Small Business Development Assignment

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SMEDA

Assignment: Subject:

SMEDA Business Finance

Submitted To: Submitted By: Class: Date:

Miss.Sahresh Zafar Sadaqat Khan (2547) BBA (H.O.N.S) 4th Semester Sep/10/2009

Qurtuba University Of Science & Information Technology

Peshawar Campus SBD Assignment

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SMEDA

Table of Contents Chapter 1 INTRODUCTION 1.1 SMEDA Vision 1.2 Mission Statement 1.3 SMEDA Objectives 1.4 SMEDA SME’s Definition 1.5 SME Definitions used by various institutions in Pakistan:1.6 Introduction - Board of Directors

Chapter 2 Business Opportunities 2.1 International Business Opportunities Service 2.2 Business Matchmaking Service

Chapter 3 Business Development 3.1 Business Guides 3.2 Pre-feasibility Studies 3.3 Regulatory Procedures 3.4 Sector Briefs 3.5 SMEDA Publications

Chapter 4 SMEDA Services 4.1 Training Services 4.2 Business Plan Development Services 4.3 Financial Services 4.4 Policy and Planning: (Role of Policy & Planning Department) 4.5 Legal Services: (Legal Services for SMEs)

Chapter 5 SECTOR DEVELPOMENT 5.1 Dairy Sector: (Sector Significance) 5.2 Gems & Jewellery Sector 5.3 Agribusiness Services at SMEDA (B&SDS) (Agriculture & Horticulture Sector)

Chapter 6 SMEDA Projects 6.1 Women Business Incubation Center 6.2 Industry Support Program 6.3 SME Cluster Development 6.4 Public Sector Development Programme PSDP

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SMEDA

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(Small and Medium Enterprise Development Authority)

1. Introduction:SMEDA was establish in October 1998 to take on the challenge of developing small and medium enterprises (SMEs) in Pakistan with a futuristic approach and professional management structure it has focus on providing an enabling environment and business development services to small and medium enterprises, SMEDA is not only an SME policy advisor body for the government of Pakistan but also facilitates other stockholders in addressing their SME development agendas. 1.1 SMEDA Vision:Growth of globally competitive SME sector through a conducive and facilitating environment and support services as an engine of growth and sustainability to national economy. 1.2 Mission Statement To function as the promoter & facilitator of SME sector in Pakistan by creating a conducive and facilitating environment as well as providing and facilitating service delivery to SMEs for enhancing their capacities and competitiveness. 1.3 SMEDA Objectives:1. Formulate Policy to encourage the growth of SMEs in the country and to advise the Government on fiscal and monetary issues related to SMEs. 2. Facilitation of Business Development Services to SMEs. 3. Facilitate the development and strengthening of SME representative bodies associations/chambers. 4. Set up and manage a service provider’s database including machinery and supplier for SMEs. 5. Conducting sector studies and analysis for sector development strategies. 6. Facilitation of SMEs in securing financing. 7. Strengthening of SMEs by conducting and facilitating seminars, workshops and training programs. 8. Donor assistances for SME development of SMEs through programs and projects. 9. Assist SMEs in getting international certifications (such as UL, CE, DIN, JIS, ASME, KS, etc.) for their products and processes. 10. Identification of service opportunities on the basis of supply/demand gap.

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SMEDA 1.4 SMEDA SME’s Definition: Small & Medium Enterprises are defined as follows, as approved in SME Policy 2007 Enterprise Category

Employment Size (a) Paid Up Capital (b) Annual Sales (c)

Small & Medium Enterprise (SME) Up to 250

Up to Rs. 25 Million

Up to Rs. 250 Million

1.5 SME Definitions used by various institutions in Pakistan:Institution

Small

Medium

SME Bank

Total Assets of Rs. 20 million

Total Assets of Rs. 100 million

Federal Bureau of Statistics

Less than 10 employees

N/A

Punjab Small Industries Fixed investment. up to Rs. 20 million Corporation excluding land and building

N/A

Punjab Industries Department

Fixed assets with Rs. 10 million excluding cost of land

Sindh Industries Department

Entity engaged in handicrafts or manufacturing of consumer or producer goods with fixed capital investment up to Rs.10 million including land & building

State Bank of Pakistan (SME Prudential Regulations)

An entity , ideally not being a public limited company, which does not employee more than 250 persons ( manufacturing) and 50 persons (trade / services) and also fulfills one of the following criteria: (i) A trade / services concern with total assets at cost excluding land and buildings up to Rs 50 million. (ii) A manufacturing concern with total assets at cost excluding land and building up to Rs 100 million. (iii) Any concern (trade, services or manufacturing) with net sales not exceeding Rs 300 million as per latest financial statements.

SME Definitions in selected Asia Pacific Economic Cooperation (APEC) member countries

Enterprises exporting up to US$2.5 Million a year are considered Small by the State Bank of Pakistan. Country Australia Canada China

Sector

Employment

Manufacturing

Less than 100 employees

Services

Less than 20 employees

Manufacturing

Less than 500 employees

Services

Less than 50 employees

Varies with Industry

Usually less than 100 Employees

Indonesia Japan*

Less than 100 employees Manufacturing

Less than 300 employees

¥100 million assets

Wholesaling

Less than 100 employees

¥30 million assets

Retailing-Services Less than 50 employees Korea Malaysia

Other Measures

Manufacturing

Less than 300 employees

Services

Less than 20 employees

Varies (for SMI)

Less than 75 employees (Different for

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¥10 million assets

Less than RM 2.5 million

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SMEDA Bumiputra Enterprises) Philippines Singapore

Less than 200 employees

P 40 million assets

Manufacturing

less than S$12 million fixed assets

Services

Less than 100 employees

USA

Less than 500 employees

1.6 Introduction - Board of Directors:Public Sector: Minister of Industries, Production & Special Initiatives Secretary Ministry of Industries, Production & Special Initiatives Secretary Ministry of Commerce Secretary Ministry of Finance Chairman Central Board of Revenue Chief Executive Officer SMEDA Private Sector: Mr. Almas Hyder Chief Executive Officer Synthetic Products Enterprises (Pvt.) Ltd. Mr. Mansur Khan President/Zarai Taraqiati Bank Limited. Mrs. Amna Nasir Proprietor, Arts & Gems Exports Dr. Fasial Bari Executive Director Mahboobul Haq Human Development Centre Engr. Squadron Leader (Rtd) Nauman Wazir, Chief Executive Officer, Frontier Foundry (Pvt) Ltd. Mr. Kamal-ud-din Ahmed, Chairman/Chief Executive Sika (Pvt) Ltd. 2. Business Opportunities:2.1 International Business Opportunities Service:SMEDA is providing a unique service to facilitate SMEs by promoting business-to-business relationships. SMEDA's role is that of a matchmaker and we provide a platform for SMEs to come together and explore different areas of cooperation using SMEDA's databases and web-site. Now anyone can look for joint ventures, buy running business, form equity partnership, look for agents or distributors franchises and other business investment opportunities through this initiative. Following is the list of available business opportunities:-

Business Title / Description Chemicals Biodegradable Wound & Burn Healing Dressings, Chemicals, Chemical Processes &

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Country Czech Republic

Validity On Going

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SMEDA Technologies

Fire and Rescue Equipment .Fire Equipment Food Exporting Food Products Information Technology MYSQL AB is looking for new Gold partners etc………..

China

On Going

Iran

On Going

Japan

On Going

2.2 Business Matchmaking Service:SMEDA is providing a unique service to facilitate SMEs by promoting business-tobusiness relationships. SMEDA's role is that of a matchmaker and we provide a platform for SMEs to come together and explore different areas of cooperation using SMEDA's databases and web-site. Now anyone can sell their business, look for joint ventures, buy running business, form equity partnership, look for agents or distributors through this initiative.

3. Business Development:3.1 Business Guides:Business Guides provide information and web links intended for entrepreneurs who want to start new businesses or expand the existing ones. Business Guides like : Copyrights Registration Procedure .  Custom Clearance Procedure for Export .  Custom Clearance Procedure for Import .  Export to Afghanistan .  Export Process Flow, Procedure & Doc.  Export Processing Zone .  Import Regulations in the EU .  Import Regulations in the USA .  How to Obtain Finance from First Women Bank Limited .  To Obtain Finance from SME Bank .  Obtaining Financing under the Export Finance Scheme .  Company Registration Process .  Legal Guide for Gemstones and Jewelry Sector . 3.2 Pre-feasibility Studies:Pre-feasibility studies are well researched yet generic due diligence reports that facilitate potential entrepreneurs in project identification for investment. The main objective of the pre-feasibility studies prepared by SMEDA is to provide information about investment opportunities to the small & medium enterprises (SME’s). A typical pre-feasibility study provides:1. Comprehensive information for investment opportunity in a business. SBD Assignment

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2. Specific information regarding different business areas like, marketing, technical, industrial information etc. for the existing entrepreneurs to improve their exiting setup. 3. Project investment information and financial projections to support viability of the business. 3.3 Regulatory Procedures:SMEDA Regulatory Procedures have been developed to disseminate information and to assist Small & Medium Enterprises on existing regulatory environment, through user-friendly systems, providing detailed description of laws & regulations, including processes required for compliance while doing business in Pakistan. 3.4 Sector Briefs:One of the objectives of SMEDA is to provide fresh impetus to Pakistan’s economy through an aggressive Sectoral Development program. Its role in this regard will be recommending policy guidelines to the government for development of small & medium businesses. The sectors have been selected on the basis of criteria like: * Growth Rate * Significant SME Presence * Labor Intensity * Sustainable Competitive Advantage * High Value Addition & Export Potential 3.5 SMEDA Publications:Small & Medium Enterprise Development Authority, SMEDA, has initiated a process of articles, books & other publications to create awareness among the general public on optimal business practices, regulatory issues, GOP schemes, new business concepts, etc.

4. SMEDA Services:4.1 Training Services:SMEDA organizes training programs, seminars, workshops and conferences of short duration in major cities across the country for raising awareness and capacity building of SMEs. These need based training programs are affordable, appropriate and innovative. These programs are aimed at improving knowledge, skills and competencies in the technical, marketing, financial, compliance, policy, regulatory, legal, commercial and other important functions. These programs help to improve major performance indicators such as productivity, quality, competitiveness and sustainability etc. The results include improvement in export potential, investment promotion, business transparency, human resource development, managerial capacity building etc. These programs help decreasing the level of SME mortality and increasing efficiency. SBD Assignment

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4.2 Business Plan Development Services:Business Plan development services is one of the key services provided to enable existing as well as potential investors to make well researched and informed investment decisions. A business plan is a plan that enables a business to look ahead, allocate resources, focus on key points and prepare for problems and opportunities presented by changing business environment. Generally people think of business plans, first for starting a new business or applying for business loans. However, business plans are also vital for managing an existing business, whether or not the business needs new loans or new investments. Businesses need plans to optimize growth and development according to plans and priorities. A business plan acts as a communication tool, which can be used to attract investment capital, secure loans, and assist in attracting strategic business partners. As a management tool, a business plan helps in tracking, monitoring and evaluating the progress of a business. As a planning tool, the business plan guides an entrepreneur through the various phases of the business, which helps in identifying roadblocks and obstacles that can be avoided. 4.3 Financial Services:Financial Services Group (FSG) is one of the support units of SMEDA. As the name suggests, FSG is responsible for all financial consulting and advisory services that SMEs may require. As for all the support functions, FSG caters to both internal sector teams as well as any external walk-in SMEs. In addition to such consulting services, FSG also acts as coordinator of government schemes, which involve financial institutions. 4.4 Policy and Planning: - (Role of Policy & Planning Department):Policy & Planning Division of SMEDA has dual focus internal & external. It plays a key role in devising and coordinating policies, action plans and strategies for SMEDA operations. On the other hand it has a mandate to carry out research, communicate with stakeholders and advocate policies with different tiers of the government with an ultimate objective of creating a conductive business environment for SMEs in Pakistan. P&P is the hub of policy and regulatory research that provides SME specific policy input to all tiers of government, government agencies and institutions, SME associations, industrial clusters and individual entrepreneurs. 4.5 Legal Services:- (Legal Services for SMEs) Welcome to SMEDA Legal Services! We add value to the business of Small and Medium Entrepreneurs (SMEs) through facilitation in: (a) resolving their legal problems (b) creating awareness of legal rights (c) disseminating information on existing regulatory requirements through training courses, seminars, self help manuals and guides, (d) frequently asked questions, and (e) interaction with regulatory authorities and service providers for removing legal impediments. SBD Assignment

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5. SECTOR DEVELPOMENT:5.1 Dairy Sector:- (Sector Significance) Agriculture is the largest sector of the Pakistani economy, contributing 23 percent to the GDP and involving 42 percent of the total labor force. Livestock is the largest of the various agriculture sub sectors. Net foreign exchange earnings from livestock products and by products like meat, skins, hides etc were more than Rs. 53 billion in 2003-04 (Source: FAO-Economic & Social Department Reports) that is about 11 percent of the overall export earnings of the country. Livestock accounts for 46.8 percent of agricultural value added and about 10.8 percent of the GDP. Milk is the largest commodity from the livestock sector accounting for 51 percent of the total value of the sector. The farm gate value of milk is estimated to be more than Rs. 390 billion. Pakistan is the Fifth largest producer of milk in the world with a total production of 28 billion liter of milk a year, whose value is more than that of the combined value of wheat and cotton, from a total herd size of 27 million milk animals (buffaloes and cows). There is a consensus among the stakeholders and the development experts that Pakistan’s Dairy Sector has immense potential for growth. The same has not been realized due to various gaps. The vital missing link being lack of shared vision and strategy for the development and lack of effective collaboration among the stakeholders including support institutions and the government agencies to implement the agreed strategy. 5.2 Gems & Jewellery Sector:The art & craft of fine quality jewellery manufacturing are deeply rooted in the traditional heritage and history of Pakistan. It was however in the Mughal period that the artisan class of goldsmiths arose to attain a distinct status in the subcontinent. The most famous among the various jewellery types that emerged during the times of the Mughals include, Minakari, Kundan, Polki, and Nauratan, etc. Presently, metropolitan cities of Lahore and Karachi are the major hubs of jewellery manufacturing. There are more than thirty major cities and nearly three hundred smaller cities/mandi towns where jewellery manufacturing and trading clusters cater to domestic demand. In addition, there are at least 45,000 villages where jewellers operate as single-shop, manufacturing and selling units to meet the demand of rural population. Pakistan is a country with a population of more than 150 million people and a rich tradition of craftsmanship in jewellery manufacturing. Skilled/semi-skilled labour force is available at relatively lower rates, which offers a comparative advantage to the country. Their skill enhancement through training would lead to greater competitiveness.

Currently, Pakistan imports more than one hundred and twenty tones of gold per annum, which makes it the eighth largest consumer of gold in the world. In the year 2002, Pakistan exported gems & jewellery worth US$32 million (which went down to US$28.2 SBD Assignment

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million in 2003). Although, the volume of exports of gems & jewellery from Pakistan is of no great significance in the total global trade of US$84.4 billion and much lower than India, which is our biggest regional competitor, but the growth potential of exports in the sector is huge Gems & Jewellery Sector Strategy:The strategy is a combined effort of Gems & Jewellery Industry's stake holders, SMEDA (MOIP&SI) and J.E Austin Inc (USAID). It is for the first time that a working Strategy from mine-to-market has been developed and is based on first hand information from the different stakeholders rather than relying on the secondary data available. The methodology applied was studying the value chain analysis and recommending solutions to the problems and designing possible pilot projects for immediate implementation. •Recommendations for Geological Survey of the Balochistan and NWFP. •Introduction of Modern Technology and Methods of Mining. •Establishment of Gems Trading House/Bureau at Karachi, Peshawar and Quetta. •Establishment of Cutting Centres in Peshawar, Karachi and Lahore. •Developing Training Facilities in the Cutting, Gemmology, Designing and Manufacturing. •Quality Control - Hallmarking and Assaying Facilities as well as Gem labs for Certification. •Marketing and Branding Initiatives, i.e., domestic market trend surveys, •Website development, policy/regulatory changes to improve enabling environment for exports, seminars and Exhibitions. •Development of Infrastructure i.e. logistics, financial, services, insurance and MIS system. 5.3 Agribusiness Services at SMEDA (B&SDS) (Agriculture & Horticulture Sector):SMEDA is a facilitating body working for the development of SMEs in the country. Business and Sector Development Services (B&SDS) department of the SMEDA is responsible to provide technical assistance to SMEs. Agribusiness Development Services of B&SDS is providing proactive technical and managerial assistance to agro SMEs in the country.

Future Initiatives SBD Assignment

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•To improve productivity, competitiveness, market intelligence and to improve access to financing for small and medium agricultural enterprises (as timely availability of credit is the main hindrance in the productivity of Agri SMEs). •Increasing access to agribusiness finance available from financial institutions to agro-enterprises for new starter or enhancing capability of existing entrepreneurs. •Providing capacity building for horticulture and agriculture (agribusiness); streamlining the collection and dissemination of market information; strengthening agribusiness technical training capacity; upgrading institutional linkages (Private Public Partnerships, building awareness for the need to comply with international agricultural product standards and practices. Revising and updating the agribusiness related regulatory policy issues and to formulate a national agribusiness policy in consultation with all relevant stakeholders. Stakeholders Involvement Plan For execution of the initiatives taken by Agribusiness Development Services SMEDA stakeholders from complete value chain will be involved in formulating Policy guidelines and future plan of action for enhancement of capabilities of Agro SMEs in Pakistan. Proposed stakeholders may include Farmers Associations, researchers at academia and at research stations, different Government departments involved in policy making or decision making process

6. SMEDA Projects:6.1 Women Business Incubation Center:Women Business Incubation Center (WBIC) is an initiative of SMEDA being funded by Government of Pakistan to provide ‘hands-on support’ to Women Entrepreneurs (WEs) in an exclusive female oriented environment. It is the first of its kind center in Pakistan wherein, Offices, Exhibition/Display facility and Business Development Services (including training programs) are being offered to Women Entrepreneurs (WEs) under one roof. The entire effort is focused at encouraging new business start-ups and support to existing businesses including the right environment for nurturing women owned and managed businesses to an extent that these become sustainable; more specifically, in start-up period (first five years) when they are most vulnerable. WBIC is a supportive entrepreneurial community designed to help grow small businesses. The center is established for providing assistance to home-based businesses or those in earlier stages of development. 6.2 Industry Support Program:SMEDA initiated an Industry Support Program in 2003 for technical support of different industrial sectors in Pakistan. SMEDA has collaborated with different international organizations like Japan International Cooperation Agency (JICA) and Gesellschaft für Technische Zusammenarbeit (GTZ). These organizations provide foreign experts to enhance the capabilities and operational techniques of local industry in different ways. For the success of these development initiatives an Industry Support Cell SBD Assignment

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(ISC) at SMEDA has been established. The main objective of establishing this cell is the capacity building of SMEDA staff and to ensure the continuity of different initiatives. ISC consists of professionals who work closely with foreign experts for the development and up gradation of local industry. 6.3 SME Cluster Development:Clusters are geographical concentration of enterprises which produce and sell a range of related or complementary products and are, thus, faced with common challenges and opportunities. Cluster development is basically supporting and strengthening the clusters by creating networking among the stakeholders to reduce the cost of doing business, bringing them on a single platform for more voice among policy makers, create new business opportunities, reducing risk of doing business and capacity building of the enterprises. Cluster development has also proved its contributing in employment generation and poverty reduction worldwide. 6.4 Public Sector Development Programme PSDP:Sr. No. Name of the Project 1 Gujranwala Business Centre (GBC) 2 Agro Food Processing Facilities (AFP) 3 Sialkot Business & Commerce Center (SBCC) 4 Women Business Development Center (WBDC) Etc……….

RS million Location Total Estimated Cost Gujranwala 98.78 Multan 135.19 Sialkot 341.67 Karachi, Sindh 34.03

References:          

http://www.smeda.org/index.php http://www.smeda.org/SMEDA-introduction_1.html http://www.smeda.org/opportunities/international-business-opportunitiesservice.html http://www.smeda.org/business-development/business-guides.html http://www.smeda.org/business-development/pre-feasibility-studies.html http://www.smeda.org/services/training-services.html http://www.smeda.org/services/financial-services.html http://www.smeda.org/sector-development/dairy-sector-brief.html http://www.smeda.org/sector-development/gems-and-jewellery-sector.html http://www.smeda.org/projects/WBIC-women-business-incubationcenter.html http://www.smeda.org/projects/cluster-development.html

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