The Ministry of Industries and Production produced two five-year policies for encouraging local production through small and medium enterprises (SMEs). However, due to the opposing views of the cabinet members as well as the reservations of the Federal Board of Revenue (FBR) and the State Bank of Pakistan (SBP), the Economic Coordination Committee (ECC) could not give their approval on the proposal. Given the rate at which our import bill keeps rising, empowering local businesses is the one option through which we can gain some momentum when it comes to economic growth and production.
There are about 500,000 SMEs with innovative business ideas, products and services that are actively looking to establish themselves in Pakistan. Their success in the market could dictate the way the economy recovers from a seemingly permanent trade deficit, depleted foreign reserves and low economic growth, so long as they are supported by the government through initiatives like tax exemptions, interest-free loans, higher credit lines and subsidies.
Without such help, they are unlikely to survive in a competitive environment dominated by entrepreneurial giants. The policies proposed by the Ministry of Industrial and Production detailed exactly these provisions to kickstart these businesses and to boost local products and services.
The FBR and SBP are primarily concerned over the matter of granting tax exemptions, subsidised interest rates and the dispensing of the Rs.30 billion SME development fund. Without the support of these two integral government bodies, the policy is rather redundant. It is imperative that they are brought on board and that adjustments are made to the policy to respect their concerns all the while ensuring that the SMEs are given some incentives to contribute positively to the economy. It is this kind of production that we currently need as our industries are falling short of the output expected from them.