Government unveils SME policy to sustain economic growth
ISLAMABAD, Dec 15 (APP): Federal Minister for Industries and Production, Makhdoom Khusro Bakhtiar unveiled the Small and Medium Enterprises (SME) Policy here on Wednesday, with special focus on promoting around 5 million businesses through facilitation in registration, streamlining of taxes, access to credit and provision of land.
According to the details, the minister announced the policy along with Federal Minister for Information and Broadcasting, Fawad Ahmed Chaudhry during a press conference. Bakhtiar said that this was for the first time that the policy comes with a proper implementation mechanism.
He said, the policy was made in 2007 but only in papers and asserted that this time it was being introduced with implementation mechanism under the supervision of National Coordination Committee with proper deadlines of tasks.
The minister said that there were around five million SME businesses in the country including one million in manufacturing sector in the shape of different enterprises. Moreover, he said that SME sector was playing crucial role in promoting inclusive economic growth in addition to providing 78 percent of employment (if agriculture is excluded) and promoting exports.
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Elaborating various initiatives of the policy, the minister said that the policy was not only directional but many of its initiatives have already been implemented.
Furthermore, Bakhtiar said that the policy has relieved the businessmen of regulatory burden by either excluding the condition of obtaining No Objection Certificate (NOC) or have minimized its requirements. He said, anyone interested in starting new business will not have to go from pillar to post for obtaining the NoC or involving any inspector.
While talking to media, Khusro Bakhtiar said ‘Zero time to start up’ initiative has been introduced under which the sector has been divided in three categories including low, medium and high risk SMEs.
The minister said that the NoC condition for the low risk businesses including services sector, wholesale transport has been abolished whereas the medium risk businesses such as light engineering, leather, auto-parts, sports goods and cutlery can get their approval within 30 days after applying for the same.
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However, he added, SMEs working in explosive, fire, boiler and chemicals have been put on high risk category saying that the policy also introduced self-declaration scheme under which the businessmen would follow the relevant laws voluntarily.
He added that only 2 percent of the self-declaration would be inspected physically adding that the government had developed a web portal, through which the businesses that are going to be inspected would be given date of inspection. This would reduce human intervention and promote transparency and check corruption.
The minister said that that another initiative taken under the scheme included streamlining of taxes for SMEs. Under the policy, turnover tax of 1.25 percent has been reduced to 0.25 percent for the business having turn over less than Rs100 million and 0.5 percent for those having turn over from Rs100 million to Rs250 million
However, if anyone is not interested in turnover tax and want to claim withholding tax then he/she would have to opt for income tax mode, which would be 7.5 percent for business with turnover less than Rs1 million and 15 percent for those having turn over from over Rs100 million to Rs250 million. The minister said the women enterprises have been given 25 percent rebate in tax. He said that these initiatives have already been taken by the government.
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In addition for giving people access to finances, the minister said the government had launched SME Asaan Scheme under which the federal government and commercial banks would give guarantee-free loans up to Rs10 million to 30,000 new businesses.
He said, in case the businesses fail, 40 to 60 percent loss would be bore by government and commercial banks. He said, the government had already earmarked Rs23.5 billion for the purpose. He said there were several other schemes the government would introduce to promote SME sector.
On provision of land, he said, the federal government in collaboration with Punjab and Baluchistan and Khyber Pakhtunkhwa (KPK) governments has earmarked 4200 acres of land, which would be transformed into 19500 plots to provide the businessman on easy loans.
The federal minister requested the Sindh government to do the same, however added that the federal government would provide such plots in Karachi from its industrial parks. He said that SMEs would also have share in public procurement, adding a plan was being prepared to fix quotas for SMEs.
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Moreover, addressing the media, he said government had also earmarked Rs30 billion for SMEDA fund that would be utilized for development of SME zones in Wazirabad, Gujranwala and Gujarat triangle. He said that SMEDA was also being transformed to make it private-sector driven body.
Meanwhile, speaking on the occasion, Fawad Chaudhry highlighted the importance of developing strong industrial foundation to promote growth and cater to the needs of 220 million population. He said unless the industrial sector of the country was promoted, it would be hard to come out of economic problems.
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