Friday, January 3, 2020

Can SMEs be helpful in the improvement of Pakistan economy?

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Can SMEs be helpful in the improvement of Pakistan economy?


Small and medium-size enterprises (SMEs) play a significant role in the economic, industrial and social development of a country. According to Rohra and Panhwar (2009), most developed countries acknowledge the importance of the SME sector to help their economies. SMEs play a specific role in development, as it has been a source of employment generation and income generation. They contribute to the development of a nation by maintaining the standard of living by increasing the income of the people. SMEs contribute to the growth and competitiveness of the economy.


SMEs in Pakistan play a critical role in the economic growth, progression of technological innovation, sourcing to large industries, cottage industries and promoting economic renewal and social development. SMEs are one of the main sources of reducing poverty, expanding the national economy. It can be the foundation of employment and social elevating. Pakistan's economy, like many developing countries, is a direct reflection of its SME sector. According to Pakistan's Economic Census 2005 (this is the latest census in Pakistan), there are 3.2 million businesses in Pakistan. SMEs represent over ninety percent of all private businesses and employ about 78 percent of the non-agricultural labor force in Pakistan. SMEs contribute more than 30% to Pakistan's GDP. Additionally, the region represents 25% of manufactured goods exports and 35% of manufacturing value. About 53% of all SME activity is in the retail, wholesale, restaurants and hotels sector. 20% of SMEs activity is believed to be 22% in industrial establishments and service provision. Recognizing the significant contribution of SMEs for economic diversification, employment generation, income generation and poverty alleviation, the Government of Pakistan (GOP) is making great efforts. And resources towards promoting entrepreneurship and the development of SMEs in general.


They constitutes the bulk of Pakistan‘s business landscape. Nothing describes the reality of the Pakistani business environment better than the nature of its SME sector. Therefore, it is important to clearly identify different categories of SMEs and take into account different types of enterprises (even small local enterprises or partnerships) under a certain definition. The first defines SMEs as having long debates and arguments about key thresholds. Many countries around the world have struggled to determine the appropriate size of SMEs and to overcome challenges that impede the progress of SMEs. Since the establishment of SMEs, the Pakistani government has been neglecting their importance and not giving them the facility to deal with the crisis. However, Pakistani SMEs have tremendous potential that can be tapped. Therefore, facilitating the new definition of SMEs requires real support from government, private and public officials as its prediction is highly productive and serves as a catalyst for economic growth and development.


Pakistan has amazing potential for development to boost economy and standard of living of its people. However, the key problems or challenges slow down the progress of SMEs. The SMEs have been neglected till late 90sand the main focus remained on corporate sectors particularly in large scale manufacturing units. Government, banks and financial institutes emphasized more on the large sector than on SMEs. Released in his article that "as indicated by the administrative and arrangement condition of Pakistan isn't helpful for the development of SMEs part and by and large government exertion is remained concentrate for the advancement of enormous firms." It has been since long that SMEs don't get sufficient access of assets and the attention focused on huge mechanical scale. The quality and accomplishment of SMEs exist in advancement, one of a kind aptitudes, great system, fast correspondence, less organization, close outside and inner contacts, advertise patterns and stream. As per other gathering of researchers the accomplishment of SMEs is impacted by information, experience and aptitudes of the representatives and proprietor. Absence of substantial assets, for example, physical and budgetary capitals are basic for a SMEs progress though immaterial assets when use appropriately are critical for the development.


Credible definition will operate as a functional key in the formulation and effective monitoring of SMEs. It actuates the arrangement creators who can make a benchmark to check dynamic upgrades in SMEs guidelines and working. The paper projections want to convince the administration authorities and SMEs to meet up so as to evacuate the level of decent variety and clashes among SMEs definitions as the present definitions shift enormously in extents to national economies. It reasons that the definition by work, resources and turnover has various preferences. The key limitations are recognized that included administrative and other government related issues, finical issues, framework, crude material, HR, innovation obstructions, peace issues and advertising issues.


Students of BBA 2K19 Batch, Shaheed Benazir Bhutto University, Shaheed Benazirabad, Sindh. 

  • Muhammd Asim
  • Muhammad Umar
  • Abdul Aziz

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