Small and Medium Enterprises (SME)

• Group Instructor : Sir Asif Iqbal

Group Members:

• Ahsan Ul arfeen• Usama Noor• Navin kumar

INTRODUCTIONSmall and Medium Enterprises (SMEs) are one of the largest and the most important sector of Pakistan's economy. Approximately 3.2 million business enterprises in Pakistan. 80% jobs to the non-agricultural labor force. Contribute over 30% to the GDP25% of exports of manufactured goods besides sharing 35% in manufacturing value added.

Characteristics of SMEs

Owner is the manager & few employeesOwned & operated independentlyRelatively small investment, production, sales, dealings etc.Inadequate efficiency of business operations - no relationship with other firms or parties for

Investment Management, finance, tax, accounting

Criteria For Definition SME

• Criteria of definition SMEs varies from nation to nation.• In Pakistan SMEs are defined against two criteria’s

Number of employees Investment • A small industry is that in which 10-35 employees are

engaged or it have the investment from Rs.2-20 Million. • A mediums industry is that which have the 36-99

employees are engaged or investment from Rs.20-40 Million.

History of SME

Every company we know began as an Small and Medium Enterprises (SME).

• Microsoft began as a couple of youth including Bill Gates and Paul Allen in a small garage in North-America

• Vodafone as we know it today was once a little spin-off from Racal

• Hewlett-Packard started in a little wood shack• Google was begun by a couple of young kids who thought they

had a good idea SMEs were neglected during 1950s and 1960s and attracted

worldwide during and after transformation from Agriculture Economies to Industrial Economies. The importance of SMEs was recognized in 1970s and 1980s, attracting the attention of main key players in the field.

SMEs contribution in the Economy

SME sector is the backbone of Pakistan’s economy in terms of its contribution towards

GDPemployment generationexport development. SMEs plays vital role in the development of any country

and their contribution can be defined in two terms. socially (by generating the jobs) economically (by generating the revenue).

Obstacles for operating SME

There is a dire need to create a favorable business environment for SMEs by eliminating unnecessary obstacles; these obstacles are:

Lack of proper infra-structure. Shortage of skilled manpower. Quality control problems. Lack of entrepreneurial expertise. Shortage / irregular availability of financing facilities. Shortage of equity sources. Inability to meet credit criteria / credit conditions. Lengthy documentation procedure.

Other Obstacles

• Rules and regulations• Fiscal and taxation system

Role of Government

• There is some institution for SME in Pakistan from government to boost economy by facilitate SMEs; these institutions are

SMEDA:SME BankBusiness Support Fund (BSF):Provincial Small Industries Corporation

(PSIC):

Essential for SME

• Access to Institutional Finance • Access to Technology • Skills• Organizational Structure/Management Level • Marketing

References

• http://www.dailynews.lk/?q=business/challenges-and-issues-faced-local-sme-sector

• http://www.msmenewsnetwork.com/index.php/homepage/sme-features/sme-news/item/2391-challenges-faced-by-the-sme-sector-in-pakistan-issues-and-remedies

• http://www.pide.org.pk/pdf/PDR/1998/Volume4/25-49.pdf

• http://www.southasia.fnst.org/Publications/360c17392i1p245/index.html

• http://www.gcu.edu.pk/publications/vc-sme.pdf• http://www.smeda.org/• http://smebank.org/about-us/history/• http://

www.pakistanbusinessjournal.com/b2b-directory/sme-business-support-fund_66090.html