Market size for SMEs should be increased, says CA Sri Lanka President
With Small and Medium Enterprises (SMEs) contributing far more to the economy of Sri Lanka than any other sector, the market size from this segment needs to be increased, says Arjuna Herath, President of the Chartered Accountants of Sri Lanka
(CA Sri Lana).
He made this comment to the Business Times on the sidelines of the signing of a MoU between CA Sri Lanka and the Ministry of Traditional Industries and Small Enterprise Development recently at the ministry. The MoU was signed by Ministry of Traditional Industries and Small Enterprise Development Secretary, V. Sivagnanasothy and Mr. Herath.
Mr. Herath told the Business Times that, “One of the critical factors the SMEs (need) is having a market for them for their service and products; sometimes the population in the area they operate is not big enough for them to grow bigger. We are trying to save the value chain of the segment that they are involved in and move it up so that they can access the bigger markets.”
He added: “We need to increase the market size for the SMEs. From an economic perspective 70 per cent to 80 per cent of the total companies in Sri Lanka are SMEs. In terms of market growth only 20 per cent of them contribute to the economy. This has to change and their contribution has to be far greater because the number of firms and people involved in employment is huge. If you can make a dent in that whole segment the impact to the economy can be fairly big”.
He also stressed that, “Small and medium practitioners (SMPs) who are now providing pure accounting services and audit services need to diversify themselves to be able to provide strategy input in terms of working capital management and preparing financial proposals for accessing finance feasibility studies. We are developing capacity within our SMPs for them to be able to service and fulfil the requirements of SMEs. We are also trying to match the requirements of the SMEs with the services that the SMPs are providing and see whether that will allow a synergy to get the SME sector moving in a more rapid progress”.
The MoU will enable SMEs to have access to a broad range of professional and other support services from SMPs to grow their business and in turn will create business opportunities to the SMPs by providing such services for a reasonable fee. It will also pave the way for the ministry to create awareness among SMEs about the services that can be obtained from the SMPs in order to upgrade and strengthen the capacity of services that could be offered by the Practicing Chartered Accountants.