ISLAMABAD (APP) - Small and Medium Enterprises (SME) sector should be supported through relaxation in taxes and financial assistance, said Mahfooz Elahi, President of Islamabad Chamber of Commerce and Industry (ICCI), addressing a business community here on Saturday. Elahi said that the SME development was a key to economic growth. and had great significance in the development of economy. He said that SMEs ar growth in both developed and developing countries. The countrys SMEs are still unable to achieve their maximum potential and are in dire need of 'hand-holding and business support services. He said that in the industrial development of a country, the importance of the SME sector cannot be neglected. SMEs constitute nearly 90 per cent of all the enterprises in Pakistan, employ 80 per cent of the non-agricultural labor force and their share in the annual GDP is 40 per cent, approximately. However, unlike large enterprises in the formal sector, a small and medium enterprise is constrained by financial and other resources. Mahfooz Elahi said that the current SME policy of Pakistan does not take into explicit account the heterogeneity of the sector and, thus, consists of broad recommendations for the entire SME sector. The empirical evidence special needs of micro, small and medium firms in view for ensuring higher growth of firms of different sizes. He said that Pakistans SMEs need to focus development of new products, Import replacements, exports goods and goods with growing demand. It would be appropriate to put the scarce national resources, in particular, capital to use for the production of new products rather than duplicate lines of production that are being carried on, even with inefficiencies. Traditional products require adaptation and modifications in design and quality to meet the current demand trends. The President said that the government financial support is also needed for the purchase and lease of suitable machines for use of the micro enterprises. Small firms may be granted this facility to get these machines. In addition, small firms may be granted reduction of Corporation and Enterprise taxes, and also exempted from stamp duty, property tax, local rates, etc. same as it was practiced in Japan and Korea for the promotion of SMEs. Mahfooz Elahi said that the real challenge of the government is to set SME policy in a way of processing a shift of SMEs from static to dynamic preoccupations. This is possible through technological change which is also influenced by international trade, thus inviting firms to follow the best practices.