SMEs make the largest contribution to economy

by Surekha GALAGODA

Web launch by Ambassador Araki and prof. Peiris.

Small and Medium Enterprises (SMEs) in any country make the largest contribution to its economy. The GDP contribution by SMEs in Japan is 99.3 per cent. The National Chamber of Commerce of Sri Lanka (NCCSL) has already helped 600 SMEs while plans are under way to support another 600 SMEs.

Small and Medium sized Enterprises (SMEs) play a critical role in a country's economy be it job creation, entrepreneurship or income generation, said President NCCSL Lal De Alwis.

In almost all countries around the world SMEs are critical for job creation, entrepreneurship and income generation.

In India, SMEs account for 45 per cent of all jobs, and contribute to 40 per cent of the GDP. In countries such as Philippines and South Africa, SMEs provide more than 60 per cent of all jobs. SMEs have also played a key role in propelling some of today's most advanced economies forward.

Japan

In Japan, for example, a rapid growth in the number of SMEs in the first few decades after the Second World War was a key factor behind the spectacular growth that Japan experienced in this period. Similarly in Taiwan-an economy with approximately the same number of people as Sri Lanka, but with 10 times higher average incomes-SMEs have been critical for modernisation and economic growth in the past five decades.

SMEs are also important in Sri Lanka as they make up more than 80 per cent of all businesses, account for about 35 per cent of employment and about 20 per cent of total industrial value addition.

The outgoing president D. Essuwaran Being presented with a memento by The new President Lal de Alwis. Pix: SumanachandraAriyawansa

The chief guest on the occasion of NCCSL 50th AGM Japanese Ambassador Kiyoshi Araki said that Sri Lanka faces a daunting challenge. "At present we can see a dramatic change in the military situation. They are advancing but a political solution is necessary for lasting peace."

Ambassador Araki said that globally, the last year was very turbulent and it is continuing this year as well.

He said that during the first quarter of last year most countries experienced negative growth while this year too there are job cuts and shrinking of operations globally.

The Guest of Honour, Export Development and International Trade Minister Professor G. L. Peiris said that there are formidable challenges facing the country and the globe but Sri Lanka can rise to the challenges as they live through resistance.

Global recession

He said the global recession will have two effects being overwhelmed by the problem or recognising the situation but not being overwhelmed.

Prof. Peiris said that no country will be insulated entirely from the financial crisis but we can mitigate the adverse consequences. For this we have to consider the strengths, which include exploiting untapped resources, attaining self-sufficiency in milk, rice, sharp focus on the SME sector, understanding the importance of women in business and increasing value addition, which helps increase employment opportunities and a better price for the products. In addition developing the backward linkages is also a must. He said that the last year growth was 7 per cent and this year it will be 6.3 per cent due to the internal and external factors affecting our economy.