New industrial units: SBP should introduce low-cost financing scheme: FBATI

The State Bank of Pakistan (SBP) should introduce a customized low-cost financing scheme for the construction of industrial units in the small and medium-sized sector aimed at promoting economic activities on a long-term basis.

Speaking exclusively to Business Recorder, Syed Raza Hussain, President of the Federal B Area Association of Trade and Industries (FBATI), said the banking regulator, through commercial banks, should introduce a financing scheme up to Rs. 500 million against the markup rate of 5–6 percent for the period of 20 years to encourage small and medium-sized entrepreneurs to construct industrial units targeting domestic and export markets.

The scheme should focus on construction activities to accelerate economic activities in major cities rather than allowing the import of machinery to prevent the loss of precious foreign exchange for the country, he further said.

The construction activities will also revive growth in different allied sectors, including cement, steel, marble, etc. On the other hand, it generates employment for hundreds of skilled laborers for a longer period, and the government will also get additional revenues from taxes, President FBATI said.

He mentioned that the high cost of construction made it unaffordable for industrialists to set up new industrial infrastructure on their land in different industrial zones of Karachi for many years, hence the negative growth in industrial production.

“Several industrial zones such as SITE, Nooriabad, National Industrial Park, and Dahabaji are wearing a deserted look, as many owners of the industrial plots are not able to construct buildings for their production units,” he said and added. Once a low-cost financing scheme is available for the construction of production units, the machinery or equipment can easily be purchased by industries for the expansion of their industrial activities.”

The owners of the lands are paying non-utilization charges to relevant authorities because they don’t have the capacity to expand their industrial activities in the industrial zones, Raza further said.

President FBATI said the low-cost financing scheme for the SME sector for the construction of industrial units is easy to execute in terms of the pre-requisite requirements and collateral conditions of the beneficiaries. The financial scheme could be offered to industrialists with established businesses for more than 5 years having ownership of land in any industrial zone.

According to the Small and Medium Enterprise Development Authority (SMEDA), there are more than 5 million SMEs in Pakistan, contributing 40% to the GDP of Pakistan and 25% to overall exports. The SME sector employs the highest percentage of the working population in the country after the agriculture sector.

In recent years, it has been observed that low-cost schemes were introduced to the SME sector, which almost ended up receiving an overwhelming response from the banks and SME beneficiaries. This scheme was successful, as the banking regulator also set targets for financing commercial banks, President FBATI said.

Source: Business Recorder, Daily Jang, Daily Dunya

https://www.brecorder.com/news/40281025

https://e.jang.com.pk/detail/614528%22

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