20000321

Shaukat asks banks

to give loans to

small, medium

enterprises

on market rates

RECORDER REPORT

KARACHI: The Minister for Finance and Economic Affairs, Shaukat Aziz has said that the development of small and medium enterprises can help in fulfilling the goal of poverty alleviation and human resource development.

Addressing the launching of Small and Medium Enterprises Association (Samea) at the Defence Library on Monday, he said that the government could not alone bear the burden of poverty alleviation which had to be shared by the process of growth mainly through small and medium industrial units.

The minister said that the government accorded great significance to the development of small and medium industries which required less capital and were highly labour intensive. These enterprises have great comparative advantage over big industries which consume large capital but provide less employment. Another advantage of the small enterprises is that they consume local raw material.

He said that large industries had failed to meet the demand for jobs in the country and "we have to widen the industrial base through development of small and medium industries to solve the problem of unemployment."

Shaukat Aziz said that the country could not make any breakthrough in export because it mainly depended on export of raw cotton and yarn and did not concentrate on value addition. This aim could be achieved in the textile sector by small and medium enterprises. Samea will provide manpower for high quality value addition in textile exports.

The minister said that the government had laid down a strategy for the development of small and medium enterprises. The Small and Medium Development Authority which is a group of professional finance and marketing experts, has been entrusted with the task of formulating export packages for fisheries, textile, agriculture , marble, jewellery and dairy sectors. A major portion of our fish catch, milk and fruits and vegetables is wasted due to lack of processing and preservation facilities.

Referring to the financing of small and medium enterprises the minister asked banks to give loans on market rates to these industries which have a good record of payment compared with larger organisations. Lending to these industries can improve the balance sheets of the banks. He said that the Government would also set up a micro credit bank which would provide financing to small and medium industries.

Shaukat Aziz said that the government would support the small and medium enterprises in the form of training and research programmes and in marketing of products and would minimise the number of taxes and simplifying them.

The minister said that the future of economy lay in Samea. He exhorted the small and medium entrepreneurs to improve their entrepreneurial skill and pay taxes to the government which in turn contributed to their development.

Earlier, President of Samea Zafar Iqbal in his address of welcome said that the need for setting up Samea had arisen due to the current economic conditions which led to the closure of a large number of small units while many big industries had become sick. The main reasons for the economic men were inconsistent policies of successive governments, inefficient bureaucracy, outdated procedures, multiplicity of taxes and decisions based on adhocism.

He said that in the worst economic crisis the only hope for the development of economy lay in the development of small and medium enterprises which had led the process of growth in many countries of the Far East.

He suggested that all government forms should also be published in Urdu because 95 percent of the entrepreneurs did not know English. At present the number of taxes charged from businessmen is 58. If the Government is serious about the development of businesses it should reduce the number of taxes and simplify their procedures,

Zafar Iqbal also proposed abolishment of wealth tax or raise in its limit from Rs. 2.5 million to Rs. 100 million. Similary income limit should be raised from Rs. 200,000 to Rs. 500,000.

He said that the basic objective of Samea would be to develop a tax culture and build mutual trust between the government and businessmen so that taxes were paid freely without any harassment and policies framed in consultation with the business community.