Federation of Pakistan Chambers of Commerce and Industry’s (FPCCI) Senior Vice President Shaikh Khalid Tawab has expressed his concerns over the insignificant and low financing of small and medium-sized enterprises (SMEs) which may contribute significantly in the economic and social development.
In a statement on Tuesday, Shaikh Khalid Tawab said that it was worrisome that 95percent of enterprises are SMEs in Pakistan, and only seven to eight percent credit financing of private sectors were given to SMEs sector while most of the credit were given to corporate sector.
He said that although the financing to SMEs sector had been increasing since last year but this financing was very low as it contributed over 40 percent in GDP, in exports earning by 25percent and employed 80 percent of non-agriculture labor force.
He quoted examples of other countries and added that SMEs had contributed more than 80 percent in their development in China, Taiwan, Korea and Singapore.
These countries achieved the status of industrial advanced countries or newly industrial nations just on the basis of development of SMEs sector. Pakistan should learn from the experience of these countries and formulate SMEs driven policies, he stated.
He further elaborated that in Pakistan the banks had been generally reluctant to give loans to SMEs sector due to high risk and transaction cost. 95 percent SMEs loans are given on collateral basis and commercial banks lack effective credit models to finance SMEs, he said.
He indicated that without financing and other facilities it was difficult for SMEs to modernize innovate and expand themselves. Keeping in view of the potential of SMEs, he suggested to increase the financing for SMEs and urged the government for significant measures for the development of SMEs sector, and training on the issues related to Cost-competitiveness, quality competitiveness, marketing, networking, product diversification, starting a business, business plan, legal issues, financial management and time management.