UNISAME URGES PM TO FACILITATE MICRO & SME SECTOR IN BUDGET

May 12, 2015 |

The Union of Small and Medium Enterprises (UNISAME) has submitted road map to the prime minister (PM) Mian Nawaz Sharif and urged him to ensure that the budget making committee does not over look the crucial requirements of the majority sector which is the engine of growth and the backbone of the economy.

President UNISAME Zulfikar Thaver said UNISAME is a sponsoredĀ  forum entrusted with the task to create awareness of the rights of the SMEs, to identify impediments in SME growth, to recommend remedies and help the government in policy making. UNISAME has given road map to the policy makers for the uplift of the sector on fast track basis.

He said the budget should aim at facilitating the micro, small to medium sized sector by providing them finance at affordable mark up from commercial banks and financial institutions according to their needs. The government must strengthen the banks, financial institutions, leasing, insurance and joint venture companies as these are the pillars of the economy. The SME Bank must be enabled to cater to the financial requirements of the sector.

He pointed out thatĀ  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 commercial banks must have arrangements and be in a position to also arrange for mortgage financing under conventional or Islamic banking systems.

The commercial banks must have affiliations with leading collateral management companies and be able to arrange warehouse receipt financing for its clients by arranging a triparte agreement between the borrower, the bank and the collateral management company.

The commercial banks must have expertise in resolving the financial needs of SMEs by enabling them to obtain finance on best possible terms promptly.

The micro finance banks must be allowed to finance the micro enterprises up to Rs 1 million and all caps must be removed.
The income tax exemption limit of Rs 400000 be increased to Rs 600000. The with holding tax applicable on cash withdrawals of Rs 50000 must be enhanced to Rs 100000.
With holding tax on profits on savings and bank deposits be reduced to 5%.
The income tax on family businesses or Association of Persons (AOP) be rationalized and also the income tax rate must be reduced and tax net be broadened.
The income tax on agricultural be imposed and tax and duties on farm inputs be exempted.
The SME Policy 2007 must be implemented and the promises made in the policy must be fulfilled. The SME Fund, the SME Export House, Technical Institute, Ombudsman, Joint Venture Fund and the SME Chamber of Commerce have not been established although the policy was passed in the national assembly and approved by the cabinet.

Since 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 it is imperative that it is not neglected and given priority.

The government knows fully well that there are almost 10 millions 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 35% of the exports and most of them are involved in value addition and they contribute 40% to GDP and offer employment to about 45% of the labour force.

The impediments to SME growth are lack of education, finance, proper environment, infrastructure, logistics and these days the law and order and energy crisis are real issues. The budget must make provision for the redress in the budget

In order to promote, encourage, facilitate, motivate and upgrade the SME sector UNISAME have suggested to the government to educate the SMEs about the new technologies in production, management, marketing, accounting & inventory control and encourage the SMEs to modernize and make plans for balancing and replacement of their units and arrange transfer of technology. The above is not an easy task and for this the government should strengthen and equip the Small and Medium Enterprises Development Authority (SMEDA) and broaden its scope to enable it to reach the SMEs involved in manufacturing, farming trading and services.

Posted in: Press Releases

Comments are closed.