SMEs propel economy with 40% GDP contribution, Senate Committee 5.2mn small and medium enterprises serve as the economy’s backbone

ECONOMY Pakistan Today
January 11, 2024

By Ghulam Abbas
SMEs
ISLAMABAD: In a recent session led by Senator Khalida Ateeb, the Senate Standing Committee on Industries and Production disclosed that the nation hosts 5.2 million Small and Medium Enterprises (SMEs), constituting a robust 40% contribution to the GDP. The meeting, held on Thursday, extensively delved into the role and impact of SMEs, shedding light on their pivotal economic significance.

The committee scrutinized the operations of the Small and Medium Development Authority (SMEDA), where officials emphasized the creation of an impressive economic value of Rs. 9.85 for every rupee invested. It is important to know that only the entities totaling 80 million Rupees fall within the SME category. As of now 64% of these entities are concentrated in Punjab.

Comprising a diverse array of businesses, from manufacturing to services, SMEs represent the heartbeat of entrepreneurial vitality. In Pakistan, SMEs account for nearly 90% of all businesses, employing over 80% of the non-agricultural workforce. SMEs play a pivotal role in poverty reduction and regional development.

Despite the establishment of 36 Common Facility Centers nationwide through PSDP funding, financial constraints have halted many SMEs. The Committee proposed public-private partnerships, among other solutions, as a strategic solution to revitalize these crucial centers. This will not only help solve the access to financing problem but also boost the entrepreneurial potential of the country.

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During the committee’s deliberations on other agenda items, it was revealed that the Pakistan Steel Mills (PSM) approved a 25% Temporary Relief Allowance for its employees. Concerns arose regarding stolen items over the last decade, prompting the Committee to direct PSM officials to furnish detailed information, including market values of stolen goods, in the next meeting.

With an annual loss of Rs. 30 billion and a hefty Rs. 1 billion break-off cost for common battery maintenance, the Committee urged decisive action on the fate of Pakistan Steel Mills to mitigate ongoing financial setbacks.

The committee also deliberated on the diminishing role of the State Engineering Corporation (SEC), established in 1973, which once boasted 12 units. Presently, only the Pakistan Engineering Company in Lahore remains, and SEC functions as a liaison officer between relevant government bodies. Despite its historic prominence, 11 out of the 12 originally owned SEC companies have already been privatized. The corporation was built in 1973 to work on import substitution, self-reliance and industrial indigenization, but with only one operational unit left, it failed to achieve those goals.

In attendance were distinguished senators, including Fida Muhammad, Faisal Saleem Rehman, Saifullah Sarwar Khan Nyazee, Zeeshan Khanzada, and Mohammad Abdul Qadir. Secretary for Industries and Production Rashid Mahmood Langrial, along with other senior officials from relevant departments, participated in the meeting.

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