Investor Presentaiton

Chapter VIII - MSMEs - Revitalizing Punjab's Economy capital development through this program will add value to the tune of 13 Billion to the economy of Punjab. TEVTA shall adopt mode of training to online through e-Rozgar initiative. The Government of Punjab, therefore evidently, is leveraging new and ongoing interventions by realigning their focus in the aftermath of COVID-19 spread which cover the entire spectrum of issues being faced by the economy. In addition to the preceding direct intervention, other policy levers are being attuned as well to yield medium to long-term dividends in wake of the challenging economic and business environment. 03 Enabling Environment to help MSMEs Sustain and Grow: In this regards, Punjab Government's strategy entails the following dimensions with a view to providing enabling environment to sustain and grow businesses in immediate to medium-term: ☐ ☐ Enabling Environment to help MSMEs Sustain and Grow Realigning Punjab Growth Strategy: With a view to bringing in resilience to the economic growth and development trajectory of the Province, Punjab Growth Strategy is being realigned. RISE Punjab Framework was developed by Planning and Development Department for the purpose of formulating a prioritization framework for guiding Development spending. Support to businesses and prioritizing those sectors for public investment which crowd-in private investment or involve multiple industries are the key pillars of this realignment. For example, one initial intervention is to increase focus on Public Works Schemes, Construction Sector and Irrigation projects that will create employment in large numbers and will support allied smaller businesses and help revive the economy. Accelerating Reforms for Ease of Doing Business: Pakistan and Punjab have made significant strides in terms of facilitating the businesses in terms of start-ups and operations. Government is contemplating accelerating the pace by reviewing the existing regulatory and licensing regimes and will carry out consultations with the private sector to further reform the regulatory regime. The Government is considering easing out the PESSI registrations and also looking at the Local Government licenses that can be relaxed to provide Ease of doing Business to the small businesses. Bringing MSMEs under Formal Net: Punjab Government is contemplating measures to reduce cost of compliance with a view to broadening the provincial tax base. Various measures are under consideration in this regard. One of the challenges in providing support to MSMEs through any sort of intervention is high degree of informality and micro enterprises being outside any formal banking and taxation net. This has consequences for provincial tax revenue as well. Crowding-in Private Investment: Innovative Financing by crowding-in private investment in times of constrained public fiscal space is a key element Government's strategy and offers a lot of potential for both Government and the private sector. Government is cognizant of the fact that a business-friendly economy is key to attracting and protecting investment. PPPs investments have a lot of potential to trickle down the economic opportunities to MSMEs, hence a sector of priority for the Punjab for FY 2020-21. Provide Productive and Skilled Labour Force: Government plans to use the existing TVET infrastructure to increase the relevance and quality of training provided. With Punjab Skills Development Authority (PSDA) in place as a regulator, private sector will be encouraged to impart skills-based trainings, thus reducing the burdent on Government providers such as Punjab TEVTA. In the context of COVID-19 induced unemployment, Government intends to strengthen this sector through PSDA regulation and involvement of private sector to produce better trained individuals. This calibrated approach looks more result-oriented. For the industrial development, the importance of the Micro and SME sector cannot be overemphasized. This segment of the market holds great promise for Pakistan. SMEs contribute more than 40% in the annual GDP, bulk of which is provided through the SMEs located in Punjab. However, unlike large enterprises in the formal sector, a small and medium enterprise is resource constrained, especially in the currently prevailing overwhelming circumstances. In addition to indigenous initiatives by the Government to support this sector, these is a need to tap international partners for support in this area. International Finance Corporation (IFC) in 2010 revealed that an estimated 50-60% of MSMEs on a global level are either under-served or completely un-served. Financial institutions, globally, are considering MSMEs sector as an opportunity to capitalize and earn significant return on investment (ROI). This is high time for Punjab and Pakistan to tap such support opportunities for its MSMEs sector to make it resilient to any future economic shocks. Page 70

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