1. National Policy Framework for SME Development in Sri Lanka
V.Sivagnanasothy
Secretary
Ministry of Traditional Industries and
Small Enterprise Development

2. Road Map Mahinda Chintana Vision for the Future
National Policy Framework on SMEs
Focus of SME Policy
Intervention and Support Mechanism
Definition of SME
Policy Intervention and Strategies

3. Mahinda Chintana Vision for the Future
Indicator
2013
2016
Economic Growth
7.3
8-10%
Per Capita Income (US$)
3,280
4,000
Poverty Head Count Index
6.5%
4.2 %
Unemployment
4.4%
3.2%
Exports (US$ Billion)
10.4 18
Provincial GDP Contribution
Transform lagging regions into emerging region of prosperity
Western
43.4
Central
9.8
Southern
11.5
Northern
4.0
Eastern
6.3
North Western
9.6
North Central
4.7
Uva
4.5
Sabaragamuwa
6.1

4. Mahinda Chintana Vision for the Future
“SMEs are the backbone of the economy”
Accounts for more than 75 % of the total number of enterprises
Provides 45% of employment and contribute to 52% of the GDP
Driver of Change for inclusive growth, regional development , employment generation and poverty reduction
Transforms lagging regions to emerging regions of prosperity

5. SME Policy Framework Matrix

6. Focus of the SME Policy
With the globalization and liberalization trend, it is important to have a renewed look of these sectors not as a mere object of “protection and promotion” but as a driving force for “growth and development”. Enhancing national and international competitiveness is fundamentally important for this sector to face the emerging challenges.
High potential viable promising sectors
Promote enterprises with high value addition and use of local raw material
Encourage export oriented, demand driven cash-cow enterprises
Promote flagship sectors with high potential spillover effects
Promote innovative technology driven enterprises
Locally and globally competitive : demand driven and market based (Globalizing world – Integrated and borderless world)
SMEs which have close cooperation with large enterprises and export firms to supply parts and components under buy-back, sub- contacting arrangements contributing to import substitution.

7. Focus of the SME Policy
Promote relocation of SMEs in the backward region to reduce urban rural imbalances
Transforming the landscape of the SMEs from mere trade and commerce towards production and industry
Cluster Approach covering the entire value chain (village development)
Women Entrepreneurship

8. Intervention and Support Mechanism
Strengthen existing enterprises : Foster micro enterprises to grow into small enterprises and small enterprises to grow into medium size enterprises and medium size enterprises to grow into large enterprises
Support start-up SMEs :
Extend nursing programme for potentially viable sick industries

9. Criteria for Selecting and Supporting SMEs
High potential, promising sectors
Picking the Winners
- committed capable interested entrepreneurs with good track records
Proven credentials as entrepreneurs – award winners
Fair amount of equity participation
Skills and competencies acquired in the sector or cluster
Committed to excellence in quality and innovation
Women entrepreneurs

10. High Potential Promising Sectors
Identification of Key Product Sectors
Current Size
Large
Small
Growth Potential
High
Footwear and Leather
Rubber based products
Coir and coir based
products
Food and beverages
Textiles and handlooms
Boat Building
Electrics and
Electronics
Souvenir , gift items
and life style products
Kithul & Palmyrah
Low

11. Definition on SMEs World-wide the definition on SME is based on
- Employment
- Turn over
- Asset Value
The recent White Paper on National Strategy for small, medium enterprise development in SL
Employees
Type
5-29
Small
30-149
Medium
> 150
Large

12. Definition on SMEs European Union and other countries Self Employment
Employees
Type
Self Employment
2-9
Micro
10-49
Small
50-249
Medium

13. Annual Turnover (Rs.Mn)
Definition on SMEs
Proposed National Policy Framework for SME Development
Both Criteria to be considered. Level of employment should be the deciding factor
Applied to individuals only . A firm which is a part of a larger grouping may need to include employees or turnover from the grouping too.
Type
Employees
Annual Turnover (Rs.Mn)
Micro
1-10
1-15
Small
11-50
16-250
Medium

14. Why definition is important ?
Instrument for targeting of policy measures and support interventions
National level data
Serve as a basis for directing state support
For economic research
Comparison among countries

15. Industrial Clusters Industrial Clusters Machinery and Equipment 12
Electronic and Electrical Appliances 3
Food and Beverages 4
Footwear, Leather and Allied Products 5
Light engineering and Engineering Industries 6
Wood and Wooden Based Products 7
Coir and Fibre Based Products 8
Printing Papers and Paper Pulp Based Products 9
Rubber and Plastic Based Products 10
Building and Building Material Based Products 11
Readymade Garments and Allied Industries 12
Kithul and Palmyrah Based Products 13
Minerals and Chemical Based Industries 14
Self Employment Sector 15
Other Products and Services

16. Crafts Clusters Crafts Clusters Crafts Cluster 1 Clay Work 11 Batiks 2
Fibre, Leaf and Grass Work 12
Lace 3
Dumbara Items 13
Lacquer and Sesath 4
Cane, Bamboo, and Reed Based Items 14
Wood Based Handicrafts 5
Handicrafts Based on Metals 15
Leather Based Products 6
Jewellery 16
Stone Based Handicrafts 7
Masks and Puppets 17
Art and Sculpture 8
Carved Masks 18
Coconut, Kithul, Tala, and Palmyrah Products 9
Musical Instruments 19
Miscellaneous 10
Textile

17. Policy Interventions and Strategies
Enabling Environment
Policy Perspective : improve the legislative, regulatory and institutional framework including simplification and rationalization of procedures to improve the competitiveness and provide conducive environment for SME development.
Challenges Addressed : Reduce transaction cost and improve ease of doing business for SMEs
Key Strategies :
SME friendly laws and regulations
quality and outreach of service delivery, SME friendly desk and one stop service
Infrastructure facilities – CSCs, Industrial estates, incubation, clustering (villages)
Industrial associations for collective voice.
Environmental friendly cleaner production technologies and practices.

18. Policy Interventions and Strategies
Modern and Appropriate Technology
Policy Perspective : Facilitate acquisition and adoption of state-of-the-art modern and appropriate clean technologies to promote knowledge based, technology intensive industry
Challenges Addressed : Access to appropriate and affordable modern technology
Key Strategies :
Technology Transfer and Development Fund (TTDF) with interest subsidy to access affordable technology.
Trilateral Cooperation between SMEs, technology providers and the Government – technology demonstration platforms
Technology transfer, training and diffusion programme

19. Policy Interventions and Strategies
Entrepreneur Culture and Skills Development
Policy Perspective : Entrepreneurship development through imparting skills and capacity development at schools, universities and vocational training centres special focus on Youth and Women.
Challenges Addressed : Building skills, entrepreneurial culture and sprit with risk taking attitude. Covert employment seekers to job creators.
Key Strategies :
Demand driven skills development programmes : GYI, SYB, IYB, EYB foe start-ups, existing enterprises and sick industry (Nursing programmes and resuscitation fund).
Recognize SME Heroes and disseminate success stories
Extension Services – project preparation, feasibility reports

20. Policy Interventions and Strategies
Access to Finance
Policy Perspective : Strengthen the mechanisms for easy and affordable access to finance to SMEs.
Challenges Addressed : SMEs have Access to Finance to invest in modernization, expansion and successful operations.
Key Strategies :
Scale up special lending windows and SME desks in banks and financial institutions
Promote viability based lending by expanding refinancing schemes, banking clinics, treasury guarantees and non- collateral based lending
Venture capital and angel funds to inject equity participation
Concessionary loans for Women and Youth entrepreneurs

21. Policy Interventions and Strategies
Market Facilitation
Policy Perspective : Facilitate and support SMEs to access local and export market through internationalization
Challenges Addressed : Re-positioned SMEs as producers of up-market products through improved product quality, packaging and branding to access local and global market.
Key Strategies :
Promote business linkages between large and SME enterprises through buyer-seller meetings, buy-back and sub-contracting arrangements
Support SMEs to participate in trade fairs and exhibitions
Technical support on market information and e-commerce
Procurement preference policy

22. Policy Interventions and Strategies
Research and Development
Policy Perspective : Facilitate R&D to improve innovations, market oriented new designs, product development , productivity improvement and competitiveness
Challenges Addressed : competitive advantage through innovations and technological advancement
Key Strategies :
Strong links between industry and R&D institutions
Focus on demand driven applied research including search to find alternative substitute materials
Quality assurance and certification
Special Funds and incentives for SME focusede R&D
Patents for innovations and commercialization

23. Policies from Budget Proposals
Development Initiatives on SME Development by M / TISED

24. Establishment of sustainable home based industrial Economic Units
Divi Neguma – National Programme on Cottage Industry Implementation Strategy 1
Prioritization of high potential key industrial sector products 2
Distrtict Exhibition : Technology Showcase & Awareness 3
Sensitization & Need Assessment 4
Technical & Managerial Training 5
Provision of Basic Tools & Raw Materials 6
Linking with Markets & Financial Institutions
Establishment of sustainable home based industrial Economic Units

25. SME Industrial Estates
Poonthoddam,
Vavuniya
Negampaha, Anuradhapura
Mihindala, Anuradhapura
Lunuvila, Puttalam
Kaludawela, Matale
Pannala, Kurunegala
Pallekelle, Kandy
Ekala, Gampaha
Galigamuwa, Kegalle
Pannaluwa, Colombo
Kotagala,
Nuwara-Eliya
Horana, Kalutara
Buttala, Moneragala
Wawulugala, Kalutara
Pusella, Ratnapura
Karandeniya, Galle
Baddegama,
Galle
Beliatta, Hambantota

26. Reactivation of the Atchchuveli I.E
S.N
Details of Industries
Type of Production
Investment (Mn) 1
Sarah Industries
Light Engineering Project
200.00 2
Union Enterprises
PVC pipe & Roofing Sheet
168.00 3
Nobble Printers
Waste Paper recycling
150.00 4
Malba Ropes (pvt) Ltd
Nylon twine making 5
Yarl SST Fibre Ltd
Fibre class
28.50 6
Hema Industries
Food based products
14.00 7
Vesta Industries
10.00 8
Sun Tech Engineering
Cement based production
7.00
Total
727.50

27. Reactivation of Elephantpass Saltern

28. Cluster Development Programmes
Budget Proposals
Industrial Production Villages – One product; One village
Clay, Cane, Coir, Leather, Blacksmith
Enterprise villages and Women Entrepreneurship
Pottery villages
Handicraft Villages
Interventions
Provision of infrastructure – roads, electricity
Technology transfer, training and CSC facilities
Market oriented new designs - gift items and souvenirs
Skills and capacity development
Raw materials ,basic tools and equipment
Quality improvement and packing
Market facilitation – buy-back and sub-contracting , buyer-seller meetings, exhibitions and Trade Fairs
Banking clinics

29. Development of Enterprise Villages and Women Entrepreneurship - 2014
Budget for = Rs. 30 Mn
Expenditure = Rs. 7.6 Mn
Toddilay/Chankanai
(Jaffna)
Jaffna
District
Village
No. of Beneficiaries
Sector
Total Cost Estimate (Rs. Mn.)
Kurunegala
Nugawela 60
Thalakola
2.1
Nuwara Eliya
Ginigathhena 39
Lace,Jewelery, Ornaments
4.6
Matale
Maussagolla 15
Lacquer
4.4
Hambanthota
Medamulana 48
Coir
Galle
Welladdaragoda
100
Coir Yarn
1.9
Puttalam
Mahanelubewa
Leather
1.1
Anuradhapura
Wanathawilluva
Cashew
Jaffna
Toddilay/
Chankanai 40
Batik
Selvapuram
Palmyrah Based Food & Handicrafts products
Vannankulam 75
Palmyrah Based Fiber Production
3.1
Mullaitivu
Mankulam
Establishment of Handicrafts Experience & Sales Centre
2.0
Kilinochchi
Vannankulam
(Kilinochchi)
Selvapuram
(Mulaitivu)
Mullaitivu
Mankulam
(Mulaitivu)
Vavuniya
Mannar
Trincomalee
Anuradhapura
Mahanelubewa
(Anuradhapura)
Puttalam
Polonnaruwa
Batticaloa
Wanathawilluwa (Puttalam)
Kurunegala
Matale
Maussagolla
(Matale)
Nugawela
(Kurunegala)
Gampaha
Badulla
Ampara
Kegalle
Nuwara Eliya
Colombo
Monaragala
Kalutara
Ratnapura
Ginigathhena (Nuwara-Eliya)
Galle
Hambantota 13
Matara
Welladdaragoda
(Galle)
Medamulana
(Hambantota)

30. Traditional Handicraft Villages developed in 2013

31. Development of Traditional
Handicraft Villages
Budget for = Rs. 35 Mn
Expenditure = Rs. 10 Mn
Jaffna
Allarai
(Jaffna)
Sarasalai
(Jaffna)
District
Village
No.of beneficiaries
Sector
Allocation
2014 (Rs.Mn.)
Puttalum
Mundalama Higuregama 30
Thalakola
1.60
Kandy
Kalasirigama
Hana (Jute)
7.40
Gampaha
Alawala
Musical Instrument
2.93
Jaffna
Sarasalai
Palmyrah Leaf Handicrafts
2.90
Hambanthota
Angulmaduwa 40
Laquer
2.00
Allarai
Coir
1.29
Matara
Kiyaduwa 20
Bamboo
1.00
Thalagune 25
Dumbara Rata
0.88
Polonnaruwa
Manampitiya
cane
1.46
Kurunagala
Galatharaya
0.80
Kalutara
Remunagoda/ Imbulgoda
Rush & Reed
1.12
Gandara/ Devinuwara/ Thalalla 75
Bobbin Lace
1.13
Trincomalee
Paththinipuram 50
0.63
Ampara
Navithanveli
100
2.80
Batticaloa
Mailambaveli
175
1.40
Killinochchi
Kiranchchi
Kilinochchi
Mullaitivu
Kiranchchi
(Kilinochchi)
Vavuniya
Mannar
Trincomalee
Paththinipuram
(Trincomalee)
Anuradhapura
Manampitiya
(Polonnaruwa)
Puttalam
Polonnaruwa
Batticaloa
Mundalama Hinguregama
(Puttalam)
Mailambaveli
(Batticaloa)
Kurunegala
Matale
Galatharaya
(Kurunegala)
Thalagune
(Kandy)
Kandy
Alawala
(Gamapaha)
Badulla
Gampaha
Navithanveli
(Amapara)
Ampara
Kegalle
Nuwara Eliya
Colombo
Kalasirigama
(Kandy)
Monaragala
Kalutara
Ratnapura
Remunagoda/ Imbulgoda
(Kalutara)
Hambantota
Galle
Kiyaduwa
(Matara)
Matara 9
Gandara/ Devinuwara / Talalla
(Matara)
Angulmaduwa
(Hambantota)

32. Development of Pottery Villages - 2014 Total Estimate Cost (Rs. Mn.)
Jaffna
Development of Pottery Villages
Budget for = Rs. 40 Mn
Expenditure = Rs Mn
Chankanai
(Jaffna)
Kilinochchi
District
Village
No. of Families
Total Estimate Cost (Rs. Mn.)
Anuradhapura
Elappankulama 43
3.62
Kurunagala
Madawalagaraya 60
4.68
Gampaha
Polwatta
470
3.65
Matale
Dodamattawala 25
3.30
Nuwara Eliya
Puranagama 40
1.53
Matara
Kumbalgama
1.74
Batticoloa
Eravur
250
3.82
Colombo
Ranala
3.12
Jaffna
Chankanai 50
4.10
Webadamulla
0.17
Puttalam
Halabawatawana 51
2.54
Melpura
2.53
Kudakelagama
1.95
Mullaitivu
Vavuniya
Mannar
Trincomalee
Elappankulama
(Anuradhapura)
Kudakelagama
(Anuradhapura)
Anuradhapura
Puttalam
Polonnaruwa
Batticaloa
Halambawatawana
(Puttalam)
Dodamattawala
(Matale)
Eravur
(Batticaloa)
Kurunegala
Matale
Madawalagaraya (Kurunegala)
Kandy
Webadamulla
(Gamapaha)
Gampaha
Badulla
Ampara
Polwatta
(Gamapaha)
Kegalle
Puranagama
(Nuwara-Eliya)
Nuwara Eliya
Colombo
Monaragala
Ranala
(Colombo)
Kalutara
Ratnapura
Galle
Hambantota
Matara 15
Kumbalgama
(Matara)
Melpura
(Matara)

33. 5 Year Strategic Plan of the Ministry
- Reports

34. THANK YOU