No need to reinvent the wheel

LAHORE: Small and medium enterprises flourished in Pakistan when the state provided an enabling environment to them. Pakistan’s engineering triangle of Gujranwala, Sialkot and Gujrat is a living example in this regard that accounts for 20 percent of our export earnings.

The exports from this region are mostly from non-traditional sectors. We almost regularly supply footballs for the World Cup besides regularly exporting these footballs to the soccer playing nations in the world.

Our surgical goods exports come from this region only. This region exports cutlery, leather gloves, leather jackets, and martial art dresses.

This engineering triangle serves the domestic market with best ceramic pottery, light engineering goods like washing machines, agricultural machinery and implants, heating equipment and many more, some of which are exported as well.

This is the only region in the country that has produced true entrepreneurs. Almost 95 percent of the medium and large industries of this region are operated by owners that started from cottage level and gradually graduated to a higher level.

Successful entrepreneurs of this region graduated to a higher level as past governments in Pakistan supported the starters at policy and technical level. Pakistan’s engineering triangle comprising Sialkot, Gujranwala and Gujrat flourished in the 1960s when the government provided them common facilities to boost their productivity and assured finances through Punjab Small Industries Corporation.

Most of these entrepreneurs started their businesses at an informal level, but entered the formal economy as they grew in size and business. Now we do not see informal sector players entering the formal sector as the enabling environment available in the 60s and 70s does not exist anymore.

There are no clusters, few inadequate common facility centers and PSIC has been made redundant.

We are no more producing entrepreneurs that have the ability to convert lower productive resources into higher productive resources. An entrepreneur creates something new and innovates within the existing economy and maintains consistency with his goals and objectives in different situations. All disruption in the economy the world over are triggered by these entrepreneurs that enter the market by launching a small enterprise.

Most developed countries have the largest share of SMEs in their economies that play an important role in furthering development. Entrepreneurship and SMEs are crucial for poverty reduction, employment generation, and to achieve higher standards of living.

The importance of SMEs can be judged by the fact that SMEs account for 90 percent of the GDP of most developed economies, 51 percent in high income countries, 39 percent in middle income and only 16 percent in low income countries.

Pakistan's economy is still dominated by SMEs not in terms of GDP but in terms of employment. Most SMEs operate informally in Pakistan and create 70 percent of employment opportunities in the country. But most of these are low paid jobs.

In the absence of state facilitations, these SMEs seldom graduate to higher levels. The government does not need to formulate new policies for supporting SMEs. It simply needs to reintroduce the policy that enabled numerous SMEs to move up the ladder. Governments the world over provide an enabling environment to small and medium enterprises as entrepreneurship is at its best in SMEs. Steve Jobs of Apple started from a small base, Bill Gates of Microsoft went on to become a billionaire from a humble beginning.