Govt Urged To Request IMF To Allocate Special Funds For SMEs

The Financial Daily 19/07/24
The Union of Small and Medium Enterprises (UNISAME) a forum entrusted with the task to create awareness of the rights of the SMEs and to identify impediments in SME growth, also to recommend remedies and help the government in policy making has expressed deep regret that the government has neglected the sector by not submitting a definite agenda to IMF for fulfilling their bonafide requirements.
The international institutions like World Bank, IMF and IFC all have soft corner for MSMEs but definitely need a dedicated convincing agenda from the borrowing country.
President UNISAME Zulfikar Thaver said we have given a road map to the policy makers for the uplift of the sector on fast track basis but the government has lost track and simply indicates that it is compelled to comply with IMF demands rather than planning or implementing any agenda.
UNISAME has submitted proposals for economic growth, ease of doing business, cost of doing business and incentives for the micro to medium sized sector prepared by experts all of which could have been discussed with IMF and received their best attention.
The government should facilitate the small to medium sized sector by financing at affordable mark up. The SMEs need finance to modernize their units, some need bridge finance others need leasing facilities and the new entrants who are educated and have innovative ideas need venture capitalist as partners.
The government needs to promote collateral management companies who can arrange warehouse receipt financing for SMEs by arranging a tripartite agreement between the borrower, the bank and the collateral management companies.
The Small and Medium Enterprises Development Authority (SMEDA) should act as a facilitator and resolve the financial needs , energy requirements and also modernization needs of SMEs by expert guidance and information to enable them to get the best possible terms. Those who desire Chinese collaboration/joint ventures/ transfer of technology under CPEC need to be introduced with Chinese investors.
SMEDA should also guide those SMEs who are in the province of Sindh and need finance for setting up new industries or modernizing their existing units to contact Sindh Enterprise Development Fund (SEDF).
Thaver said we all agree that the SME sector is the vibrant sector, backbone of the economy, the engine of growth and the vehicle for poverty alleviation and best for creating employment yet the government never attempted to impress upon
the IMF for special promotion and development funds.
The government knows fully well that there are more than 5 million SMEs in Pakistan and in addition to this there are equal number of SME farmers and although this sector is referred to as the SME it is the majority sector capable of growth and stimulating the economy.
The SMEs contribute to 30% of the exports and most of them are involved in value addition and they contribute 35% to GDP and offer employment to about 40% of the labour force yet the government imposed almost 30% tax on profits on exporters and removed the Fix Tax Regime (FTR).
The impediments to SME growth are lack of education, finance, proper environment, infrastructure, logistics and these days the energy crisis is a real issue the team dealing with IMF should have high lighted the issues and the requirements of the sector and invited the attention of the IMF for extraordinary support for the sector.
The government needs to promote, encourage, facilitate, motivate and upgrade the SME sector we have suggested to the government to talk to the IMF about SME promotion and development and how this sector can generate revenue, increase exports and alleviate poverty and decrease unemployment.
UNISAME Council members believe the government having complied with the measures recommended by the IMF will now impress upon them to allocate funds for the majority small to medium sector but having big potentiality.

Posted in: Press Releases