Can SMEs boost exports as well as foreign reserves into the stratosphere through sharper policy? (2/2)

IN yesterday’s edition of the Daily FT, we began to explore the hypothesis that Sri Lanka’s small and medium-sized enterprises (SMEs) have arguably being neglected by successive governments but also suffered from haphazard policymaking that fails to recognise their full potential.

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It is especially timely — given that the SMEs have the wherewithal, and the incumbent regime the political will — to develop the contention that these enterprises, in fact, hold the keys to unlocking more lucrative state coffers... A trajectory which, if taken at the right tangent by a savvy administration, can boost Sri Lanka’s under-threat foreign exchange reserves on the road ahead.

Contradicting some of the extant research and providing contrary evidence of sharply delineated or specifically policy-driven state support for Sri Lankan SMEs, a paper was presented at an Asian confab over a decade ago (which, in itself, is a clue that little if anything of note has been said or done about the issue under consideration since then).

Presented at the 4th IMF-Japan High-Level Tax Conference for Asian Countries in Tokyo (2-4 April, 2013), the paper titled ‘Government Policy and Strategy for SME Development’ suggests that there is — or at least was, at the time — a discernible policy strategy in place in this regard.

Arguing that SMEs are being strengthened by the government, its authors J. P. D. R. Jayasekara and Anuradha Thilakaratna argue that “the government has assigned high priority to the SME sector to strengthen the SME [sic] as the backbone of the economy”.

They add that “steps have been taken by the government to form an entrepreneurial development environment by introducing appropriate policy and providing greater incentives for SMEs”.

Affirming that “SMEs are the central mechanism in the entire operation”, they observe that “government social welfare schemes are being redesigned to provide stimulus to SMEs”, and cite the instances of Thriposha; surgical gauze; selected pharmaceutical products; and school textbooks, uniforms, furniture” etc. as being cases in point where this policy-driven reality obtains (Jayasekara and Thilakaratna, 2013).