Mashood Khan Director SMEDA said Pakistan’s Small and Medium Enterprises (SMEs) are the backbone of the economy, contributing significantly to employment, industrial output, and exports. However, SMEs continue to face several challenges that must be addressed in the upcoming budget to enhance competitiveness, increase exports, and support economic growth.

1. Rationalization of Wharfage and Port Charges
   SMEs are facing an excessive burden due to unrealistic wharfage, terminal handling, and local shipping line charges on both imports and exports. These costs significantly reduce the competitiveness of Pakistani products in international markets. The government should introduce a uniform structure for wharfage and port handling charges across Karachi Port Trust (KPT), Port Qasim Authority (PQA), and Gwadar Port to ensure transparency and cost efficiency.
2. Raw Material Pricing and Supply Chain Stability
   Many SMEs procure raw materials through local distributors and agents who often create artificial shortages and impose unjustified price increases. This practice substantially increases production costs and reduces export competitiveness. The government should intervene to monitor market practices and ensure fair pricing and uninterrupted supply of industrial raw materials.
3. Market Access and Export Consolidation
   Access to international markets remains a major challenge for SMEs. Pakistan’s Commercial Attachés in GCC countries, Europe, Australia, and other regions should actively facilitate business linkages and identify reliable distributors and buyers for SME products. Furthermore, the government should support export consolidation programs that allow multiple SME products to be shipped in a single Full Container Load (FCL). Products such as kitchenware, washroom accessories, home décor items, engineering goods, and handicrafts can be consolidated to reduce logistics costs and improve export viability.
4. Support for Auto Parts Export Certification
   Pakistan’s auto parts sector has significant export potential but faces challenges in meeting international certification requirements. Certifications such as IATF 16949 cost approximately Rs. 700,000 per company, while ISO 14001 Environmental Certification costs approximately Rs. 500,000 per company. A dedicated budget allocation should be introduced to subsidize these certifications and help SMEs access global automotive supply chains.
5. Audit Exemption for Small SMEs
   SMEs with annual turnover below Rs. 500 million should be exempted from routine audits by multiple government agencies, including Income Tax, Sales Tax, EOBI, SESSI, Labour, Environmental, and other departments. This will reduce compliance costs, minimize unnecessary administrative burdens, and allow entrepreneurs to focus on business expansion and employment generation.
6. Reduction in Sales Tax on Small Cars
   The sales tax on vehicles up to 800cc should be reduced from 18% to 9%. This measure would make vehicles more affordable for consumers, increase vehicle demand, promote localization, encourage investment in domestic manufacturing, and create additional employment opportunities within Pakistan’s auto parts industry.
7. Enhancement of Auto Financing Limits
   The State Bank of Pakistan should increase the vehicle financing limit from Rs. 3 million to Rs. 8 million. This will improve consumer purchasing power, stimulate automotive demand, and support industrial growth.
8. Increase in Vehicle Financing Tenure
   The maximum vehicle financing tenure should be increased from the current limit to seven years. Longer repayment periods will reduce monthly installments, improve affordability for consumers, and support growth in the automotive sector.
9. Reduction in Energy and Logistics Costs
   High electricity tariffs, gas prices, and logistics costs continue to undermine the competitiveness of Pakistani SMEs. The government should introduce targeted relief measures for export-oriented SMEs to lower production costs and strengthen their position in international markets.
   The proposed measures will significantly improve the business environment for SMEs, enhance exports, create employment opportunities, increase industrial investment, and contribute to sustainable economic growth. Supporting SMEs is not merely an economic necessity; it is a strategic investment in Pakistan’s future competitiveness and prosperity.