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SME Led Economic Growth - CreatingJobs and Reducing Poverty

Minis t ry of In du str ies , Product ion & Specia l In i t ia t ives

Government of Pakis tan

Turn Potential into ProfitSmall and Medium E nterprise Development Autho rityGovernment of P akistan

http:/ / www.smeda.org.pk

SME Policy 2007

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SMEDA - Ministry of Industries, Production & Special Initiatives, Government of Pakistan

2

T able of Contents

Abbreviations

E xecut ive Sum ma ry 5

Sect ion I Int roduct ion

Back gr o u n d 7

E co n o m ic Ra t io n ale / P e r sp ect ive 8

Sm all Bu s in es s P r o m o t io n : H is t o r ica l P e r sp e ct ive 9

SM E D ev e lo p m en t Rece n t St e p s b y G o P 9

Section I I SME Po licy: Ob jectives, Scop e & Princ iples

SM E P o licy O b jec t iv es 11

SM E P o licy Sco p e 11

SM E P o licy P r in c ip les 11

Sect ion III SME P ol icy Recomm end at ions

SM E D ev e lo p m en t V is io n 13

SM E P o licy St a t em en t 13

SM E D ef in it io n 14

Bu s in es s E n v ir o n m en t 14

A cces s t o F in an ce & Re la t ed Se r v ices 16

Su p p o rt in g H u m an R es o u rc e D e v elo p m e n t, T e ch U p - gr ad at io n & M a rk et in g 1 7

E n t r ep r e n eu r sh ip D ev elo p m en t 19

Section IV SME Policy Implementation & Resource Allocation

SM E P o licy O wn er sh ip & I m p lem en t a t io n 21

SM E P o licy I n v es t m e n t & E x p ect ed I m p ac t 21

Su m m ar y o f R eso u r ce A llo cat io n 21

SM E P o licy I m p le m en t a t io n P lan 22

Sect ion V SME P ol icy Monitoring, E valuat ion & Coordinat ion

M o n it o r in g & E va lu at io n 23

Co o r d in at io n 24

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Abbreviations

B M O B u s in e s s M e m b e r s h i p O r g a n iz a t io n

B D S P s B u s in e ss D e v e lo p me n t S e rv ic e P ro v id e r s

B I P B u s in e s s I m p r o v e m e n t P r o g r a m

C B R C e n t ra l B o a rd o f R e v e n u e

C C I s C h a m b e r o f C o m m e r c e & I n d u s t r i e s

C I B C r e d it I n f o r m a t i o n B u r e a u

C F C C o m mo n F a c i l it y C e n te r

E P Z s E x p o r t P r o c e ss in g Z o n e s

E P Z A E x p o r t P r o c e s s i n g Z o n e s A u t h o r i t y

E P B E xp o r t P r o m o t io n Bu r eau

N C SM E s N a t io n a l C o m m i t t e e o n S m a ll & M e d i u m E n t e r p r i s es

F B S F e d e ra l B u re a u o f S ta t i s t ic s

F P C C I F e d e r a t io n o f P a k i s t an C h a m b e r o f C o m m e r c e & I n d u s t r y

F I s F in a n c ia l In s t i tu t io n s

G o P G o v e r n m e n t o f P a k is t an

G D P G r o s s D o m e s t ic P r o d u c t

H E C H i gh e r E d u c a t io n C o m m i s s io n

H R D H u m a n R e so u r c e D e v e lo p m e n t

I S I C I n t e r n a t i o n a l S t an d a r d I n d u s t r i al C l as s i fi ca t i o nIL P In d u s t r i a l L in k s P ro g ra m

L U MS L a h o re U n iv e r s i ty o f Ma n a g e me n t S c ie n c e s

M E s M e d i u m E n t e r p r i s es

M T D F M e d i u m T e r m D e v el o p m e n t F r a m e w o r k

Mo C Min i s t ry o f C o m me rc e

Mo IP &S I Min i s t ry o f In d u s t r i e s , P ro d u c t io n & S p e c ia l In i t i a t iv e s

M o I T T M in is t ry o f I n f o rm a t io n T ec h n o lo gy & T eleco m

Mo S T Min i s t ry o f S cie n c e & T e c h n o lo g y

P I M P a k i s t an I n s t i t u t e o f M a n a g em e n t

P R S P P o v e r t y R e d u c t io n S t ra t e g y P a p e r

P A A P A M P a k i st a n A s s o c ia t i o n o f A u t o m o t i v e P a r t s & A c ce s s o r i esMa n u fa c tu re r s

P C S ME s P ro v in c ia l C o m mi t t e e s o n S ma l l & Me d iu m E n te rp r i se s

R & D R e s ea r c h & D e v el o p m e n t

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S E C P S e cu r i t i e s & E x c h a n g e C o m miss io n o f P a k i s t a n

S ME D A S m a ll & M e d iu m E n t e r p r i se s D e v e lo p m e n t A u t h o r i t y

S ME s S ma l l & Me d iu m E n te rp r i se s

S E s S ma l l E n te rp r i se s

S B P S ta t e B a n k o f P a k i s t a n

T E V T A T e c h n ic a l E d u c a t io n & V o c a t io n a l T ra in in g A u th o r i ty

T U S D E C T e c h n o l o g y U p - g r a d at i o n & S ki ll D e v e lo p m e n t C o m p a n y

T D AP T rad e D ev e lo p m en t A u t h o r it y o f P ak is t an

T I C s T e c h n o l o g y I n n o v a t io n C e n t e r s

T A s T ra d e A sso c ia t io n s

U N U n i t ed N a t i o n s

V C V e n tu r e C a p i t a l

W T O W o r l d T r a d e O r g an i z a t io n

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Executive Summary

S M E s e c t o r i s t h e b a c k b o n e o f P a k i st a n s e c o n o m y . T h e s i gn i f ic a n c e o f t h e i r r o l e isc lea r ly ind ica ted by va r ious s t a t i s t i c s . Accord ing to more recen t e s t ima tes the re a reapprox ima te ly 3 .2 mi l l ion bus ines s en te rp r i s e s in Pak i s t an . En te rp r i s e s employ ing up

t o 9 9 p e r s o n s c o n s t i t u t e o v e r 9 0 % o f a l l p r i v a t e e n t e r p r i s e s i n t h e i n d u s t r i a l s e c t o ra n d e m p l o y n e a r l y 7 8 % o f t h e n o n - a g r ic u l t u r e la b o u r f o r c e . T h e y c o n t r i b u t e o v e r 3 0 %t o t h e G D P a n d a c c o u n t 2 5 % o f e x p o r t s o f m a n u f a c t u r e d g o o d s b e s i d e s s h a r i n g 3 5 %i n m a n u f a c t u r i n g v a l u e a d d e d .

P r o m o t i o n o f S M E s h a s t h e r e f o r e b e e n t h e c e n t e r p i e c e o f G o v e r n m e n t s s t r a t e g y f o re c o n o m i c r e v i v a l , p o v e r t y a l l e v i a t i o n a n d e m p l o y m e n t g e n e r a t i o n . T o t h i s e n d , t h elog ica l f i r s t s t ep was the fo rmula t ion o f a comprehens ive SME Po l icy re f l ec t ing thev i ew p o i n t s o f m u l t i p le s t a k e h o l d e r s .

T h e G o v e r n m e n t o f P a k i s t a n t h u s c o n s t i t u t e d a n S M E T a s k F o r c e , b y N o t i f i c a t i o nN o . 1 ( 6 8 )/ 2 0 0 3 - I n v - I I I o f 2 9 Ja n u a r y 2 0 04 o f t h e M i n i s t r y o f I n d u s t r i e s a n dP r o d u c t i o n . S ME T a s k F o r c e i n clu d e d b o t h p u b l ic & p r iv a t e s ec t o r m e m b e r s .

I n o r d e r t o e n a b l e t h e SM E T a s k F o r c e t o w o r k e f f e c t iv e ly, f o u r W o r k i n g C o m m i t t e e swere s e tup to ca r ry ou t t echn ica l ana lyses , de l ibe ra te f ind ings and addres s fo l lowingcore i s sues :

i. B u si n es s E n v i r on m en t - C r e a t i n g a f a v o r a b l e b u s i n e s s e n v i r o n m e n t f o r S M E s i nPak i s t an ' s economy and e l imina t ing unneces sa ry obs tac le s , r educ ing cos t o f d o i n g b u s i n e ss

ii. A cces s t o F i n a n ce - Inc reas ing SMEs acces s to fo rma l f inance inc lud ing equ i ty

f inanc ing whi le addres s ing the ques t ion o f l ack ing documenta t ion and banks 't echn ica l capab i l i t i e s and improv ing SMEs ' capac i ty to become bankab le .

iii. A cces s t o R es ou r ces & S er v ices - I m p r o v i n g t h e d e li v er y m e c h a n i s m s f o r a s s is t a n c ea n d a c c e s s t o r e s o u r c e s f o r S M E s i n P a k i s t a n , i n t e r a l i a b u s i n e s s d e v e lo p m e n tse rv ices , qua l i f i ed human re sources , marke t ing and t echno logy , so a s toi m p r o v e t h e i r c o m p e t i t i v e n e s s , p r o d u c t i v i t y a n d c a p a c i t y f o r e m p l o y m e n tg e n e r a t i o n .

iv . S M E D ef i n i t i on , f eed b a ck , M on i t or i n g & E v a lu a t i on M ech a n i s m - Es tab l i sh inga p p r o p r i a t e a n d h a r m o n i z e d d e f i n i t i o n s f o r P a k i s t a n o f w h a t a r e t o b ec a t e g o r i z e d m i c r o , s m a l l , m e d i u m , a n d l a r g e e n t e r p r i s e s . F u r t h e r m o r e , t h e

e s t a b l i s h m e n t o f a s o u n d m e c h a n i s m b y w h i c h d e v e l o p m e n t o f t h e S M E s e c t o ra n d e f f e c t iv e n e s s o f a s s is t a n c e p r o v i d e d t o S M E s c a n b e m o n i t o r e d .

T h e W o r k i n g C o m m i t t e e s a f t e r d u e d e l i b e r a t i o n , f i n a l i z e d t h e i r r e c o m m e n d a t i o n s . I norde r to ach ieve consensus , w ide s ca le Na t iona l , P rov inc ia l & Reg iona l consu l t a t ionsw e r e h e l d . T h e p a r t i c i p a t i o n o f s t a k e h o l d e r s h a s b e e n t h e r e f o r e , t h e c o r n e r s t o n e o f t h e p o l ic y d e v e l o p m e n t p r o c e s s .

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T h e b r o a d e r o b j e c t i v e s t o b e a c h i e v e d b y S M E P o l i c y a s c o n t a i n e d i n t h i s d o c u m e n ta re ; ac ros s the boa rd recogn i t ion o f SMEs a s a s ec to r requ i r ing s epa ra te po l i cy &r e g u l a t o r y s p a c e , d e f i n e S M E s t h a t q u a l i f y f o r s u p p o r t , p r o p o s e c o u n t e r b a l a n c i n gmeasures to e l imina te d i s advan tage o f s i ze , r emove unneces sa ry regu la to ry burden ,i n s t i t u t e S M E s u p p o r t m e c h a n i s m i n b o t h p u b l i c & p r i v a t e s e c t o r s , i m p r o v e s u p p o r tde l ive ry mech an i sms and e s t ab l ish p o l i cy eva lua t ion and rev iew sys tem s .

S p e ci f ic a ll y t h e P o l ic y e n v i si o n s i n c r e as i n g t h e s h a r e o f m a n u f a c t u r in g s m a lle n t e r p r i s e s f r o m 5 . 5 % t o 7 % , w h i l e d e c r e a s i n g t h e t h r e s h o l d a n d d e n s i t y o f r e g u l a t i o n s t h e r e b y r e d u c i n g t h e c o s t o f d o i n g b u s i n e s s . I t a l s o s e t s t h e t a r g e t o f i n c r e a s i n g t h e s h a r e o f S M E s i n v a l u e a d d e d p r o d u c t i o n t o 4 0 % , a n d w o m e no w n e r s h i p t o i n c r e a s e t o 6 % . A n u m b e r o f m e a s u r e s a r e p r o p o s e d t o a c h i e v e t h e s eo b j e c t i v e s i n c l u d i n g s e t t i n g u p S M E s u p p o r t f u n d s a n d c r e a t i n g a m u t u a l l ycoope ra t ive & fac i l i t a t ive , has s le f ree bus ines s env i ronment .

T h e P o l i c y a l s o c o n t a i n s o u t l i n e o f a m o n i t o r i n g m e c h a n i s m a t t h e F e d e r a l &Prov inc ia l l eve l s to ove rsee and a s ses s impac t o f SME deve lopment in i t i a t ives be ingi m p l em e n t e d u n d e r t h e P o l ic y.

T h e F e d e r a l C a b i n e t o f P a k i s t a n w a s p l e a s e d t o a p p r o v e S M E P o l i c y o n J a n u a r y 1 7 ,2 0 0 7 . T h e a p p r o v a l o f S M E P o l i c y u s h e r s i n a n e w e r a o f f o c u s e d S M E d e v e l o p m e n tin i t i a t ives neces sa ry fo r th i s s ec to r to rea l i ze i t s t rue po ten t i a l and con t r ibu te towardse c o n o m i c d e v e l o p m e n t .

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Section I In troduction

Background

A c c o r d i n g t o t h e r e c e n t C e n s u s o f E s t a b l i s h m e n t s c o n d u c t e d b y t h e F e d e r a l B u r e a uof S ta t i s t i c s (FBS) the re a re abou t 3 .2 mi l l ion economic e s tab l i shments in Pak i s t an .O u t o f t h e s e s m a l l a n d m e d i u m s i z e e n t e r p r i s e s ( w i t h e m p l o y m e n t b a s e u p t o 9 9 )c o n s t i t u t e a b o u t 9 0 % o f a ll p r iv a t e e n t e r p r i s es e m p l o y in g a p p r o x im a t e l y 7 8 % o f n o n -agr icu l tu re l abor fo rce 1. S ME s c o n t r i b u t ed o v e r 3 0 % t o G D P , 2 5 % in e x p o r t e ar n i n gsb e s id e s s h a r i n g 3 5 % i n m a n u f a c t u r i n g v a lu e a d d i t io n 2.

E c o n o m i c in d i c a t o r s c l ea r ly r e v e al t h e i m p o r t a n c e a n d p o t e n t i a l o f t h e S M E s e c t o r i nt h e n a t io n a l ec o n o m y . T h is r e al iz a t io n l ed t h e G o v e r n m e n t o f P a k i st a n ( G o P ) t oiden t i fy SMEs as one o f the four p i l l a r s o f economic rev iva l p lan l a id ou t in 1999-2000 .

I n o r d e r t o d e v i s e a b a s i c f r a m e w o r k f o r t h e g r o w t h a n d d e v e l o p m e n t o f S M E s t h eG o v e r n m e n t o f P a k i s t a n c o n s t i t u t e d a T a s k F o r c e f o r S M E P o l i c y D e v e l o p m e n t i nJ an u a r y 2 0 0 4 u n d e r t h e c h a i r m a n s h i p o f S e c r e t a r y, M i n is t r y o f I n d u s t r i es , P r o d u c t i o na n d S p e c i a l I n i t i a t i v e s . T h e T a s k F o r c e , c o m p r i s i n g o f G o v e r n m e n t o f f i c i a l s a n dmajor p r iva te s ec to r s t akeho lde rs , was e s tab l i shed wi th the fo l lowing ob jec t ives :

Achieve d i s c re te po l i cy and regu la to ry space fo r SMEs a long wi thiden t i f i ca t ion o f key a reas fo r re fo rms conce rn ing l aws , regu la t ions , andp r o g r a m s .

Deve lop SME Po l icy iden t i fy ing ro le s o f Fede ra l , P rov inc ia l and Loca lG o v e r n m e n t s a n d p r i v a t e & p u b l ic s e c t o r s in S M E s e c t o r d e v e l o p m e n t .

D e f in e p r i n c i p l es o f S M E s u p p o r t a n d s e t p r i o r i t ie s .

I n s t i t u t i o n a l i z e S M E s u p p o r t t o e n s u r e r e g u l a r i n f o r m a t i o n s h a r i n g a m o n gF e d e r a l , P r o v in c i a l, L o c a l G o v e r n m e n t s a n d S M E s .

P r o p o s e d e t a i l e d p r o c e s s e s a n d t i m e b o u n d a c t i o n a n d r e s o u r c e r e q u i r e m e n tf o r S M E s e c t o r d e v e lo p m e n t a n d s u p p o r t p r o g r am s .

P r o p o s e s e p a r a t e e c o n o m i c i n d i c a t o r s t o i n s t i t u t e m o n i t o r i n g a n d e v a l u a t i o nm e c h a n i s m s f o r S M E P o l i c y a n d P r o g r a m s .

P r o p o s e a N a t i o n a l l e v e l A u t h o r i t y t o c o o r d i n a t e a c t i v i t i e s f o r S M Ed e v e l o p m e n t .

T h e T a s k F o r c e f u r t h e r c o n s t i t u t e d f o u r W o r k i n g C o m m i t t e e s t o d e l i b e r a t e u p o n t h e

a reas o f i ) Bus ines s Env i ronment i i ) Acces s to F inance & Re la ted Se rv ices , i i i ) Acces st o R e s o u r c e s & S e r v ic e s a n d i v ) SM E D e f i n it i o n , F e e d b a c k & M o n i t o r i n g M e c h a n i s m .

T h e S M E P o l ic y h a s b e e n d e v e lo p e d a s a r e s u l t o f t h e d e li b e r a t i o n s o f t h e S ME T a s k F o r c e a n d i t s f o u r W o r k i n g C o m m i t t e e s . T h e S M E P o l i c y f o r m u l a t i o n w a s ap a r t i c i p a t o r y p r o c e s s t h r o u g h w h i c h p r i v a t e s e c t o r b o d i e s , c h a m b e r s o f c o m m e r c e

1Census of E stablishments-2005

2 Eco nomic Survey of Pakistan 2003-04

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a n d i n d u s t r i e s , t r a d e a s s o c i a t i o n s , p u b l i c s e c t o r o r g a n i z a t i o n s a n d m o r e t h a n 1 0 0 0S M E s w e r e c o n s u l t e d a c r o s s t h e c o u n t r y .

E conomic Rat iona le / Perspec t ive

Having reached macro economic s t ab i l i ty in the f i r s t f ive yea rs o f the new mi l l enn iumt h e G o P i s n o w l o o k i n g a t s e c o n d - g e n e r a t i o n e c o n o m i c r e f o r m s t o t r i g g e r e c o n o m i cg r o w t h a n d r e d u c e p o v e r t y . I t i s r e a l i z e d t h a t t h e p o l i c y i n t e r v e n t i o n s i m p l e m e n t e ddur ing the l a s t f ive yea rs , though e s sen t i a l , a re no t su f f i c i en t to fos te r b road basedeconomic g rowth . None the le s s , the f i s ca l space c rea ted a s a re su l t o f the s t r i c tf i n a n c i a l d i s c i p l i n e e n f o r c e d i n p a s t f e w y e a r s p r o v i d e s G o P w i t h a n o p p o r t u n i t y t oi n v e s t i n s u p p o r t i n g p r i v a t e s e c t o r l e d e c o n o m i c g r o w t h i n i t i a t i v e s . T h i s g r o w t h , i f w e l l d i s t r i b u t e d a m o n g s t v a r i o u s g e o g r a p h i c a l r e g i o n s a n d s o c i a l p o p u l a t i o n g r o u p s ,may addres s the th ree ma in economic cha l l enges faced by Pak i s t an today , i . e .

P o v e r t y ;

Job c rea t ion ; and

R u r a l d e v e lo p m e n t ;

G o P h a s i d e n t i f i e d S M E s a s o n e o f t h e f o u r p r i o r i t y a r e a s f o r e c o n o m i c g r o w t h . T h eP o v e r t y R e d u c t i o n S t r a t e g y P a p e r ( P R S P ) a n d t h e M e d i u m T e r m D e v e l o p m e n tF r a m e w o r k ( M T D F ) c l e a r l y p r o p o s e s S M E d e v e l o p m e n t a s a k e y p o l i c y o p t i o n f o rp o v e r t y r e d u c t i o n a n d p r i v a t e s ec t o r d e v e l o p m e n t .

T h e G o v e r n m e n t i s t a k i n g a n u m b e r o f m e a s u r e s f o r p r i v a t e s e c t o r d e v e l o p m e n ti n c l u d i n g l i b e r a l i z a t i o n o f e c o n o m y , i n v e s t m e n t p r o m o t i o n ; e x p o r t f a c i l i t a t i o n ,f in a n c i a l s e c t o r r e f o r m s , c a p it a l m a r k e t r e f o r m s a n d c r e a t io n o f a c o n d u c iv e b u s in e s se n v i r o n m e n t . T h e r e i s , h o w e v er , a n e e d t o c r e a t e a n S M E f o c u s a m o n g s t t h e s e p o l ic yin i t i a t ives to a l low s ign i f i can t acc rua l o f economic ga ins fo r the SME sec to r .

I n t e r v e n t i o n s f o c u s e d a t SM E l ed p r i v a t e s e c t o r d e v e lo p m e n t w i ll n o t o n l y c o n t r i b u t et o h i g h e r g r o w t h r a t e s b u t w i ll a ls o e n s u r e t h a t t h e i n e q u a l it i e s in i n c o m e g e n e r a t i o na n d a c c u m u l a t i o n o f w e a l t h a r e a d d r e s s e d . I n c l u s i o n o f m a r g i n a l i z e d g r o u p s a n dgeograph ica l a reas a re manda ted by h ighe r inc idence o f pove r ty , e .g . , 34 .7% in ru ra la r e a s a s c o m p a r e d t o t h e 2 0 . 9 % u r b a n a r e a s 1. A l so a n S M E l ed s t r a t e g y w il l a ll o w aw id e g e o g r a p h i c a n d s e c t o r a l s p r e a d f o r i n v e s t m e n t s a n d j o b c r e a t io n i n c lu d i n g r u r a la r e a s o f t h e c o u n t r y .

An SME led p r iva te s ec to r g rowth s t ra t egy i s a l so in l ine wi th the l e s sons l ea rned int h e 6 0 s i n d u s t r i a l i z a t i o n p r o c e s s d u r i n g w h i c h a l t h o u g h G D P g r o w t h r a t e s o f 6 . 0 +were ach ieved bu t the skewed income d i s t r ibu t ion re su l t ed in r i s ing pove r ty . The 60ss t ra tegy was p r imar i ly based on suppor t to l a rge -sca le manufac tu r ing .

T h e S M E P o l i c y T a s k F o r c e t h u s r e c o m m e n d s t h a t p r i v a t e s e c t o r l e d e c o n o m i cg r o w t h s t r a t e g y s h o u l d b e p r i m a r i l y b a s e d o n S M E d e v e l o p m e n t . T o a c h i e v e t h i so b j e c t iv e a c o h e r e n t p o l i cy f r a m e w o r k i s p r e s e n t e d i n t h i s SM E P o l i c y d o c u m e n t .

T h e T a s k F o r c e f e e l s t h a t u n l e a s h i n g t h e e n t r e p r e n e u r i a l p o t e n t i a l o f t h e p e o p l e o f P a k i s t a n is t h e b a s is o n w h i c h f a s t a n d s u s t a i n a b le e c o n o m i c g r o w t h c a n b e a c h i e v e d .

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T h e P o l i c y f r a m e w o r k i s e x p e c t e d t o c o n t r i b u t e i n e n t e r p r i s e g r o w t h b a s e d o n t h eh u m a n c a p a c it y a n d m a r k e t o p p o r t u n i t ie s a v a il ab l e i n t h e c o u n t r y .

Smal l Bus iness Promot ion - H is torical Perspec t ive

While deve lop ing the Po l i cy f ramework the Task Force rev iewed the pas t in i t i a t ives in

t h i s a r e a . T h e v a r i o u s l e v e l s o f t h e G o v e r n m e n t i n P a k i s t a n h a v e , i n t h e p a s t ,f o r m u l a t e d a n d t o a n e x t e n t i m p l e m e n t e d s m a l l - s c a l e b u s i n e s s p r o m o t i o n p o l i c i e s .H o w e v e r , t h e s e p o l i ci es w e r e l im i t e d i n t h e i r s c o p e , t o b e g i n w it h , a n d a r e n o t i n l i n ew it h t h e d y n a m i c s o f p r e s e n t t i m e .

G o v e r n m e n t o f P a k i s t a n , i n i t i a t e d s m a l l i n d u s t r i e s p r o m o t i o n t h r o u g h f o r m a t i o n o f t h e W e s t P a k i s t a n Sm a l l I n d u s t r i e s C o r p o r a t i o n . A l t h o u g h t h e C o r p o r a t i o n c r e a t e d a nimpac t in i t s ea r ly yea rs ye t i t s P rov inc ia l succes sors cou ld no t sus ta in i t sc o n t r i b u t i o n d u e t o v a r i o u s l i m i t a t i o n s . T h e f o l l o w i n g f e a t u r e s o f t h e P r o v i n c i a lS m a l l I n d u s t r i e s C o r p o r a t i o n s m a k e t h e m i n a p p r o p r i a t e a n d i n s u f f i c i e n t i n p r e s e n tt i m e :

O v e r e m p h a s is o n i n d u s t r i a l a n d m a n u f a c t u r i n g a c t i v it i e s w it h l it t l e f o c u s o n

se rv ice s ec to rs

O v e r e m p h a s i s o n h a r d w ar e s u p p o r t ( l a n d , e le c t r ic it y , m a c h i n e r y , e t c ) wi t hl i t t l e o r no emphas i s on so f tware suppor t , i . e . i n fo rma t ion , bus ines sd e v e lo p m e n t s e r v i c e s e t c .

L a c k o f c o h e r e n t p o l i c y f r a m e w o r k t h a t d e t e r m i n e s t h e r o l e o f a l l r e l e v a n ts t a k e h o l d e r s o t h e r t h a n t h e d e d i c a t e d i n s t i t u t i o n s c r e a t e d f o r s m a l l s c a l ei n d u s t r y s u p p o r t

Lack o f compl imen ta ry sk i l l deve lopment in i t i a t ives

T h e Y o u t h I n v e s t m e n t , Y e l l o w C a b s a n d S e l f - e m p l o y m e n t p r o m o t i o n i n i t i a t i v e s o f

t h e 8 0 s a n d 9 0 s f o l l o w e d t h e s m a l l - s c a l e i n d u s t r i a l p r o m o t i o n p o l i c y o f t h e 6 0 s a n d70s . These s chemes were l imi ted in s cope and des igned a s such tha t they d id no ta d d r e s s t h e c o r e i s s u e s o f e n t e r p r i s e d e v e l o p m e n t a n d e m p l o y m e n t g r o w t h a n ds u f f e r e d f r o m p o l i t ic a l m a n i p u l a t i o n a c c r u in g t o b a d l o a n p o r t f o l io s o f b a n k s a n d l o s so f p u b l i c f u n d s . T h e s e s c h e m e s c o n t r i b u t e d l i t t l e i n e c o n o m i c g r o w t h a n de m p l o y m e n t c r e a t i o n . I n s o m e w a y s t h e s e i n i t i a t i v e s c r e a t e d t h e m i n d s e t o f t h eb a n k i n g co m m u n i t y t h a t i s t o d a t e , r e s p o n s i b l e f o r a c au t i o u s s t a n c e t o w a r d s SM Efinanc ing in Pak i s t an .

SME Developm ent Recent Steps by the Governm ent

I n t h e r e c e n t p a s t S M E D A s t a n d s o u t a s a s i g n i f i c a n t s t e p t o w a r d s G o P c o m m i t m e n tt o S M E d e v e l o p m e n t . C r e a t e d a s a n a u t o n o m o u s i n s t i t u t i o n w i t h p r i v a t e s e c t o r l e dg o v e r n a n c e s t r u c t u r e , S M E D A p r o m i s e s t o b e c o m e a n i m p o r t a n t i n s t i t u t i o ns p e a r h e a d i n g G o v e r n m e n t s S M E d e v e l o p m e n t e f f o r t s . H o w e v e r , i n a b s e n c e o f ac o h e r e n t S M E d e v e l o p m e n t p o l i c y f r a m e w o r k i t i s u n r e a l i s t i c t o e x p e c t a s i n g l eo r g a n i z a t i o n s u c h a s S M E D A , t o b e a b l e t o i m p l e m e n t a g g r e s s i v e S M E d e v e l o p m e n tin i t ia t ives becau se :

I s s u e s t o b e a d d r e s s e d f o r S M E d e v e l o p m e n t f a l l w i t h i n t h e p u r v i e w o f a l a r g en u m b e r o f M i n i s t r i e s a n d D e p a r t m e n t s a t t h e F e d e r a l , P r o v i n c i a l a n d L o c a l

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g o v e r n m e n t l e v e l s . S M E D A h a s n o i n s t i t u t i o n a l j u r i s d i c t i o n o r l i n k a g e w i t h s u c hins t i tu t ions ; and

S M E D A h a s l i m i t e d b u d g e t a n d m a n p o w e r , p o s i n g r e s t r i c t i o n s o n i t s c a p a c i t y t olaunch cap i t a l in tens ive in i t ia t ives and ex ten d i t s ou t reach

C r e a t i o n o f t h e S M E B a n k a l s o m a r k s t h e G o v e r n m e n t s c o m m i t m e n t t o w a r d s S M Edeve lopment agenda . The Bank , however , i s in i t s ea r ly days o f a ma jo r re s t ruc tu r ingexe rc i s e and focuses on a s ing le i s sue faced by SMEs , i . e . , a cces s to f inance , and tha ttoo on a ve ry limi ted s ca le .

T h u s t o p r o v i d e a c o h e r e n t p o l i c y m e c h a n i s m , t h e r e i s a n e e d t o d e v e l o p ac o m p r e h e n s i v e S M E P o l i c y f o r P a k i s t a n t h a t d e f i n e s t h e r o l e o f c o n c e r n e d p u b l i csec to r ins t i tu t ions . Such a Po l i cy f ramework wi l l p rov ide the requ i red d i rec t ion andf o c u s f o r a c h i e v in g S M E l e d e c o n o m i c g r o w t h r e s u l t in g i n j o b c r e a t i o n a n d r e d u c t i o ni n p o v e r t y . P r i v a t e s e c t o r g r o w t h i n S M E s e c t o r ( a s o p p o s e d t o t h e l a r g e s c a l emanufac tu r ing) wi l l r e su l t in l e s se r inves tmen ts pe r job c rea ted , w ide r geograph ic ands o c ia l sp r e a d o f i n v e s t m e n t s a n d b e t t e r i n c o m e d i s t r ib u t i o n .

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Sect ion I I SME Policy: Object ives, Scope andPrinciples

Objective

T h e o b j e c t i v e o f S M E P o l i c y i s t o p r o v i d e a s h o r t a n d a m e d i u m t o l o n g - t e r m p o l i c yf r a m e w o r k w i t h a n i m p l e m e n t a t i o n m e c h a n i s m f o r a c h i e v i n g h i g h e r e c o n o m i c g r o w t hb a s e d o n S M E l e d p r i v a t e s e c t o r d e v e lo p m e n t .

Scope

The SME Po l icy sugges t s concur ren t and spec i f i c po l i cy measures in a l l pos s ib le a reaso f S M E d e v elo p m e n t :

B u s i n e ss e n v i r o n m e n t

Access to f inance

H u m a n r e s o u r c e d e v el o p m e n t

S u p p o r t f o r t e c h n o l o g y u p - g r a d a t i o n a n d m a r k e t i n g

A s i n g l e S M E d e f i n i t i o n i s r e c o m m e n d e d t o b e a p p l i c a b l e t o a l l i n s t i t u t i o n scoun t rywide to a l low un i fo rmi ty in des ign ing suppor t sys tems and incen t ives and a l sot o m o n i t o r p r o g r e s s.

T h e S M E P o l i c y a l s o c o n t a i n s a n i m p l e m e n t a t i o n a n d a d j u s t m e n t m e c h a n i s m t h a tiden t i f i e s the fo l lowing :

I m p l e m e n t a t i o n a n d m o n i t o r i n g m e c h a n i s m

Capac i ty bu i ld ing requ i rements o f the pub l i c ins t i tu t ions

R e s o u r c e a ll o c at i o n a n d p o t e n t i al s o u r c e s o f f u n d i n g

Linkages wi th o the r in i t i a t ives and pub l i c s ec to r re fo rm proces ses (Soc ia lS e ct o r R e f o r m s )

S e lf c o n t a in e d f r a m e w o r k f o r o n g o i n g f e e d b a c k a n d a d j u s t m e n t

Role o f va r ious pub l i c and p r iva te s ec to r p laye rs a t Fede ra l , P rov inc ia l andLocal levels

Principles

The Po l i cy f inds i t appropr ia te to h igh l igh t the key p r inc ip le s on which i t i s be ingbased . They a re :

T h e r e c o m m e n d a t i o n s p r o p o s e d i n t h e S M E P o l i c y m a y b e i m p l e m e n t e d / s u p p o r t e d t h r o u g h a n S M E A c t 2 0 0 6

T h e S M E P o l i c y c o v e r s m e a s u r e s f o r p r o m o t i o n o f E n t r e p r e n e u r s h i p C u l t u r e a n d s u p p o r t f o r g r o w t h o f e x i st i n g e n t e r p r i s e s

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T h e S M E P o l i c y r e a l i z e s t h e d i f f e r e n t a p p r o a c h e s r e q u i r e d f o r s u p p o r t i n gS m a ll E n t e r p r i s es a s o p p o s e d t o M e d i u m E n t e r p r i s e s . T h u s , w h e r e v er r e q u i r e d ,s e p a r a t e p o l i c y m e a s u r e s a r e p r o p o s e d f o r s m a l l a n d f o r m e d i u m e n t e r p r i s eg r o w t h

W o m e n a n d o t h e r m a r g i n a l i z e d g r o u p s a r e p r o p o s e d t o r e c e i v e s p e c i a l f o c u s

w i t h in t h e S M E P o l ic y

R u r a l b a s e d a n d a g r o p r o c e s s i n g e n t e r p r i s e s a r e p r o p o s e d t o r e c e i v e s p e c i a la t t e n t i o n w h i le d e v is i n g s p e c if ic s u p p o r t m e c h a n i s m s

S M E d e v e l o p m e n t o f f e r s m o s t v i a b l e o p t i o n f o r p r i v a t e s e c t o r l e d g r o w t h t h a treduces pove r ty and c rea te s a l a rge number o f jobs a l l ac ros s Pak i s t an

S M E d e v e l o p m e n t m u s t b e a t t h e c e n t e r s t a g e o f a l l e c o n o m i c g r o w t h p o l i c i e so f Pak i s t an

S M E d e v e lo p m e n t i n P a k is t a n w i ll r e q u i r e d e c is i ve a n d c o n c u r r e n t m e a s u r e s i na number o f po l i cy a reas such a s bus ines s regu la t ions , f i s ca l , t r ade ru le s ,l a b o u r , i n c e n t i v e s a n d s u p p o r t ( H u m a n R e s o u r c e D e v e l o p m e n t , T e c h n o l o g y ,Marke t ing , e t c . ) lead ing to an SME Space in th ese do mains

SMEs face inhe ren t d i s advan tages (because o f the i r s i ze ) v i s - -v i s l a rge f i rms ,w h i c h n e e d t o b e o f f s e t b y g o v e r n m e n t s u p p o r t m e c h a n i s m s a n d in c e n t i v e s

E f f e c t i v e i m p l e m e n t a t i o n o f t h e P o l i c y f r a m e w o r k w i l l r e q u i r e o w n e r s h i p ,c o m m i t m e n t a n d m o n i t o r i n g a t h i g h e s t l e v e l o f t h e G o v e r n m e n t

SME deve lopment requ i re s p rov i s ion o f l eve l p lay ing f i e ld fo r sma l le r f i rmsv i s - -v is l a rge en t e rp r i s e s

P r i v a t e s e c t o r w i l l b e e n c o u r a g e d t o p l a y a k e y r o l e i n i m p l e m e n t a t i o n o f t h eSME Po l icy inc lud ing mobi l i za t ion o f cap i t a l and ope ra t iona l re spons ib i l i ty fo r

i m p l e m e n t i n g p o l i c y m e a s u r e s s u g g es t e d i n t h i s d o c u m e n t

Financ ia l suppor t to en te rp r i s e s wi l l be , whereve r pos s ib le , a t a co l l ec t iveleve l , and wi l l e s sen t i a l ly requ i re re source commi tmen t on beha l f o f thebene f ic ia r i e s

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Sect ion I I I SME Policy Recommendations

SME Development Vision

S M E l e d e c o n o m i c gr o w t h r e s u l t in g i n p o v e r t y r e d u c t i o n ,

c r e a t io n o f j o b s a n d u n l e a sh i n g t h e e n t r e p r e n e u r i a lp o t e n t i a l o f t h e p e o p l e o f P a k is t a n

SME Pol icy Sta tem ent

T o crea te globa l l y compe t i t i ve S M E s by crea t ing a hass l e f ree bus iness env i ronm en t , en sur ing

p rov i s ion of m od er n in f ra st ru ct u re & in st i t u t ion a l su p p or t s t ru ct u r es for a cces s t o r es ou rces &

serv ices. T he G overnm en t sha l l t ak e measures for p romo t ion o f w omen en t repreneursh ip , c lu s t e r developmen t and a l so focus on neglected / un tapped secto rs o f t he economy . S t reng then in g Ind us t ry -

A ca d em i a l i n k a ges sh a l l a l so b e a k ey f ea t u re of t h e P ol i cy

T o a c h i e v e t h e o b j e c t i v e s s e t - o u t i n t h e S M E P o l i c y S t a t e m e n t , t h e f o l l o w i n gr e c o m m e n d a t i o n s a r e p u t f o r w a r d i n v a r i o u s a r e a s a ff e c t in g S M E s i n P a k i s t an .

GoP - SMEs have Developedmutual Cooperation & Trust

GoP Facilitates Access tosustainable BDS in all areas of

country

SMEs get access to qualified HR,Markets & Technology

SMEs have access to SupportFunds across Pakistan

GoP is continuously documentingstatistics on SME Development

and Int'l Benchmarks

GoP is delivering reliable periodicreports on SME development

including details on funding and

efficiency of systemSMEs observing their basic

responsibilities for social &corporate compliance

No. of Start-up Enterprises byUniversity Graduates increases to

6%

Share of Women ownership inSMEs increases to 6%

SMEs increase their share invalue added to 40%

Share of Micro Enterprises in

employment decreases by 7%

Manufacturing SEs increase theirshare from 5.5% to 7%

Threshold on taxation and densityof regulations rationalized

SME Vision 2015

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SME Definit ion

Problem Statement

P a k i s t a n d o e s n o t h a v e a s i n gl e d e f in i t i o n o f S m a ll a n d M e d i u m E n t e r p r i s e s . V a r io u sGovernment agenc ie s , e .g . , S ta te Bank o f Pak i s t an (SBP) , Fede ra l Bureau o f S ta t i s t i c s(FBS) , Prov inc ia l Labour Dep t s . , e t c . u se the i r own de f in i t ion . Absence o f a s ing leSME de f in i t ion makes i t d i f f i cu l t to iden t i fy t a rge t f i rms , a l ign deve lopmentp r o g r a m s , c o l le c t d a t a a n d m o n i t o r p r o g r e s s .

Pol icy Recommendat ion

G o P m a y a d o p t a s i n g l e S M E D e f i n i t i o n t h a t i s a c c e p t e d b y a l l p u b l i c a n d p r i v a t eagenc ie s . However , va r ious o rgan iza t ions may be a l lowed a two-yea r t ime f rame toa l i g n t h e i r c u r r e n t S M E d e f i n i t i o n i n l i n e w i t h t h e S M E D e f i n i t i o n p r o p o s e d i n t h i sPol icy .

SME d e f in i t ion i s a s fo l lows :

Enterprise Category Employment Size(a)

Paid Up Capital(b)

Annual Sales(c)

Small & MediumEnterprise (SME)

Up to 250 Upto Rs. 25 Million Up to Rs. 250 Million

T h e F e d e r a l G o v e r n m e n t , i n l i n e w i t h t h e e c o n o m i c d e v e l o p m e n t o f P a k i s t a n m a y ,f rom t ime t o t ime m odi fy the e l igib i li ty c r it e r i a a s i t s ees f it . A l l p rov ide rs o f s e rv icesr e c e i v i n g f u n d i n g f r o m t h e G o v e r n m e n t m a y d e f i n e m o r e n a r r o w s c o p e s f o r s p e c i f i ct a r g et i n g p u r p o s e s .

De ta i l ed re source a l loca t ion , p r inc ipa l implement ing agenc ie s & t ime- f rame fo re s tab l i sh ing a s ing le SME Def in i t ion in Pak i s t an i s annexed .

Expec ted I mpac t

S i n g l e S M E D e f i n i t i o n i s e x p e c t e d t o c r e a t e f o c u s i n G o v e r n m e n t p o l i c i e s ( t a r g e t e dt o w a r d s S M E d e v e l o p m e n t ) a n d u n i f o r m i t y i n c o m p i l a t i o n a n d r e p o r t i n g o f S M Ere la ted da ta .

Business E nvironment

Problem Statement

T h e f i s c a l , l a b o u r a n d e n t e r p r i s e r e g u l a t i o n s o f t h e F e d e r a l a n d P r o v i n c i a lG o v e r n m e n t s i n P a k i s t a n d o n o t p r o v i d e f o r a f o c u s o n S M E s t h a t i s i n l i n e w i t hthe i r spec i f i c needs . Gene ra l ly the f i s ca l regu la t ions d iv ide en te rp r i s e s by incomeleve l s and l abour re la ted regu la t ions rea l i ze on ly two fo rms o f en te rp r i s e s , sma l l and

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l ar g e , t h u s , n o t p r o v i d i n g l aw s a n d i m p l e m e n t a t i o n m e c h a n i s m s t h a t a r e s e n s it i v e t oS M E n e e d s .

L a r g e l y , t h e s u p p o r t a n d g r i e v a n c e r e d r e s s a l r e g i m e o f t h e G o v e r n m e n t d o e s n o td i f fe ren t i a t e be tween en te rp r i s e s on the bas i s o f the i r s i ze thus mak ing i t d i f f i cu l t fo rS M E s t o a c c e s s p u b l i c s u p p o r t p r o g r a m s a n d a t t e n t i o n o f p u b l i c a u t h o r i t i e s w h e n

compe t ing fo r i t w i th the l a rge f i rms . Th i s d i lu te s the ab i l i ty o f SMEs to e f fec t ive lyc o m p e t e w i t h l a r ge f i r m s .

Pol icy Recommendat ions

T h e T a s k F o r c e r e c o m m e n d s p r o m u l g a t i o n o f a n S M E A c t t h a t ( i n a d d i t i o n t oaddres s ing o the r i s sues re la ted to SMEs) p rov ides fo r iden t i f i ca t ion o f f i s ca l ,reg i s t ra t ion , l abour and inspec t ion l aws tha t may be s impl i f i ed fo r Smal la n d / o r M e d iu m E n t e r p r is e s.

A bus ines s en t i ty may be ce r t i f i ed a s an SME by a s imple p roces s to bee x e r ci se d b y SM E D A i n p a r t n e r s h i p w i t h o t h e r g o v e r n m e n t a g e n c ie s , c h a m b e r s

o f c o m m e r c e a n d i n d u s t r i e s , t r a d e a s s o c i a t i o n s a n d o t h e r p r i v a t e s e c t o rr e p r e s e n t a t i v e o r g a n i z a t i o n s . T h e p r o c e s s o f S M E C e r t i f i c a t i o n i s p r o p o s e d t ob e v o l u n t a r y f o r t h o s e f i r m s w h o c h o o s e t o d o s o , t o b e n e f i t f r o m t h e s u p p o r tm e c h a n i s m a n d s im p l i f ie d r e g u l a t o r y r e gi m e p r o p o s e d t h r o u g h t h i s P o l i cy .

The Fede ra l Government may encourage pe r iod ic rev iew of a l l f i s ca l l aws inf o r c e w i t h a v i e w t o f a c i l i t a t e a n d i m p r o v e g r o w t h o f t h e s m a l l & m e d i u me n t e r p r i s e s

Per iod ic rev iew of Labour Leg i s l a t ion wi th a v iew of fac i l i t a t ing sma l len te rp r i s e g rowth may be unde r taken whereby app l i cab i l i ty o f ce r t a in l aws mayb e r e l a x e d f o r S E s f o r a c e r t a i n p e r i o d o f t i m e . H o w e v e r , p r o v i s i o n o f e d u c at io n / a s sis t a n ce t o S ME s t o a c h ie v e p r o p e r s a fe t y at w o r k a n d c o m p li an c e

wi th in te rna t iona l conven t ions sha l l be e s sen t i a l .

S M E D e s k s m a y b e e s t a b l i s h e d a t t h e F e d e r a l , P r o v i n c i a l , B a n k i n g a n d T a xO m b u d s m a n O f f ic e s f o r h a n d l in g a n d a d d r e s s i n g SM E g r ie v a n c e s. T h eCompla in t Ce l l e s t ab l i shed a t S ta te Bank o f Pak i s t an may a l so fac i l i t a t er e d r e s s a l o f S M E c o m p l a in t s .

A m i n i m u m q u o t a i s p r o p o s e d t o b e e s t a b l i s h e d f o r S M E s f o r a l l o c a t i o n o f l a n d i n t h e I n d u s t r i a l E s t a t e s a n d E x p o r t P r o c e s s i n g Z o n e s ( E P Z s ) . S M E s m a yb e c h a r g e d a c o n c e s s io n a l r a t e o f l a n d ( a t n o p r o f it n o l o s s b a s i s ) a s c o m p a r e dt o t h e c o s t o f f e r e d t o l ar g e - sc a le e n t e r p r i se s .

A l l p u b l i c s e c t o r p r o c u r e m e n t m a y e n c o u r a g e p a r t i c i p a t i o n o f S M E s w i t h

c e r t a in p r o d u c t s / c o n t r a c t s e x cl u s iv e ly t o b e c o m p e t e d a m o n g s t t h e SM E s .

G o P m a y c o n s id e r t o s u p p o r t e st a b li sh m e n t o f a n SM E P r o m o t io n C o u n c i l( inc lud in g it s loca l chap te rs ) and SME spec i f i c T rad e Assoc ia t ions fo ro r g a n i z i n g S M E s a n d p r o v i d i n g t h e m w i t h a p l a t f o r m t o l o b b y f o r f a v o u r a b l eg o v e r n m e n t p o l i c ie s .

G o v e r n m e n t t o e n s u r e a d e q u a t e p r o v i s i o n o f p h y s i c a l i n f r a s t r u c t u r e ( r o a d s ,u t i l it i e s e t c . ) in ex i s t ing SME c lus te r s .

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C a p a c it y b u il d in g a n d s t r e n g t h e n i n g o f e x is t i n g C C I s an d T A s , m a y b e u n d e rt a k e n , m a k i n g t h e m m o r e e f f e c t i v e f o r s u p p o r t i n g t h e i r m e m b e r s i n c l u d i n gS M E s , w i t h s p e c i a l f o c u s o n W T O & i t s i m p a c t o n l o c a l i n d u s t r y . M o r e o v e r ,G o v e r n m e n t f u n c t i o n a r i e s i n t a x , r e g i s t r a t i o n , l a b o u r , e t c . d e p a r t m e n t s a r ep r o p o s e d t o u n d e r g o s p e c ia li z ed t r a i n i n g f o r h a n d l i n g SM E r e la t e d i s s u e s.

G e n u i n e S M E r e p r e s e n t a t i v e s a r e p r o p o s e d t o b e i n d u c t e d i n a l l f e d e r a lm o n i t o r i n g a n d d i s p u t e r e s o l u t i o n s c h e m e s w i t h p r i v a t e s e ct o r p a r t i c ip a t i o n .

Regula to ry reg ime fo r spec ia l i zed s ec to rs in p rov inces ( such a s min ing) may bedeve loped a s pe r the i r spec i f i c requ i rements keep ing in v iew the i r reg iona ldynamics .

G o P m a y f o ll o w a n e f f e c t iv e s t r a t e gy t o r e a c h o u t a n d c o m m u n i ca t e w it h S M E su s i n g a p p r o p r i a t e e l e c t r o n i c a n d p r i n t m e d i a . R e g u l a t o r y c o m p l i a n c ep r o c e d u r e s w i l l b e w i d e l y c o m m u n i c a t e d t o S M E s . C o m m u n i c a t i o n w i l linc reas ing ly use Urdu & loca l languages wher e use fu l .

I m p r o v i n g a n d e n f o r c i n g I n t e l le c t u a l P r o p e r t y Ri gh t s f o r S M E s .

A vas t poo l o f in fo rma t ion , ana lyses and s tud ie s a re ava i l ab le tha t may fo rm the bas i sf o r i m p l e m e n t i n g t h e r e c o m m e n d a t i o n s o n B u s i n e s s E n v i r o n m e n t . D e t a i l s o f a d d i t io n a l r e s o u r c e s r e q u i r ed a r e a n n e x e d .

Expec ted I mpac t

I m p l e m e n t a t i o n o f t h e r e c o m m e n d a t i o n s f o r c r e a t i n g c o n d u c i v e B u s i n e s sE n v i r o n m e n t f o r S M E s w i l l r e s u l t i n r e d u c i n g t h e n u m b e r a n d s i m p l i f y i n g t h ecompl iance p roces s o f SME regu la t ions . Th i s i s expec ted to t r igge r fa s t pacedc r e a t i o n a n d g r o w t h o f e n t e r p r i s e s r e s u l t i n g i n e c o n o m i c d e v e l o p m e n t a n d j o bc r e a t i o n .

Access to F inan ce & Related Services

Problem Statement

A c c o r d i n g t o t h e I n v e s t m e n t C l i m a t e A s s e s s m e n t 2 0 0 3 , b a n k s p r o v i d e f o r o n l y 7 - 8 %o f t h e t o t a l f u n d i n g r e q u i r e m e n t o f S M E s . A l s o , a s p e r a s t u d y b y LU M S o n B a rr i er st o S M E G r ow t h in P a k i st a n : A n A n a l ys is of C o n st r a in t s , a cces s to f inance , was iden t i f iedb y SM E s , a s t h e s in g le m o s t i m p o r t a n t i m p e d i m e n t t o g r o w t h . T h i s p r o b l e m i n c r e a s esi n m a g n i t u d e w i t h r e d u c t i o n i n s i z e a n d e x p e r i en c e o f t h e f i r m .W i t h t h e p r o m u l g a t i o n o f t h e P r u d e n t i a l R e g u l a t i o n s f o r S M E F i n a n c i n g b y S B P , t h eb a s ic r e g u la t o r y f r a m e w o r k f o r p r o m o t i n g S M E s a c c es s t o f o r m a l f i n a n c i n g h a s b e e n

prov ided . However , inc reased SME acces s to f inanc ing wi l l r equ i re in te rven t ions ina l l th ree a reas o f SME f inanc ing , i . e . , demand s ide (SMEs) , supp ly s ide (Banks ) andin te rmed ia r i e s and regu la to rs (SBP, SMEDA, e tc ) .


I n c o r p o r a t i o n o f S M E f i n a n c i n g i n t h e A n n u a l C r e d i t P l a n o f t h e S B P a n dm o n i t o r i n g t o c at e r f o r u n d e r s e r v e d s e gm e n t o f t h e S ME s .

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Review of Pruden t i a l Regu la t ions , pe r iod ica l ly , in l ine wi th the SME c red i td e m a n d a n d s u p p l y d a t a .

E s t a b l i s h m e n t o f C r e d i t G u a r a n t e e a n d C r e d i t I n s u r a n c e a g e n c i e s , o p e r a t i n gin l ine wi th sound in te rna t iona l p rac t i ce s , to p rov ide incen t ives and r i sk cove rf o r b a n k s , s o a s t o p r o v i d e t h e m t h e r e le v a n t c o m f o r t i n f i n a n c i n g SM E s .

S u p p o r t t o F I s i n d e s i g n i n g a n d l a u n c h i n g i n d u s t r y b a s e d p r o g r a m - l e n d i n gs c h e m e s .

C a p a c it y b u i ld i n g o f t h e C I B t o r e p o r t p o s it i v e a n d n e g a t i v e d a t a & s h a r i n g o f S M E f i n a n c i n g d a t a b y t h e S B P .

I m p r o v e m e n t i n t h e r e g u l a t o r y p r o c e d u r e s a n d f i s c a l i n c e n t i v e s f o r V e n t u r eCap i ta l compan ies .

I n t r o d u c t i o n o f B a n k r u p t c y L a w s w it h d e d i c a t e d a n d e f f e ct i v e j u d ic ia l p r o c e s s .

E x p a n s i o n i n t h e r o l e o f B a n k i n g O m b u d s m a n t o i n c l u d e r e d r e s s a l p r o c e s s f o rS M E c o m p l a in t s .

A w a r e n e s s a n d p r o m o t i o n o f o p t i o n s f o r f o r m a l f i n a n c i n g a n d g o o d a c c o u n t i n gp r a c t i ce s a m o n g s t S M E s .

P r o m o t i o n o f I s l a m i c m o d e o f f in a n c i n g f o r SM E s .

T h e r e s o u r c e a l l o c a t i o n f o r i m p l e m e n t i n g t h e r e c o m m e n d a t i o n s o n i m p r o v i n g S M E s a c c e s s t o f i n a n c e a r e a n n e x e d . T h e s e e s t i m a t e s , h o w e v e r , m a y b e m o d i f i e d o n c ed e t a i l e d s t u d i e s a r e c o n d u c t e d o n d e m a n d a n d v i a b l e s i z e o f t h e c r e d i t g u a r a n t e e ,c r e d it i n s u r a n c e a n d v e n t u r e c a p i t a l f u n d i n P a k is t a n .

Expec ted I mpac t

I t i s e x p e c t e d t h a t i m p r o v e m e n t i n t h e r e g u l a t o r y f r am e w o r k , p r o v i s io n o f s p e c i a li z edc red i t l ines and r i sk sha r ing s chemes fo r FIs wi l l r e su l t in c rea t ing an env i ronmentwhere banks wi l l aggres s ive ly pursue the oppor tun i t i e s o f fe red by the SME f inanc ingm a r k e t i n P a k i s t a n . I m p r o v e m e n t i n t h e r e g u l a t o r y a n d f i s c a l e n v i r o n m e n t a n dp r o v i s i o n o f m a t c h i n g c o n t r i b u t i o n w i ll r e s u lt i n e s t a b l is h m e n t o f n e w v e n t u r e c a p i t a lcompan ies . Bo th these measures wi l l improve acces s ib i l i ty o f s t a r tups and ex i s t ingS M E s t o f o r m a l s o u r c e s o f f i n a n c i n g , r e m o v i n g a m a j o r b a r r i e r t o t h e i r g r o w t h a n dd e v e l o p m e n t .

Supp or t ing H uman Resource Deve lopmen t

Techn ology Up-grada t ion and Marke t ing

Problem Statement

T h e p o o r n a t io n a l p er f o r m a n c e o n t h e H u m a n D e v el o p m e n t I n d e x o f t h e U N h a s it sc o n s e q u e n c e s f o r S M E s i n P a k is t a n . T h e s e i n c lu d e i n a d e q u a t e a n d g e n e r ic e d u c a t io na n d i n s u f f i c i e n t , p o o r l y f o c u s e d a n d u n d e r - s e r v i n g t r a i n i n g i n f r a s t r u c t u r e . S M E sm o s t l y d r a w t h e i r h u m a n r e s o u r c e ( i n c l u d i n g t h e o w n e r s ) f r o m e i t h e r t h e h i g h e re d u c a t i o n i n s t i t u t i o n s o r t h e t e c h n i c a l t r a i n i n g i n f r a s t r u c t u r e , b o t h o f w h i c h a r e n o t

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a t t u n e d t o t h e S M E n e e d s n o r a r e t h e y e q u i p p e d t o a d d r e s s t h e m . T h i s s i t u a t i o nl imi t s the capac i ty and capab i l i ty o f SMEs to innova te , add va lue , upgrade t echno logya n d d e v i s e n e w m a r k e t i n g s t r a t e g i e s . A d d i n g t o t h e s e w o e s a r e t h e l i m i t e d o p t i o n sa v a il ab l e t o S M E s t o i n v e s t i n H R D , t e c h n o l o g y a n d e x p l o r a t i o n o f n e w m a r k e t s . A s are su l t , t he SME sec to r in Pak i s t an i s usua l ly engaged in low va lue addedm a n u f a c t u r i n g u s i n g i n e f f ic ie n t l ab o u r , o u t d a t e d t e c h n o l o g y a n d o p e r a t i n g i n l im i t e d

a n d t r a d i t i o n a l m a r k e t s . T h e S M E s e c t o r n e i t h e r p o s s e s s e s t h e f i n a n c i a l s t r e n g t h n o rthe co l l ec t ive wisdom to c l imb i t s way ou t o f th i s low equ i l ib r ium en te rp r i s eac t iv i ty .

P u b l ic s e ct o r i n s t it u t i o n s a lo n e c a n n o t a d e q u a t ely p r o v id e H R D , t e c h n o lo g y an dm a r k e t i n g s u p p o r t . H o w e v e r , c u r r e n t l y, t h e r e e xi st s a n i n s u f f ic ie n t c a p a c it y o f t h ep r iv a t e s e ct o r B u s in e s s D e v elo p m e n t S er v i ce P r o v id e r s ( BD SP s ) t o a d d r es s S MEneeds and l imi ted demand fo r such s e rv ices by SMEs (because o f l ack o f awarenes s o rc a p a c i t y t o p a y ) . T h u s c o n c r e t e a n d s u b s t a n t i a l G o v t . c o m m i t m e n t i s n e e d e d t oes tab l i sh I s lan ds of E x cel l ence i n H R D , t e c h n o l o g y u p - g r a d a t i o n a n d m a r k e t i n g , w i t hs t r o n g a n d a c t i v e p a r t i c i p a t i o n f r o m S M E a s s o c i a t i o n s a n d p r i v a t e s e c t o r b u s i n e s sse rv ice p rov ide rs . Once e s tab l i shed , these B es t P r a ct i ce M od el s will be emu la ted by theS ME s . A ls o , s t ro n g i n ce n t iv e s n e ed t o b e p r o v i d e d t o b o t h S M E s ; f o r i n v es t m e n t i nH R D , t e c h n o l o g y a n d m a r k e t i n g i n n o v a t i o n a n d t o B D S P s t o d e s i g n a n d p r o v i d ei n n o v a t i v e b u s in e s s d e v e lo p m e n t s e r v i c es t o S M E s .


H uman Resource Deve lopmen t

N e e d A s s e s sm e n t S u r v e y t o i d e n t i f y m a j o r S M E n e e d s in H R D , t e c h n o l o g y u p -g r a d a t io n a n d m a r k e t i n g.

E s t a b l i s h m e n t o f I n s t i t u t e s o f S m a l l a n d M e d i u m E n t e r p r i s e &

E n t r e p r e n e u r s h i p D e v e l o p m e n t ( I N S M E D ) i n s e l e c t b u s i n e s s s c h o o l s . Capac i ty bu i ld ing and up-g rada t ion (cu r r i cu lum redes ign , p rov i s ion o f

equ ipment , t eache rs t ra in ing , SME l i a i son , e t c . ) o f s e lec ted s ec to r spec i f i ct echn ica l t r a in ing ins t i tu te s s e rv ing in ma jo r SME c lus te r s and e s tab l i shment o f s u c h i n s t i t u t e s w h e r e n o n e e x is t .

E n c o u r a g i n g u s e o f t h e t e c h n i c a l t r a i n i n g i n f r a s t r u c t u r e b y t h e p r i v a t e s e c t o rB D S P s s e r v i n g S M E s e c t o r a n d i n c e n t i v e s f o r i n v e s t m e n t i n s e t t i n g u p S M Etra ining fac i l i t ies

I n d u c t i o n o f g e n u i n e S M E r e p r e s e n t a t i v e s i n p r i v a t e s e c t o r b o a r d s o f t h etechn ica l t r a in ing ins t i tu te s .

Technology Up-gradat ion

I n t r o d u c t i o n o f S M E s p e c i f i c r e s e a r c h p r o j e c t s s u p p o r t i n g R & D a n dUnive rs i ty - Indus t ry l i a i son p rograms by Min i s t ry o f Sc ience & Techno logy( M o S T ) , H i g h e r E d u c a t i o n C o m m i s s i o n ( H E C ) , P a k i s t a n S o f t w a r e E x p o r tB o a r d (P S E B ) , M in i s t r y o f I n f o r m a t i o n T e c h n o l o g y ( M o I T ) a n d o t h e r s .

E s t a b l i s h m e n t o f T e c h n o l o g y I n n o v a t i o n C e n t e r s ( T I C s ) o f f e r i n g c o m m o nfac i l i ty , t echno logy up-g rada t ion , R&D and des ign re la ted s e rv ices to SMEs .

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L a u n c h i n g o f p i l o t t e c h n o l o g y u p - g r ad a t i o n p r o j e c t s f o r m a j o r S M E c lu s t e r s o ncos t sha r ing bas i s .

I n c e n t i v e s f o r I n v e s t m e n t i n n e w E m e r g i n g S ec t o r s a n d S k il ls u p g r a d e .

Market ing E n c o u r a g e e s t a b l i s h m e n t o f S M E s e c t o r s p e c i f i c e x p o r t m a r k e t i n g c o m p a n i e s

b y p r o v i d i n g m a t c h i n g g r a n t s i n c o n d u c t i n g i n t e r n a t i o n a l m a r k e t i n g r e s e a r c h ,deve lop ing marke t ing s t ra t eg ie s , deve lop ing marke t ing ma te r i a l , packag ing ,b r a n d i n g , p a r t i ci p a t in g a n d c o n d u c t i n g t r a d e f a i r s an d u n d e r t a k i n g p r o m o t i o n a land m arke t ing ac t iv it i e s .

Match ing g ran t s fo r deve lop ing wor ld -c la s s t r ade and p roduc t d i rec to r i e s fo rma jo r SME c lus te r s (e .g . , Members d i rec to ry by Pak i s t an Assoc ia t ion o f A u t o m o t i v e P a r t s & A c c e s s o r i es M a n u f a c t u r e r s )

E s t a b l is h m e n t o f S M E q u o t a in t r a d e d e l e ga t i o n s s u p p o r t e d b y E P B

C o m p i l a t i o n a n d d i s s e m i n a t i o n o f d a t a o n l o c a l m a r k e t s u s i n g m a n u f a c t u r e r s ,d i s t r ib u t o r s a n d r e t a il er s d a t a

P r o v i s i o n o f s u p p o r t t o S M E a s s o c i a t i o n s i n e x p l o i t i n g l o c a l m a r k e to p p o r t u n i t ie s b y h o l d in g d o m e s t ic p r o d u c t e x h i b it i o n s

E s t a b l i s h m e n t o f A n n u a l S M E A w a r d s ( o n t h e l i n e s o f A n n u a l F P P C I E x p o r tT r o p h y A w a r d s ) f o r r e c o g n i z i n g o u t s t a n d i n g p e r f o r m a n c e i n d o m e s t i c a n di n t e r n a t i o n a l m a r k e t s , t e ch n o l o g y i n n o v a t i o n , H R D p r a c t i c es , e t c .

R e s o u r c e a ll o c a t io n , t i m e f r a m e a n d i m p l e m e n t i n g a g e n c ie s f o r p o l i c y r e c o m m e n d a t i o no n s u p p o r t i n g H R D , t e c h n o l o g y u p g r a d a t i o n a n d m a r k e t i n g a r e a n n e x e d .

Expec ted I mpac t

I t i s e x p e ct e d t h a t e f f e c t i v e im p l em e n t a t i o n o f P o l ic y r e c o m m e n d a t i o n s i n s u p p o r t i n gH R D , t e c h n o l o g y u p - g r a d a t i o n a n d m a r k e t i n g w i l l c r e a t e a h u m a n r e s o u r c e p o o l a n dn e c e s s a r y i n f r a s t r u c t u r e f o r a d d i n g v a l u e t o S M E b u s i n e s s e s b y t e c h n o l o g y u p -g r a d a t io n a n d i n n o v a t i v e m a r k e t i n g . I t w i ll a ls o i n c r e a s e r o l e o f p r i v a t e s e ct o r B D S P si n s e r v in g t h e S M E s e c t o r i n u n d e r t a k i n g b u s i n e s s d e v e lo p m e n t a c t iv i t ie s .

E ntrepreneurship Developm ent

Problem Statement

Pak is tan i s a soc ie ty o f employees . The educa t ion and soc ia l sys tem does no te n c o u r a g e e n t r e p r e n e u r s h i p a s a p r e f e r r e d c a r e e r o p t i o n a m o n g s t t h e y o u t h .E n t r e p r e n e u r s h i p i s u s u a l l y u n d e r t a k e n b y t h o s e b e l o n g i n g t o t h e e x i s t i n g b u s i n e s sf a m i li es . A s a r e s u l t t h e e c o n o m y w it n e s s e s a s m a ll n u m b e r o f n e w e n t e r p r i s es b e i n g

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c r e a t e d an d t h a t t o o i n t r a d i t i o n a l a r e a s o f b u s i n e s s o v e r c r o w d in g t h e s u p p l y / p r o d u c tb a s e a n d t h e i r m a r k e t s .

O n t h e o t h e r h a n d , t h e r e a r e n o l i m i t a t i o n s i n t h e e n t r e p r e n e u r i a l c a p a b i l i t i e s i n t h ep o p u l a c e . I f , t h i s e n t r e p r e n e u r i a l p o t e n t i a l c a n b e u n l e a s h e d , b y p r o v i d i n g l e v e lp lay ing f i e ld , in fo rma t ion , awarenes s and suppor t in e s t ab l i sh ing en te rp r i s e s , Pak i s t an

c a n w i t n e s s f a s t p a c e d g r o w t h i n e s t a b l i s h m e n t o f n e w e n t e r p r i s e s c r e a t i n g n e we m p l o y m e n t o p p o r t u n i t i e s , i m p r o v i n g d i s t r i b u t i o n o f w e a l t h a n d e x p l o i t i n g t h eo p p o r t u n i t ie s o f f e r e d b y in t e r n a t i o n a l m a r k e t s in t h e l ib e r a l iz e d W T O r e g im e .

T h e p a s t G o v e r n m e n t p r o g r a m s t o e n c o u r a g e e n t r e p r e n e u r s h i p s u c h a s S e l f E m p l o y m e n t S c h e m e , Y o u t h I n v e s t m e n t P r o m o t i o n S o c i e t y a n d Y e l l o w C a b S c h e m ew e r e l i m i t e d a n d n o t t o o c o m p r e h e n s i v e l y d e s i g n e d a n d t h u s a c h i e v e d l i t t l e i np r o m o t i n g e n t r e p r e n e u r s h i p a m o n g s t t h e e d u c a t e d P a k i s t a n i y o u t h . T h e r e i s a n e e df o r G o v t . t o a c t i ve ly p r o m o t e e n t r e p r e n e u r s h i p t h r o u g h c h a n g e s in e d u c a t i o nc u r r i c u la , b y c r ea t i n g a w a r en e s s a m o n g s t yo u t h a n d b y p r o v i d in g e f f e c t i ve s u p p o r t t ot h o s e w h o w i s h t o e s t a b l i sh n e w e n t e r p r i s e s .


R e v i s i o n i n p r i m a r y a n d h i g h e r e d u c a t i o n c u r r i c u l a f o r p r o m o t i n ge n t r e p r e n e u r s h i p a m o n g s t t h e e d u c a t e d yo u t h

Inc lus ion o f En t rep reneursh ip courses in (a l l p ro fe s s iona l degree award ing)h ighe r educa t ion , t echn ica l and voca t iona l t r a in ing ins t i tu t ions in Pak i s t an

E n t r e p r e n e u r s h i p C o m p e t i t i o n s a t u n i v e r s i t y l e v e l t o c u l m i n a t e i n A n n u a lE n t r e p r e n e u r s h i p C o m p e t i t i o n a t N a t i o n a l l e v e l f o r s e l e c t i n g b e s t b u s i n e s sp l a n s / m o d e l s a n d p r o v i d in g gr a n t f o r p r o j e c t im p l e m e n t a t i o n

E s t a b l is h m e n t o f t e c h n o l o g y a n d b u s i n e ss i n c u b a t o r s i n s e le c t e d u n i v e r s it i e s in

Pak i s t an

I d e n t i f i c a t i o n o f i n v e s t m e n t o p p o r t u n i t i e s o f f e r e d b y b a c k w a r d a n d f o r w a r dl in k a g e s o f s u c c e s s f u l s er v i ce s / p r o d u c t s

Expec ted I mpac t

I m p l e m e n t a t io n o f t h e r e c o m m e n d a t i o n s o n s u p p o r t i n g e n t r e p r en e u r s h ip a m o n g s t t h ePak i s t an i you th wi l l r e su l t in l a rge r s egments o f the educa ted popu la t ion t ak ingin te re s t in e s t ab l i sh ing the i r own bus ines ses and some wi l l even tua l ly implement the i rideas . As a re su l t , a fa s t inc rease may be wi tnes sed in en te rp r i s e c rea t ion thus add ing

jo b s t o t h e ec o n o m y a n d im p r o v in g in co m e d is t r ib u t io n s .

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Sect ion IV SME Policy Implementation andResou rce Allocat ion

SME P ol icy Ownership and I mp lementat ionA l ar g e n u m b e r o f G o v e r n m e n t M i n i st r i e s an d o r g a n iz a t i o n s ( in a d d i t i o n t o t h epr iva te s ec to r ) w i l l have to p lay the i r ro le in removing imped iments and p rov id ings u p p o r t f o r S M E g r o w t h . T h e r e f o r e , it i s im p e r a t i v e t h a t t h e S M E P o l ic y i s ap p r o v e db y t h e P r i m e M i n i s t e r a n d e n d o r s e d b y a l l P r o v i n c i a l G o v e r n m e n t s . S u c h s u p p o r tc o u p l e d w i t h c l e a r d e f i n i t i o n o f r e s p o n s i b i l i t i e s o f v a r i o u s G o v e r n m e n t i n s t i t u t i o n sw i l l p r o v i d e t h e r e q u i r e d p o l i c y v e h i c l e f o r p r o m o t i n g S M E l e d e c o n o m i c g r o w t h i nP a k i s t a n .

SME Pol icy Inves tment and E xpec ted Im pac t

T h e S M E P o l i c y a l s o p r e s e n t s t h e e s t i m a t e s o f p u b l i c a n d p r i v a t e s e c t o r i n v e s t m e n t s

f o r i m p l e m e n t a t i o n o f t h e p o l i cy r e c o m m e n d a t io n s a n d e n v i s ag es b e n e f i t s in t e r m s o f e n t e r p r i s e g r o w t h , j o b c r e a t io n a n d p o v e r t y r e d u c t io n .

Sum mary of E st imated Resource Allocat ion

T h e p r o p o s e d r e s o u r c e a l l o c a t i o n f o r i m p l e m e n t i n g t h e S M E P o l i c y i s s u m m a r i z e d a sb e l o w . H o w e v e r , t h e e s t im a t e s m a y b e r e v is e d o n c e d e t a il e d im p l e m e n t a t i o n p l an s a r ed e v e lo p e d a n d t h e s t u d i e s ( p r o p o s e d i n t h i s d o c u m e n t ) h a v e b e e n c o n d u c t e d :

Sr. N o. T h e m at ic AreaE s t i m a t e dReso u rce

Allocation(Rs. Mi l lion)

1 . SM E D ef in it io n, F ee db ac k, M on it or in g & E valu at io nM e c h a n i s m

27 .6

2 . Bu sin e ss E n v ir o n m e n t 35 5

3 . A c c ess t o F in an c e & Se r v ic e s 773 6

4 . Su pp or tin g H u man Reso ur ce D e velo pm en t, T ec hn olo gy U pg r a d a t i o n M a r k e t i n g & E n t r e p r e n e u r s h i p D e v e l o p m e n t

5010

T ota l 13,128.6

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SME Po l i cy Im p lem e n ta t i o n P l an

Pro p o sed

I n s t i t u t io n s / T a s k s

P r in c ip a l im p lem en t in g

Ag en c i es

E s t i m a t e d

Reso u rceReq u i rem en t

(PKRMil l ion)

Jan-Mar

Apr-Jun

Jul-Sep

Oct-Dec

Jan-Mar

Apr-Jun

July-Sep

Oct-Dec

Jan-Mar

Apr-Jun

July-Sep

Oct-Dec

2007 2008 2009

SME P ol icy Approvalf ro m Cab in e t

Fed era l Cab in e t / Mo IP& SI

1. SM E Fee d b a c k , M o n it or in g & E va lu a t io n 27.60

1 . 1 S M E D a t a b a s eD e v e l o p m e n t

S M E D A

1 .2 SM E B as el in e Su rv ey SM E D A

2. Bu s in e ss E n viro n m en t 355.002 . 1 A p p r o v a l &P r o m u l g a t i o n o f S M EA c t 2 0 0 7

SM E D A / M o IP & SI / M oL a w , J u s t ic e & H u m a nR i gh t s / P a r l ia m e n t

2 . 2 E s t a b l i s h m e n t o f

S M E P r o m o t i o n C o u n c i l

S ME D A / M o I P & SI / T A s /

C C I s

2 . 3 E s t a b l i s h m e n t o f S M E C e r t i f i c at i o n

P r o c e s s

SM E D A / C C I s/ T A s

3. Ac c es s t o F in a n c e & Rela t e d Se rvice s 7,736.00

3 . 1 E s t a b l i s h m e n t o f C r e d i t G u a r a n t e e F u n d s

SB P / SM E D A / M o F / M o I P & S I

3 . 2 E s t a b l i s h m e n t o f C r e d i t I n s u r a n c e

SB P / SM E D A / M o F / M o I P & S I

4. Ac c es s t o Re so u rc e s & Se rvic es 5,010.00

4 . 1 E s t a b l i s h I n s t i t u t e so f S m a l l & M e d i u m

E n t e r p r i s e &E n t r e p r e n e u r s h i p

D e v e l o p m e n t ( I N S M E D )

SM E D A / H E C / M o IP & SI / N A V T E C /

T U S D E C / M o S T / U n i v e r si t ie s

4 . 2 S M E S u b c o n t r a c t i n gE x c h a n g e

S ME D A / M o I P & SI

4 . 3 B u s i n e s s Su p p o r tF u n d

M o F / M o I P & S I

4 . 4 C o m p e t i t i v e n e s sS u p p o r t F u n d

M o F / M o I P & SI

E s t im a te d T o ta l 13,128.60

Th e t im e l i n e d ev e lo p ed i s su b j ec t t o t h e a p p ro v a l o f Gov ern m en t o f Pak i s t an & av a i lab i l i t y o f ad eq u a t e r eso u rces fo rim p lem en ta t i o n .

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Section V - Monitoring, E valuation, and Continu ousImp rovement of Policy

Monitoring and Evaluat ion

I n o r d e r t o i n c r e a s e t h e q u a l i t y a n d q u a n t i t y o f i n f o r m a t i o n a v a i l a b l e o n t h ed e v e l o p m e n t o f e n t e r p r i s e s i n P a k i s t a n i d e n t i c a l s t a n d a r d s h a v e t o b e u s e d f o rc la s s i fy ing en te rp r i s e s . The s i ze c la s s i f i ca t ion sugges ted in th i s Po l i cy documentb e c o m e s a m i n im u m s t a n d a r d f o r a l l o r g a n i z a t io n s i n P a k is t a n w h ic h a r e m o n i t o r i n ge n t e r p r i s e d e v e l o p m e n t a n d / o r a d m i n i s t e r in g s u p p o r t t o e n t e r p r i s e s . A l lo rgan iza t ions need to be ab le to aggrega te and d i s aggrega te the i r da ta accord ing tot h e s e s i z e s t a n d a r d s .

The app l i ca t ion o f the measures unde r the Po l i cy which d raw, d i rec t ly o r ind i rec t ly ,o n p u b l i c f u n d s , F e d e r a l , P r o v i n c i a l , a n d L o c a l , w i l l b e c o n t i n u o u s l y m o n i t o r e d a n de v a l u a t e d s o a s t o p e r m i t c o n t i n u o u s i m p r o v e m e n t . A l l o r g a n i z a t i o n s , a t N a t i o n a l ,Prov inc ia l , and Loca l l eve l s , wh ich a re invo lved in the admin i s t ra t ion o f suppor t

m e a s u r e s t o e n t e r p r i s es , b o t h f a c il it a t o r s a n d p r o v i d e r s , w il l m o n i t o r t h e p e r f o r m a n c eby co l l ec t ing a t l ea s t the fo l lowing in fo rma t ion :

b .1 N u m b e r o f m i cr o , s m all, an d m ed iu m e nt e rp r is es se rv edb .2 G en d er o f o w n er sb .3 M ajo r se ct o r s o f en t er p r is e a ct iv it y (I SI C )b .4 Le vels o f s at is fac tio n re co rd edb .5 F eed back r ece iv edb . 6 T o t a l c o st o f se r vic e ( dir e ct a n d i n dir e ct ) i n P K R p e r b e n ef ic ia r y

e n t e r p r i s eb . 7 T o t a l b e n e fit o f s er v ic e i n t e r m s o f e m p l o ym e n t , gr o w t h a n d i n co m e

(dur ing s e rv ice and a f t e r s e rv ice ) pe r b ene f ic ia ry en te r p r i s e

T h e o r g a n i z at i o n o f t h e m o n i t o r i n g a n d e v a lu a t i o n s y s t em , i n c l u d i n g t h e a g g r e ga t i o na n d a n a l y s i s o f t h e i n f o r m a t i o n w i l l b e u n d e r t a k e n b y S M E D A . S M E D A w i l l p r o v i d ec o n s o l i d a t e d r e p o r t s o n e n t e r p r i s e d e v e l o p m e n t a s w e l l a s o n t h e i m p l e m e n t a t i o n o f e n t e r p r i s e s u p p o r t u n d e r t h i s P o l i c y o n a s e m i - a n n u a l b a s i s t o t h e N a t i o n a lC o m m i t t e e o n S m a ll a n d M e d i u m E n t e r p r i s e s ( N C S M E ) . S M E D A w i ll a ls o p r e p a r e a nA n n u a l R e p o r t o n S M E D e v e l o p m e n t t o b e p r e s e n t e d t o t h e P a r l i a m e n t b y t h eM i n is t e r f o r I n d u s t r i es , P r o d u c t i o n a n d S p e c ia l I n i t ia t iv e s .

Continu ous Im provement of Pol icy

Moni to r ing and eva lua t ion re su l t s w i l l be used by a l l s t akeho lde rs to con t inuous ly

improve the ex i s t ing po l i cy and the spec i f i c measures t aken . Moreove r SME Surveyss h a ll b e u n d e r t a k e n p e r i o d i c a ll y t o a s s e ss t h e i m p a c t o f i n t e r v e n t i o n s m a d e a n d t a r g e ts u p p o r t m e c h a n i s m s w h e r e r e q u i r ed .

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Coordinat ion

N at iona l Commit tee on Smal l and Medium E nterpr i ses (N CSME s)

The Min i s t e r fo r Indus t r i e s , P roduc t ion & Spec ia l In i t i a t ives sha l l cha i r the s emi -

a n n u a l m e e t i n g s o f t h e N a t i o n a l C o m m i t t e e o n S m a l l a n d M e d i u m E n t e r p r i s e s( N C S M E s ) . T h i s C o m m i t t e e w i l l r e v i e w t h e i m p l e m e n t a t i o n o f S m a l l a n d M e d i u mE n t e r p r i s e P o l i c y , a n d d e c i d e w h i c h s h a p e s p e c i f i c m e a s u r e s f o r e n t e r p r i s edeve lopment wi l l t ake and how ex i s t ing measures need to be ad jus ted in l ine wi thd e v e l o p m e n t s a n d i n t h e i n t e r e s t o f c o n t i n u o u s i m p r o v e m e n t . T h e C o m m i t t e e w i l la l s o s e r v e a s a m e c h a n i s m t o i m p r o v e c o o r d i n a t i o n b e t w e e n d i f f e r e n t s t a k e h o l d e r sa n d r e s o l v e d i f f e r e n c e s w h i c h m a y e x i s t b e t w e e n t h e m . S M E D A w i l l f u n c t i o n a s t h eS ec r e t a r ia t t o t h e C o m m i t t e e .

Members of N CSME s

M e m b e r s o f t h e N a t i o n a l C o m m i t t e e o n S m a l l a n d M e d i u m E n t e r p r i s e s a r e ; M i n i s t e r

f o r I n d u s t r i e s , P r o d u c t i o n a n d S p e c i a l I n i t i a t i v e s , M i n i s t e r o f S t a t e f o r F i n a n c e ,M i n i s t e r o f S t a t e f o r E c o n o m i c A f f a i r s , D e p u t y C h a i r m a n P l a n n i n g C o m m i s s i o n ,P r o v i n c i a l M i n i s t e r s f o r I n d u s t r i e s , G o v e r n o r o f t h e S t a t e B a n k o f P a k i s t a n ,C h a i r m a n C e n t r a l B o a r d o f R e v e n u e , C h a i r m a n S e c u r it i e s & E x c h a n g e C o m m i s s io n o f Pak i s t an , Fede ra l Sec re ta ry fo r Indus t r i e s , P roduc t ion & Spec ia l In i t i a t ives , Fede ra lS ec r e t a r y C o m m e r c e , F e d e r a l S e c r et a r y f o r L a b o r , M a n p o w e r a n d O v e r s e a s P a k is t a n i s,Fede ra l Sec re ta ry fo r S ta t i s t i c s , Fede ra l Sec re ta ry fo r Educa t ion , Fede ra l Sec re ta ry fo rS c i e n c e a n d T e c h n o l o g y , F e d e r a l S e c r e t a r y f o r W o m e n D e v e l o p m e n t , P r e s i d e n t o f F P C C I , P r e s i d e n t s o f K a r a c h i , L a h o r e , S a r h a d & Q u e t t a C h a m b e r s o f C o m m e r c e &I n d u s t r y a n d P r e s i d e n t s o f s m a l l a n d m e d i u m e n t e r p r i s e B u s i n e s s M e m b e r s h i pO r g a n iz a t i o n s ( BM O s ) .

T h e G o v e r n m e n t i n c o n s u l t a t i o n w i t h F P C C I w i l l a p p o i n t f i v e r e p r e s e n t a t i v e s o f C h a m b e r s o f C o m m e r c e a n d I n d u s t r y r e p r e s e n t i n g p r e d o m i n a n t l y S M E s e c t o r . T h r e er e p r e s e n t a t i v e s o f s m a l l a n d m e d i u m e n t e r p r i s e b u s i n e s s m e m b e r s h i p o r g a n i z a t i o n ss h a ll a ls o b e m e m b e r s o f t h e s a id C o m m i t t e e .

T h e C o m m i t t e e m a y c o - o p t f u r t h e r M e m b e r s a s i t s e e s f i t t o a d d r e s s s p e c i f i c i s s u e sa n d e n s u r e r e p r e s e n t a t i o n o f s m a l l a n d m e d i u m e n t e r p r i s e i n t e r e s t s . S i m i l a r l y , t h eG o v e r n m e n t m a y a d d o r r e m o v e m e m b e r s o f t h e C o m m i t t e e as it d e e m s f i t .

Provincia l Commit tees on Small and Medium Enterprises(PCSMEs)

T h e C h i e f E x e c u t i v e o f e a c h P r o v i n c e w i l l c h a i r t h e m e e t i n g s o f t h e P r o v i n c i a lC o m m i t t e e s f o r S m a l l a n d M e d i u m E n t e r p r i s e s ( P C S M E s ) p e r i o d i c a l l y . T h e s eC o m m i t t e e s w i l l s u p p o r t t h e N a t i o n a l C o m m i t t e e o n S m a l l a n d M e d i u m E n t e r p r i s e s(NCSMEs) by a s sembl ing expe r t i s e f rom a l l f i e lds a s neces sa ry in o rde r to p repa re ,d e v e lo p , a n d i m p r o v e S m a ll a n d M e d i u m E n t e r p r i s e P o l ic y, i n c lu d i n g b u t n o t l im i t e dt o s p e c i f i c s u p p o r t m e a s u r e s a n d i m p r o v e m e n t s i n t h e e n a b l i n g e n v i r o n m e n t . I t w i l lp r e p a r e r e c o m m e n d a t i o n s f o r a p p r o v a l b y N C S M E s a s n e c e s s a r y . S M E D A P r o v i n c i a lO f f ic e s w il l fu n c t i o n a s t h e S e c r e t a r ia t t o e a c h o f t h e P r o v i n c ia l C o m m i t t e e s .

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Memb ers of P CSME s

M e m b e r s o f t h e P r o v i n c i a l C o m m i t t e e s o f S m a l l & M e d i u m E n t e r p r i s e s s h a l l b ed e c id e d b y t h e C h i e f E x e c u t i v e o f e a c h P r o v i n c e .

s Me Policy 2007

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