July 12, 2020: The Union of Small and Medium Enterprises invited the attention of the Prime Minister (PM) Imran Khan to the delay in the announcement of the SME policy 2020 which is ready but in doldrums for reasons best known to the ministry of industries.
President UNISAME Zulfikar Thaver said as a member of the advisory committee of the SME policy he witnessed the enthusiasm and passion of all stakeholders but now he is witnessing the frustration because of the delay which also means delayed implementation as well. UNISAME has urged the PM to announce the SME policy forthwith and also the board of directors of the Small and Medium Enterprises Development Authority (SMEDA).
Thaver said the idea was to replace the SME policy 2007 with an updated version encompassing all aspects of SME promotion and development. The simplest and not expensive way was to revalidate the old policy with few modifications wherever required.
However, he regretted that the policymakers could not comprehend the simple fact that the parameters of the SME definition needed to be widened rather than narrowed.
The valid argument of UNISAME representing the sector was the depreciation of the rupee and this was well supported by the State Bank of Pakistan (SBP).
The actual factual position is that by narrowing the definition of SMEs, the dynamic upper-medium sector will be excluded and will not fit in the definition.
It is pertinent to note that currently, it is this upper-medium sector which is most vibrant and has the resources to set up new import substitution industries. The small and medium are badly affected by the pandemic and the big sector is shy, it is waiting for the economy to get into gear and recover as against the upper-medium is inclined and ready.
The argument which the government experts are giving is that the upper mediùm sector will enjoy the tax benefits as well which are for the SMEs. This matter can easily be resolved by placing a ceiling of assets, turnover or employment strength for the purpose of tax benefits, and for all other purposes, the upper-medium could be defined as SMEs. One thing is clear that they cannot be labeled as large so obviously they come under SMEs. The last definition of SMEs was those whose employment strength was 250, turnover was up to 800 million and productive assets up to 100 million. Considering the depreciation of the rupee it calls for broadening of the definition and narrowing it amounts to being irrational.
Leaving the definition what is most harmful is the delay in the announcement and implementation of the SME policy which is expected to make life easy for SMEs in many ways such as cost of doing business, ease of doing business, transfer of technology, marketing, and financial support for the sector and other facilities, support, encouragement and motivation much needed for the sector.
Thaver said in view of the importance of the SME policy the SMEs, SBP, SMEDA and all stakeholders are looking forward to the SME policy.