Islamic Banking need to be promoted in SME sector

Saturday, March 08, 2014 - Karachi—The Union of Small and Medium Enterprises (UNISAME) has submitted recommendations for the serious consideration of the policy makers in the forthcoming budget and trade policies in order to stimulate the economy which can only be done by promoting the majority SME sector wholeheartedly and giving them a comfortable environment. The Union believes that SME promotion and development is no charity but it is the right of every SME and responsibility of the state to uplift the sector. The state must provide them equitably and make dedicated efforts to make doing business easy.

The SME sector includes traders, manufacturers, farmers and service providers. There are millions of SMEs all over Pakistan including many hospitals schools and consultants’ services. We were told 15 years ago that they were 3.2 millions SMEs but we are sure if you also include the SME farmers there would be almost 6 millions by now. We have created awareness about the importance of the sector and identified the impediments and have submitted recommendations every year for inclusion in the budget, trade policy, industrial policy and have urged the ministry of industries to revisit the SME policy made in 2007. We keep voicing the requirements of the sector all the time. The SME issues are poor law and order, loadsheding, poor infrastructure, lack of finance, information, transfer of technology, incentives and defective taxation system other than the corruption, non implementation of SME policy in right earnest. The union has submitted the following recommendations to SMEDA for onward submission to the concerned policy makers.

Law & Order: We have suggested the formation of SME Liaison Committee (SME-LC) on the pattern of the CPLC to arrange collective protection squads in industrial areas as the SMEs are threatened by gangsters and politically patronized miscreants. The SMEs need a strong committee to work as liaison between the police and the entrepreneurs and to exert pressure on the police to trace the culprits and prosecute them. The SME-LC chief must get the status of honorary first class magistrate to prevail on the police department and the relevant S.H.Os. 

Energy Crisis: We have suggested that alternate energy systems must be promoted and those SMEs willing to install alternate energy devices of solar, wind, Biomass be encouraged and the government needs to exempt the import of alternate energy systems on duty and leasing facilities must be provided on special affordable mark-up. Finance: This is a very important issue, as banks are demanding immovable property as collateral. The banks need to be educated on the subject of SME financing and taught risk management. The commercial banks need training and education on collateral management, warehouse financing, also financing on the basis of positive cash flows and the government must promote Islamic financing, leasing, hire purchase, commercial property leasing. The union has urged the government not to privatize the SME Bank but make it an SME Bank in the real sense.

The union has also urged the State Bank of Pakistan (SBP) to establish the SME Guarantee Insurance Company to insure SME financing and indemnify the banks against default by the borrowers. The SME needs venture capital and the system of venture capital needs to be promoted. The SMEs are looking forward to the establishment of the Exim bank as promised in the trade policy. Infrastructure: The infrastructure is poor and the SMEs are disabled due to poor infrastructure in the industrial areas. There is need for industrial estates and the need for government to allot land at concession for industrial estates. The leasing companies must adopt commercial property leasing to finance the SMEs to buy shops, workshops, warehouses and factories under commercial property leasing.

Technology Transfer: The SMEs need to import technology to manufacture quality goods and the government should facilitate collaboration with advanced countries to enable SMEs to manufacture goods with indigenous raw material and also import substitution goods in Pakistan.

Source: http://pakobserver.net/detailnews.asp?id=235662

Dubai to launch Halal Index

Dubai: Dubai Exports is looking to issue an online Halal Index to list all UAE-based firms that are halal, Saeed Al Awadi, CEO of Dubai Exports, told Gulf News.

The index will be set up by Dubai Exports, an agency of the Department of Economic Development (DED), and will include relevant information about all the halal companies, banks, financial institutions, Islamic products and Islamic services in Dubai.

“This Index will boost the businesses of these firms by encouraging to enhance their local industries and products and by providing these businesses with new export opportunities across new markets,” Al Awadi said.

Halal companies, are firms engaged in the business of production, marketing and distribution of products that are Sharia compliant.

Al Awadi said that this comes in line with the government’s initiative to position Dubai as the world capital for Islamic economy in two years.

He added that this index will facilitate the growth of Dubai’s halal exports, which are expected to lead the region soon.

Dubai could emerge as the leader in the next phase of the evolution of Sharia-compliant sectors, including finance and insurance, Halal food and lifestyle, and travel.

“This index will be a good platform for all halal firms in the UAE to gain the opportunities for halal businesses and Islamic industries, which is now well established across geographies,” Al Awadi added.

With a clear vision of establishing itself as the centre of a global Islamic economy, Dubai looks likely to be the one with the biggest potential.

With Muslim consumer expenditure globally on food and lifestyle sectors around $1.62 trillion (Dh5.9 trillion) in 2012 and expected to reach $2.47 trillion by 2018, Al Awadi pointed to the need to boost this business sector by providing the right infrastructure and services.

Dubai Exports is looking to boost the emirate’s export by 20 per cent this year through the expansion to new markets, Al Awadi said.

“Dubai’s export long–term strategies to grow with the exports will continue to provide support required for our local companies to grow with their businesses and in turn the emirate’s Gross Domestic Production (GDP).

“The infrastructure and facilities already in place provide simple export process to our local companies wanting to enter new markets,” he said.

Source: http://gulfnews.com/business/general/dubai-to-launch-halal-index-1.1301675