Karachi, June 03, 2015 (PPI-OT): The Union of Small and Medium Enterprises (UNISAME) invited the attention of Ishaq Dar federal finance minister (FM) that the finance ministry is taking the MSME issues non seriously and it is believed that they have not considered sufficient support to facilitate the under privileged sector in the forthcoming budget.
President UNISAME Zulfikar Thaver said the union is apprehending neglect of the finance ministry and overlooking of important requirements of the sector for finance, technical and marketing support, information technology, making the environment conducive and reducing cost of production. The sector will be disappointed if the budget fails to facilitate them.
He made it clear to the FM that the sector is the majority sector and the backbone of the economy. It is the responsibility of the state to promote, support, facilitate and encourage the sector. The sector is the engine of growth and vehicle for employment.
It is high time the government realizes the need to modernize farming, trading, manufacturing and services and comprehends the need to work from grass root level for the primary sector which is the source of raw material from farm produce, Needless to say the SME sector is the value addition sector and deserves priority along with housing.
Thaver reiterated the need to increase the tax exemption limit from Rs 400000 to 600000. The SMEs are required to pay income tax on their own income and also on association of persons (AOP) which are family concerns and registered as firms. This double taxation is unfair and must be waived.
The cash from bank withdrawal is subject to withholding tax (WT) on drawings of Rs 50000 and above and this needs to be increased to Rs 100000. Profit on savings is subject to withholding tax at 10% and this is very high as the profit on savings has been reduced substantially and accordingly the WT must be reduced to 5% to accommodate the senior citizens and the middle class and also to encourage savings.
Import duties on energy devices must be made 0% and in fact installation be financed on subsidized rates. Import duties on raw materials be reduced to encourage import substitution industries. Tax exemptions for innovative industries, industrial estates and purchase of land for industries must be on easy instalments and soft loans.
Export refinance rate must be revised according to the reduction in discount rate. Warehouse receipt financing and collateral management, risk management system be sharpened to facilitate growth. Banks, insurance and leasing need modernization.
The micro finance (MF) banks be allowed to finance the small sector and accordingly the limit of Rs 500000 be enhanced to 1 million. The restrictions on financing the micro sector be removed to enable the MF banks to increase their scope. The import duties on farm inputs and farm equipments be exempted to encourage modernization of farms.
The local industry needs support and tariff protection and the items made in Pakistan be protected from imported goods being dumped in the markets. The Small and Medium Enterprises Development Authority (SMEDA) needs to be strengthened with sufficient funds and personnel to cover all districts of the country and to expand its outreach efficiently.
One window operation be made available to investors. The Trade Development Authority of Pakistan (TDAP) be directed to set up marketing support on modern lines with IT exhibitions and galleries on internet and promote online business of Pakistani goods.
The government needs to subsidize technology transfer, collaborations and joint ventures under private public partnership. There is urgent need for SME chamber of commerce, Export house, SME specific bank, Technical institute and Ombudsman.
UNISAME experts urged the FM to personally ensure that the requirements of the sector are considered diligently and the sector facilitated in letter and spirit as per the SME policy which gives priority to the sector inclusive of housing and agro based industries.
For more information, contact:
Union of Small and Medium Enterprises (UNISAME)
75/1 3rd Commercial Street,
Phase IV, D.H.A., Karachi, Pakistan
Cell: +92-300-8245307, +92-321-8245307