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Junaid Makda for simplifying taxation procedures, incentives to SMEs

Junaid Makda for simplifying taxation procedures, incentives to SMEs

KARACHI: The State Bank of Pakistan (SBP) and Unites States Agency for International Development (USAID) have assured that the Karachi Chamber of Commerce and Industry (KCCI) will be taken on board and frequently consulted prior to devising numerous polices for the Small & Medium Enterprises (SMEs) while special attention will be given to SMEs’ issues which are brought to SBP’s and USAID’s notice by KCCI.

The assurance was given by Senior Joint Director, Development Finance Division, State Bank of Pakistan Najam Altaf and Business Development Support Specialist USAID Nauman Ali Syed at a Small & Medium Enterprises Activity held at KCCI which was well attended by various stakeholders while President KCCI Junaid Esmail Makda, Senior Vice President KCCI Khurram Shahzad, Vice President KCCI Asif Sheikh Javaid, Managing Committee members and others were also present on the occasion.

Najam Altaf, Senior Joint Director, Development Finance Division, State Bank of Pakistan, in his presentation, pointed out that keeping in view the 30 percent contribution of SMEs in GDP, 25 percent in exports and 78 percent in the industrial employment, banks and the government have started realizing the particular needs and preferences of SMEs.

He said that SMEs are confronting numerous issues including low financial literacy, lack of collateral and documentation, lack of awareness on SME financing products, complicated loan procedure, reluctance to tax filing, Quick and easy access to informal finance. The State Bank is trying to deal with these issues and is taking steps to increase SME share from existing 8 percent of private sector credit to 17 percent by 2020, he added.

He said that steps were being taken to simplify tax regime for SMEs which include Tax rate reduction on banks’ income derived from SME financing, Tax holiday on income of eligible start-ups and women borrowers and reduction in sales tax on service sector. Moreover, Ministry of Commerce and other stakeholders will work to create a Marketplace Website under e-Commerce while an innovation challenge fund will also be launched to explore new solutions to promote SME financing through technology, he added.

In his presentation, Business Development Support Specialist USAID Nauman Ali Syed informed that SMEA is a five-year, US $35 million project aimed at helping SMEs from selected sectors grow. “We aim to do this by improving firm level performance, fostering entrepreneurship, helping understand and access new markets and promoting access to finance”, he added.

He informed that under SMEA, work was being carried out in different sectors including ICT, Hospitality, Textile, Light Engineering, Logistics and Packaging and Minerals with an objective to help increase sales revenues and help create jobs, besides focusing on identifying and supporting women-led businesses along with exploring new and emerging sectors.