ISLAMABAD: Adviser to Prime Minister on Finance and Revenue Shaukat Tarin would be holding a meeting with all the stakeholders of SME Policy today (Monday) to address their concerns about tax relaxation and collateral free lending envisages in five years proposed policy designed to increase its contribution to the economy.
An official said that the approval of the proposed SME policy was delayed after Federal Board of Revenue (FBR) and State Bank of Pakistan concerns with regard to tax relaxation and lending.
An official said that SME policy envisages increasing the economic contribution of SME with sustained SME growth of 9 percent per annum in the next four to five years and services sector of the SMEs to 10 per cent per annum by 2025 from existing growth of 4.43 percent in 2020-21.
The policy also targets increasing average SME sector employment to 5 percent per annum from 2.43 percent during the last three years besides increasing SME sector exports 10 percent per annum by 2025. SME credit will be increased from Rs 437.57 billion Rs 800 billion and number of SME from 172,1393 to 700,000 by fiscal year 2025.
An official said that the FBR had some reservations over tax relaxation whereas SBP on collateral free lending to the SMEs as policy envisages that SME Asaan Finance Scheme (SAAF) for collateral-free lending launched by the State Bank Pakistan will be targeted towards SMEs, based upon size, sector, geography, and gender.
Sources further stated that the policy will ensure full implementation of the Enhanced National Financial Inclusion Strategy (NFIS) 2023, as it envisages host of measures to enhance financial access to the SME and would ensure full implementation of the Enhanced National Financial Inclusion Strategy (NFIS) 2023.
As per policy, the SBP will review key regulations relating to SME financing on a periodic basis and implement changes to smoothen process and reduce the cost of accessing and providing capital besides as well as it will widely disseminate information about the “movable assets registry” to ensure its uptake by commercial lending institutions.
The SBP will put in place a system to periodically review the process of account opening, and documentation required by commercial banks, to ensure that it remains streamlined and any steps or documents that are not necessary, may be eliminated. The SBP will facilitate commercial banks to open back to back letter of credit, so that the exporting firms are able to use their receivables as collateral to secure short-term financing.
Last ECC meeting has delayed approval of the policy after FBR and SMEs reservations. An official said that the adviser on finance directed that he would hold a meeting with stakeholders including FBR and SBP on Monday to address their concerns today (Monday).
Copyright Business Recorder, 2021