Government should utilize prevailing strengths and opportunities to convert existing threats into growth opportunities while eliminating weaknesses in a bid to develop the SME sector in Sri Lanka, a draft report commissioned by the Ministry of industry and Commerce and conducted by Ernst & Young on ‘Legal and Institutional Study for Creating Enabling Environment for SMEs’ said.
The draft report has been compiled following an extensive consultation with stakeholders which included 200 SMEs and more than 30 government agencies who are involved in SME activities. And the complete report, complied with the support of Ministry of Industry and Commerce is to be launched by end of November or December this year, after incorporating all the recommendations made by relevant stakeholders into the draft report. In addition, the Ministry of Industry and Commerce is expected to present a Cabinet paper shortly in relation to some of the recommendations made by stakeholders in this regard.
“While the government has come up with a number of loan schemes and projects to boost the local SME sector, it is disheartening to note that the majority of real SMEs in this country have not been able to receive these loans facilities due to various reasons,” Arjuna Herath, Partner at Ernst & Young told participants at the final feedback session of the draft report, held at BMICH yesterday.
Herath said Sri Lanka has over 50 government institutions and agencies serving the SME sector. Noting that access to finance and the ability to fulfill collateral requirement remain as the main challenge that hampers the growth of the industry to a great extent, Hearth mentioned some of the recommendations, highlighted in the report relating to the SME framework in Sri Lanka at the session.
Accordingly, the report suggests to create Central Bank of Sri Lanka (CBSL) affiliated credit guarantee institutions and a SME credit Guarantee Fund collaborated with CBSL and Ministry of Finance , formulate a government policy for public sector to create linkages to procure goods and services form SMEs and establish SME specific Industrial Zones, separately or within the industry zones to meet SME requirement and create online platforms to assimilate market information of the manufacturing and agriculture sectors while creating mobile applications for effective management of market supply and demand conditions at regional level.
“The report also highlights the need to institutionalize the SME Authority with amalgamation of selected key existing structures, set up national SME Advisory Commission which will be the apex policy setting and monitoring body, establish the concept of one stop at the regional level, empower business support service centre which is to be set up at district level,” Herath said.
Furthermore, the report stresses the need to support effective monitoring and coordination of SME related activities across the government entities, facilitate the amalgamation of National Enterprise Development Authority (NEDA), Industrial Development Board (IDB) and Small Enterprises Development Bureau (SED) and absorb other SME related projects, entities and operations towards creating a SME authority.
Minister of Industry and Commerce Rishad Bathiudeen addressing the event said the study has been commissioned at a cost of Rs 3.2 million and thanked the German development agency GIZ office in Sri Lanka for extending financial support for this initiative.
Minister Bathiudeen also stressed: “There are more than one million registered SMEs in Sri Lanka providing employment to three million. When we take the unregistered SMEs the numbers will be much more. 52% of our GDP is driven by this sector with more than 40 percent of employment. Also More than 70 percent of enterprises are SMEs and in 2013 20% of exports came from SMEs.”
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