Govt urged to save SMEs from collapse

KARACHI: The Union of Small and Medium Enterprises (UNISAME) has invited the attention of Adviser to Prime Minister on Commerce, Industry and Production Abdul Razak Dawood to the basic necessities of the SME sector without which the SME policy will not prove effective, a statement said on Friday.

UNISAME President Zulfikar Thaver sent SOS to the adviser, saying that finance has become unaffordable, utilities have become costly, logistics expensive and raw material beyond reach of the textile, rice, sports, surgical, cutlery, leather, carpets, light engineering and foodstuffs units of the SMEs.

The SME farmers and service providers are also facing hardships due to the tax axe. The budget has increased taxes and the 17 percent sales tax is beyond comprehension, he added.

Thaver said that the SMEs never expected such harsh treatment and unfriendly policies from a government, which had made promises to uplift the sector on fast track basis. UNISAME has urged the government to spare the SME sector and save the sector from collapse, as it is becoming uncompetitive due to high cost of production, high cost of doing business and uncertainty of parity rate.

The UNISAME president suggested fixation of dollar rate after injecting sufficient amount, ensuring no further increase in interest rate and facilitating export refinance to SMEs only, and exemption to those SMEs from sales tax who export 90 percent of their production.

UNISAME experts said the SME policy will be a futile exercise if the basic needs of finance, energy, availability of raw material, logistics and tax incentives are not provided. The definition of SMEs needs to be widened and not narrowed in view of the depreciation of the rupee, they said.

The new SME policy is aiming at narrowing the turnover parameter from the present 800 million to 650 million. This will be a grave mistake, as the medium sector is the most vibrant sector and any exclusion of the upper medium sector from the definition would prove detrimental. In fact, the turnover parameter needs to be increased to one billion as recommended by the State Bank of Pakistan (SBP), to enable the upper medium sector to come forward and modernise their units and join the mainstream.

The large sector is shy and the upper medium is in a position to collaborate under CPEC and form partnerships and joint ventures, the experts said.