President, Union of Small and Medium Enterprises (UNISAME) Zulfikar Thaver and member National Committee SMEs (NCSMEs) has called upon the Federal Minister to comprehend the fact that the government needs to focus on the SME sector as the sector is capable of reviving the declining economy and no time should be lost in this endeavor.

He said considering the fact that the large sector has slowed down due to the prevailing conditions and is apprehensive of the increase in fuel prices, wages and cost of production which will hamper their feasibilities and put them out of gear for a certain period till prices stabilize as against this the SME sector is vibrant and has the built-in mechanism to overcome as the SME industries are owner driven.

Explaining the salient features of the sector he said this sector comprises of 96 percent of all enterprises in trading, manufacturing, services and agriculture and is capable of boosting the economy with a little pampering, said a statement issued here Sunday.

He emphasized that this sector needs land at concession, finance at affordable mark up and back up support of leasing, insurance, good logistics and technical support from institutions like the Small and Medium Enterprises Development Authority (SMEDA), Trade Development Authority of Pakistan (TDAP), Pakistan Council of Scientific and Industrial Research (PCSIR), Engineering Development Board (EDB) and other SME promotion and development organizations.

The Union of Small and Medium Enterprises (UNISAME) has recommended the Islamic mode of financing as the best option for the SMEs during the present period of reduced financing by commercial banks.

Kazi Shafiquddin Hub Operations Manager Bank Islami Pakistan Ltd (BIPL) explained the benefits of Islamic mode of financing to the members of UNISAME and emphasized the fact that in the present scenario Islamic mode of financing is the most suitable where the financing is based on partnerships under Mushariqa and Mudaraba and the burden is not felt by the borrowing partner as it is based on the profitability of the venture.

He also suggested other means of financing such as Ijara where the subject moveable property is given on lease to the borrower and the borrower repays in  easy installments which are treated as rent and on completion of installments the moveable property is transferred to the borrower. He also mentioned the Maskan financing for housing and outlined the features for the SMEs who are desirous of buying houses for themselves but are unable to pay in lump sum due to involvement in business trading or industry and by availing the facilities of Maskan they can own their houses and save the rent amount by paying the loan.

The State Bank of Pakistan has introduced financing facility for establishment of new power projects using renewable energy with a capacity of up to 10 MW with a view to meeting the growing electricity demand of the country.
According to a circular (SMEFD Circular No. 19) issued Tuesday, sponsors of power projects can avail financing facility through banks/DFIs for new imported and locally manufactured plant, machinery and equipment. Preference shall be given to projects being established in the less developed areas, it said.

As per eligibility criteria laid down in the circular, financing will be available to the prospective sponsors desirous of setting up of power projects with a capacity of up-to 10 MW, who have completed prescribed requirements of AEDB, the concerned regulatory authority and other relevant govt dept/authority, in compliance with the prevalent Renewable Energy Policy of the GoP.

With a view to encourage the sponsors of Rice Husking Mills / Automatic Sella Plants to modernize their mills/units to produce quality rice, SBP is introducing a new medium to long term financing Scheme. Financing facilities under the Scheme shall be allowed subject to the terms & conditions prescribed under scheme for “Refinancing Facility for Modernization of Small and Medium Enterprises (SMEs)” details of which are attached as Annexures.

2. Under the Scheme financing shall be available at subsidized rates for import/purchase of new Rice Husking Machines, Paddy Driers and Parboiling Plants by the sponsors of Rice Husking Mills / Automatic Sella Plants. The rates of mark-up under the Scheme shall be as under:-

President Barack Obama urged US banks on Saturday to unfreeze credit for small businesses, calling them “the engine” of the country’s economy. “Small businesses have always been the engine of our economy creating 65 per cent of all new jobs over the past decade and a half and they must be at the forefront of our recovery,” Obama said in his weekly radio address.

State Bank of Pakistan has issued the following details about refinancing facility for modernisation of Small and Medium Enterprises (SMEs) communicated through its circular No. SMEFD 17 dated November 2, 2009.