PIAF feels for small and medium enterprises

The Pakistan Industrial and Traders Association Front (PIAF) has felt strong concerns for the small and medium-sized enterprises.  

“SMEs are being deprived of relief from the government. Announcements are just rhetoric as SBP, FBR, LESCO, SNGPL Punjab Social Security Dept and EOBI did nothing,”

PIAF Chairman Mian Nauman Kabir said on Thursday.

In a joint statement with senior vice chairman Nasir Hameed Khan and vice chairman Javed Iqbal, hailed the approval of another relief package of billions of rupees by the Economic Coordination Committee of the Cabinet for the SMEs, urging the authorities to also ensure the provision of this facility on an urgent basis to the small businesses, which are facing a severe financial crisis due to prolonged lockdown.

Nauman Kabir said that on April 22, the State Bank of Pakistan had announced incentive package to help businesses avoid layoffs while directing banks to provide refinancing at zero per cent.

The central bank had announced relaxations in collateral requirements, further reduction in end-user rate, reimbursement of wages, special accounts for employees to receive wages, borrowing from banks other than maintaining payrolls, simplification of application form for small and medium enterprises and bank’s exposure limits.

He added that earlier on April 10, the central bank had also announced an incentive scheme entitled Refinance Scheme for Payment of Wages and Salaries to the Workers and Employees of Business Concerns, enabling the provision of concessional credit for payroll finance to businesses that commit to not lay off workers for the next three months.

But the reality is that banks have refused to offer such loans, except extending only Term Finance Funding, with a restriction of on-time payment of markup and other conditions. The bank officials say that they have no instructions from the govt in this regard which is very unfortunate.

PIAF senior vice chairman Nasir Hameed Khan said that social security and EOBI payments are being demanded by the departments as usual, as the government promise of workers salary funding via Social Security channel has not been implemented yet.

He said that utility companies including SNGPL and LESCO have neither provided any relief in tariff nor extending dates of bills payment, contrary to the commitment of the government.

He stated that the actual position is that the government has announced relief for the large industry by reducing the interest rate, besides declaring Rs12,000 package for the poor sections of society but the SMEs, which are actually a backbone of the economy, are still waiting for some relief.

Presently, the SMEs cannot take loan to pay workers at 4% markup from banks without approved limits. The PIAF leadership suggested the government to devise a policy for provision of soft loan or qarz-e-hasna only for filers and documented businesses on very nominal interest rate so that they could bear their running cost and pay the salaries to their workers.

“One option is that the registered SMEs should be provided up to 5,000 litres of free fuel to run affairs of their businesses, which will encourage other non-registered SMEs to become fillers.”

Vice-chairman Javed Iqbal added that small traders and shopkeepers were in critical situation and their financial security was the responsibility of the government in the present crisis. He asked the government to focus on addressing the economic woes of the business community, especially the small traders. “We appreciate the government’s plan of waiving off SMEs electricity bills for the next six months and hope the plan will be implemented immediately.”