Shahab Anwar Khawaja, CEO
 Small & Medium Enterprise Development Authority (SMEDA)

One does not always appreciate that this task is extremely challenging, because it involves it will involve a change of the mindset on both sides, but mainly on the state sector side. It will also mean that while we are talking about a change of the entire system, we are talking more, a state of transparency. We are also talking about easy access to information. And we are also talking about automation, which could lead to a very
substantial change in the way transportation and trade is being conducted.

What is the SME sector in Pakistan? If you count all the micro, small, and medium enterprises, there are about 2.5 million of them, predominantly in the service sector. The overall number is very large. They are disorganised; they don’t have management capacities; their level of efficiency is low, and they have very serious problems with their access to financing. So while we are talking about trade and transport facilitation for SMEs, and particularly for export, we need to look internally. Unless their efficiencies are at a level where they can compete with the international world, it will be very difficult for them to stay afloat.

SMEDA has conducted two surveys: one with the International Labour Organization (ILO) and the other with the World Bank. The results are not too supportive of the present business environment in Pakistan. In most of the cases, the environment in terms of inspections, labour and accessibility to finance, time it takes to obtain simple electrical connections, the time it takes for most SME management to deal with the public sector people
is extremely high.

We understand in the public sector that there are serious problems faced by the private sector vis-à-vis the public sector. SMEDA when it was set up five years ago, has tried to play its role. IT has tried to improve things for SMEDA. How far we have gone is up to the private sector to judge. But there is so much to be done.

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Why do we need a public-private partnership? There are several reasons, but the main reason is that the Government, although it is the central authority, does not have enough resources to change the status quo. The task is very difficult and that is why the private sector is required, because the private sector has, to a certain extent, the resources, the capabilities and the potential.
What does the private sector lack? They do not have proper access in the corridors of Government, in the public sector.

Coming to this project, which I have been associated with for the last six years–even before the project was born, we should ask, “What have we achieved?” This project was meant for the private sector. Whether this project was initiated on the request of private sector, I cannot comment. But I can definitely say that this project was intended for the private sector. I can also say that the private sector has not played its role very well in order to take advantage of this project.

In Pakistan we have a certain mindset where we don’t accept change and where we don’t accept to work in a proper procedure or system. Over the last two and a half years in this trade facilitation project we have tried to approach the major trading houses in the private sector. My conclusion is that the main and big trading houses, perhaps, do not need trade facilitation.

First, the big bosses are not even aware of what is happening in the market or what is happening in the Government organisations. They have their own managers to tackle the issues and these managers have certain shortcuts to come to the conclusion of any task given to them. So unfortunately the first realisation we should make is that, in the private sector, the big trading houses are not really accepting this change.

Secondly, there are the small and medium enterprises. These are the people to whom we should ask what are the real trade obstacles. Indeed, they are the main sufferers. This project is really meant for them.

We should have learned a lesson for our next project, that when we start our facilitation work, we have to go to that particular area to find out what are their grievances. We have to develop the agenda based on the small and medium enterprises rather than giving to them our own agenda. The current project relied too heavily on the opinions of our experts and consultants to set the agenda rather than asking the agenda from the SMEs.

 Finally, and this is from sitting in the private sector, we need to talk about the public sector. Over these last two years, similar to the way that the large trading houses have not concerned themselves with this project, the public sector has also not given us their full attention. The public sector has to change its mindset too. Because I am aware that it is very difficult for the public sector to have the same mindset as the private sector. You cannot change the thinking so soon. But at least the beginning
has been made, awareness has been created, the direction has been set and we hope that in the times to come we will see some tangible results.