Around 90 per cent of the economy depends on SMEs while no one has looked into their improvement to reach the next level so far, it was revealed at the 2-day National Forum on Small and Medium Enterprise Empowerment 2014 (NFSMEE) organised by the Ceylon Chamber of Commerce (CCC). The chamber has taken the lead [...]

The Sunday Times Sri Lanka

SMEs get boost from CCC forum as questions surface about a bigger role in SL’s economy


Around 90 per cent of the economy depends on SMEs while no one has looked into their improvement to reach the next level so far, it was revealed at the 2-day National Forum on Small and Medium Enterprise Empowerment 2014 (NFSMEE) organised by the Ceylon Chamber of Commerce (CCC).

The chamber has taken the lead to empower SMEs, aiming at poverty reduction, equitable distribution of wealth and if their efforts succeed, it would infuse a great boost to the economy of the country.

Seen here is a section of the small entrepreneurs. Pic by M.A.Pushpakumara

The event was held in Colombo last week with various experts addressing the forum and the valiant feature, which would not normally be found in such type of forums, was the participation of Small and Medium Entrepreneurs themselves in large numbers – almost half the delegates – 100. In most such forums, conferences and discussions, while experts on the subject speak and even make decisions, there are unlikely to be people who are actually concerned in the subject matter – example – a discussion on consumers, but no consumers.

Chandula Abeywickrema, Managing Director/CEO, CCC Solutions (Pvt) Ltd who handles the SME Empowerment, told the Business Times (BT) during the second day morning tea recess that these SM entrepreneurs came from all parts of the country, even from the North. He said that they were provided with free board and lodging.

He said that the climax of the forum was the matching session between the SMEs and the corporate entities that would offer multiple opportunities to create linkages and partnerships between the corporate sector and the SME sector.

He said that this would give an ideal opportunity to the number of regional SMEs for linkages and partnerships with the Colombo based corporate sector.

The BT team was present during both days of the forum and during tea and lunch recesses, it was able to meet a cross-section of these entrepreneurs who came to find solutions. Some of the medium scale entrepreneurs who are clamouring to climb the next stage; told the BT more than anything they need information how to cut across the barriers – specially those created by some state agencies.

The BT spoke to a lad who could speak English fluently and was B.Tech/CIMA qualified – Bhanu Watawana, Director – Engineering Finefinish Engineering running a large lathe factory in Biyagama.

He said his company is 13 years old and they have started the business with only two lathe machines and now it has swelled up to 25 machines run with 60 workers and their total assets base is estimated to be Rs.100 million. Asked why he came for the forum, he said, “We do not need any financial assistance. We need linkages. We are interested to find information whether there is any possibility of exporting their products.”
He said that they service some FDI companies. He said that they even cater to the guest hotel Hilton Colombo, but they do not have contact with the management.

The BT also met eight small entrepreneurs from Akkaraipattu and Ampara.

One of them, A.M. Thasim said that he has started rice milling plant in 2008 by mortgaging his property for Rs. 1 million. He said that his purpose of attending the forum was to obtain a loan of about Rs, 500,000 at low interest.

The purpose of this loan is to store paddy for a three month period. They mill 300 bags of paddy, each containing 65 kg. But if they do not have enough stocks to continue the mill, the workers would leave the factory and when they go home, up and down transport cost has to be paid and their return could not be assured.

The summation of the queries revealed that most barriers for business and industries come from state agencies. The forum showed Lucky Yoghurt owned by Dr. Keerthi Gunawardhane as a success story of a small scale entrepreneur who could climb to the top of a massive industrial concern, even competing with reputed multinationals.Informing the audience on his road to success, Dr. Gunawardhane said it took 12 years for his brand to be registered. When BT asked him whether this delay is in the hands of authorities, he said at least it would take four years to get a brand registered. The BT has been persistently exposing such delays at the hands of state authorities, specially when obtaining patent rights, the gateway to commercialisation.

Some of the state officials who addressed the forum conceded the factual situation and indicated the extent of stagnation in the SME sector, implying the failure of the government so far to address the issues pertaining to SMEs.

Dr. B.M.S. Batagoda, Deputy Secretary to the Treasury said that many speak about large businesses and industries, what their background etc. He said that 90 per cent of the SMEs export but their turnover is about 9 to 10 per cent, implying the extent of negligence so far by state agencies, by not addressing the issues of the small man.

During the inaugural session, Suresh Shah, Chairman, CCC said that in this SME empowerment they have involved a number of stakeholders such as policy makers aiming at a strong partnership with SMEs.

While accepting that SMEs are the lifeblood of the economy, he said in all countries in general, SMEs represent 99 per cent of the economy which would influence the GDP and creating jobs.

He requested the policy makers ‘To tilt the policy framework in favour of SMEs’ and pointed out that many other factors are tilted against them.
Andrew McCartney, Senior IFC SME Banking Advisory Service Specialist, speaking on ‘IFC Experience in Global and Regional SME

Development and its Relevance to Sri Lanka’ said that SMEs are crucial for the creation of jobs, to reduce poverty and increase shared prosperity. “Access to finance a key constraint for SME growth,” he said, though there is conducive environment for SMEs to grow globally. He emphasised “There one trillion dollar credit gap remaining globally”.

Dr. P. S. Srinivas. World Bank Asia Region Global Practice Manager speaking on ‘The Role of SMEs in Economic Development: International Experience and perspective’ pointed out that SMEs represent all but 0.2 per cent enterprises, accounts for 80 per cent of jobs, but only 37 per cent of the GDP and 24 per cent of exports.

He said that these exports are mostly of low value and in services and despite SME policies in almost all countries they are generally less productive than larger companies. He said that they mostly remain small, over time.

He said that there are many programmes, too many implementing agencies, or inadequate monitoring and evaluation while limited adaptation of programmes based on evidence was another issue. He said that there also has been an excessive focus on incentives, tax breaks, subsidies, reserve sectors as well as fiscal incentives – reduced tax credits, VAT exemptions and lower import duties.

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