99 persons constitute over 90% of all pr ivate enterprises in t he industrial sector and employ nearly 78% of t he non-agri culture labour force. They contri bute over 30% to t he GDP a nd acc ount 25% of exports of manufactured goods besides shari ng 35% in manufacturi ng value added. Prom otion of SMEs has therefore been t he center pi ece of G overnme nts strategy for economic revival, poverty alleviation and e mployment ge neration. To this end, t he logical first step was the formulation of a compr ehe nsive SME Policy reflec ting the viewpoi nts of multi ple stakeholders. The Governm ent of Pakistan thus constitut ed an SME Task Force, by Notifi cation No.1(68)/2003-Inv-III of 29 January 2004 of t he Ministry of I ndustries and Producti on. SME Task Force i ncluded bot h public & pr ivate sector mem bers. In order t o enable t he SME Task Force to work effe ctively, four Working Committees were setup to carry out tec hnical analyses, deliberate findings and address foll owi ng core issues: i. Business Environment - Creating a favorable business environme nt for S MEs in Pakistan's economy and elimi nating unnece ssary obstacles, reducing c ost of doing business Access to Finance - Increasing SMEs access to formal fi nance i ncludi ng equity fina ncing w hile addressing the question of lacking d ocumentati on and banks' technical capabilities and impr oving SMEs' c apacity to bec ome bankable. Access to R esources & Services - Improvi ng the delivery mec hanisms for assistance and access to resources for SMEs in Pakist an, inter alia business development services, qualified human resources, marketing and technol ogy, so as to impr ove their com pet itiveness, productivi ty and capacity for em ployment generation. SME Definition, feedback, Monitoring & Evaluation Mechanism - Establishing appr opriate and harm onized defi niti ons for Pakistan of what are to be categor ized micr o, small, medium, and large e nter prises. Furtherm ore, the establishme nt of a s ound m echanism by whi ch devel opm ent of t he S ME sector and effective ness of assistance pr ovided t o S MEs can be m onit ored.
ii.
iii.
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The Worki ng Committ ees after due de libe ration, fi nalized t heir rec omme ndations. In order t o ac hieve consensus, wide scale Nati onal, Pr ovincial & Regi onal consultations were he ld. The partici pation of stakeholder s has been the refore, t he c or nerstone of the pol icy devel opme nt pr ocess.
The br oader object ives to be ac hieved by S ME Policy as contained i n t his docume nt are; across the board r ecogniti on of SMEs as a sector requiring separate poli cy & regulatory space, de fine SMEs that qualify for support, pr opose c ounter balanci ng measures to eliminate d isadvantage of size, remove unnecessary regulatory burd en, institute SME support m echanism in both public & private sectors, im prove suppor t delivery mec hanisms and establis h polic y evaluation and review systems. Speci fically t he P olicy envisions i ncreasing t he s hare of manu facturing small enter prises from 5.5% to 7%, while de creasing the t hreshold and density of regulations there by reduci ng t he c ost of d oing business. It also sets the target of increasing the share of SMEs in value added pr oducti on t o 40%, and wome n owne rshi p to incr ease to 6%. A number of measures are proposed to achieve these obje ctives including setting up SME support fu nds and creating a mutually cooperative & facilitative, hassle fre e busine ss environm ent. The Policy also contains outli ne of a monit ori ng mechanism at the Federal & Provinc ial levels to oversee and assess impact of SME development initiatives bei ng impleme nted u nder t he P olicy. The Federal Cabi net of Pakistan was pleased to appr ove SME P olicy on January 17, 2007. The appr oval of SME P olicy ushe rs in a new e ra of focused SME devel opment initiatives necessary for this sector to realize its true potential and contri bute towards economic developme nt.
Section I
Background
Introduction
According to the rece nt Ce nsus of Establishments conducted by the Fede ral Bureau of S tatistics (FBS) there are a bout 3.2 milli on e conom ic establishments i n Pakistan. Out of these small and medium size enterprises (with employment base up to 99) constitute a bout 90% of all private enterprises employing appr oximately 78% of nonagriculture labor force 1. SMEs contributed ov er 30% to GDP, 25% in export earni ngs besides sharing 35% i n manu facturing value addition 2. Economic indi cators clearly reveal the impor tance and pote ntial of the SME sector i n the nati onal econom y. This realization led the Gover nme nt of Pakistan (GoP) t o identi fy SMEs as one of the four pillars of economi c revival plan laid out in 19992000. In orde r to devise a basic framework for the growt h and devel opme nt of SMEs the Governme nt of Pakistan constitute d a Task Force for SME Pol icy Devel opme nt i n January 2004 under the chairma nshi p of Se c retary, Ministry of Industries, Producti on and Special I nitiatives. The Task Force, c ompr ising of Gover nme nt officials and major private sector stakeholders, was established wit h t he foll owi ng object ives: Achieve discrete policy and re gulatory space for SMEs along wit h identi ficati on of key areas for re forms c once rni ng laws, regulations, and programs. Develop SME Policy id enti fyi ng r oles of Fede ral, Provincial and Local Governme nts and private & public sectors i n SME sector devel opm ent. Defi ne princ iples of SME support and set pr iorities. Institutionalize SME support t o ensure re gular informati on sharing among Federal, Provincial, Local Gover nme nts and SMEs. Propose detailed pr ocesses and time bound action a nd resource requireme nt for SME sector developme nt and support pr ograms. Propose separate ec onomic indi cators t o institute moni tori ng and evaluation mechanisms for SME Polic y and P rograms. Propose a National developm ent. level Authori ty to coor dinate activities for SME
The Task Force further constituted four Working Committe es to deli berate upon t he areas of i) Business Environme nt ii) Access t o Fi nance & Related Services, iii) Access to Resources & Services and iv) SME De fi nit ion, Fe edback & M oni tori ng Mec hanism. The SME Policy has bee n devel oped as a result of the deli berati ons of the SME Task Force and its four Working Committees. The SME Policy formulation was a partici patory proc ess through which private sector bodies, chambers of c ommerc e
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and industries, trade associations, publ ic sector organizations and more than 1000 SMEs were consulted across the country.
GoP has identifi ed SMEs as one of the four priority areas for ec onomi c gr owt h. The Poverty Reduction Strategy Paper (PRSP) and the Medium Term Development Framework (MTDF) clearly proposes SME developm ent as a key policy option for poverty reducti on a nd private sector devel opment. The Gover nme nt is taking a num ber of measures for private sect or d evelopment includi ng li beralization of ec onomy, i nvestment pr om oti on; ex por t facilitati on, fina ncial sect or re forms, capital market re forms and creati on of a c onducive business environme nt. There is, however, a need t o c reate an SME focus amongst t hese polic y initiatives to allow si gni fica nt accrual of economic gains for t he SME sector. Interventions focused at SME led private sec tor devel opment will not only contri bute to hi gher grow th rates but wi ll also e nsure that the i nequalities in i nc ome generati on and accumulation of wealt h are addressed. Inclusion of mar gi nalized gr oups and geographical areas are mandated by higher incide nce of poverty, e.g., 34.7% in rural areas as compared to the 20.9% urban areas 1. Also an SME led strate gy will allow a wide geographic and sect oral spread for inv estments and job creation includi ng rural areas of the cou ntry. An SME led private sector growt h strategy i s also in line with the lessons learned in the 60s industrialization process during w hich although GDP growth rates of 6.0+ were achieved but the skewed income distri bution resulted in rising poverty. The 60s strategy was primarily based on suppor t to large-scale manufacturi ng. The SME Pol icy Task Force t hus recom mends t hat private sect or le d ec onomi c grow th strate gy should be primarily based on SME devel opme nt. To achieve t his obje ctive a cohere nt policy framework is pre sented i n t his SME Poli cy d ocument. The Task Force feels t hat unleashi ng t he e ntre preneurial pote ntial of the people of Pakistan is the basis on whic h fast and sustainable ec onomi c gr owt h can be ac hieved.
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The Pol icy framework is expe cted t o c ontr ibute i n e nter prise growt h based on t he human capacity a nd market opportu nities available i n t he c ountry.
The Youth Investme nt, Yell ow Cabs and S elf-em pl oyme nt promoti on i nitiatives of the 80s and 90s follow ed t he small-scale i ndustrial prom oti on policy of t he 60s and 70s. These schemes were limited in scope and designed as such that they did not address the core issues of enterprise development and em pl oyment gr owt h and suffered fr om political ma nipulati on accruing t o bad l oan portfoli os of banks and loss of publ ic fu nds. These schemes c ont ri buted littl e in economic gr owth and empl oyme nt creati on. I n some ways these initiatives created t he mindset of the banking com munity t hat is to date, respons ible for a cautious stance towards SME fina ncing i n Pakistan.
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gover nme nt levels. SMEDA has no i nstituti onal jurisdict ion or l inkage with such institutions; and SMEDA has limited budget and manpowe r, posi ng restricti ons on its capacity to launch capi tal inte nsive initiatives and exte nd its outreach Creation of the SME Bank also marks the Governme nts commitme nt t owards SME developm ent agenda. The Bank, however, is in its early days of a major restructuri ng exercise and focuses on a single issue faced by SMEs, i.e., access to financ e, and that too on a very limit ed scale. Thus to provide a cohere nt policy mec hanism, there is a need to develop a comprehe nsive SME Polic y for Pakistan that defines t he r ole of c onc erne d publ ic sector instituti ons. Such a Policy framewor k will provide the required directi on and focus for achieving SME led economic gr ow th resulting in j ob creati on and reduct ion in poverty. Private sector gr owt h i n SME sector (as opposed to t he lar ge scale manufacturing) wil l result i n lesser i nvestme nts pe r j ob created, wide r geographic and social spread of i nvestments and be tter i nc ome distributi on.
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Section II
Objective
The objective of S ME Policy is to provide a short and a medium to l ong- term poli cy framework wit h an impleme ntati on mec hanis m for achievi ng higher ec onomic gr owt h based on SME led private sector developme nt.
Scope
The SME Policy suggests concurre nt and spe cific poli cy measures in all possible areas of S ME developme nt: Business environme nt Access to fi nance Human resource developme nt Support for tec hnology u p-gradation and ma rketing
A single SME de finition is rec omme nde d to be applicabl e t o all i nstituti ons countryw ide to allow uni formity in desi gni ng support systems and incentives and also to m onit or pr ogress. The SME Policy also contains an implem e ntation and adjustment mechanism that identi fies t he foll owi ng: Impleme ntati on a nd m onit ori ng mec hanism Capacity buildi ng r equirements of t he publi c institutions Resource allocati on and pot ential s ources of fundi ng Linkages wit h ot her i nitiatives and pu blic sector reform pr ocesses (Social Sector R eforms) Self c ontained framew ork for ongoing feed back and adjustment Role of various public a nd private sector players at Federal, Provincial and Local l evels
Principles
The Poli cy finds it a ppr opriate to hi ghlight the key principl es on whi ch i t is bei ng based. They are: The recommendations pr oposed i n t he SM E Policy may be im pleme nted / support ed t hrou gh a n SME Act 2006 The SME P olicy covers measures for pr omotion of Ent repr eneurshi p Culture and support for gr owt h of e xisting e nter pris es
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The SME Policy realizes t he di ffere nt approac hes required for supporti ng Small Enter prises as opposed to M edium Enterprises. Thus, wherever required, separate policy measures are pr oposed for small and for medium ente rpr ise grow th Wome n and othe r margi nalized gr oups are proposed to receive spec ial focus withi n t he SME P olicy Rural based and agro processing ente rprise s are proposed t o receive special attenti on w hile devising speci fic support mec hanisms SME developme nt offers most viable opti on for private sector led growt h t hat reduces poverty and creates a large num ber of j obs all across Pakistan SME development must be at t he cent er sta ge of all ec onomi c grow th polici es of Pakistan SME developm ent in Pakistan wil l require d ecisive and concurre nt measures in a number of policy areas such as business regulations, fiscal, trade rules, labour, ince ntives and support ( Human Resource Developme nt, Technol ogy, Marketing, etc.) leadi ng to an SME Space i n these d omains SMEs face inhere nt disadvantages (because of the ir size) vis--vis large firms, whic h ne ed t o be offset by governme nt support mec hanisms and ince ntives Effective impl ementati on of the Pol icy fr amework will require ow nership, commitme nt a nd m onit ori ng at hi ghest level of the G over nment SME developme nt requires pr ovision of l e vel playing fiel d for smaller firms vis--vis large enterprises Private sector w ill be e nc ouraged t o play a key role in impleme ntation of the SME Policy inc luding mobilization of capital and operati onal responsibili ty for impleme nti ng policy measures suggested in t his docume nt Financial support t o enter prises will be, wherever possible, at a collective level, and will essentially require resourc e commit ment on behal f of t he bene ficiari es
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Threshold on taxation and density of regulations rationalized Manufacturing SEs increase their share from 5.5% to 7% Share of Micro Enterprises in employment decreases by 7% SMEs increase their share in value added to 40% Share of Women ownership in SMEs increases to 6% No. of Start-up Enterprises by University Graduates increases to 6% SMEs observing their basic responsibilities for social & corporate compliance
GoP - SMEs have Developed mutual Cooperation & Trust GoP Facilitates Access to sustainable BDS in all areas of country SMEs get access to qualified HR, Markets & Technology SMEs have access to Support Funds across Pakistan GoP is continuously documenting statistics on SME Development and Int'l Benchmarks GoP is delivering reliable periodic reports on SME development including details on funding and efficiency of system
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Policy Recommendation
GoP may adopt a single S ME Defi niti on t hat is accepted by all publ ic and private agencies. However, various orga nizations m ay be allowed a tw o-year time frame t o align t heir curre nt SME de fini tion i n line w ith t he SME Defi niti on pr oposed i n this Policy. SME defi niti on is as foll ows: Enterprise Category Small & Medium Enterprise (SME) Employment Size (a) Up to 250 Paid Up Capital (b) Upto Rs. 25 Million Annual Sales (c) Up to Rs. 250 Million
The Federal Gover nme nt, in li ne wit h t he economic developme nt of Pakistan may, from time t o time m odify the el igi bilit y crite ria as it sees fit. All providers of services receiving fu ndi ng fr om t he G overnme nt ma y defi ne m ore narrow scopes for specific targeti ng purposes. Detailed resource all ocation, princ ipal im pleme nti ng a genc ies & time- frame for establishing a single S ME Defi niti on in Pakistan is anne xed.
Expected Impact
Single SME Defi niti on is expec ted to create focus in Gover nment policies (targete d towards SME developme nt) and uni formity in com pilation and re porting of SME related data.
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large, thus, not pr ovidi ng laws and impleme ntation mec hanisms that are sensitive to SME needs. Largely, t he support and grievance r edressal regime of t he Gover nme nt d oes not differe ntiate be tween ente rpr ises on t he basis of t heir size thus making i t difficult for SMEs to access public support programs and attenti on of publ ic authori ties whe n competing for i t wit h the large firms. This dilutes the abilit y of SMEs to e ffec tively compete wit h lar ge firms.
Policy Recommendations
The Task Force recomme nds promul gation of a n SME Act that (i n additi on t o addressing ot her issues related to SMEs) pr ovides for identifi cation of fiscal, registration, labour and inspe ction laws that may be simpli fied for Small and/or M edium Enter prises. A business entity may be certi fied as an SME by a simple pr ocess to be exercised by SMEDA i n partnershi p wi th ot her governme nt a gencies, cham bers of c ommerce and industries, trade associations and other private sector represe ntative orga nizations. The process of SME Certificati on is proposed to be voluntary for those fir ms who choose t o do so, to benefi t fr om t he support mechanism and simpli fie d re gulatory re gime proposed through t his P olicy. The Federal Gover nme nt may encourage pe riodic review of all fiscal laws in for ce wit h a view to facilitate and i mpr ove gr owt h of the small & mediu m enter prises Periodi c review of Labour Le gislation w ith a view of facilitating small enter prise gr owt h may be under taken where by applicabili ty of certain laws may be relaxed for SEs for a certain pe riod of time. However, pr ovision of education/assistance t o SMEs t o ac hieve proper safet y at w ork and c omplianc e with i nter national c onve ntions shall be essential. SME Desks may be established at the Fed eral, Provincial, Banking and Tax Ombudsman Offi ces for hand ling a nd a ddressing SME grievances. The Com plaint Ce ll establis hed at State Bank of Pakistan may also facilitate redressal of SME c om plaints. A minimum quota is proposed t o be establ ished for SMEs for allocati on of land in t he I ndustrial Estates and Export Pr ocessing Zones (EPZs). SMEs may be char ged a concessional rate of land (at no pr ofit no l oss basis) as compared to t he c ost offered t o large-scale ent erpr ises. All public sector procureme nt may enc ourage partici pation of SMEs with certain products/contracts exclusively to be competed amongst the SMEs. GoP may consider t o support establis hme nt of an SME Pr omotion Counc il (includi ng its l ocal c hapters) and SME speci fic Trade Associati ons for orga nizing SMEs and providi ng the m wit h a platform t o l obby for favourable gover nme nt polic ies. Governme nt t o ensure adequate provision of physical i nfrastructure (roads, utilities etc.) in existing SME clusters.
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Capacity buildi ng a nd stre ngt he ni ng of exis ting CCIs and TAs, may be u nder taken, making t hem mor e e ffe ctive for supporti ng t heir m embe rs inc luding SMEs, with special focus on WTO & its im pact on l ocal i ndustry. Moreover, Governme nt functi onaries in tax, registrat ion, labour, etc. departme nts are proposed to under go specialized trai ning for handli ng SME related issues. Genuine SME representatives are propose d to be i nducted in all fed eral moni tori ng and d ispute resolution schem es with private sector partici pati on. Regulatory re gime for specialized sectors i n provi nces (such as mining) may be develope d as per their speci fic requireme nts keeping i n view their re gi onal dynamics. GoP may foll ow an effective strategy to reac h out and communicate wit h SMEs using appr opr iate elec tronic and pri nt media. Re gulatory com plianc e proc edures will be widely commu nicated to SMEs. Communication will increasingly use Urdu & l ocal languages whe r e useful. Impr oving and e nforc ing I ntellec tual Propert y Rights for SMEs.
A vast pool of information, analyses and studies are available that may form the basis for im pleme nti ng t he recommendations on Business Environme nt. Details of additional resources required are annexed.
Expected Impact
Impleme ntati on of t he rec ommendations for creati ng c onducive Business Environm ent for SMEs will result in re ducing the num ber and simpl ifyi ng t he compliance pr ocess of SME regulations. This is expected to trigger fast paced creation and grow th of ent erpr ises resulting in ec onom ic developme nt and job creation.
Policy Recommendations
Incorporation of SME fi nanci ng i n t he Annual Cred it Pla n of the SBP and moni tori ng t o cater for underserved segment of the SMEs.
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Review of Prude ntial R egulations, pe riod ic ally, in li ne with t he SME c redit demand and supply data. Establishment of Cr edit Guarantee and Cr edit Insurance agencies, operati ng inli ne with sou nd inter nati onal practi ces, to provide incent ives and risk cover for banks, so as to provide them the relevant com fort in fi nanci ng SMEs. Support t o F Is in designi ng and launchi ng i ndustry based pr ogram-lend ing schemes. Capacity buildi ng of the CIB t o re port posit ive and ne gative data & shari ng of SME fina ncing data by the SBP. Impr ovement in t he re gulatory pr ocedures and fiscal i ncentives for Venture Capital c ompa nies. Intr oduction of Bankruptcy Laws with ded ic ated and effect ive judicial pr ocess. Expansion i n t he rol e of Banking Ombudsm an to i nclude re dressal pr ocess for SME complaints. Awareness and promot ion of options for for mal financi ng and good accou nting practices amongst S MEs. Prom otion of Islamic mod e of fi nanci ng for SMEs.
The resource all ocation for im pleme nti ng t he recom mendati ons on im provi ng SMEs access to fina nce are annexed. These esti mates, however, may be mod ifi ed once detailed studies are conducted on dema nd and viable size of the credit guarantee, credit i nsurance and ve nture capital fund in Pakistan.
Expected Impact
It is expec ted t hat im proveme nt i n t he re gul atory framework, pr ovision of s pecialized credit lines and risk sharing schemes for FIs will result in creating an environment where banks will aggressively pursue the opportu nities offered by the SME fi nanci ng market in Pakistan. Impr ovement in t he regulatory a nd fiscal environme nt and provisi on of matc hi ng c ontri bution will resul t in establishment of new ve nture capital compa nies. Both t hese measures will im prove accessibility of startups and existi ng SMEs to formal sources of fina ncing, removing a major barrier t o their growth and developm ent.
Supporting Human Resource Development Technology Up-gradation and Marketing Problem Statement
The poor nati onal per forma nce on t he Human Development Index of t he UN has its consequences for S MEs in Pakistan. These i nclude i nadequate and ge neric education and insuffi cient, poorly focused and und er-serving trai ning infrastructure. SMEs mostly draw t heir human resource (i ncludi ng t he owners) fr om eit her t he hi ghe r education i nstitutions or the tec hnical traini ng i nfrastructure, bot h of whi ch are not
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attuned to t he SME needs nor are t hey e quipped to addr ess them. This situation limits the capacity and ca pability of S MEs to innovate, add value, upgrade te chnology and devise new marketi ng strategies. Adding to these w oes are t he lim ited opt ions available to SMEs to invest in HRD, technol ogy and ex ploration of new markets. As a result, the SME sector i n Pakistan is usually engaged i n l ow value added manufacturing using ine fficie nt labour, outd ated technol ogy and operating i n limi ted and traditional markets. The SME sector neither possesses the financial strengt h nor the c ollect ive wisdom t o cl imb its way out of t his low equilibrium e nter prise activity. Public sector i nstituti ons alone can not a dequately provide HR D, technol ogy and marketing support. However, currentl y, the re exists an insufficie nt capacity of t he private sector Business Development Servi ce Provide rs (BDSPs) t o address SME needs and limited demand for such services by SMEs (because of lack of awareness or capacity to pay). Thus concrete and substantial Govt. commitme nt is needed t o establish Islands of Excellence in HRD, tec hnol ogy up-gradati on and marketing, wit h strong and active partici pation fr om SME associations and private sector business service providers. Once established, these Best Practice Models will be emulated by the SMEs. Also, strong inc entives need to be provided t o both SMEs; for i nvestment i n HRD, technology and marketing innovati on and to BDSPs to design and pr ovide innovative business developme nt services to SMEs.
Capacity buildi ng and up- gradation (cur riculum redesign, provision of equipment, teachers traini ng, SME liaison, etc.) of sele cted sect or speci fi c technical trai ning institutes serving in major SME clusters and establis hment of such institutes whe re none exist. Encouragi ng use of the technical t raini ng i nfrastructure by t he private sector BDSPs serving SME sector and incent ives for i nvestment i n setting up SME training facilities Induction of ge nuine SME represe ntatives in private sector boards of t he technical training i nstitutes.
Technology Up-gradation
Intr oduction of SME specific research projects supporti ng R&D and University-I ndustry liaison programs by M inistry of Scie nce & Technology (MoST), Higher Education Commission ( HEC), Pakistan Software Export Board (PSEB), Ministry of I nfor mation Technol ogy (M oIT) and ot hers. Establishment of Tec hnol ogy I nnovation Cent ers (TICs) offe ring c ommon facility, tec hnol ogy up- gradation, R&D and d esign r elated services to SMEs.
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Launchi ng of pilot technol ogy up-gradati on projects for major SME clusters on cost sharing basis. Ince ntives for I nvestment i n new Emer ging Sectors and Skills upgrade.
Marketing
Encourage establ ishme nt of SME sect or specific e xport marketi ng c om panies by pr ovidi ng matc hi ng grants in c onducting inter national marketing research, developi ng marketing strate gies, developing marketing material, packaging, brandi ng, partici pating and c onducti ng trade fairs and undertaking pr om oti onal and marketing activities. Matching grants for d eveloping world-class trade and pr oduct dir ectories for major SME clusters (e.g., Members directory by Pakistan Association of Automotive Parts & Accessories Manu facturers ) Establishment of SME quota in t rade dele gations suppor ted by EPB Com pilati on a nd disseminati on of data on l ocal markets using manufacturers, distributors and retailers data Provision of support to SME associati ons i n expl oit ing opportunities by holding d omestic pr oduct e xhibiti ons l ocal market
Establishment of Annual SME Awards (on t he li nes of Annual FPPCI Export Trophy Awards) for rec ognizing outstandi ng per formance i n d omestic a nd inter national markets, technol ogy i nnovation, HRD pract ices, etc.
Resource allocation, time frame a nd im plem e nting age ncies for polic y rec omme ndati on on supporting HRD, tec hnol ogy up gradation and marketi ng are annexed.
Expected Impact
It is ex pected that e ffective im plem entati on of Pol icy rec omme ndati ons i n supporting HRD, tec hnol ogy up- gradation and marketi ng will create a human resource pool and necessary infrastructure for addi ng value to SME businesses by tec hnol ogy upgradation and i nnovative marketing. It will a lso i ncrease r ole of private sector BDSPs in serving t he SME sect or i n undertaking business development activities.
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created and t hat too i n traditi onal areas of business overcrowdi ng the supply /pr oduct base and their markets. On the other ha nd, there are no limitati ons in the ent repreneurial capa bilities i n t he populace. If, t his e ntre pre neurial pote ntial can be unl eashed, by pr ovidi ng level playing field, information, awareness and support i n establis hing e nter prises, Pakistan can wit ness fast paced gr owth i n establis hment of ne w e nter prises creati ng new empl oyme nt opportuni ties, improvi ng dist ribution of wealth and ex pl oiti ng t he opportunities offer ed by internati onal markets in t he li beralized WTO re gime. The past Government programs to enc ourage entre pre neurshi p such as Self Employme nt Sc heme, Youth I nvestment Pr omot ion Society and Yell ow Cab Sc heme were limit ed and not too c omprehe nsivel y designed and t hus achieved lit tle i n prom oti ng e ntre pre neurshi p amongst t he e d ucated Pakistani yout h. There is a need for G ovt. to actively prom ote entr epre neurship thr ough changes in education curricula, by creati ng awareness amongst y outh and by pr oviding e ffective support t o those w ho wish t o establish new e nter prises.
Policy Recommendations
Revision i n pr imary and higher educ ation entre pre neurshi p amongst t he educated y out h curricula for promoti ng
Inclusion of Entre pre neurshi p courses in (all pr ofessional de gree awardi ng) higher education, t echnical and vocational tr aining i nstitutions in Pakistan Entrepre neurshi p Compe titi ons at university level t o culmi nate i n Annual Entrepre neurshi p Com petiti on at National level for selecti ng best business plans/models and pr oviding grant for pr ojec t implem entati on Establishment of tec hnol ogy and business incubators in selected u niversities in Pakistan Identi ficati on of i nvestment opportuniti es offered by backward and forwar d linkages of successful services/pr oducts
Expected Impact
Impleme ntati on of t he rec omme ndati ons on support ing e ntre pre neurship amongst t he Pakistani youth will result in larger segments of the educated populati on taking interest i n establ ishi ng t heir ow n businesses and some wi ll eventually i mplem ent the ir ideas. As a result, a fast increase may be wit nessed in ente rpr ise creation t hus adding jobs t o t he ec onomy a nd im pr oving income distributions.
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Section IV
Bu si ne ss E nv i ronme nt Ac c e ss to F i nanc e & Se rv ic e s Su pporti ng Hu man Re sou rc e De v el opme nt, T e c hnol ogy U p gradati on Mark e ti ng & E ntre pre ne u rshi p De v el opme nt Total
SM E Polic y I mple me ntati on Plan Propos e d I ns ti tutions /Tas ks Pri nc i pal i mple me nti ng A g e nc ie s E s ti mate d Re s ourc e Re qui re me nt (PKR M i lli on) Jan - Mar Apr - Jun Jul - Sep Oct - Dec Jan - Mar Apr - Jun July - Sep Oct - Dec Jan - Mar Apr - Jun July - Sep Oct - Dec
2007 Fe de ral Cabi ne t / SM E Polic y A pproval M oI P& SI f rom Cabi ne t 1 . SM E Fee dbac k, M oni tori ng & E valuati on SME DA 1 .1 SME Database De v e l opme nt 1 .2 SME Base l i ne Su rv e y SME DA 2 . Bus i ne ss E nvi ronme nt SME DA/MoIP & SI/Mo 2 .1 Approv al & Law, Ju sti c e & Hu man P romu l gati on of SME Ri ghts/P arl i ame nt Ac t 2 0 0 7 SME DA/MoIP & SI / TAs / 2 .2 E stabl i shme nt of C C Is SME P romoti on C ou nc i l SME DA/C C Is/TAs 2 .3 E stabl i shme nt of SME Ce rti f ic ati on P roc e ss 3 . Ac c es s to Fi nanc e & Re late d Se rvi c e s SBP /SME DA/ MoF / 3 .1 E stabl i shme nt of MoIP & SI C re di t Gu arante e Fu nds SBP /SME DA/ MoF / 3 .2 E stabl i shme nt of MoIP & SI C re di t Insu ranc e 4 . Ac c es s to Re sourc e s & Se rvi c es SME DA/HE C / MoIP& SI/ 4 .1 E stabl i sh Insti tu te s NAVTE C / of Smal l & Me di u m TU SDE C / E nte rpri se & MoST/U ni v e rsi ti e s E ntre pre ne u rshi p De v e l opme nt (INSME D) SME DA/MoIP & SI 4 .2 SME Su bc ontrac ti ng E xc hange MoF / 4 .3 Bu si ne ss Su pport MoIP & SI F u nd MoF /MoIP & SI 4 .4 C ompe ti ti v e ne ss Su pport F u nd E s ti mate d Total 2 7 .6 0
2008
2009
3 5 5 .00
7 ,7 3 6 .0 0
5 ,0 1 0 .0 0
1 3 ,1 28 .6 0
The ti me li ne de ve lope d i s s ubje c t to the approval of G ove rnme nt of Paki s tan & avai lability of ade quate re s ourc e s f or i mple me ntati on.
The or ganization of t he monit ori ng and evaluation system, includi ng t he aggre gation and analysis of the information will be unde rtaken by SMEDA. SMEDA will provide cons olidated re ports on ent erpr ise development as well as on the impleme ntati on of enter prise support u nder t his Pol icy on a semi-annual basis to the National Comm ittee on Small and M edium Enter prise s (NCSME). SMEDA will also prepare an Annual Report on SME Devel opm ent to be pr esented to t he Parliame nt by the Minister for Industries, Production and Spec ial Initiatives.
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Members of NCSMEs
Members of t he Nati onal Comm ittee on Sm all and Medium Enter prises are; Minister for I ndustries, Producti on and S pecial I ni tiatives, Minister of State for Fina nce, Minister of State for Ec onomic Affairs, Deputy Chairman Planning Com mission, Provinc ial Ministers for Industries, Governor of t he State Bank of Pakistan, Chairman Ce ntral Board of Revenue, Chairm an Securities & Excha nge Commission of Pakistan, Federal Secretary for Industries, Producti on & S pecial I nitiatives, Federal Secretary Comme rce, Federal S ecretary for Labor, Manpow er and Overseas Pakistanis, Federal Secretary for Statistics, Federal Secretary for Education, Federal Secre tary for Science a nd Technol ogy, Federal Secretary for Wom en Devel opment, Preside nt of FPCCI, Presidents of Karachi, Lahore, Sarhad & Quetta Chambers of Commer ce & Industry and Presidents of small and medium enter prise Business Membership Organizations (BMOs). The Gover nme nt in consultation wit h FP CCI will appoi nt five r eprese ntatives of Cham bers of Commerce a nd Industry re pres enti ng pred omi nantly SME sect or. Three represe ntatives of small and medium e nter prise business membershi p or ganizations shall also be m embe rs of the said Committe e . The Commit tee may co- opt furthe r Mem ber s as it sees fit to address speci fic issues and ensure r eprese ntation of small and me dium ente rprise int erests. Similarly, t he Governme nt may add or re move mem bers of the Com mittee as it d eems fi t.
Provincial (PCSMEs)
Committees
on
Small
and
Medium
Enterprises
The Chie f Executive of eac h Pr ovince wi ll chair t he m eeti ngs of the Provi ncial Comm ittees for Small and Medium Ent erprises (PCSMEs) pe riod ically. These Comm ittees will support t he National Com mittee on Small and Medium Enter prises (NCSMEs) by assembli ng expertise fr om all fiel ds as necessary i n order to pr epare, develop, and im pr ove Small and Medium Enterprise P olicy, i ncluding but not limite d to speci fic support measures and impr ovem ents in t he e nabli ng envir onment. It will prepare r ecomm endati ons for a ppr oval by N CSMEs as necessary. SMEDA Provincial Offices wil l fu ncti on as t he Secr etariat to each of t he P rovi ncial Commit tees.
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Members of PCSMEs
Members of the Pr ovincial Committees of Small & Medium Enterprises shall be decided by t he Chie f Executive of each Pr ovi nce.