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 countries New Zealand1 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