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SMEDA SME Policy paper 2007- A Critical Review (An analytical commentary upon SME policy proposed by SMEDA Pakistan)

Saleem, Shahid (2008): SMEDA SME Policy paper 2007- A Critical Review (An analytical commentary upon SME policy proposed by SMEDA Pakistan).

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Abstract

SMEs and sound financing of SMEs are latest trends in Pakistani educational and banking scenario. Although, the concept got importance during Bhutto regime of 70s, but never gained much strength especially to financial sector, until SMEDA and SME bank had not emerged during last decade. Pakistan, as we know it today, is a developing country with a GDP per capita ranking, recently shifted from Low income countries to Middle income countries, contains a lot to SMEs. Furthermore, SMEs existing in Pakistan are contributing a 30% of national GDP, 25% in export earnings, & employing about 78% of non-agricultural labor force.

So, it is right time to develop and implement a sound, comprehensive, and coherent policy for all SMEs working in the country. While also right time for government, to develop a practical solution to problems and difficulties of this important, but neglected sector of the past. I want to tell you when I started analyzing this policy; I worked on following main lines, to have a critical analysis for this policy paper of SMEDA, given below:

1. I made a basic research, & studied some basic theories about global emergence/background of SMEs.

2. Then, I moved to discuss the basic introduction of SMEDA policy, my analysis of Pakistani SME sector and need for this policy, in form of quick review.

3. Then I made a critical analysis of policy objectives/scope/ principles, recommendations, implementation, & monitoring mechanisms.

4. Finally, I made a final conclusion of all above mentioned working of mine with some additional informative links, as well for my report's reader.

Conclusion: After analyzing this policy paper, I think that this policy paper is not sufficient towards very complex needs and changing requirements of Pakistani SMEs, especially in its implementation part. Recently, in Pakistan we heard that hundreds of businesses have been closed due to shortage of Electricity, water, Sui gas (natural gas), or due to law and order situation (like assassination of Ex-Prime Minister of Pakistan Benazir Bhutto in Rawalpindi). It is also heard that every day million of assets are being transferred to Gulf countries by existing business community, in such a scenario no SME can prevail and grow with reasonable level of certainty. Moreover, economically, this policy is viable but not focused for some excellence sectors in future, like a widely acclaimed adopted one village, one product model for microfinance and SMEs, this policy shall be focused on some specific businesses and product lines, instead of forming a mass of unplanned and less cost-effective SMEs, in today world of globalization and specialization.

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