SME sector passing through a worst time due to measures taken under the influence of IMF
Islamabad, August 05, 2019 (PPI-OT): The Islamabad Chamber of Commerce and Industry said that the SME sector was passing through a worst time due to some measures taken by the government under the influence of IMF and called upon it to announce soon a new SME policy in order to create conducive environment for these businesses for their better promotion and growth. Ahmed Hassan Moughal President and Rafat Farid Senior Vice President, Islamabad Chamber of Commerce and Industry said that due to tough business conditions, SMEs were compelled to take loans to meet the needs of working capital instead of expansion as their survival was in jeopardy.
They said that according to State Bank of Pakistan, SMEs obtained loans of Rs.111 billion during the first eleven months of 2018-19 out of which Rs.94 billion was taken for working capital, which showed that they were undergoing very difficult times. Ahmed Hassan Moughal said that during the last 11 months, the rupee has experienced over 30 percent depreciation while the prices of electricity, gas and POL products have been hiked many times in addition to increasing taxes in budget. He said that all these measures have made exorbitant increase in the cost of doing business.
He said that inflation in the country has also exceeded 10 percent causing hefty squeeze in the purchasing power of people and this situation has badly affected business activities as well. He said that SMEs in the region were getting around 19 percent of the total private sector credit, but in Pakistan SME were getting just 7.7 percent of total private sector credit, which showed that access to finance was a major problem for these businesses in the country. ICCI President said that SBP has also increased interest rate to 10.25 percent while interest rate in India was 5.75 percent, in Bangladesh 6 percent and in China 4.35 percent.
He said it was very difficult for SMEs to obtain loans from banks at over 10 percent interest rate and compete with regional counterparts. He urged that government should announce a specific concessional package for SMEs to ease their problems. He said that many Chinese companies were expected to come to Pakistan to take part in CPEC projects. He said that Chinese companies were equipped with latest technology and sufficient capital, therefore, he stressed that Government of Pakistan should provide all possible cooperation and support to local SMEs enabling them to enter into sustainable JVs with Chinese counterparts and play more effective role in the economic development of the country.
For more information, contact:
Islamabad Chamber of Commerce and Industry (ICCI)
Chamber House, Aiwan-e-Sanat-o-Tijarat Road,
Mauve Area, G-8/1, Islamabad, Pakistan
Tel: +92-51-2250526, 2253145, 8432676
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