ISLAMABAD, May 08 (APP):Adviser to the Prime Minister for Commerce and Investment Abdul Razak Dawood Friday said the recent amendment in the Secured Transaction Act-2016 would help in operationalizing e-registry of movable and immovable assets which would in turn enhance easy access to credit particularly by Small and Medium Enterprises (SMEs).
These amendments would also be instrumental in improving Pakistan’s ranking in “getting credit” indicator by more than 20 positions in the World Bank’s ease of doing business report, said a press release issued by the Ministry of Commerce here.
The adviser said the recent amendments in companies act 2017 would lessen the administrative burden on businesses.
He said this would also impact the two indicators in our ease of doing business ranking, first on starting a business and second protecting minority investors.
He said the function of Secured Transaction Registry (STR) had been established at the Securities and Exchange Commission of Pakistan (SECP).
The registry would record charges/security interests created by entities on their movable assets.
Now, the financial institutions (Secured Transactions) Act, 2016 enacted to provide an integrated legal framework for creation of security interest over movable assets besides providing for establishment of a secured transactions registry for unincorporated entities, he said.
The adviser said the creation of secured transaction registry would facilitate small borrowers from SMEs and agriculture sector to secure credit from financial institutions against their movable assets, receivables intellectual property, inventory, agricultural produce, petroleum or minerals, motor vehicles.
He said the establishment of Secured Transaction Act 2016, would improve Pakistan’s ranking in “getting credit” indicator of the World Bank’s ease of doing business index that required establishment of an integrated or unified collateral registry to register security interests in movable assets by incorporated and unincorporated entities.
He said the importance of this initiative, highlighted that micro, small and medium enterprises (MSMEs) played a vital role in the economic development of the country due to their significant contribution in terms of output, exports and employment.
Particularly, SMEs constituted approximately 90% of businesses in Pakistan, employed 80% of the non-agricultural labor force and contributed 40% in country’s annual gross domestic product (GDP), he said.
He said despite playing a significant role in economic growth of the country, SMEs access to formal finance was limited to only 6% of the total financing by the banking sector.
The adviser was optimistic that this initiative would prove to be a game-changer by improving the access to finance for the MSMEs, agri-borrowers and rural enterprises.