Sme Development Plan

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Sme Development Plan

  1. 1. SME DEVELOPMENT PLAN
  2. 3. <ul><li>PUNJAB’s ECONOMIC VISION </li></ul><ul><li>CREATING A BETTER QUALITY OF LIFE FOR THE CITIZENS OF PUNJAB BY: - </li></ul><ul><li>GENERATING GROWTH IN THE ECONOMY TO CREATE </li></ul><ul><li>EMPLOYMENT. </li></ul><ul><li>2. UPGRADING TECHNOLOGY TO ENHANCE PROFITABILITY. </li></ul><ul><li>DIVERSIFICATION FROM AGRICULTURE TOWARDS </li></ul><ul><li>SERVICES & INDUSTRY FOR GREATER ECONOMIC STABILITY. </li></ul><ul><li>IMPROVING THE INFRASTRUCTURE NECESSARY FOR ECONOMIC </li></ul><ul><li> UPLIFT. </li></ul>
  3. 4. <ul><li>PROVINCIAL POLICY </li></ul><ul><li>IT HAS BEEN PROVEN THAT THE PUBLIC SECTOR IS INEFFICIENT AT DOING BUSINESS THEREFORE BUSINESS IS BEST LEFT TO THE PRIVATE SECTOR. </li></ul><ul><li>THE PUBLIC SECTOR SHOULD LIMIT ITS ROLE TO CREATING AN ENABLING ENVIRONMENT FOR THE PRIVATE SECTOR TO GROW AND PROSPER. </li></ul><ul><li>THE RESULTING ECONOMIC ACTIVITY WILL ACHIEVE THE GOVERNMENT’S OBJECTIVES OF EMPLOYMENT GENERATION, INCREASED INCOMES AND POVERTY ALLEVIATION. </li></ul>
  4. 5. MISSION “ PROVIDE PRACTICAL SUPPORT AND ADVOCATE THE CASE FOR GROWTH OF COMPETITIVE INDUSTRIES TO ACHIEVE THE FOLLOWING BENEFITS: - a. EMPLOYMENT GENERATION IN INDUSTRIAL, SERVICES AND AGRO SECTORS. b. SUSTAINED GROWTH IN PRIVATE SECTOR PROFITS. c. SUSTAINED GROWTH IN EXPORT REVENUES. d. SUSTAINED GROWTH IN GOVERNMENT REVENUES.
  5. 6. FOR THE PURPOSE OF ANALYSIS, INDUSTRIES WHICH HAVE SIMILAR PROBLEMS HAVE BEEN GROUPED AS UNDER: - 1. LARGE & MEDIUM INDUSTRY (ANNUAL TURNOVER RS.100.0 MILLION AND ABOVE) 2. SMALL & COTTAGE INDUSTRY (ANNUAL TURNOVER BELOW RS.100.00 MILLION)
  6. 7. <ul><li>SITUATIONAL ANALYSIS LARGE AND MEDIUM INDUSTRY </li></ul><ul><li>Pros </li></ul><ul><li>1. The Managements are smart & knowledgeable. </li></ul><ul><li>2. Have good access to finances. </li></ul><ul><li>3. Have carried out BMR and are introducing new technologies. </li></ul><ul><li>4. Are aggressively marketing their products. </li></ul><ul><li>Cons </li></ul><ul><li>1. Limited role in development of Policy & Tariff/Tax Regimes. </li></ul><ul><li>2. Energy being provided is inefficient & costly. </li></ul><ul><li>3. Availability of skilled managers and workers poor. </li></ul><ul><li>4. Infrastructure (Estates & Communication) poor. </li></ul><ul><li>Lack of local production of chemicals, dyes and accessories adding 10% to costs. </li></ul><ul><li>Modern units are not labour intensive. </li></ul><ul><li>Investment per worker is high. (Rs.300,000/- per worker). </li></ul>
  7. 8. GROWTH OF COMPETITIVE LARGE & MEDIUM INDUSTRY PROVIDE PRACTICAL SUPPORT FOR THE GROWTH OF LARGE AND MEDIUM INDUSTRY THROUGH: - 1. WELL DEVELOPED AND MODERN INFRASTRUCTURE. Link page 9 2. HUMAN RESOURCE DEVELOPMENT. Link page 11 3. EFFICIENT AND CHEAP SERVICES. Link page 14
  8. 9. WELL DEVELOPED AND MODERN INFRASTRUCTURE
  9. 10. <ul><li>Industrial Infrastructure. </li></ul><ul><li>The Government’s policy of abolishing regulating regimes has led to a mushrooming of Industries in and around cities and towns. Resultantly these scattered units cannot be provided services efficiently nor can they dispose off their effluents in a complaint manner. </li></ul><ul><li>There is a need to:- </li></ul><ul><li>Draft a law directing all industry to be established in an Industrial Estate. </li></ul><ul><li>Declare areas where industrial units have informally clustered as Industrial Estates and provide infrastructure for such estates. </li></ul><ul><li>Upgrade existing notified Industrial Estates. </li></ul><ul><li>Master Plan & establish new Industrial Estates and Commerce Centers near all Cities, Tehsil Head-quarters in Punjab. </li></ul><ul><li>Develop a plan for supportive communication network. (Roads, Railways, Telecommunication) </li></ul><ul><li>c. Invite the Private Sector to establish and develop Industrial Estates. </li></ul>
  10. 11. HUMAN RESOURCE DEVELOPMENT
  11. 12. Establishment of Polytechnics Responsive to Industrial Needs. Capable Technicians are the back bone of any industry and are essential if industrial competitiveness is to be achieved. Presently the number of Polytechnics (26 only) are insufficient to meet the growing needs of industry i.e. in quantity, quality and equipped with industry responsive skills. This shall be achieved by deemphasizing Commercial Colleges and establishing 62 new Polytechnics. To meet the emergent needs TEVTA will examine the possibility of notifying selected Industrial units as Polytechnics and promoting Apprenticeship in Industry.
  12. 13. Expand Vocational Training Institutes (VTIs) from 70 to 500 VTIs. As industrial growth takes place, the need for skilled workers is multiplying e.g. with the lifting of textile quotas the textile industry is expanding. It is, however, facing an acute shortage of expert stitchers. These needs have to be met by a network of VTIs sited near industrial clusters and responding to industrial needs. To respond immediately to industry needs, selected industries will be declared VTIs, provided a budget to initiate instructions & practical training in the factory premises is allocated.
  13. 14. EFFICIENT & CHEAP SERVICES
  14. 15. PROVISION OF SERVICES Allow/Promote Power Houses for Industrial Estates. WAPDA electricity is not efficient or dependable 11 cents at which electricity is being provided is the highest in the world. Cluster / Industrial Estate specific Power Houses be established by the Private Sector. Will provide efficient and dependable electricity at 5 cents. Availability of Gas. a. Ensure availability of gas to industrial estates. b. Establish links with Central Asia, Iran and/or Qatar for further supplies as present supplies are expected to level off in 3 years. Availability of Water. As industrialization takes place, use of water in industry shall jump from the present 2.2 MAF to 3.8 MAF by the year 2025 and shall be provided by the Irrigation Department.
  15. 16. <ul><li>SMALL & COTTAGE INDUSTRY </li></ul><ul><li>Pros </li></ul><ul><li>This sector employs maximum labour. </li></ul><ul><li>Investment cost per worker is low (Rs.30,000/- per worker) </li></ul><ul><li>Cons </li></ul><ul><li>Weak management and organization. </li></ul><ul><li>Use second or even third hand machinery. </li></ul><ul><li>Technology employed is old. </li></ul><ul><li>Workers mostly ‘shagirds’ and not educated/trained. </li></ul><ul><li>Almost no access to bank financing. </li></ul><ul><li>Marketing is poor. </li></ul><ul><li>In danger of collapse with the invasion of cheap and better products from China & India. </li></ul>
  16. 17. PROMOTE SMALL AND COTTAGE INDUSTRY INDUSTRIAL GROWTH SMALL INDUSTRY Establish sector specific Industrial Development Centres for Small Industry which will : - a. Provide latest technology/practices. b. Provide access to latest machinery. c. Provide training in new technologies and machinery. d. Provide credit (Banks & PSIC) for BMR or new ventures. e. Financing Plan.
  17. 18. <ul><li>Establish Industrial Development Centres (IDCs) and provide Technology, Training and Credit to Small Industry to become Internationally Competitive. </li></ul><ul><li>Punjab has approximately 6000 units of Small Industries. The majority are based in lanes and mohallas, using second hand machinery with basic technology and skills and generally starved of funds. Resultantly their products are of poor technology and quality which will be swept away by the influx of quality products from the world as tariff barriers are lowered. At least one IDC shall be established for a specific sector e.g. leather, cutlery, sports goods etc. achieving a target of 50 by the financial year 2005-06 with the following components:- </li></ul><ul><ul><li>Technical Assistance Wing </li></ul></ul><ul><ul><li>Machinery Wing </li></ul></ul><ul><ul><li>Training Wing </li></ul></ul><ul><ul><li>Incubator for creating Entrepreneurs. </li></ul></ul>
  18. 19. <ul><li>INDUSTRIAL DEVELOPMENT CENTRES (IDCs) </li></ul><ul><li>TECHNICAL ASSISTANCE WING </li></ul><ul><li>Majority of small units using out dated technologies and designs. </li></ul><ul><li>In a competitive environment the consumer shall select a product which is the best in quality and has a competitive price. </li></ul><ul><li>With the lowering of tariffs, influx of Chinese and Indian goods are sweeping the markets. </li></ul><ul><li>It is important to upgrade the local technologies, designs and lower production costs to save the Small Industry from collapse. </li></ul><ul><li>For this purpose sector specific world class consultants shall be hired for a period of 3 years to transfer latest technologies and achieve a quantum technology jump. </li></ul>
  19. 20. <ul><li>INDUSTRIAL DEVELOPMENT CENTREs (IDCs) </li></ul><ul><li>COMMON PROCESSING FACILITY </li></ul><ul><li>The machinery being used by the Small Industry are normally of old vintage producing poor quality products. </li></ul><ul><li>The IDC shall acquire the latest machinery for demonstration, training and use as a common facility. </li></ul>
  20. 21. <ul><li>INDUSTRIAL DEVELOPMENT CENTREs (IDCs) </li></ul><ul><li>TRAINING IN NEW TECHNOLOGIES </li></ul><ul><li>The managers, supervisors and workers of small units have, generally, not received formal training and are mostly ustad & shagird. </li></ul><ul><li>It is proposed that the Consultancy Wing will prepare the training programs which shall be made available to the managers and supervisors using the latest machinery and process to upgrade their technology levels. </li></ul>
  21. 22. <ul><li>INDUSTRIAL DEVELOPMENT CENTREs (IDCs) </li></ul><ul><li>CREDIT FACILITY </li></ul><ul><li>Small industrial units face considerable difficulty in accessing to credit. Some surveys indicate that 90% units avail either expensive credit from the market or use retained savings. In both cases the small units cannot generate sufficient earnings to grow and enlarge their businesses. </li></ul><ul><li>Each IDC shall provide space for the Banking Sector to provide credit for BMR or Venture Capital. </li></ul>
  22. 23. <ul><li>INDUSTRIAL DEVELOPMENT CENTREs (IDCs) </li></ul><ul><li>FINANCING PLAN </li></ul><ul><li>Generating employment opportunities in the private sector is a vital strategy of the Government. </li></ul><ul><li>Only successful industrial units shall generate resources to expand, grow and create employment. </li></ul><ul><li>The establishment of IDCs shall be a public sector investment program in the nature of a development grant for supporting small scale industry. </li></ul><ul><li>For transfer and acquisition of technology for the Banking Sector and PSIC shall provide credit for BMR or New Entreprizes. </li></ul>
  23. 24. COTTAGE INDUSTRY About 60 to 70% of Punjab’s population is village based. Structurally 30% of each village have been landless workers who provided services to the landed class. This under privileged group is still at the bottom of the income range and most prone to poverty. It is proposed to establish a Rural Enterprise Support Organisation (RESO) which shall have the outreach to create entrepreneur organizations, identify and redesign local products to international standards, find markets and market these products, thus generating employment and improving incomes in rural areas.
  24. 25. <ul><li>COTTAGE INDUSTRY </li></ul><ul><li>RURAL ENTREPRISE SUPPORT ORGANISATION (RESO) </li></ul><ul><li>The RESO shall be structured as a Public Limited Company owned by the Government of Punjab to generate accelerate value added and contemporary enterprise in the rural areas. The initial grants shall be provided by the Government of the Punjab/Donors which shall cover the overhead costs of the Organization and a revolving pool of funds for credit. Later as on the venture succeeds, the Banking Sector is expected to enter the market and lend to the cottage industry for which RESO shall provide credit guarantees. </li></ul><ul><li>The RESO shall comprise Institution Building, Sales and Marketing, Contemporary Design and Credit Wings. Their duties shall as under: - </li></ul><ul><li>a. Institution Building Wing </li></ul><ul><li> Visit villages and organize the Entrepreneurial class of villages into </li></ul><ul><li>Entrepreneur Organizations who shall have regular meetings and a </li></ul><ul><li>Capital Building program. </li></ul>
  25. 26. b. Sales and Marketing Wing Village entrepreneurs lack the ability to market their products and are at the mercy of middle men. RESO shall establish external linkages and outlets for marketing and sales of the EO products. c. Contemporary Design Development (CDD) Wing Village products are extremely traditional in concept, colour and design and may not appeal to the modern mind. The CDD Wing shall redesign local handicrafts/products for the modern markets. d. Credit Wing Village entrepreneurs have no access to credit and generally obtain raw materials and capital form middleman. Therefore, their returns are minimal and are not a justified return for the hardwork, skill and effort invested. RESO shall provide the necessary credit on personal guarantees/ EO savings to cut out the middleman and ensure a just return to the entrepreneur. e. Sustainability As the Eos mature and their capital grows, greater responsibilities shall be transferred to the members. Eventually the ownership of RESO shall be transferred to the Eos carrying out operations based on their accumulated savings and Bank lending.
  26. 27. EASY ACCESS TO FINANCES Focused Funding of SMEs. While the Large Industry can access funds from the Banking Sector (BS), Small & Micro enterprises have considerable difficulty. The Banking Sector is not comfortable with funding below Rs.2 crores thus smaller units remain starved, stunting the growth and development of Small & Micro Enterprises. There is a need to direct the Banking Sector to strengthen their Investment Wings and achieving targets. PSIC has to be strengthened to finance the Small & Cottage Industry who the Banking Sector is not entertaining.
  27. 28. <ul><li>TO SUM UP </li></ul><ul><li>The biggest problem facing the Government is employment generation. There is a need to create 1 million jobs a year to achieve a growth of 7 to 8% per annum. The Government of Punjab will recruit only 25,000 persons in the CFY. The remaining jobs have to be generated in the services, industry and agriculture sectors. </li></ul><ul><li>An enabling and supportive environment is necessary for the private sector to establish competitive industries which will generate growth and employment. </li></ul><ul><li>The Large & Medium Industry can compete but need good infrastructure, services, skilled manpower and need to be provided a single forum where policy and taxation proposals can be decided. </li></ul><ul><li>The Small & Cottage Industry, which is 60% of the Industry is un- prepared for the forthcoming challenges and needs hand holding support from the Government to improve their technology levels, skills, marketing and access to finances. </li></ul><ul><li>In order to support the Industrial Sector a number of proposals are suggested for the MTBFR. </li></ul>
  28. 29. PROVINCIAL MEDIUM TERM BUDGETARY PROPOSALS PROMOTING SUPERIOR TECHNOLOGIES
  29. 30. INDUSTRIAL EFFICIENCY <ul><li>PIEDMC </li></ul><ul><li>Industrial Estates </li></ul><ul><li>Management </li></ul><ul><li>Boards. </li></ul><ul><li>Seed Money </li></ul><ul><li>Private Sector </li></ul><ul><li>Banking Sector </li></ul><ul><li>Rs.20.5 billion </li></ul><ul><li>The Government’s policy of abolishing regulating regimes has led to a mushrooming of SMEs in and around cities and towns. Resultantly these scattered units cannot be provided services efficiently nor can they dispose off their effluents in a complaint manner. </li></ul><ul><li>There is a need to:- </li></ul><ul><li>Draft a law directing all industry to be </li></ul><ul><li>established in an Industrial Estate. </li></ul><ul><li>ii. Declare areas where industrial units </li></ul><ul><li>have clustered as Industrial Estates </li></ul><ul><li>and provide infrastructure for such </li></ul><ul><li>estates. </li></ul><ul><li>iii. Upgrade existing Industrial Estates to </li></ul><ul><li>become complaint. </li></ul><ul><li>iv. Establish new Industrial Estates and </li></ul><ul><li>Commerce Centers near all Cities, </li></ul><ul><li>Tehsil Head-quarters in Punjab. </li></ul>
  30. 31. ESTABLISHMENT OF POLY TECHNICS RESPONSIVE TO INDUSTRIAL NEEDS TEVTA <ul><li>Govt. of Pakistan through PSDP for capital works and Govt. of Punjab/TEVTA through the Annual Budget for recurring costs. </li></ul><ul><li>Targets </li></ul><ul><li>Polytechnics -48 </li></ul><ul><li>Tech Trg Inst.– 42 (Men) </li></ul><ul><li>Voc Trg Inst.- 34 (Female) </li></ul><ul><li>Rs.14.0 billion </li></ul>Capable Technicians are the back bone of any industry and are essential if industrial competitiveness is to be achieved. Presently the number of Polytechnics (26 only) are insufficient to meet the growing needs of industry i.e. in quantity, quality and equipped with industry responsive skills. This shall be achieved by deemphasizing Commercial Colleges and establishing 62 new Polytechnics. To meet the emergent needs TEVTA will examine the possibility of notifying selected Industrial units as Polytechnics and promoting Apprenticeship in Industry.
  31. 32. EXPAND VOCATIONAL TRAINING INSTITUTES (VTIs) FROM 70 TO 500 VTIs Vocational Training Institutes Council (VTIC) Zakat Fund Rs.740.0 million over 4 years. As industrial growth takes place, the need for skilled workers is multiplying e.g. with the lifting of textile quotas the textile industry is expanding. It is, however, facing an acute shortage of expert stitchers. These needs have to be met by a network of VTIs sited near industrial clusters and responding to industrial needs. To respond immediately to industry needs, selected industries will be declared VTIs, provided a budget to initiate instructions & practical training in the factory premises.
  32. 33. SUPPORTING GROWTH OF COMPETITIVE SMEs
  33. 34. INDUSTRIAL DEVELOPMENT CENTRES (IDCs) Department of Industries ADP PSDP EDF DONORs Rs.2.0 billion Establish 50 sector specific IDCs near industry clusters such as leather, sports, ceramics, furniture, cutlery etc. Each IDC shall comprise of Technical, Machinery, Training and Credit Wings to achieve the objective of transferring latest technology to operative units a new ventures thereby producing quality goods.
  34. 35. RURAL ENTREPRISE SUPPORT ORGANIZATION (RESO) Department of Industries ADP PSDP DONORs Rs.1.0 billion The Government shall establish RESO as a Government owned Public Limited Company with Institution Building, Sales and Marketing, Design Development and Credit Wings. Initially there shall be a Provincial Head Quarter and 7 District Branches working with 50 villages each. Successful models shall be developed and RESO expanded to 34 Districts of the Province to achieve the objectives of employment generation in the rural areas and poverty alleviations.
  35. 36. THANK YOU

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