KARACHI, Nov 8 (Pakistan Point News - APP - 08th Nov, 2016 ) : Senior Vice President, Federation of Pakistan Chambers of Commerce and Industry (FPCCI) Shaikh Khalid Tawab has emphasized on easy and maximum availability of finance to small and medium enterprises (SMEs), which are the backbone of economy of a country. "SMEs shall contribute significantly in the economic and social development, employment generation and poverty alleviation of the country," he said in a statement here on Tuesday.
It was regrettable that 95 percent of the country's enterprises were SMEs and only seven to eight percent credit financing of private sectors was given to this core industrial sector. Most of the credit were given to corporate sector. SMEs contributed over 40 percent to the country's gross domestic product (GDP) and 25 percent in exports earning and employed 80 percent of non-agriculture labor force. Quoting the examples of other countries, he mentioned that SMEs were dominating in China, Taiwan, Singapore, Hong Kong and Korea and contributed more than 80 percent in their development.
These countries achieved the status of industrial advanced countries or newly industrial nations just on the basis of development of SMEs sector. Pakistan should learn from the experience of these countries and formulate SMEs driven policies, he asserted. He elaborated that in Pakistan the banks were generally reluctant to give loans to SMEs sector due to high risk and transaction cost. Ninety percent SMEs loans were given on collateral basis and commercial banks lacked effective credit models to finance SMEs.
Without easy availability of the required finance and other facilities, he cautioned, it was difficult for SMEs to modernize, innovate and expand themselves. Shaikh Khalid Tawab urged the government for taking significant measures for development of SMEs sector including training of the investors on the issues related to Cost-competitiveness, quality competitiveness, marketing, networking, product diversification, starting a business, business plan, legal issues, financial management and time management.