ISLAMABAD: The eroded rupee will not only hit the manufacturing sector but it will also take a toll on the country’s SME sector, an official of the FPCCI said Tuesday. The SMEs which were already fighting for their survival in an adverse environment will face more troubles, therefore, authorities should take notice of the situation, he said.
The importance of the SME sector cannot be overemphasized as it is directly linked to the development of an economy and eradication of poverty, said Atif Ikram Sheikh, Chairman FPCCI Regional Committee on Industries.
He said SMEs have proved to be the engine of growth in several successful economies. These economies include Japan, South Korea, Taiwan and India. But Pakistan’s authorities have largely ignored the sector, he added. He said the weakness of rupee will increase cost of machinery and raw material which will add to the problems of the manufacturing sector which has recently shown signs of some improvement. He said that a falling currency will never attract additional foreign investment as the investors consider many more things before taking a decision.
Foreign investors also consider policy consistency, business environment, sentiment, consumption, prospects for export, the purchasing power of the masses, and demography etc., he added.
He noted that the recent depreciation of around five percent may give some help to the exporters; however, it is not the prudent economic decision in the economy where borrowing is on, current account deficit is more than $12 billion, trade deficit is over $32 billion and imports are not being curtailed through localization as done in our neighboring countries.