Address by Mr. Makhdoom Khusro Bukhtyar, Federal Minister for the ministry of industries a production, government of Pakistan

Islamabad, June 25, 2021 (PPI-OT):Excellencies, respectable officials from the federal and provincial governments, esteemed members from the Chambers of Commerce and Industries and trade associations, Ladies and Gentlemen. Assalam-o-Alaikum and a very good morning to you all. Today I am honoured for being invited as a Special Guest for this important webinar on SME Development in Pakistan, hosted by USAID Small and Medium Enterprise Activity (SMEA).

It goes without saying that the Small and Medium Enterprises have played a vital role in economic development of every country and these have also served as one of the major drivers of economic change. SME Sector contains immense potential to generate employment, alleviate poverty and integrate into global value chains and hence the sector has been able in creating prosperity, fostering development and achieving growth trajectory through positive spillovers on the other sections of the economy. No country, whether developed or developing, has achieved sustainable and inclusive economic growth without a dynamic and thriving SME sector.

In Pakistan, the story has been no different. According to the estimates of Small and Medium Enterprise Development Authority (SMEDA), SMEs constitute nearly 90% of all enterprises in Pakistan, employ 80% of the non-agricultural labour force and their share in the yearly GDP is about 40%. Government of Pakistan has remained instrumental in supporting SMEs through various measures during the Covid-19Pandemic. In order to ensure continuity of their operations and sustainability and for this, in a well-coordinated and structured manner, the government opened up the businesses under strict Covid-19 SOPs during 2020 besides reducing SBP’s policy rate to a single digit, deferring payment of mark-up on loans and making it convenient for the SMEs to maintain their liquidity through various financing schemes.

Despite these measures, it is understood that much is required to be done to ensure sustainability and resilience of the SME Sector, considering its valuable contribution in the economic development of the country and its potential to take the economy towards an inclusive and sustainable growth. And this requires appropriate and long term policy interventions with appropriate implementation mechanism with particular focus on the SME sector.

Today’s webinar is a good opportunity to flash the importance of the SME Sector in economic growth and social uplift of the country which surely would highlight various cross-cutting issues and challenges that impede growth of the SME sector and restrict its true potential. The over-regulated business environment, complexities in technological and human resource development, weak linkages with local and global value chains, access to finance, difficulties in doing business and other issues may also be highlighted to develop a fair understanding of challenges faced by the SME Sector and developing a way-forward for the sector and policy makers to take required measures.

As regards specific interventions from the Ministry of Industries and Production, the Ministry has been actively collaborating with SMEA Project for the development and roll out of the much awaited SME Policy. The policy proposes SME focused initiatives for augmenting access to finance, developing skilled and productive workforce, simplifying tax regime, increased participation in public procurement, setting up regulatory sandboxes, promotion of accelerators and incubators and providing incentives such as matching grants especially to the IT start-ups for establishing online market places. The policy further adopts a targeted approach by encouraging educational institutions to formulate rules and procedures for effective protection and commercialization of innovations originating from the lab and research work with effective protection through the national Intellectual Property regime.

These measures would largely take care of market risks and failures arising out of externalities and asymmetric information. I am sure that once the policy fully rolls out, it would create synergies between the SME sector and institutions operating in the country to make the sector vibrant, performing and progressing. On this occasion, I would specifically like to commend efforts and support of USAID SMEA for having created awareness on the issues and challenges faced by the SME Sector and suggesting policy and implementation related interventions that would go a long way in addressing systemic flaws and capacity related constraints, both in the public and private sector domains.

Most of the policy reforms at the provincial and federal levels are under-way with the help of USAID SMEA project and I am sure that by the time the project reaches towards its closure, its core objective would have surely been achieved. Excellences, Ladies and Gentlemen! On this note, I would like to thank you all for giving me an opportunity to express my point of view. I am sure that the subsequent deliberations and panel discussions would be meaningful and shall focus on discussing core issues relating to the SME Sector and arriving at viable and workable proposals. Thank you.

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