Energy crisis hits SMEs hard

Karachi: The ongoing crisis of energy particularly load shedding of electricity and gas and frequent closures of gas stations in Pakistan has hit hard the small and medium sized enterprises, dealing a heavy to national economy.

This was told by Union of Small and Medium Enterprises (UNISAME) leaders to Nawaz Ahmad Sukhera, chief executive officer (CEO) of the Small and Medium Enterprises Development Authority (SMEDA), provincial chief Muslim Raza, deputy general manager Mukesh Kumar and manager Feroz Ahmad during a meeting here.

President UNISAME Zulfikar Thaver told the meeting that besides the law and order situation and energy crisis the SMEs are unable to function and are running in losses due to high cost of production caused by the increase in prices of raw material and packing material because of the dollar exchange rate and the increase in the prices of fuel which has made logistics costly.

He said that the SMEs need finance at affordable markup, land at concession, uninterrupted supply of raw material and energy. He added that there is a technological gap and the SMEs need to know about the latest technology in their respective fields. The SMEs need the facilities of leasing to buy commercial property, plant, machinery and equipment, raw material, income generating vehicles to enable them repay in instalments under pay as you earn scheme and urged the CEO to make strong recommendation to the government for promotion of soft leasing terms for SMEs.

The leasing companies are charging high mark up because they themselves are borrowing from the banks and the SME Leasing a subsidiary of SME Bank is having insufficient funds to cater to the SMEs.

The participants stressed the need for credit insurance to make the banks comfortable in financing the SMEs and issuance of SME credit card for the SMEs to enable them purchase raw material and repay on realization of sale proceeds.

Sukhera said he is planning to work for export promotion of Pakistani goods on the one hand and the other for making SME units competitive in domestic market.

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