The SITE Association of Industry, in partnership with the International Labour Organization (ILO) and the Small & Medium Enterprises Development Authority (SMEDA), recently held a consultation session focused on overcoming obstacles faced by the textile and automobile industries.
The meeting aimed to identify critical challenges confronting enterprises and prioritize incentives to encourage the formalization of Small and Medium Enterprises (SMEs) along with their supply chains. Participants contributed feedback on existing issues and offered practical suggestions to help shape a future national strategy for SMEs formalization.
Key attendees included M Naeem Ansari, National Project Coordinator at ILO; Syed Nazar Ali, Secretary General of EFP; Mukesh Kumar, Deputy General Manager at SMEDA; and Muhammad Awais, Project Consultant for SME Formalization.
Welcoming the guests, SVP Khalid Riaz of the SITE Association highlighted how many member businesses have consistently contributed to the Sindh Employees’ Social Security Institution (SESSI) and the Employees’ Old-Age Benefits Institution (EOBI), fulfilling their legal duties yet receiving little recognition or visible returns.
He advocated for capping contributions to SESSI and EOBI, especially for SMEs operating on thin profit margins, emphasizing that formalization must be value-driven rather than purely regulatory. Simplification of registration and inspection processes, coupled with timely and visible services for compliant employers, are essential to success.
Participants were informed about ILO and SMEDA’s collaborative development of a national roadmap for SME formalization in Pakistan. This initiative seeks to transition SMEs from the informal to formal economy through evidence-based research and inclusive stakeholder engagement, with a particular focus on export-driven value chains in textiles and automotive sectors.
Muhammad Awais shared findings from a comprehensive baseline study assessing informality and value chain dynamics within these industries.
Majyd Aziz, former president of EFP and former chairman of SAI, welcomed ILO’s presence in Karachi and praised SMEDA’s efforts. He acknowledged labour and environmental compliance challenges, especially for export-oriented textiles under constant buyer pressure. He urged government support to assure social safety nets and recommended reserving 10-15% of government procurement for SMEs to encourage formalization. Aziz also suggested that large industries assist SMEs in meeting occupational safety and health standards.
Anwar Aziz, regional chairman of APTPMA, discussed the financial impact of minimum wage policies and proposed imposing a turnover-based charge on all industrial and commercial enterprises to provide social protection for all workers. He also shared his perspective on gratuity laws.
Former SVP Abdul Kadir Bilwani called for abolishing withholding tax to ease burdens, revisiting SME definitions, capping social benefit contributions, and transferring management control of Valika Hospital to SITE along with associated contributions. He highlighted the heavy tax and regulatory burdens facing SMEs.
Syed Nazar Ali stressed the importance of sustainable business practices encompassing climate, social, and economic dimensions, noting that despite benefits, many remain hesitant to formalize.
The session included participation from President Ahmed Azeem Alvi, Vice President Muhammad Riaz Dhedhi, Azeem Motiwala, Junaid-ur-Rehman, Ahmed Zulfiqar Chaudhry, and representatives of the textile and automobile industries. Muhammad Tahir Goreja, chairman of the Labour Sub-Committee, concluded with a vote of thanks.
