KARACHI: Mian Nasser Hyatt Maggo, President Federation of Pakistan Chambers of Commerce and Industry (FPCCI), has demanded that the government should update the definitions of Micro, Small and Medium-sized organizations and make it MSMEs on the lines of current best practices internationally; for devising preferential treatment protocols based on peculiar ground realities of Pakistan.
MSMEs are the engines of growth and employment generation, he said in a statement. Hailing the efforts of Makhdoom Khusro Bakhtiar, Federal Minister for Industries & Production, for launching long-overdue SME Policy of Pakistan, he said that the SME Policy has been in the making for many years now and the process unfortunately got deferred many times over.
Maggo said that financing is the lifeline for SMEs and the SBP’s current SAAF Scheme has allowed a banking spread of 8% to commercial banks; on top of 1% refinancing rate of SBP; which makes it 9% for the SMEs. This high cost of capital is unaffordable, unproductive and unfeasible. FPCCI has proposed an interest rate of 3% for SMEs to make it viable for small businesses and entrepreneurs.
FPCCI President proposed that the defined annual sales threshold of a meagre 250 million rupees does not reflect the current ground realities of Pakistan; as when that threshold was set, the exchange rate was around 60 rupees for a dollar, which has now climbed to over 170 rupees. Therefore, he suggested, the new limit should be set at 1.5 billion rupees for SMEs.
FPCCI Chief reiterated his proposal for a simplified and streamlined taxation regime; including, easy-to-fill tax return forms; end to corruption; phased lowering of sales tax rates, etc., through its alignment to the FPCCI’s proposal called ‘Simplification of Taxation System in Pakistan’, sent to the Prime Minister of Pakistan back in February 2021.
About the glaring issues in labour-related provincial and federal levies on SMEs in Pakistan, Mian Nasser Hyatt Maggo proposed that all the provincial and federal levies to be clubbed together to make a single levy to be charged either as a percentage of turnovers or on some other pertinent criteria for the sake of simplification; but, protecting the present collections for the purposes these departments have been created, as well.
In order to keep demand-side variables in SMEs favour, President FPCCI suggested that the government should keep their procurement from SMEs strong and steady; incorporating procurement for CPEC-related projects.
Copyright Business Recorder, 2021