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Malik urges stronger institutional support, easier financing to unlock growth potential
LAHORE:
Small and medium enterprises (SMEs) need stronger institutional support, easier access to finance and technology-driven business clusters if they are to play a bigger role in exports, industrial growth and job creation, former SAARC Chamber of Commerce and Industry President Iftikhar Ali Malik said on Wednesday, urging the government to place the sector at the centre of its economic strategy.
He called for the establishment of centres of excellence dedicated to SME clusters, saying such facilities should focus on innovation, digital integration, modern manufacturing techniques and improved access to financing. He said the initiative would help local businesses become more competitive in international markets while accelerating industrial development.
His proposal comes at a time when the government is also stepping up efforts to strengthen the SME sector. Official figures show that Pakistan has about 7.14 million micro, small and medium enterprises, contributing nearly 40% to the country’s GDP, around 30% of exports and employing more than 80% of the non-agricultural workforce, underlining the sector’s importance to economic growth.
“SMEs are the backbone of our economy and the foundation of regional economic integration,” Malik said. He noted that enterprises operating in textiles, surgical instruments, information technology, light engineering, agro-based industries and food processing have already earned international recognition for product quality but require stronger institutional support to improve their global competitiveness.
He said SMEs not only drive industrial production but also create employment opportunities and help reduce poverty. According to Malik, developing countries derive around 40% of their GDP from SMEs, while the share rises to nearly 70% in developed economies, making investment in the sector essential for long-term economic sustainability.
He also expressed optimism over the D-8 SME Cooperation Framework, saying it could help member countries internationalise their SMEs, improve integration into global value chains and expand access to international markets. He said trade among D-8 member states reached about $157 billion last year, reflecting a 10% increase over the previous year, and expressed hope that intra-D-8 trade could rise to $500 billion within the next five years under the bloc’s Decennial Roadmap and Preferential Trade Agreement.
Industry representatives believe that while policy support has improved in recent years, access to affordable credit, digital technology and export marketing remains a major challenge for smaller businesses.
Naeem Khan, an SME owner engaged in light engineering, said many small manufacturers possess the technical capability to compete internationally but remain constrained by limited financing and outdated production facilities. “If specialised SME clusters provide modern machinery, digital services and easier financing under one roof, thousands of small businesses will be able to expand exports and create new employment opportunities,” he said.
The government has recently announced several initiatives aimed at expanding SME financing. The State Bank of Pakistan (SBP) has set targets to significantly increase lending to the sector over the next two years, while policymakers continue to emphasise that SMEs remain central to export diversification, entrepreneurship and sustainable economic growth.
Malik urged policymakers to make SME development a national priority, arguing that stronger institutions, better financing mechanisms and innovation-driven industrial clusters would improve competitiveness, accelerate industrial modernisation and help prepare local businesses for the demands of the Fourth Industrial Revolution. He said sustained public-private collaboration would be essential if Pakistan is to unlock the full economic potential of its millions of small businesses.
Meanwhile, according to a statement issued on Wednesday, the government is reviewing barriers to bank financing for small and medium enterprises.
A high-level consultative meeting with Special Assistant to the PM Haroon Akhtar Khan explored measures to improve SME credit access.
Khan said the PM is committed to making bank financing accessible and has formed a working group with the SBP to simplify lending.
SMEDA CEO Nadia Jahangir Seth said a free SME Registration Portal has been established to help businesses benefit from government programmes.
Over 70 SME-based chambers and industry associations attended the meeting. Their recommendations will be conveyed to the PM.