Pakistan: SMEs urge government support as economy faces severe challenges

Karachi [Pakistan], November 3 : The Pakistani economy is in dire straits, and Small and Medium-sized Enterprises (SMEs) have emphasized that a lasting recovery depends on a robust SME sector, reported The Express Tribune.
Entrepreneurs believe that strengthening this sector is crucial for revitalizing the nation's economy. They are urging the government to facilitate collaboration among SMEs to bolster this vital part of the economy for the greater good of the public.
According to a report by The Express Tribune, in Karachi, two out of seven major SME zones--North Karachi Association of Trade and Industry (NKATI) and Federal B Area Association of Trade and Industries (FBATI)--are experiencing significant financial strain.
These zones, along with small industrial estates in various Sindh districts such as Hyderabad, Larkana, Shaheed Benazirabad, Badin, and others, are facing severe challenges.
They struggle with high business costs, steep energy tariffs, rising rents, expensive tanker water fees, inflated logistics expenses, deteriorating road and sewer infrastructure, ongoing inflation, and unsustainable pressure from Independent Power Producers (IPPs).
Moreover, these businesses are burdened by rampant corruption and extortion demands from 67 different government departments.
Entrepreneurs have urged the government to establish a comprehensive mechanism, similar to a one-window operation, to support small enterprises in overcoming the bureaucratic hurdles that impede industrial growth.
They highlight that these departments are often accused of soliciting bribes and kickbacks, which is untenable in light of the current economic difficulties. Despite being the backbone of the economy, SMEs encounter numerous challenges, including difficult working conditions, a high level of informality, productivity concerns, and low wages.
FBATI President Sheikh Muhammad Tehseen emphasized the challenges impacting the stability of small and medium-sized businesses in Karachi.
He pointed out that soaring utility costs for electricity, gas, and water, along with elevated interest rates, are significantly eroding the profits of businesses that depend on financing options.
In addition to these challenges, business owners and their employees face inadequate basic infrastructure, including a deteriorating road network, water shortages, and malfunctioning streetlights, complicating operations in Pakistan's primary commercial and export hub.
Furthermore, street crime remains a constant threat to the safety and property of both business owners and their employees in industrial areas.
Tehseen noted that these issues are hindering worker productivity and disrupting economic activities.
The report further states that businesses are currently grappling with widespread viral outbreaks, including chikungunya, dengue, and malaria, which have affected the health of a significant portion of the workforce. This situation creates additional difficulties for exporters and business owners who are already struggling to keep their operations running.
Hyderabad Chamber of Commerce and Industry (HCCI) President Adeel Siddiqui voiced his frustration over the lack of comprehensive policies for SMEs in the 77 years since Pakistan gained independence.
"It's truly disappointing," he remarked. He criticized the government's excessive emphasis on the textile sector, which has struggled to surpass USD 25 billion in exports over the last decade.
He questioned, "Why aren't the long-ignored SMEs receiving the support, incentives, and affordable loans necessary for growth?"
He urged policymakers to prioritize SMEs despite the challenges they face.
Siddiqui also expressed concern about the Sindh Environment Protection Agency's (SEPA) mandates requiring SMEs to install sewage treatment plants, which is particularly challenging given the significant water shortages in these areas. Small industries are already forced to buy water because the Water and Sanitation Agency (WASA) failed to provide a reliable supply in Hyderabad.
"How can small businesses manage to pay for water tankers and install sewage treatment plants, especially when they are working with tight budgets?" Siddiqui questioned.
He also urged the government to increase the youth loan scheme from Rs7.5 million to Rs15 million to provide young entrepreneurs with the financial support they need to launch sustainable businesses.