Government urged to assist in reviving the small and medium-sized enterprise (SME) sector
Published on: February 10, 2024.
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FAISALABAD – Urgent action is needed from the government to revive the struggling small and medium-sized enterprise (SME) sector in order to stimulate the economy and create jobs, according to Dr Sajjad Arshad, the acting president of the Faisalabad Chamber of Commerce & Industry (FCCI). Currently, approximately 40% of SMEs have ceased operations due to exorbitant energy costs, soaring inflation, political uncertainty, delayed refunds, and inconsistent policies.
Dr Sajjad Arshad emphasized the need for collaboration among all stakeholders, including the business community, politicians, civil and military bureaucracy, and the judiciary in order to steer the economy in the right direction. He stressed that a strong economy and millions of jobs are necessary to address the ongoing crises. The FCCI maintains constant communication with the government to address the issues faced by the business community on a priority basis. Dr Sajjad Arshad stated that without proper development of SMEs and a reduction in energy costs, Pakistan cannot increase its exports.
He highlighted the stark difference in electricity rates among different countries. Bangladesh and Vietnam have electricity rates of eight and six cents per unit respectively, while Pakistan’s rate stands at 14 cents per unit. Dr Sajjad Arshad also drew attention to the recent increase in gas prices, rendering entrepreneurs unable to compete with their regional counterparts in the international market. He suggested that subsidised loans be provided to the SME sector to facilitate the generation of solar energy, citing China’s success in producing 50% of its electricity from solar and wind sources.
Dr Sajjad Arshad further emphasized Pakistan’s underutilization of its abundant coal resources in Thar. He attributed political uncertainty as a factor contributing to the decline in exports and remittances and hindering foreign direct investment. He called for the implementation of long-term policies to stabilize the economy. He mentioned the European Union’s GSP-Plus status, which provides preferential trade access, asserting that Pakistani entrepreneurs have not fully capitalized on this opportunity and are still focusing on traditional exports. Dr Sajjad Arshad urged the government to maximize the benefits of the GSP-Plus facility as it continues until 2027. Currently, Pakistan exports rice worth $2.4 billion, but there is potential for this figure to increase to $10 billion.
Muzamil Ahmed, an owner of a thread factory, stressed the crucial role of SMEs in strengthening the economy. He criticized the government for favoring larger units while neglecting SMEs. High operating costs, including electricity, gas, and raw materials, are impeding the ability of SMEs to pay workers’ salaries and resulting in factory closures and downsizing. Muzamil Ahmed urged the government to address the issue of high energy costs by discussing it with the International Monetary Fund (IMF) and implementing a special energy package for the SME sector.
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