Budget has very little for critical SME sector: ICST

Islamabad Chamber of Small Traders (ICST) on Tuesday asked the government to pay special attention to the small and medium-sized enterprises (SME) sector which has been ignored in the recent budget.

A vibrant SMEs sector can play a key role in creating jobs and high economic growth; it has the potential to provide employment for the majority of the labor force still working in agriculture, said Patron ICST Shahid Rasheed Butt.

He said that achieving and sustaining such growth and higher employment will require a boost in industrial and services growth, spurred by SMEs, therefore, the government should consider special incentives for the sinking SME sector.

Shahid Rasheed Butt said that several factors constrain the growth and competitiveness of SMEs that include lack of access to adequate and timely financing.

Without financing, borrowing becomes more expensive and profit margins are reduced, holding back the establishment of new units and the consequent increase in job creation, he added.

He said that SMEs have 40 percent share in the Gross Domestic Product (GDP), 30 percent share in exports and employing millions and therefore, it cannot be ignored by the policymakers.

He said that among 3.5 million SMEs in Pakistan, 65 percent are located in Punjab that can be balanced through policy interventions.

Energy crisis, lack of regulatory support, incoherent laws, deficiency of market information and skilled labor and want of finances are the main reasons behind lackluster performance of SME sector.

State Bank of Pakistan (SBP) should improve rules and regulations for SME financing as financing constraints can be attributed to a combination of factors that include policy, legal and regulatory framework, bankruptcy and contract enforcement, institutional weaknesses, lack of reliable credit information on SMEs.