Creating an Enabling Environment for SMEs in Sri Lanka * The Role

Creating an Enabling Environment for SMEs in Sri Lanka – The Role of the Public Sector. Presented by Azmi Thassim, Past President, Hambantota District Chamber of Commerce

Small and Medium Enterprises are recognised throughout the world as a very important part of the economic and social structure of a nation.

 Services to the community  Creating employment opportunities

As this is true of the Sri Lankan situation too, creating an enabling environment for SMEs in Sri Lanka is vital.

In Sri Lanka, it is the public sector (being the primary regulator), that has the authority, responsibility and also the capability to create this environment.

Three key bodies hold this mandate 1. Parliament of Sri Lanka – Acts and Legislation 2. Provincial Councils of the nine provinces – Statutes 3. Local authorities around the country (which come to more than 300) – By Laws

The public sector in Sri Lanka has been unable to optimise it’s contribution towards the creation of the best possible environment for SME’s.

The way forward;  Establish a Ministry specifically focussed on Entrepreneurship and SMEs.  This ministry will work towards harnessing the powers within the key bodies in delivering the best outcome for SME’s.  Avoid duplication of tasks by clearly demarcating responsibilities effecting SME’s.  Devolve authority to provincial & local bodies  Learn from regional success stories from our neighbours and adapt to suit our needs.

The way forward ..continued

 Knowledge, understanding and attitudes of the civil society regarding SME development should be improved.  Aspects of entrepreneurship should be taught to people following courses in vocational training centres.  Invite educators and capable professionals to volunteer.  Provide opportunities for international study tours & learning exchange programmes.  Amend labour laws to suit requirements in keeping with the times. (Gratuity, EPF legislation etc.)  Access to credit at reasonable cost (i.e.: 5%-6%).  Offer assistance to SME’s to offset initial set up and start up cost by way of lower tax thresh holds, training and/or subsidies.

And last but not least…

 Establish a continuous consultation process with the SMEs by inclusive representation  This can be achieved by regional chambers of commerce by formalising SME’s into groups and associations thus giving them power and recognition.  The public sector should allow adequate representation through the chambers of commerce when formulating laws or offering incentives to SME’s. This will improve effectiveness and efficiency.

The End