Trade: (Revival of SME sector demanded)

ISLAMABAD: United Business Group (UBG) of FPCCI on Sunday said revival of Small and Medium Enterprises should be preferred to boost exports and generate employment.

Government is focusing too much on mega projects and privatization while paying little attention to the troubled SME sector, said Abdul Rauf Alam, Chairman North Zone UBG and presidential candidate for FPCCI, in a statement here.

Demanding incentives for SME sector, he said that the Rs 86 billion sector having 30 percent share in the GDP, 30 percent share in exports and employing millions cannot be ignored.

UBG to push for SME growth after FPCCI elections, he said, adding 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 interventions.

Rauf Alam 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.

He said 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 as 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.