Trade: (Special incentives for SME sector demanded in upcoming budget)

ISLAMABAD: President Pakistan Businessmen and Intellectuals Forum (PBIF) and former provincial minister Mian Zahid Hussain on Tuesday demanded special incentives for the sinking SME sector in the upcoming budget.

The sector having 40 percent share in the GDP, 30 percent share in exports and employing millions cannot be ignored as its decline will hurt all facets of the economy, he said.

Talking to the business community, he said that among 3.5 million SMEs in Pakistan, 65 percent are located in Punjab while slightly over 2 percent are in in Balochistan which can be balanced through policy interventions.

He said that law and order, energy crisis, lack of regulatory support, incoherent laws, deficiency of market information and skilled labour and want of finances are the main reasons behind lacklustre performance of SME sector.

SBP pushed banks to boost SME financing which increased by 20 percent to 299 billion of which loans worth 91 billion or 30 percent got infected, he said. Mian Zahid Hussain said that defaults compelled lenders to rethink SME financing as default ratio of corporate sector stands at 13 percent while 12.4 percent of agri loans get infected, according to available data.

He noted that textile and garments sector has emerged ab biggest defaulter which failed on 50 percent of its financial obligations. He also called for reviving textile and garments sectors which is steadily going down in competition with China, India, Bangladesh and Vietnam while the spinning capacity of country has declined by 30 percent, enough to catch the attention of policymakers.

He asked the banks to revisit policy of ignoring SMEs and chalk out an implementable plan to develop this critical sector to reduce poverty and unemployment.

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