Small and medium scale enterprises are receiving particular Government attention, as it has a vital role in the economy of a country particularly in the under developed countries. In Pakistan it accounts for 30 per cent of the value added in manufacturing sector and more than 5 per cent of GDP as compared to the contribution of 12.5 per cent by large scale industry in the private sector. The share of small industries sector in the export of merchandise is 18 per cent. The small enterprises encompass both formal and informal activities. It covers all domains of business and industrial sectors and is ranges from thousands very small units to a sizeable modern factory existing in unorganised sector.
In Pakistan 81 per cent of the labour force is employed in the manufacturing sector alone. It provides training grounds in the development of technical skills, marketing experience and managerial capabilities. The development of small scale industries has a strong socio economic impact in the third world countries predominantly where the labour is available at comparatively cheaper rate and there is acute un-employment problem. Furthermore it requires smaller capital and generates greater employment opportunities. It has the substantiality of withering the worse adversities of recession as well as inflation
A major problem in the development of small scale industry is that on the average, large scale manufacturing is five times more capital intensive than the small scale sector. According to the Economic survey of 1985-86, published by Government of Pakistan, creation of one job in the small scale manufacturing sector costs about 80 times more than in the large scale manufacturing sector. As a result of this problem SMEs remain far behind the large scale industry. Due to production on small scale they do not get the benefit of economies of scale as availed by the large scale industry in Pakistan.
The development of small scale industry is one of the most effective means of stimulating entrepreneurship in a society. To develop entrepreneurship in Pakistan Government or Government Institutes should help the entrepreneurs by providing the following facilities.
Firstly, help in selection of new SME start-up technological process selection. Secondly, once process decided upon then help in selection of brand new/second machines to stay inside a certain capital investment cost range. Thirdly, help in start-up of the manufacturing / production process by selection of helpful consultants. Fourthly, Inspection of first production batches for achieving proposed quality standards of manufactured product.
In this regard training programs on power of social media (Gmail, Facebook & Tweeter), effective planning for product launch, export markets & marketing, business plan development, legal issues (Contract Management, Taxation, Company Registration), export import documentation and financing schemes should be provided to the potential entrepreneurs.
Government should conduct training programmes that will help in providing effective solutions to improve major performance indicators; productivity, quality, competitiveness, sustainability and knowledge management of SMEs for easier and faster path to ISO compliance and WTO requirements.
This will help in the development of small scale industry in Pakistan. Improvement and increase in small scale enterprises will result in the production and export of more finished goods which will give more foreign exchange as compared to the foreign exchange collected on the export of raw materials. This will lead to the improved balance of trade and balance of payments.as a result of which our trade deficits will start decreasing and will come to an end with the development of entrepreneurship in Pakistan.