industrial policy, its spatial aspects and cluster development in ...

The government should recommend to the State Bank to promote Venture Capital
Funds in Pakistan in order to stimulate small scale entrepreneurship in the country and
also rectify credit market failures present in the formal commercial banking system.
Venture Capital Funds do not only provide capital but also support nascent enterprises
and entrepreneurs with technical and managerial support. Such support is crucial for
the success and survival of a new business.
The State Bank along with the Ministry of Industries should provide information on
investment opportunities in the country and facilitate investment by expatriate
Pakistani’s both directly and through such Venture Capital funds.
Invoice based financing, where the borrower gives accepted invoices (or receivables) of
its business customers or downstream buyers, as collateral to the commercial bank
should be promoted by the State Bank as an alternative to collateral based lending.
Other measures that should be taken with respect to SMEs include:
• A cabinet committee for SMEs should be established to fast track decisions on
SME policy matters.
• Exemption limit for excise duty should be raised from Rs. 5 million to Rs. 10
million.
• A capital subsidy for investment in technology should be provided.
• Incubation centres should set up in sunrise industries. Some of the sunrise
industries include:
• Bio-technology
• Information Technology
• Electronics and telecommunication equipment
• Non-conventional energy sources
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