The Small and Medium Enterprises Development Authority (Smeda) has submitted an exclusive set of proposals for the federal budget 2013-14 with regard to SMEs development in the country.
The proposals were collected through SME sector’s stakeholders both from private and public sector on call of Smeda CEO Sardar Ahmad Nawaz Sukhera. A direct consultation was also made in this regard with trade bodies, SME associations and sector development companies to develop fiscal measures for creating a conducive business environment for SMEs.
Salient features of the recommendations submitted by Smeda to the Ministry of Finance include reduction of corporate tax on small companies from 25% to 20% to enhance corporatization. To increase savings it is recommended to decrease withholding tax on profit on deposits from 10% to 5%.Sales tax for SME manufacturers & exporters is desired to be reduced and special concession on sales tax may be granted to farm inputs such as seeds, pesticides and fertilizer.
In order to cope with energy crisis, it is also proposed that the import of generators and alternate energy resources may be zero rated, as electricity load-shedding has an adverse impact on the productivity of SMEs.
Support for human resource development is important to enhance SME productivity and competiveness in local and global market. It is recommended that Research and Development support @ 5% of the export value may be provided to prominent SME sectors such as leather, gems and jewelry, sports goods, cutlery, light engineering, garments and hosiery.
CEO SMEDA said that SMEs constituted around 99% of total economic establishments in Pakistan, which was contributing 40% to GDP and playing a role backbone in the national economy. The government, therefore, should pay special attention to SME development in the upcoming budget to enhance its productivity and competitiveness in local and global markets, he said.
This is notable that the federal budget being an important policy document has a direct impact on the business environment of the country. Every year, the business community anxiously awaits announcements of incentives and initiatives in the federal budget to plan their future targets and strategies. SMEDA in its role as an SME development agency provides feedback of the SME sector to the government of Pakistan for including SME friendly measures in the budget.