MGT601 SME MANAGEMENT

Lesson 07 Government Efforts Towards SME Development

Chapter Learning Objectives This lecture will throw light on:  The efforts of government towards SME development,  The role of institutions in public sector.

The efforts of Government towards SME Development The government of Pakistan keeping in view the importance of SMEs has adopted multi -pronged approaches at the regional, sub regional and national levels. Initiatives at the regional and sub-regional levels include efforts to strengthen economic integration and cooperation.

Continued……. At the national level;  Structural adjustment programs have been in operation along with attempts at restructuring and diversifying the production base, integrating the informal sector into the economic mainstream and stimulating the increased participation at the enterprise level.

Continued….. Over the years the government has developed a wide network of numerous support institutions for the development of small-scale enterprise in the country. The development process was initiated in the sixties and the concept of development derived its origin from the “Indian Model” of small enterprise development.

Continued….. The basic idea behind the model is to develop infrastructure facilities such as industrial estates, common facility centers and vocational training institutes, which would, to a great extent the problems faced by the SMEs.

Continued……. Based on this model numerous provincial level organizations were set-up mostly with the help of foreign assistance in the shape of grants and soft loans.

Continued……. Some of these institutions are which exclusively work for the small sector and besides the efforts of the Government;

Provincial Level Institutions 1. Punjab Small Industries Corporation (PSIC)  The PSIC was established in 1972 as an autonomous body for the promotion and development of the small-scale industries in the province.

Punjab Small Industries Corporation….. The PSIC covers the critical areas of investment promotion and provision of credits for setting up new industries and modernization of the existing ones. It also promotes the common facility center, technology transfer, guidance, handicrafts development and design facilities.

Punjab Small Industries Corporation….. The PSIC also covers;  Financing and Loans: PSIC is providing two types of loans to its clients, working capital and capital investment loans. The maximum limit of loan is RS. 7.5 Lac.

Punjab Small Industries Corporation…..  Industrial Estates: PSIC has developed 14 industrial estates in various areas of the Punjab.  Services and Programs: PSIC has also launched “Rural Industrialization Program” to control unemployment and strengthen the marginal household income through stimulation of industrial growth in the urban and rural areas of the Punjab.

Punjab Small Industries Corporation….. PSIC has established various types of service centers e.g. metal industries development center, Sialkot, Engineering service centers. Gujranwala, institute of pottery development, Shahdara etc.

Sindh Small Industries Corporation (SSIC) SSIC was established in 1972 having motives to indulge into promotional activities of small-scale industries in Sindh. The objectives of SSIC include financial assistance, education of craftsman, census and survey of cottage and small industries, procurement and distribution of raw materials to artisans and craftsman.

Sindh Small Industries Corporation…. The SSIC also covers; Industrial Estates and Colonies: The SSIC has established 17 industrial estates in Sindh. Total number of plots developed there are 1938 and there are 302 units working utilizing 571 plots. There are six different craftsman colonies established having 92 shops.

Sindh Small Industries Corporation…. Financing Schemes: In October 1992, a self- employment scheme was started for locally manufactured machinery (LMM). The loan ceiling is 1 million with the markup rate of 14%. The total amount disbursed to 171 units is rupees 98 million.

Small Industries Development Board (SIDB) Khyber Pakhtunkhwa The SIDP was established in The SIDB is an autonomous body, focusing on manpower training, model projects and industrial infrastructure. It has 14 regional offices in the different cities of KP.

Small Industries Development Board (SIDB) Khyber Pakhtunkhwa….. The SSIC covers;  Training Centers  Development Programs and Model Projects  Industrial Estates  Financial Assistance

Directorate of Industries (Balochistan) The directorate of industries was formed in 1976 and it looks after all the promotional schemes for SMEs. Further more, the directorate is also involved in providing various kinds of advisory and consultancy services.

Directorate of Industries (Balochistan)….. Training Centers:  The directorate operates sixty-three training centers in various trades, one service center, 5 sales and display shops and one small-industries estate. Of the 63 training centers, about third are carpet centers, seven are embroidery centers and the others cover areas like tailoring, wood work, marble work, mazri and durree production.

Financial Institutions Financial sector organizations also are of great importance to the SME development in the country. The government has also established some institutions, which cater to the financing needs of the small firms.

Financial Institutions……  Small Business Finance Corporation (SBFC)  Youth Investment Promotion Scheme (YIPS)  Regional Development Finance Corporation (RDFC)  Industrial Development Bank of Pakistan (IDBP)

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