SMEs in the Informal Sector in Pakistan and Sri Lanka

SWSB Dasanayaka,University of Moratuwa

Discussion by Derek Blades

Many definitions

Pakistan• Eight agencies – eight

definitions• Various combinations of

employment, assets, net sales, total investment, equity, turnover

• Federal Bureau of Statistics: Number of employees

Sri Lanka• Twelve agencies – twelve

definitions• Various combinations of

employment, value of machinery, fixed assets, capital employed, export turnover, capital investments

• Department of Census and Statistics: Number of employees.

Poor coverage of SMEs

• Focus on manufacturing. Little information on SMEs in agriculture and services

• In both countries “SMEs data base is very fragile and unreliable due to regular changes in survey units definitions, uneven sector coverage, data too aggregated, non-continuity of surveys”

• Conflict zones

What do we know about SMEs?

Pakistan• 98% of enterprises are

SMEs (less than 100 employees)

• 30% of manufacturing GVA and 80% of manufacturing employment

• manufacturing 20% • trade, restaurants, 53% • other services 22%

Sri Lanka• 96% of enterprises are

SMEs• 36% of total employment

and 20% of GDP• Within manufacturing GVA:

– Food etc 38%– Textiles, apparel etc 24%– Chemicals 8%– Wood and products 5%

Conclusions and Recommendations

• Separate SME data base

• Encourage development of SMEs in rural areas

• Comprehensive data needed on GVA in SMEs• Poor coordination among agencies set up to

promote SMAs

Research agenda• Agree on definitions• Review of past studies• Training needs for staff dealing with SMEs• Identify priority sectors• Labour productivity – formal versus informal• Review financial institutions• Scope for ICT• National policy framework• Regional policy

An alternative approach?

• Legislation to promote competition

• Corruption

• Costs of doing business

• Literacy

• Education

• Role of women

Perceived corruption: rank in 180 countriesNew Zealand 1

Singapore 4

Malaysia 47

China, People's Rep. of 72

Thailand 80

India 85

Sri Lanka 92

Nepal 121

Viet Nam 121

Indonesia 126

Pakistan 134

Philippines 141

Bangladesh 147