ISLAMABAD: Federal Minister for Industries and Production Makhdoom Khusro Bakhtiar on Wednesday unveiled the small and medium enterprises (SME) policy.
Addressing a press conference, flanked by Federal Minister for Information and Broadcasting Chaudhry Fawad Hussain — Bakhtiar said the government aims to promote around five million businesses through facilitation in registration, streamlining of taxes, access to credit and provision of land.
“This is the first time that the policy has been introduced with a proper implementation mechanism,” he highlighted.
The minister told the media that the policy was drafted in 2007 but only on paper, asserting that this time it is being introduced with an implementation mechanism under the supervision of the National Coordination Committee with proper deadlines of tasks.
The industries minister highlighted that there are around five million SME businesses in the country, including one million in the manufacturing sector in the shape of different enterprises.
“The SME sector is playing a crucial role in promoting inclusive economic growth, in addition to providing 78% of employment (if agriculture is excluded) and promoting exports,” he said, citing facts and figures.
Elaborating on the various initiatives of the policy, the minister said that the policy was not only directional but many of its initiatives have already been implemented.
“The policy has relieved the businessmen of the regulatory burden by either excluding the condition of obtaining a no-objection certificate (NOC) or have minimised its requirements,” he explained.
Shedding light on a new initiative, Bakhtiar informed the media that the “zero time to start up” initiative has been introduced under which the sector has been divided into three categories — low, medium and high-risk SMEs.
“The NOC condition for low-risk businesses, including the services sector abd wholesale transport has been abolished, whereas medium risk businesses, such as light engineering, leather, auto-parts, sports goods and cutlery can get their approval within 30 days after applying for the same,” he mentioned.
However, he added, SMEs working with explosives, fires, boilers and chemicals have been put on the high-risk category.
Under the SME policy, a self-declaration scheme has also been introduced under which the businessmen would follow the relevant laws voluntarily.
He added that only 2% of the self-declaration would be inspected physically.
Moreover, the government has developed a web portal, through which the businesses that are going to be inspected would be given the date of inspection. “This would reduce human intervention and promote transparency and check corruption,” he asserted.
The minister further said that another initiative taken under the scheme pertains to the streamlining of taxes for SMEs.
“Under the policy, turnover tax of 1.25% has been reduced to 0.25% for the businesses with a turnover of less than Rs100 million and 0.5% for those with a turnover from Rs100 million to Rs250 million,” Bakhtiar said.
However, if anyone is not interested in turnover tax and wants to claim withholding tax then he/she would have to opt for income tax mode, which is set at 7.5% for businesses with a turnover less than Rs1 million and 15% for those with a turnover from over Rs100 million to Rs250 million.
The minister announced that women enterprises have been given a 25% rebate in tax.
Speaking on the occasion, Fawad Chaudhry highlighted the importance of developing a strong industrial foundation to promote growth and cater to the needs of the 220 million population.
He said unless the industrial sector of the country was promoted, it would be hard for the country to emerge out of the economic problems it is facing.
