ISLAMABAD: Federal Minister for Industries and Production, Makhdoom Khusro Bakhtiar on Wednesday unveiled the Small and Medium Enterprises (SME) Policy.
The minister announced the policy during a press conference wherein he was flanked by Federal Minister for Information and Broadcasting, Fawad Ahmed Chaudhry.
Bakhtiar said that this was for the first time that the policy, which focuses on promoting around five million businesses through facilitation in registration, streamlining of taxes, access to credit and provision of land, comes with a proper implementation mechanism under the supervision of a National Coordination Committee (NCC) with proper deadlines of tasks. “The policy was made in 2007 but only in papers,” he added.
The minister said that there were around five million SME businesses in the country, including one million in the manufacturing sector in the shape of various enterprises.
He said that the SME sector was playing a crucial role in promoting inclusive economic growth in addition to providing 78 per cent of employment, excluding agriculture, as well as promoting exports.
Bakhtiar said that many of its initiatives had already been implemented. He said that the policy has relieved businessmen of regulatory burden by either excluding the condition of obtaining a No Objection Certificate (NOC) or minimising its requirements.
“Anyone interested in starting a new business will not have to go from pillar to post for obtaining the NOC or involve an inspector,” he added.
Elaborating further, he said that the condition of obtaining an NOC had been abolished for low risk businesses including the services sector and wholesale transport whereas medium risk businesses such as light engineering, leather, auto-parts, sports goods and cutlery can get NOCs approved within 30 days of applying for the document.
However, he added, SMEs working in explosive, fire, boiler, and chemicals have been put in the high risk category and will require an NOC.
Further, the policy also introduces a self-declaration scheme under which businessmen would follow relevant laws voluntarily. Only 2pc of the self-declared businesses would be inspected physically. For this purpose, the government has developed a web portal through which businesses that would be inspected would be given a date of inspection, reducing human intervention and promoting transparency, besides checking corruption.
The federal minister said that that another initiative taken under the scheme included streamlining taxes for SMEs.
“Under the policy, turnover tax of 1.25pc has been reduced to 0.25pc for businesses having a turn over of less than Rs100 million and 0.5pc for those having a turn over between Rs100 million to Rs250 million,” he said.
However, if anyone is not interested in turnover tax and wants to claim withholding tax then they would have to opt for the income tax mode, which would be 7.5pc for businesses with a turnover less than Rs1 million and 15pc for those having a turnover from over Rs100 million to Rs250 million.
Likewise, women-owned enterprises have been given a 25pc rebate in tax.
In addition of giving people access to finances, the minister said that the government had launched the SME Asaan Scheme under which the federal government and commercial banks would give guarantee interest-free loans of up to Rs10 million to 30,000 new businesses.
In case a business which has borrowed money fails, 40pc to 60pc of the loss would be borne by the government and commercial banks. “The government has already earmarked Rs23.5 billion for this purpose,” Khusro Bakhtiar said, adding that there were several other schemes that would be introduced to promote the SME sector.
On provision of land, he said the federal government, in collaboration with Punjab, Balochistan and Khyber Pakhtunkhawa (KP) governments, has earmarked 4,200 acres of land which would be transformed into 19,500 plots to be provided to businesses on easy loans.
He requested the Sindh government to do the same, however, he added that the federal government would provide such plots from its industrial parks in Karachi.
Moreover, the Industries and Production minister said that SMEs would also have share in public procurement, adding a plan was being prepared to fix quotas for SMEs in this regard.
He said government had also earmarked Rs30 billion for SMEDA that would be utilised for development of SME zones in Wazirabad, Gujranwala and Gujarat triangle and added that SMEDA would be transformed in to a private-sector driven body.
Meanwhile, speaking on the occasion, Fawad Chaudhry highlighted the importance of developing a strong industrial foundation to promote growth and cater to the needs of the country’s 220 million population.
He said that it would be difficult to overcome economic issues unless the industrial sector of the country was promoted.
