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Case Study: SMEs in South Asian Economy and HRD:

Linkage of HRD and SMEs Contribution of SME in India, Pakistan Largest Supplier Of Jobs Introduction Of Globalization SMEs are to face more competitive environment at Domestic and international level Appropriate knowledge and skill development Important to provide assistance to SME to improve working conditions and standard of living of workers The Global Competitiveness Report 2010 ranks South Asian countries at different levels need to undertake a serious regional level initiative to establish a base-line in HRD practices in SAARC

Pakistan During 2004-2005:

Second rapidly growing economy in Asia after China in 2004
Increase in real GDP is the courtesy of performance of large scale manufacturing and services sector Even though the large scale manufacturing registered 15.4% growth

(SMEs) is the core issue in the countrys progress

One person manufacturing enterprise Ten to thirty five employees with two to twenty million rupees capital intact in equity

Thirty six to ninety nine employees with twenty to forty million capital intact in equity

Role of SMEs in the progress and well-being of masses in Pakistan:

The assessment of the role of SMEs in Pakistan is of vital importance. Sometimes we have shinny figures and data regarding economy like GDP growth or per capita income but these can be misleading because the earners of these massive growth are not masses but the capitalists in the country. SME produces the income stream for masses located in the countryside and the capitalists associated with this activity that is generally medium or small as the name suggests.

What SMEs are capable to produce:

Pakistan would be way ahead on economic racetrack of the world Produce billion of dollars worth items that is why SMEDA is quite right in stating its mission as Turning potential into profits A truer and fair picture of the role of SMEs in Pakistan.

Potentials and Threats regarding development of SMEs in Pakistan

We have to boost the progress and efficiency of SMEs. Financing SMEs in heavy liquidity period for banks is not a burden Exploring a specific niche product is another way to boost SMEs sector The movement of masses from rural to urban areas is another hot slot of the time Stock markets in the country are in deprivation of number of newly listed companies SMEs will be the main source of poverty reduction in Pakistan

Opportunity for Local Consultant(s) - Pakistan SME Sector Development Program , SME Sector Development Project
BACKGROUND AND RATIONALE Pakistans poverty reduction strategy has explicitly identified A developed and appropriately supported SME sector can facilitate poverty reduction increasing competitiveness, improving income distribution, broadening the accumulation of wealth, and cushioning business cycle effects It is essential to develop an SME policy to recognize and promote appropriate mechanisms The Ministry of Industries and Production (MOIP) The SME policy will reflect the Governments objective of encouraging SME development and competitiveness

Human Resource Development:

Access to Resources & Services:
The consultant shall be responsible for reviewing and proposing recommendations for increasing access of SMEs to various Business Development Services and Resources including: Human Resource Development Propose a comprehensive training and HRD policy for SMEs in Pakistan. The consultant shall; Discuss the appropriate roles of public and private sector in HRD for SMEs Review the international best practices in HRD for SMEs Recommend ways to keep quality training programs for SMEs affordable Propose Programs/ Mechanisms for the Promotion of Entrepreneurship Development

Significance of SMEs:
SMEs are considered the engine of economic growth in both developed and developing countries, as they: Provide low cost employment since the unit cost of persons employed is lower for SMEs than for large-size units. Assist in regional and local development since SMEs accelerate rural industrialization by linking it with the more organized urban sector Help achieve fair and equitable distribution of wealth by regional dispersion of economic activities Contribute significantly to export revenues because of the low-cost labor intensive nature of its products.

Significance of SMEs:
Have a positive effect on the trade balance since SMEs generally use indigenous raw materials Assist in fostering a self-help and entrepreneurial culture by bringing together skills and capital through various lending and skill enhancement schemes Impart the resilience to withstand economic upheavals and maintain a reasonable growth rate since being indigenous is the key to sustainability and self-sufficiency.

Problems Faced by Pakistans SME Sector

not able to derive optimal benefits despite a series of efforts launched by various policy makers at different times
insufficient and low quality production to meet the demands of local and international markets, deficit in balance of payments and ever rising unemployment, etc.

Pakistan 's SMEs are still unable to achieve their maximum potential and are in dire need of hand-holding' and business support services.

SME Financing and Hand-Holding

Research reveals that despite the lack of collateral, SMEs are a better credit risk, as the default rate of this sector is much below that of large enterprises (LEs).

Throughout the world, SMEs have provided tremendous opportunities to financial institutions to design various tools for the sector's development (e.g. Program Lending Schemes, Credit Scoring, Venture Capital Financing, etc.).

Conclusion And Recommendations:

The Human Resource Development is an unending and continuous process, and involves many dimensions. The foremost area of human resource development activity involves education and acquisition of knowledge. We in Pakistan, have lost much time in making education compulsory by law and deciding to make it free, at least upto the secondary level. This needs to be done without any further loss of time. The health sector too needs to be dealt with more seriously, specially the preventive side covering hygiene and environmental protection. Discipline is yet another area which needs attention, and for that purpose military training for all must be made mandatory. This will make people more disciplined and also more healthy. This will also take care of a major part of defence needs and enable the country to reduce expenditure substantially on the large standing army. The financial resources thus saved could be used for education, R&D, health and other social programmes.

Conclusion And Recommendations:

As a part of the HRD programme package, suggested in this paper, the most essential nd most crucial aspect suggested is the development of human character, which has deteriorated because of neglect. No deliberate or serious is being made this direction, neither by parents nor leaders, nor teachers and not even the religious ulema, who have on their own assumed responsibility in this direction. Mass training for designers be organized because design content of a product is one of the largest value added components in the product and consumes less in terms of capital than any other input factor to make the product of quality. Design input, in fact, is synonymous with human creativity. At least 2% of the GNP be allocated to Research & Development activity, instead of 0.2% as at present, to create technology and produce differentiated products.

Conclusion And Recommendations:

Training and retraining of workers should become a norm for the industry and business throughout the country. Commercial Courts created under Ordinance 1980 should be made more active and quality failure complaints taken up seriously. Massive efforts should be made in the field of human resource development, particularly in the field of technical education and training. Mass media should mobilize public opinion to create a quality culture in the country. Govt. should make efforts to push economic growth process. For this purpose Economic Revival Package should announce for the revival of industries sector, to stimulate production and investment.

Conclusion And Recommendations:

Govt. should seriously try to boost exports through broadening the tax base and lowering tariffs Govt. should announce a package for the development of agriculture sector. Beside this a number of fiscal and monetary measures should take to attract industrialists and particularly foreign investment.

More Technical and Vocational training facilities should be provided. In this way unemployed people will get the chance to enhance their skills and become able to earn reasonable income.
With a view to reduce educate unemployment; self-employment scheme should be encouraged in true manners. Govt. should take proper steps for the development of SMEs in urban and rural areas.