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Project Report on SMEDA
by Commerce Solutions in

WHAT ARE SME'S

 As defined by State Bank of Pakistan - SME (Small and Medium Enterprise) means an entity, ideally not a public limited company, which does not employee more than 250 persons (if it is manufacturing concern) and 50 persons (if it is trading / service concern) and also fulfills the following criteria of either 'a' and 'c' or 'b' and 'c' as relevant:

(a) A trading / service concern with total assets at cost excluding land and buildings up to Rs 50 million.
(b) A manufacturing concern with total assets at cost excluding land and building up to Rs 100 million.
(c) Any concern (trading, service or manufacturing) with net sales not exceeding Rs 300 million as per latest financial statements.


 

SIGNIFICANCE OF SME'S

SME's are considered the engine of economic growth in both developed and developing countries, as they:
Provide low cost employment since the unit cost of persons employed is lower for SME's than for large-size units.


 

PROBLEMS FACED BY PAKISTAN'S SME SECTOR

Pakistan's economy has amazing potential for development but sadly, we haven't been able to derive optimal benefits despite a series of efforts launched by various policy makers at different times. The impetus of all these endeavors was on the large scale industries and manufacturing concerns. High rate of failures, owing to economic slumps, institutional malpractices, political motives and damaging activities of labor unions in that sector, left the formal lending institutions with huge infected portfolios, in addition to adverse effects on the entire economy e.g. insufficient and low quality production to meet the demands of local and international markets, deficit in balance of payments and ever rising unemployment, etc. 

Pakistan's SME's are still unable to achieve their maximum potential and are in dire need of 'hand-holding' and business support services.

STATE OF SME'S IN PAKISTAN

In the industrial development of a country the importance of the SME sector cannot be overemphasized. SME's constitute nearly 90% of all the enterprises in Pakistan; employ 80% of the non-agricultural labor force; and their share in the annual GDP is 40%, approximately. However, unlike large enterprises in the formal sector, a small and medium enterprise is constrained by financial and other resources. This inherent characteristic of an SME makes it imperative that there should be a mechanism through which it may get support in different functions of business including technical up gradation, marketing, financial and human resource training & development.

SMEDA is the flagship organization of Pakistan which is providing the necessary services to help SME's overcome the weaknesses that are endogenous to their very nature. It is an autonomous body working under the umbrella of the Ministry of Industries & Production and contributes towards the growth and development of SME's in Pakistan through:

(i) the creation of a conducive and enabling regulatory environment;
(ii) development of industrial clusters;
(iii) the provision of Business Development Services to SME's in all areas of business management.

Adhering to a clear mandate and a logical path to achieve quantitatively verifiable targets, SMEDA carries out comprehensive analyses of international trends, national policies and other macroeconomic factors affecting SME's in Pakistan for a gradual progress towards the creation of a favorable business environment for its key clients – the SME's of Pakistan. At the same time, we also interact with the SME's working in industrial sectors such as Agriculture, Fisheries, Textiles, Handloom Weaving, Transport, Leather, Marble & Granite, Carpets and Light Engineering. This interaction takes place at the individual as well as collective level to provide proactive and responsive financial, technical, management and marketing services to SME's.

At the collective level SMEDA addresses the problems and needs of SME's in the form of an industrial cluster – a concentration of largely homogenous enterprises within a certain geographical area. SMEDA interacts with the stakeholders operating in such clusters on a regular basis and collects first hand information about their problems and needs. During this interaction, the issues are prioritized and the important problems are selected for detailed working through which the projects/programs are identified.
SME support through cluster development program is provided on two fronts:

1. Regulations and policy level support
2. Institutional & networking support

In the policy level support, problems related to any Government department or Government policy/regulation are studied and, if found valid, are advocated with the concerned authorities. At the institutional level, SMEDA provides support to SME's by creating networking amongst the concerned stakeholders or by directly starting development projects in the clusters. Such projects may include establishing a training institute, building a common facility centre, building a model plant with state-of-the-art technology for SME's to emulate through reverse engineering. These projects also include upgrading technology in a particular industrial sector and starting a program-lending scheme for this purpose in collaboration with the financial institutions.

Up to now, SMEDA has been involved in cluster development projects in the areas of Boat Modification in Marine Fishery Sector, Credit for Auto Vendors, Carpet Weaving, Marble & Granite, Dates & Apples Processing, Wooden Furniture, Leather Garments, Ceramic Kilns, Cotton Ginning, and Glass Bangles Cluster.
Some of the important cluster development projects undertaken by SMEDA are:

Textile/Apparel

1. Ginning Technology Up-Gradation
2. Program Lending For Power Looms
3. Computer Aided Design Centre (Common Facility Centre-Sialkot)
4. Designing Institute for Garments (Peshawar)
5. Accessories Sector Study
6. Development of Handloom Cluster

Horticulture/Fruits and Vegetables

7. Establishment of Cool-Chain Agriculture Export Processing Zone
8. Fruit Processing Facility (NWFP in Collaboration with EPB)
9. Assistance to Set Up Horticulture Export Board
10. Revitalization of Sunflo Cit-Russ for Citrus Cluster Development.
11. Apple Treatment Plant in Balochistan (Co-Ordination with EPB)

Fisheries

12. Program Lending Boat/Engine Modification, Gwadar District
13. Establishment of Shrimp Farms
14. Fish Processing Facility In Gwadar (Feasibility Study)
Granite & Marble
15. Export Warehouse Marble (Azakhel NWFP)
16. Establishment of Model Quarry and Training Institute Marble
17. Joint Ventures and Technology Transfer Arrangements (NWFP)

Gems

18. Five New Gem Mines To Be Operationalized (NWFP)
19. Lapidaries Program Lending (NWFP)
20. Glass & Ceramics
21. Ceramics Kiln Up-Gradation: Common Facility Centre, Gujrat
22. Sanitary Ware & Pottery Sector Kiln Up-Gradation
23. Bangles Kiln Up-Gradation (Hyderabad)


 

Agriculture

24. Agri-Mall – One Stop Shop for Agriculture Inputs
25. Support Services for Agricultural Credit (SSAC)
26. Establishment of 3 Private Sector Warehousing & Trade Promotion Facilities in Afghanistan

As a part of its Business Development Services, SMEDA also provides Human Resource Training services by conducting extensive training need analysis of different SME clusters. SMEDA has so far conducted more than 230 training courses and workshops focusing on developing sector specific skills.

SMEDA, envisions to become a model of public-private partnership for better facilitation of the small & medium enterprises in Pakistan through the creation of a more equitable, transparent and conducive regulatory environment for the businessmen. SMEDA believes in synthesizing home-grown solutions to the problems of SME's, based on global information and local wisdom achieved through cross-country analysis, experience of indigenous entrepreneurs and constraints of the government.

INTRODUCTION

The Small and Medium Enterprise Development Authority- SMEDA

Premier institution of the Govt. of Pakistan under Ministry of Industries, Production & Special initiative, SMEDA was established in October 1998 to take on the challenge of developing Small & Medium Enterprises (SME's) in Pakistan. With a futuristic approach and professional management structure it has focus on providing an enabling environment and business development services to small and medium enterprises. SMEDA is not only an SME policy-advisory body for the government of Pakistan but also facilitates other stakeholders in addressing their SME development agendas.

SMEDA, envisions to become a model of public-private partnership for better facilitation of the small & medium enterprises in Pakistan through the creation of a more equitable, transparent and conducive regulatory environment for the businessmen. SMEDA believes in synthesizing home-grown solutions to the problems of SME's, based on global information and local wisdom achieved through cross-country analysis, experience of indigenous entrepreneurs and constraints of the government.


SMEDA Vision

Growth of globally competitive SME sector through a conducive and facilitating environment and support services as an engine of growth and sustainability to national economy.

Mission Statement

To function as the promoter & facilitator of SME sector in Pakistan by creating a conducive and facilitating environment as well as providing and facilitating service delivery to SME's for enhancing their capacities and competitiveness.

SMEDA Objectives


 


SMEDA OFFICES

H E A D   O F F I C E

  

Address:

6th Floor, LDA Plaza, Egerton Road, Lahore 

  

Tel:

(042) 111-111-456 

  

Fax:

(042) 6304926, 6304927 

  

Email:

helpdesk@smeda.org.pk

  

R E G I O N A L    O F F I C E S

Balochistan

  

  

Address:

Bungalow No. 15-A Chaman Housing Scheme Airport Road, Quetta. 

  

Tel:

(081) 2831623 - 2831702 

  

Fax:

(081) 2831922 

  

Email:

helpdesk.balochistan@smeda.org.pk

NWFP

  

  

Address:

Ground Floor, State life Building, The Mall, Peshawar.

  

Tel:

091-111-111-456, 091-9213046-7 

  

Fax:

91-286908 

  

Email:

helpdesk.NWFP@smeda.org.pk

  

Punjab

  

  

Address:

8th Floor, LDA Plaza, Egerton Road, Lahore. 

  

Tel:

(042) 111-111-456 

  

Fax:

(042) 6304926, 6304927 

  

Email:

helpdesk.punjab@smeda.org.pk

  

Sindh

  

  

Address:

5 TH Floor, Bahria Complex II, M.T. Khan Road, Karachi.

  

Tel:

(021) 111-111-456 

  

Fax:

(021) 5610572 

  

Email:

helpdesk.sindh@smeda.org.pk

  

R E G I O N A L    B U S I N E S S    C E N T E R S (RBC's)

HUB ( Balochistan )

  

  

  

  

Address:

3rd Floor, Civic Center, District Lasbela, Balochistan, Hub. 

  

Tel:

0853-303222, 0333-2271844 

  

Fax:

0853-302827 

  

Email:

rbc.hub@smeda.org.pk

  

Gawadar ( Balochistan )

  

  

  

  

Address:

Gwadar Chamber of Commerce and Industry GCCI House, Airport Road, Gawadar. 

  

Tel:

0333-7841691 

  

Email:

rbc.gawadar@smeda.org.pk

  

Abbottabad ( NWFP )

  

  

  

  

Address:

Hazara Chamber of Commerce & Industry, Abbottabad.

  

Tel:

0992-9310321 

  

Fax:

0992- 384931 

  

Email:

rbc.abbottabad@smeda.org.pk

  

MINGORA ( NWFP )  

  

  

  

  

Address:

Small Industrial Development Board, Patti Centre, Rahim Abad, Mingora.

  

Tel:

0333-9158908 

  

Email:

rbc.mingora@smeda.org.pk

  

Peshawar ( NWFP )

  

  

  

  

Address:

(ITAC) Sarhad Chamber of Commerce & Industry Chamber House G.T Road, Peshawar.

  

Tel:

091-9212352

  

Fax:

091-9213316 

  

Email:

rbc.peshawar@smeda.org.pk

  

SARGODHA ( Punjab )

  

  

  

  

Address:

Regional Business Centre80/2-A, Satellite Town, Sargodha. 

  

Tel:

048-9230662 

  

Fax:

048-9230835 

  

Email:

rbc.sargodha@smeda.org.pk

  

BOARD OF DIRECTORS

Public Sector:


 


 

Private Sector:


 


INTERNATIONAL BUSINESS OPPORTUNITIES SERVICE

SMEDA is providing a unique service to facilitate SME's by promoting business-to-business relationships. SMEDA's role is that of a matchmaker and we provide a platform for SME's to come together and explore different areas of cooperation using SMEDA's databases and web-site. Now anyone can look for joint ventures, buy running business, form equity partnership, look for agents or distributors franchises and other business investment opportunities through this initiative.

BUSINESS MATCHMAKING SERVICE

SMEDA is providing a unique service to facilitate SME's by promoting business-to-business relationships. SMEDA's role is that of a matchmaker and we provide a platform for SME's to come together and explore different areas of cooperation using SMEDA's databases and web-site. Now anyone can sell their business, look for joint ventures, buy running business, form equity partnership, look for agents or distributors through this initiative.


 

PRE-FEASIBILITY STUDIES

Pre-feasibility studies are well researched yet generic due diligence reports that facilitate potential entrepreneurs in project identification for investment

The main objective of the pre-feasibility studies prepared by SMEDA is to provide information about investment opportunities to the small & medium enterprises (SME's). A typical pre-feasibility study provides:


 


 

REGULATORY PROCEDURES

SMEDA Regulatory Procedures have been developed to disseminate information and to assist Small & Medium Enterprises on existing regulatory environment, through user-friendly systems, providing detailed description of laws & regulations, including processes required for compliance while doing business in Pakistan.


 

SECTOR BRIEFS

One of the objectives of SMEDA is to provide fresh impetus to Pakistan's economy through an aggressive Sectoral Development program. Its role in this regard will be recommending policy guidelines to the government for development of small & medium businesses.

The sectors have been selected on the basis of criteria like:

The sector analysis template includes all-important considerations including Technology, Finance, Marketing, HR Development and the Regulatory Framework. Another key area to look for value addition is in the market penetration area. There may be potential in the distribution channel and marketing intermediary functions.

SMEDA PUBLICATIONS




SMEDA Publications & Business Information Dissemination

Small & Medium Enterprise Development Authority, SMEDA, has initiated a process of articles, books & other publications to create awareness among the general public on optimal business practices, regulatory issues, GOP schemes, new business concepts, etc.


 


 

COMMERCIAL CONTRACTS TEMPLATES FOR BUSINESS TO BUSINESS

Contracting is at the heart of business development. Any business firm interested in outsourcing any of its functions, looks for good sources and secures its interest through commercial contracts.

 Documenting the business arrangements and for consistent standard of transactions, appropriately worded contracts add security and value to the business. In line with SMEDA mandate to facilitate Small and Medium Enterprises sample contract forms for various business to business activities have been developed by 'SMEDA Legal Services'. The purpose of these Business to Business Commercial Contract templates is to provide SME's, Service Providers, Companies and Firms with information pertaining to requisite format and content of a Business to Business Commercial Contract.

 
 

The information contained in the templates is meant to be of practical use, in order to enable the legal service providers and SME's to enhance their awareness on contractual liabilities arising from business transactions, increase their capacities with reference to documenting business transactions and improve business opportunities. Entrepreneurs interested in enhancing their understanding about the nature and form of a commercial contract can also use these templates.


 

SERVICES

OFFERED BY

SMEDA


 

BUSINESS PLAN DEVELOPMENT SERVICES

Business Plan development services is one of the key services provided to enable existing as well as potential investors to make well researched and informed investment decisions.

What Is A Business Plan?

A business plan is a plan that enables a business to look ahead, allocate resources, focus on key points and prepare for problems and opportunities presented by changing business environment.

Generally people think of business plans, first for starting a new business or applying for business loans. However, business plans are also vital for managing an existing business, whether or not the business needs new loans or new investments. Businesses need plans to optimize growth and development according to plans and priorities.

A business plan acts as a communication tool, which can be used to attract investment capital, secure loans, and assist in attracting strategic business partners. As a management tool, a business plan helps in tracking, monitoring and evaluating the progress of a business. As a planning tool, the business plan guides an entrepreneur through the various phases of the business, which helps in identifying roadblocks and obstacles that can be avoided

What We Provide In A Business Plan?

A standard business plan provides information and recommendations on key business areas including market size and growth projections, most suitable management structure, technology and machinery selection, comprehensive financial analysis with projections and business strategic options. However, please remember that your business plan is exclusively yours and will be custom prepared to meet your objectives.

Our Experience

At SMEDA, we have access to one of the finest human resource pool available in the country. Individual team comprising of a team leader, financial expert and technical expert is assigned to each business plan.  Our business plan development team has so far successfully completed business plans for a diverse range of business sectors including, Textiles, Agriculture, Information Technology, Automobiles, Light Engineering, Healthcare, Education, and many more. 

How Can You Avail This Facility?

SMEDA provides business plan development services at highly subsidized rates for SME's. If you are an SME entrepreneur with a new business idea or you are planning to expand your existing business set up, you simply have to fill up a Project Brief Form available at any of our offices.

Business Plan Charges

Although business plan fee may vary depending on scope of work and size of investment, standard business plan development services are offered at a highly subsidized rate of Rs. 10,000.


 


 

TRAINING SERVICES

Vision

To be the leading facilitator in providing affordable, appropriate and innovative Training Services for Small and Medium Enterprises (SME's) in Pakistan.

Mission

To facilitate SME's in their HR capacity building of entrepreneurs, managers, supervisors and operational staff for improving their level of skills, competencies and awareness  in technical, marketing, financial, policy, regulatory, legal, commercial and other functions through the provision of direct and indirect training services.

Functions Brief

Training Programs organized by SMEDA Training Services are effective solutions to improve major performance indicators; productivity, quality, competitiveness, sustainability and knowledge management of SME's for easier and faster path to ISO compliance and WTO requirements. The results include improvements in export potential, regional investment attractiveness, business transparency, human resource development, managerial capacity and potential of SME's. This has definitely helped decreasing the level of SME mortality in the regions and increasing efficiency of introduction of innovations and new technologies.


 

FINANCIAL SERVICES

Role of Financial Support Services at SMEDA

Overview

Financial Services Group (FSG) is one of the support units of SMEDA. As the name suggests, FSG is responsible for all financial consulting and advisory services that SME's may require. As for all the support functions, FSG caters to both internal sector teams as well as any external walk-in SME's. In addition to such consulting services, FSG also acts as coordinator of government schemes, which involve financial institutions. A brief description of the services provided by FSG to each "client" is as follows:

Internal Sector Teams

FSG assists all the internal sector teams in analyzing their respective sectors and evaluating and valuing their strategies. The work involved in doing so entails:

Financial /Economic Analysis

Financial and economic analysis is carried out for various sectors being studied internally at SMEDA, specifically covering the following:

  • Past industry performance How the relevant sector has performed overall in terms of its financial viability and economic value addition historically?
  • Competitive analysis What are the various cost structures and value addition processes within a sector across the individual players in it?
  • Analyze financing modes currently available to the industry Source of financing? Does it have access to formal capital or not? Is it pre-dominantly equity financed or bank rolled

Financial Modeling

After the past performance is analyzed, using SMEDA's analysis template, the Sector Teams form a complete turn around strategy for the sector, which may include recommendations for review of regulatory policies, training, up-gradation of the existing technologies/processes or setting up of new projects. What ever the strategy may include, its financial viability and sustainability has to be proven prior to its implementation. To ascertain this financial feasibility, FSG prepares extensive financial projections using comprehensive models. Such models require extensive technical understanding of the industry, which is obtained from the sector teams. The models prepared by FSG are "live" models giving extensive flexibility to the user to evaluate the viability of the strategy under numerous scenarios.

Marketing / Co-ordinate with Investors

Once the financial viability and sustainability of the strategy is established, it needs to be "sold" to investors. Such investors include:

  • Banks
  • Corporate equity investors
  • Individual equity investors

FSG works very closely with the Sector Teams to market the strategy to potential investors by highlighting and explaining in detail the financial feasibility of the project.

Assistance / Guidance in Preparation of Selling Documents 

A very important part of marketing strategy includes the compiling of "selling documents" in the form of information memoranda, financial feasibility or project descriptions. FSG coordinates with internal sector teams and with banks for preparation of such documents.

External SME Walk-ins

FSG has started providing financial consulting and advisory services to Small and Medium Enterprises which require such services. Such services entail:

  • Financial analysis to detect problems / requirements of SME's
  • Assistance in the preparation of a business plan
  • Assisting the SME's in negotiations with banks

Rs. 10,000 will be collected upfront which is the cost of business plan development. If financing is also to be arranged then 1% of financing arranged minus the 10,000 already paid will become payable upon financial close. If 1% of the financing amount is lower than 10,000 then Rs. 10,000 is the only amount payable.

Formal financing Instruments for SME's

Financial Services Group, a part of Business Development Services of SMEDA has initiated a project to facilitate information dissemination to the SME sector about available formal financing instruments for SME's.


 

INFORMATION RESOURCE CENTRE (IRC)


 


 

SMEDA Information Resource Centre (IRC) has been established to cater to the information needs of SME's and stakeholders from both the public and private sectors. IRC maintains a collection of more than 3400 books and CD-ROMs/DVDs besides subscribing leading newspapers and more than 20 journals of international repute on diverse business sections and related fields. A number of full text online journals are also available for SME's and researchers on different fields of knowledge. IRC collection consists of databases, directories, reports, yearbooks, annual reports, and loose-leaf material that are available for easy retrieval through latest library management tools. Hard format of training programs conducted by SMEDA are also available in IRC. SMEDA IRC collection is increasing by an aggregate 10 % every year.

SMEDA-IRC serves as an information repository for entrepreneurs, research students, academicians and other business stakeholders. IRC is information resource sharing partner with a number of public & private organizations. It acquires information material from partner organizations in case of non availability of specific resources.

    
 


 


 


 


 


 


 


 

POLICY AND PLANNING

Role of Policy & Planning Department

Policy & Planning Division of SMEDA has dual focus internal & external. It plays a key role in devising and coordinating policies, action plans and strategies for SMEDA operations. On the other hand it has a mandate to carry out research, communicate with stakeholders and advocate policies with different tiers of the government with an ultimate objective of creating a conductive business environment for SME's in Pakistan. P&P is the hub of policy and regulatory research that provides SME specific policy input to all tiers of government, government agencies and institutions, SME associations, industrial clusters and individual entrepreneurs.

Functional Brief

Provision of SME – specific inputs in the macroeconomic and Sectoral policies

Generating strategic ideas and their development into projects

Execution of Research Projects

Liaison with the different tires of government

Information Dissemination

Networking with the relevant organizations to fill in information and resource gaps


 


 

LEGAL SERVICES

Legal Services for SME's 

Welcome to SMEDA Legal Services! We add value to the business of Small and Medium Entrepreneurs (SME's) through facilitation in: (a) resolving their legal problems (b) creating awareness of legal rights (c) disseminating information on existing regulatory requirements through training courses, seminars, self help manuals and guides, (d) frequently asked questions, and (e) interaction with regulatory authorities and service providers for removing legal impediments.

Patent help-line officers

Patent drafting, patent drawings or patent illustrations- the names have changed over the years, but one thing hasn't patent application still needs accurate, high quality patent drafts to get your patent granted.

With the concept of globalization in this ever changing world, the degree of awareness regarding the possession of intellectual property rights is considerably increasing, SMEDA is playing a vital role in making conducive environment for SME's with reference to their intellectual property rights by forwarding its help in shape of Information, documentation and networking.


 

DAIRY SECTOR

Sector Significance


Agriculture is the largest sector of the Pakistani economy, contributing 23 percent to the GDP and involving 42 percent of the total labor force. Livestock is the largest of the various agriculture sub sectors. Net foreign exchange earnings from livestock products and by products like meat, skins, hides etc were more than Rs. 53 billion in 2003-04 (Source: FAO-Economic & Social Department Reports) that is about 11 percent of the overall export earnings of the country.
Livestock accounts for 46.8 percent of agricultural value added and about 10.8 percent of the GDP. Milk is the largest commodity from the livestock sector accounting for 51 percent of the total value of the sector. The farm gate value of milk is estimated to be more than Rs. 390 billion.
Pakistan is the Fifth largest producer of milk in the world with a total production of 28 billion liter of milk a year, whose value is more than that of the combined value of wheat and cotton, from a total herd size of 27 million milk animals (buffaloes and cows).
There is a consensus among the stakeholders and the development experts that Pakistan's Dairy Sector has immense potential for growth. The same has not been realized due to various gaps. The vital missing link being lack of shared vision and strategy for the development and lack of effective collaboration among the stakeholders including support institutions and the government agencies to implement the agreed strategy.

Strategy Development

Realizing the significance of the sector in terms of contribution to GDP, employment and importance to serve as a vehicle to alleviate poverty especially among the rural population, Ministry of Industries, Productions and Special Initiatives Government of Pakistan identified Dairy Sector as one of the key sectors for development on priority basis. A Strategy Working Group (SWOG) was constituted by Federal Minister for Industries, Production and Special Initiatives Mr. Jahangir Khan Tareen to develop Diary Sector Development Strategy. The SWOG includes members from prominent stakeholders of the Dairy Industry who are working together voluntarily to identify issues and propose strategic framework to up-grade Dairy Sector. SMEDA provided support and facilitated the group in the entire process.
As a result of SWOG deliberations since its formation in July 2004, the private sector led group has progressed significantly towards strategy development through consensus of the stakeholders and achieved many mile stones towards implementation of the same.

Benchmarking
Strategy Working Group selected New Zealand and Australia as Best Models and India as a Comparable Model for benchmarking of Dairy Sectors in these countries for dairy sector in Pakistan. An international Dairy Expert from New Zealand Visited Pakistan in December 2004 as the first step. Initial comparisons were made and initiatives were rationalized. Australia was added as a benchmark country to capture new initiatives identified by the expert.
A delegation comprising members of the Strategy Working Group visited New Zealand and Australia in February 2005 to study the dairy sector in these countries. The purpose of the visit was to benchmark dairy sector and learns how to improve dairy sector in Pakistan based on experiences of these two benchmarked countries. Study tour to India is also planned to study a comparable model and also to seek technical assistance from AMUL (India) related to policy reforms in Pakistan. The Final Policy Proposal would be formulated after study tour of India.

Consensus, Approval and Implementation

SWOG and SMEDA initiated a series of interactions with key stakeholders across the dairy value chain and support institutions including Universities and Educational Institutions, Support Agencies of the Government of Pakistan like PCSIR, NSRP. PRSP's, etc to understand the needs and demands of the stakeholders identify gaps and missing/week links and identify possible solutions to the problems facing the sector. A strategy formulated as a result was presented to the Prime Minister of Pakistan. The Prime Minister of Pakistan has approved the strategy and proposed initiatives including establishment of a fully functional company for the better management of the sector. Pakistan Dairy Development Company "Dairy Pakistan" is in the process of registration as an independent not-for-profit company to further refine sector strategy and design, implement initiatives identified for the development of the sector.

PROGRESS ON KEY STRATEGIC INITIATIVES

The key strategic initiatives meant to achieve the overall strategy objectives are outlined as under.


Milk Collection & Chilling Projects

Feasibility for the joint Milk Collection Initiative by Millac, Niralla, and Dairy Crest has been finalized. Local staff has been hired and MOU between 3 parties is being signed.

NRSP Joint Milk Collection Pilot Project

Process for engaging a Research Agency to prepare project feasibility for an NRSP supported initiative for milk collection at Rahim Yar Khan is underway.

Joint Milk Collection Pilot Project in Sindh

Engro Foods a leading business house has initiated a project  for a Joint Milk Collection Project in Dharki Sindh with collaboration from SRSP.

Milk Chilling & Collection Pilot in collaboration with P&D Punjab

Proposal to fund milk chilling & collection equipment to Strategy Working Group is under process by Planning & Development, Government of the Punjab

National Dairy Lab(s)

The Working Group realizing the importance of a National Laboratory for quality testing of milk constituted a working group comprising of Nestle, Millac, UoAF and SMEDA to initiate work for the development of proposal for a National Quality Lab for the sector. PCSIR, Faisalabad University Labs, and Agha Khan Hospital Labs are included in a capacity building program for the above mentioned initiative.

Pilot on Milk Quality Survey

A milk quality survey to gauge the quality of milk available to consumers in Lahore was organized by SMEDA in March 2005 in collaboration with PCSIR, Institute of Food Science & Technology (University of Agriculture Faisalabad), Nestle, and Millac. The survey results were shared with the stakeholders and helped realize the gravity of situation with respect to quality of milk available to consumers in Lahore.

Training & HR Development

Strategy Working Group sub-committee including SMEDA  worked with UoAF to have Four Years Undergraduate, Masters and PhD studies identified and developed with industry inputs. Internship program between UoAF and Dairy Working Group member companies also has been planned.

Safety Standards

Private sector worked with SMEDA to formulate recommendations on Food Safety Standards and dairy related quality laws. SMEDA contributed by benchmarking milk quality standards of the leading Dairy industries in the world.
Dairy Sector Research
Work was also initiated in April 2005 with Institute of Food Science & Technology University of Agriculture, Faisalabad), PCSIR, Nestle and Millac for further research related to quality of milk. Other planned Research Projects in this area include:

Quality of Milk-Further Research

Research on the impact of poor quality milk on consumers' health is planed. Similarly surveys on domestic Market trends and demand to ascertain level of market appreciation of quality milk, and willingness to pay for improved Quality Milk would be assessed and existing/latent market demand for consumer price elasticity would be undertaken. Market Research to ascertain the supply side has also been identified and planned including Applied Productivity Research on Animal Breeding/AI, Fodder/Improved Quality water, Health/Veterinary Services, Husbandry practices; Hygiene Issues would be taken up.

Policy Reforms

SMEDA is acting as a facilitator and support platform by developing a Policy Reform Package for the Dairy Sector. A white paper on policy and regulatory reforms would be finalized after study tours to India in December 2005.


 

GEMS & JEWELLERY SECTOR

Introduction
The art & craft of fine quality jewellery manufacturing are deeply rooted in the traditional heritage and history of Pakistan. It was however in the Mughal period that the artisan class of goldsmiths arose to attain a distinct status in the subcontinent. The most famous among the various jewellery types that emerged during the times of the Mughals include, Minakari, Kundan, Polki, and Nauratan, etc. Presently, metropolitan cities of Lahore and Karachi are the major hubs of jewellery manufacturing. There are more than thirty major cities and nearly three hundred smaller cities/mandi towns where jewellery manufacturing and trading clusters cater to domestic demand. In addition, there are at least 45,000 villages where jewellers operate as single-shop, manufacturing and selling units to meet the demand of rural population.

Pakistan is a country with a population of more than 150 million people and a rich tradition of craftsmanship in jewellery manufacturing. Skilled/semi-skilled labors force is available at relatively lower rates, which offers a comparative advantage to the country. Their skill enhancement through training would lead to greater competitiveness.

Currently, Pakistan imports more than one hundred and twenty tones of gold per annum, which makes it the eighth largest consumer of gold in the world. In the year 2002, Pakistan exported gems & jewellery worth US$32 million (which went down to US$28.2 million in 2003). Although, the volume of exports of gems & jewellery from Pakistan is of no great significance in the total global trade of US$84.4 billion  and much lower than India, which is our biggest regional competitor, but the growth potential of exports in the sector is huge.

Gems & Jewellery Sector Strategy

The strategy is a combined effort of Gems & Jewellery Industry's stake holders, SMEDA (MOIP&SI) and J.E Austin Inc (USAID). It is for the first time that a working Strategy from mine-to-market has been developed and is based on first hand information from the different stakeholders rather than relying on the secondary data available. The methodology applied was studying the value chain analysis and recommending solutions to the problems and designing possible pilot projects for immediate implementation.

The main strategic initiatives of the Gems & Jewellery Strategy cover the following areas of intervention in the value chain:

Measures for a Conducive Business Environment


 


 


 

AGRIBUSINESS SECTOR

Agribusiness Services at SMEDA (B&SDS) (Agriculture & Horticulture Sector)

SMEDA is a facilitating body working for the development of SME's in the country. Business and Sector Development Services (B&SDS) department of the SMEDA is responsible to provide technical assistance to SME's. Agribusiness Development Services of B&SDS is providing proactive technical and managerial assistance to agro SME's in the country.

Future Initiatives


 

WOMEN BUSINESS INCUBATION CENTER

Women Business Incubation Center (WBIC) is an initiative of SMEDA being funded by Government of Pakistan to provide 'hands-on support' to Women Entrepreneurs (WE's) in an exclusive female oriented environment. It is the first of its kind center in Pakistan wherein, Offices, Exhibition/Display facility and Business Development Services (including training programs) are being offered to Women Entrepreneurs (WE's) less than one roof. The entire effort is focused at encouraging new business start-ups and support to existing businesses including the right environment for nurturing women owned and managed businesses to an extent that these become sustainable; more specifically, in start-up period (first five years) when they are most vulnerable. WBIC is a supportive entrepreneurial community designed to help grow small businesses. The center is established for providing assistance to home-based businesses or those in earlier stages of development.


 

Services offered at WBIC


 


 


 


 


 

INDUSTRY SUPPORT PROGRAM


 

SMEDA initiated an Industry Support Program in 2003 for technical support of different industrial sectors in Pakistan. SMEDA has collaborated with different international organizations like Japan International Cooperation Agency (JICA) and Gesellschaft für Technische Zusammenarbeit (GTZ). These organizations provide foreign experts to enhance the capabilities and operational techniques of local industry in different ways. For the success of these development initiatives an Industry Support Cell (ISC) at SMEDA has been established. The main objective of establishing this cell is the capacity building of SMEDA staff and to ensure the continuity of different initiatives. ISC consists of professionals who work closely with foreign experts for the development and up gradation of local industry.

SME POLICY DEVELOPMENT

Promotion of Small and Medium Enterprises (SME's) entails enhancement of the competitiveness of the economy and generation of additional employment. A thriving Small and Medium Enterprise (SME) sector has long been recognized as one of the key characteristics of any prosperous and growing economy.

Pakistan is an economy comprising mainly of SME's. The significance of their role is clearly indicated by various statistics. According to more recent estimates there are approximately 3.2 million business enterprises in Pakistan. Enterprises employing up to 99 persons constitute over 95% of all private enterprises in the industrial sector and employ nearly 78% of the non-agriculture labor force. They contribute over 30% to the GDP, Rs.140 billion to exports, and account 25% of exports of manufactured goods besides sharing 35% in manufacturing value added.

However, there has been concern that in Pakistan the SME sector has not been able to realize its full potential. The SME's continue to suffer from a number of weaknesses, which hamper their ability to take full advantage of the opening of economy and the increasingly accessible world markets. The areas of constraints are normally identified as labor, taxation, trade capacity, finance and credit availability.

It is understood that despite previous efforts the SME sector has not received due priority on account of segregated efforts and non-consolidation of programs to achieve well targeted results. In order to move forward, we need to develop a common vision for SME's to be the real engine of growth. Our vision also needs to be achievable so we may find motivation in implementing phase.

Implementing change requires the formulation of a Policy for SME development and assigning specific responsibilities for its implementation and continuous improvement. The Government of Pakistan has thus constituted the SME Task Force, by Notification No.1 (68)/2003-Inv-III of 29 January 2004 of the Ministry of Industries and Production, which is to define the basic elements of our SME policy.

As there are many cross-cutting issues to be addressed, the SME Task Force is composed of diverse sectors and levels of Government and includes major stakeholders of the private sector, and SME in particular. Where the SME Task Force deems it necessary or useful, it may invite specific organizations or individuals to assist its work. It may also co-opt further members.

The Small and Medium Enterprises Development Authority (SMEDA) was established in 1998 in order to foster the development of SME in the economy and was expected to take a key role in this process. Its functions include, inter alia, the facilitation on policy making and the provision of overall planning, programming, research and evaluation of matters related to SME in Pakistan; monitoring and evaluation; encouraging and facilitating development of SME and to protect their interests. It is attached with the Ministry of Industries, Production & Special Initiatives.

In order to enable the SME Task Force to work effectively, four Working Committees were setup to carry out technical analyses and deliberate the findings.

The Working Committees addressed the following core issues:

1. Business Environment - Creating a favorable business environment for SME in Pakistan's economy and eliminating unnecessary obstacles

2. Access to Finance - Increasing SME's' access to formal finance including equity financing while addressing the question of "lacking documentation" and banks' technical capabilities and improving SME's' capacity to become bankable.

3. Access to Resources & Services - Improving the delivery mechanisms for assistance and the access to resources for SME in Pakistan, inter alia business development services, qualified human resources, and technology, so as to improve their productivity and capacity for employment generation.

4. SME Definition, feedback, Monitoring & Evaluation Mechanism - Establishing appropriate and harmonized definitions for Pakistan of what are to be considered micro, small, medium, and large enterprises. Furthermore, the establishment of a sound mechanism by which their development of the SME sector and the effectiveness of the assistance provided to SME can be monitored.

The Working Committees after due deliberation, finalized their recommendations in each of the areas cited above.

The broader objectives to be achieved by this policy exercise are; across the board recognition for SME's as a sector requiring separate policy & regulatory space, define SME's that qualify for support, propose counterbalancing measures to eliminate disadvantage of size, remove unnecessary regulatory burden, institute SME support mechanism in both public & private sectors, improve support delivery mechanisms and establish policy evaluation and review systems.

In order to achieve the above, wide scale consultation with the Provinces was held to elicit views of the ultimate beneficiaries, i.e. SME's. The participation of stakeholders has been therefore, the cornerstone of the policy development process.

The recommendations compiled during the consultative process have resulted in the formulation of an SME Policy approved by the Federal Cabinet on January 17, 2007.


 

INDUSTRIAL INFORMATION NETWORK (IIN)

Mr. Jehangir Khan Tareen, Former Federal Minister for Industries, Production and Special Initiatives launched Pakistan's first B2B (business-to-business) and business information portal, "Industrial Information Network" (IIN) www.iin.com.pk, on 25th of June, 2005. The launch event was held in Pearl Continental Hotel Lahore and was attended by over 350 people belonging from various business sectors including textile, leather, auto, insurance, academia, banking, legal, young entrepreneurs, IT, commercial counselors, chambers, export promotion bureau and donor agencies.

 While speaking on the occasion, Mr. Jehangir highlighted the opportunities that are available because of the rapid advancements in the field of information and communication technology (ICT) and empowerment of groups and individuals to transcend boundaries and connect directly with one another across the globe.

Mr. Tareen said that ICT's role in driving down costs, improving productivity, reducing time to market and providing quality services the customers cannot be denied. Understanding the role of ICT resulted in an investment of over $200 million in IT products during the fiscal year 2003-4.

He said that the development of IIN is a shining example of the Government's changing approach to delivering services through one window. IIN will surely be an answer to most of the present and future information challenges and of direct assistance in international outreach.

Mr. Tareen also spoke on the importance of B2B models and gave the examples of Boeing and Wal-mart and the benefits achieved by them by adopting the B2B models. He said that the launch of IIN's B2B e-market is testimony to the government's commitment to help businesses meet new challenges posed by the use of e-commerce in the global market place.

Mr. Tareen said that IIN portal will act as point of contact for the business community. It will provide the information that a businessman needs. He invited the business community to join hands with the IIN team in identifying their business information requirements to serve them better.

He also said that his Ministry is committed to raise the share of manufacturing sector in GDP. As SME's are the backbone of the country's economy they are being given special focus and an SME policy is being developed.

Mr. Tareen appreciated the role of the United Nations Industrial Development Organization (UNIDO), which conceived the idea of an IIN network, the Ministry of Information Technology and Telecom which provided the funding and the Small and Medium Enterprise Development Authority (SMEDA), which rendered technical support. He said that without the support of and of these organizations, this project would still have been a dream.

Speaking on the occasion Mr. Suleman Ghani, Secretary MoIP highlighted the challenges faced by business community in strategic decision making due to unavailability of timely information. He said that it is due to information technology that now information can be made available anywhere and at anytime. He also said that currently, the virtual absence of electronic trade, particularly by the export-oriented industries, is taking a heavy toll on the national economy by limiting the productivity on the one hand and access to the international markets on the other.

Mr. Suleman said that the export-oriented sectors and the industries can benefit from the B-2-B, particularly traditional exports like textile, leather, surgical goods, sport goods and handicrafts. It can now be expected to benefit from the IIN Project. He said that the Electronic Commerce is an ultimate marketing tool in the digitalized world of today and Local businesses should grasp, the information technology tools, their intelligent use in e-commerce and e-business to keep up with the pace of development in the country.

He said that in Pakistan e-commerce is still in its infancy and faces many barriers to grow but there is a lot of scope of e-commerce in Pakistan, and most companies are eager to go to the digital world but holding their plans to start e-business until clouds of barriers disappear, the time has come now, launch of "Industrial Information Network" is expected to minimize the barriers and serve as a catalyst for developing business-to-business e-commerce and information network in Pakistan.

Mr. Shahab Khawaja, Chief Executive Officer of SMEDA said that IIN web portal is designed to become one of the largest sources of generating, exchanging and disseminating business information in the country, which was focusing on providing value-added support and services to industry.

While talking about Pakistan's first B2B web portal, he said that the primary IIN objectives are to promote the business-to-business e-commerce within the country and utilize IT to link businesses with international buyers, vendors, trade facilitation bodies and government institutions. IIN will enable Pakistani businesses to create a place for themselves in the e-world and get their share out of this fast growing trade channel.

Mr. Shahab said that IIN portal will be facilitating SME's as well as large businesses and a project worth Rs. 39 million for a three year period. He said that the IIN project would initially focus on textile and leather sectors during its first three years of operations. He also said that after textile and leather dairy, gems & jewelry and marble & granite will be the focused sectors for IIN.

Mr. Khawaja highlighted the current sections of IIN and said that currently IIN is providing a set of complete information on ginning, spinning, weaving and tanning. The other important set of information available at IIN include government rules and regulations, information on financial products and services, business news, shipping news and schedules, business startup information, economic indicators, pre-feasibility studies, tips and case studies on human resource, marketing and financial management etc. He also said that IIN portal also carries a full chapter highlighting WTO and Pakistan relations with its impact on different industries.

He congratulated Mr. Salman Khalid, Project Director - IIN, and his team on their commitment and dedication to bring the IIN dream into reality.

Khawaja Yousaf, Chairman Pakistan Tanners Association appreciated the role of SMEDA and said that SMEDA has always been in the forefront by addressing the common concerns of private sector and solving them. He said that the addition of information services in the form of IIN web portal is another step by SMEDA to serve the business community in a holistic manner

He also said that PTA strongly believes that Information has now become critical for sustenance and growth of any Business or Industry in the globalized economy. . He said that because of unavailability of right, updated and timely information along with lack of information at a centralized place, the entrepreneurs in Pakistan are unable to access and gauge the market pertaining to technology, competition and price of product & services. And with the increase in competition and melting away of international boundaries, the demand for information is reaching new heights.

He highlighted that the countries willing to do business in form of Trading, Transfer of Technology and other forms of sustainable relationships with the industrial and business communities of Pakistan are unable to access the profiles of industries of their interest. The development of Industrial Information Network is undoubtedly the challenge taken up by SMEDA to narrow this 'Digital Divide' between the Business Community of Pakistan and the rest of the World. He said that services offered by IIN will make it act as a catalyst for Pakistani businessmen to increase their business volumes through an interactive e-Marketplace facilitating Business to Business (B2B) relationships. He wished success to the project with full assurance of support from PTA.

Mr. Arif Saeed, Chairman All Pakistan Textile Mills Association praised the efforts of MoIP and MoITT for its efforts in promoting ICT in the country. He said that the development of industrial information network is a very positive move by the Government in providing the business community the information required to enable them run their organizations efficiently.

He said that the development of IIN portal is only the first step. The main challenge will be to have this platform communicated and marketed effectively so that a proper utilization of this effort can be made. He also said that if we browse the internet, we find many resources rich with information but searching for them is what needs time. Availability of all the required information at one platform does not exist. Similarly there are a lots of B2B portals available online today but unfortunately there was none by Pakistani government.

Mr. Arif appreciated the role of SMEDA and said that SMEDA has always been on the forefront whenever and wherever some facilitation is required. SMEDA, especially the team involved in the designing and maintaining of this network deserves to be appreciated.

He also highlighted the role of associations like APTMA that can play a vital role in identifying what exactly is required by the industry which can then be worked on and made available for the users. He concluded with his best wishes for the project.

Mr. Salman Khalid – Project Director IIN gave a briefing on IIN, its current services and vision. Speaking on the occasion Mr. Salman Khalid – Project Director IIN said that business worth $4,160 billion was being transacted through e-commerce and is expected to grow to $10,800 billion by 2006. He elaborated salient features of the portal and said that the IIN offered state-of-the-art set of services that include a unique platform for international outreach and provision of updated international business information, International trade inquiries where buyers and sellers can contact one another directly.

He said that the potential beneficiaries of this website are Entrepreneurs, Exporters and Business and Industrial associations who are looking for opportunity to gain access to worldwide trade and business enquiries all while staying in their office. IIN will also help the International buyers and prospective industrial partners to identify their counterparts in specific areas of interest.

Mr. Salman also said that before the portal's formal launch it is receiving over 1,000 hits per day from countries like the United States, Germany, Denmark and Italy, which is expected to increase after launch.

Presentation of souvenir shields followed the speeches that were presented to Mr. Jehangir Tareen, Mr. Suleman Ghani, Mr. Misbah-ur-Rehman, Mr. Arif Saeed, Khawaja Yousaf and Mr. Salman Khalid.

In the end, a multimedia presentation on IIN was shown explaining different sections of the portal and the benefits that one can achieve by becoming a part of IIN. And then the event was concluded and lunch was served.

The event got an effective coverage by both print and electronic media. All national as well as regional newspapers published news on the launch event. In addition all major television channels also made the coverage of the event. About 90 people from media were present at the event.


 


 

PISDAC-Pakistan Initiative for Strategy Development and Competitiveness

A joint SMEDA-USAID sponsored Public-Private Dialogue on Competitiveness was conducted over an eight-week period (May - July 2004) in which sessions were held with stakeholders of all important SME clusters in Pakistan. The purpose of the dialogue was to stimulate debate by leading a focused discussion that sought to identify global trends in innovation and investment the two drivers of competitiveness in key industry sectors.  Business champions in each region and from key SME sectors and others were brought together in a series of workshops to identify trends in innovation and investment in the global markets within each sector. The implications of these trends were considered illustratively in terms of four areas of relevance; human resources, research and development, infrastructure, and management. From this discussion, the dialogue was developed into one that identified priority areas for business and the policy community.
 
More than 300 people participated in 15 workshops held all over Pakistan. The sectors covered during this exercise included gems & marble, agro-processing, dairy, information technology, food processing, light engineering and fisheries. This exercise has provided valuable insight into the problems and challenges currently being faced by SME's in Pakistan. The major findings include:
 

The objective of the PISDAC Project is to support self-selected Pakistani industries in developing strategies for upgraded production. The goal is to help institute a self-sustaining process by which such industries organize themselves to increase their productivity. In particular, the Project will work to help the industries organize, plan, and implement actions to increase their competitiveness. The selected industries will have developed better strategies for upgrading industrial production.


Currently the project is working with the stakeholders from the Dairy, Marble & Granite, Gems & Jewelry, and the Cotton sectors. More sectors will be addend to the Project during FY 2005-06.


 

CLUSTER DEVELOPMENT

SME Cluster Development

Clusters are geographical concentration of enterprises which produce and sell a range of related or complementary products and are, thus, faced with common challenges and opportunities. Cluster development is basically supporting and strengthening the clusters by creating networking among the stakeholders to reduce the cost of doing business, bringing them on a single platform for more voice among policy makers, create new business opportunities, reducing risk of doing business and capacity building of the enterprises. Cluster development has also proved its contributing in employment generation and poverty reduction worldwide.  


 

SME Clusters in Pakistan have huge potential and critical to SME growth. SMEDA has always been fully cognizant of the significance of Cluster Development and has taken several initiatives. These initiatives includes Technological Up-gradation, establishment of Common Facility Centers(CFCs) , access to Formal Finance for SME clusters, Marketing support, Improving HR skills and Awareness on International Certification & Regulations.

Worldwide, one of the most widely used practices to support industrial clusters is provision of Common Facility Centers (CFC). The establishment of CFCs is an integral part of SMEDA's Cluster Development activities. So far SMEDA has been able to establish following CFCs with Chambers of commerce and industry and industry/trade associations:


Credit is life line for any running business including SME's and realizing the potential in SME sector and its importance, SMEDA has successfully launched following financing schemes in Punjab:

The proposals for following CFCs were prepared and submitted to Govt. of Punjab. The Planning & Development Department-Punjab has approved these CFCs and allocated Rs.100 million for the year 2005-2006. The construction of buildings ad procurement of machinery and equipment are under process.

Besides above program SMEDA is also working in cluster profiling, marketing support to cluster stakeholders and training to skills enhancement for SME's as well as rural clusters. 

SMEDA in collaboration with PSIC and UNIDO has started "Cluster Development Program for SME's in Punjab". The objective of this program is to help in developing seven different SME clusters of Punjab. The Diagnostic Study of these seven clusters has been completed. In the next year action plan would be implemented. Besides these clusters, SMEDA is also working exclusively with UNIDO in four clusters i.e. Sports Wear Sialkot, Auto Part Lahore, PVC Pipes & Plastic Products Lahore and Marble & Granite Rawalpindi/Islamabad.