Small & Medium sized Enterprises (SMEs) comprise a sizeable portion of and play a significant role in Pakistan’s economy. According to one recent extensive study, total SMEs in the country number around 2 million, of which approximately 0.4 million are manufacturing units, 0.6 million are service sector units and the remaining 1 million are in the retailing/trade sector. According to the same study, SMEs constitute over 90% of the business establishments in Pakistan and contribute Rs. 34 billion (11%) annually to the GDP. 67% of the labor force in the Pakistani manufacturing sector works in SMEs engaged in manufacturing. Furthermore, 80% of the employment in the economy is created by SMEs. However, at the same time statistics from the same study tell us that 72% of the SMEs are sole proprietary concerns with only one third of the owners receiving a college education. Additionally, only 3% have received any technical training. In other words, the overwhelming bulk of SMEs are run in mostly an informal and unstructured manner as sole proprietorships, by people who have received little or no professional training and possibly limited access to technical advice and financial resources.

Extensive studies have also been conducted in the recent past to gauge how efficient the SME sector is, given that most SMEs are informal operations with little or no exposure to professional management leadership and management techniques and exist in a complex and constraining atmosphere. One recent study concludes that due to various specific financial sectors, judicial, fiscal and regulatory constraints as well as generic infrastructure and human resource constraints, at present the SME sector in Pakistan is far from fulfilling its growth potential, being plagued by inertia and lack of structural change. Another recent study highlights multiple structural, regulatory and legal impediments in the existing business environment, which it finds as highly constraining for the growth of the SMEs. A review of these studies and any serious analysis of the SME sector in Pakistan, divulges that it is a large and complex entity affected by many variables. For any meaningful academic analysis, it therefore, becomes very important to identify the specific aspect of the SME sector, which is under scrutiny.

We have already briefly identified that most SMEs in Pakistan function as sole Proprietorships. Sole proprietorship is an arrangement whereby the owner/manager and the businesses are but a single entity and the business enterprise does not have a separate legal entity from its owner, as in a company. Sole proprietorships can be tax paying and law obeying entities or businesses, which are invisible on all legal, regulatory and fiscal Planning radar screens. They are by and large characterized by an informal style of operation by a loose and lean owner-manager structure which more often than not combines the two roles, lack of professional expertise and management practices, little or no documentation, reliance on personal sources of capital, weak market and financial access and an aversion to disclosures of any kind. Many advocates of the corporate structures are of the view that corporation (a term which has come to mean the formal registration of a business as a limited liability company as well as the conduct of business under the structure and system of a limited liability company) is a sure shot solution for the many woes faced by SMES. This is quite apart from the phenomenon of Corporation being looked upon as a vital public policy imperative as it will bring many entities in the informal sector to the more transparent, regulated, taxed and accounted for formal sector.

SMEs in Gujranwala

Gujranwala District is situated on the main railway line connecting Lahore and Peshawar. The Grand Trunk Road runs parallel to the railway line and passes through the centre of the city. The Chenab River forms the northern boundary of the District. Gujranwala district is spread over an area of 3,622 Square Kilometers comprising of following four tehsils: I. Gujranwala II. Kamoke III. Nowshera Virkan IV. Wazirabad Gujranwala district is one of the major industrially developed districts of the country. Keeping in view the availability of raw-material and skilled labor, Gujranwala district Supports a variety of industries. It is centre of electrical and engineering goods, Manufacturing industries, plastic products industry and ceramic products industries. Small and Medium Enterprises (SMEs) play a key role in the economic development of countries. In Pakistan, this sector faces major obstacles and problems that impede their functions. The Entrepreneurship & Small and Medium Enterprise Centre (ESMEC) works for the promotion of entrepreneurship in the country and for the developmental needs of the SMEs. The Konrad-Adenauer Foundation of Germany was instrumental in setting up this centre in 1990. One of the key objectives of ESMEC is to investigate the role that government policies and other macro level factors such as the legal system and culture play in facilitating or hindering entrepreneurship. In addition, research is undertaken to understand the role that SMEs play in Pakistan’s economy by exploring the specific mechanism by which they add value to the national economy. At the micro level the objective of SMEC is to assess the specific training and developmental needs of SME owner managers and their enterprises and to design and deliver training programs. Majority of the registered commercial and industrial development banks of Pakistan have their branches in this cluster. Financing from banks is easily available at very competitive rates. Gujranwala is one of the most important industrial cities of Pakistan, and playing significant role in overall growth of the country’s economy. Gujranwala has gained popularity for its small and medium entrepreneurs; approximately 6500 SMEs and 25000 Cottage industry of diverse nature is working for bringing up-ward changes in economy. Exports from this region have shown an ascending trend, statistics available indicate that exports increased several hundreds percent from US 80 M $ to US 780 M $ during last six years due to the liberal polices introduced by Government of Pakistan combined with the efforts of local industrialists. Industry of Gujranwala has substituted the Import Bill of approximately US 660 M $ that is noteworthy. Industries of Gujranwala are dragging the attention of foreign investors and numbers of investors from different regions of world are ready to invest in several sectors. Our topic is small and medium enterprises. We collected information from the following enterprises, 1. Mehar Rice Mills 2. Sarwar Fan 3. Pak Wood Furniture 4. Sialkot Sweets House 5. Rahwali Kulfi 6. MUHAMMDI Sweets

We tried to find out the problems of the SMEs located in Gujranwala and Gujrat. We also identified there contribute towards the economics development of Gujranwala. To evaluate this purpose, we selected randomly medium and small enterprises as well. We visited them more then 3 times to collect latest and best information. Our parameters of evaluation are… 1. Role of the owner. 2. Role of the worker/employee. 3. Role of the seen/unseen factors. 4. Role of the government. 5. Role of the fate/links 6. Demand factor. 7. Electricity 8. Price relation with cost. 9. Advantages and disadvantages of Bank loan. 10.Role of the Technology. 11.Role of SMEDA.

 Maher Rice Mills We are going to explain the problems these firms and their role for the economic development. First, we disclose the Mehar Rice Mills Ali Pure Chattha Rusul Nager. In any business the role of owner can not be ignored by any one. In fact owner has to be very careful about all the activities. Mr. Sarwar is the owner of this mill. He handles all the business activities by himself. He has 20-25 permanent employees and more the 100 seasonal employees. If fact recruitment is also depend upon demand. There are also many seen and unseen factor can influence this business like weather fate, links, sudden demand, infected by sects and prayers. SMEDA. Then comes to Government A government can destroy any plenty business and can also flourish any destroyed business in Pakistan. The Government imposes with the holding and unfavorable taxes from the small and medium mills as compare to the large rice mills. It’s amazing that there are some persons who did not pay any amount taxes tax like  Hamid Nasir Chattah (Ex. Speaker of National Assembly)  Asad Ullah Cheema (MNA Jalal Pur) The demand supply would on its peak from Oct to Jan. In this season they generate a lot of profit and play vital role for the economy of the region. The firm also borrows some loan at high rate of interest and firm also facing the electricity problems. From the month of June to September the prices of rice so high but due the restriction of export prices have been stabled. Prices are also high because of there is no modern technological facilities since long. Our rice mills play vital role towards the development of the economy of the city. It also provides the implement opportunities for the local people. If they have modern technology and support from government they really develop there field and economy of the region.

 Sarwar & Bros FAN Manufacturing Mr. Sarwar and Bros is joint owner of this business. He hired about 40 - 45 employee. But main leading role played by themselves. This business has monopoly in Gujranwala in manufacturing fan grounds. The workers are hired on seasonal and contract basis. At this time we surveyed. It was the season of harvesting wheat so that supply of labor is short and the labour which is available demand more wage. This is difficult for the owner to maintain the price. It is the peak production time of fan manufacturing to the demand of fan at this time is also at its peak. There backward linkages are i) Steel mills ii) Chemical mills iii) Nickel industry iv) Small Manufacturer Trader There are also some forward linkages i) Fan Manufacturing ii) Traders, iii) Suppliers iv) Exporters

This business is greatly influenced by electricity problem. It increases the production cost many times. This results in increase in price because of cost push inflation of Nickel industry and Steel mills. According to them they increase there price from 100 -115 gears. But in last three years it increase from 115 - 350. They also borrow some loan from bank. According to them, this business consists of credit transactions. The pay their supplies at the spot but on credit to there customers. The disadvantage of this bank loan is to pay interest on regular basis no matter whether you earn profit or not. As the technology improves day by day the manufacturing production of fan also increases. But new technology demands skilled & educated persons to operate those machines. The Sarwar & bros is also the member of PEFMA & GCCI. PEFMA stands for Pakistan Electricity Fan Manufacturer Association & GCCI means Gujranwala Chamber Of Commerce & Industry. But these are not so beneficial for there business. The Govt. imposes variety of direct & indirect Taxes but not provide any benefit for the promotion & development of the business. Although this firm looks small but it plays a vital role in the economic development of Gujranwala. It provide jobs about 40 - 45 employees in Gujranwala. They have provided servant quarters free of cost. Govt. should provide facilities to this business to encourage its employees because it has a bright future.

 Pak Wood Furniture

Mr. Zafar is the owner of this business and run all the business by himself. He has about 30 regular workers which make furniture. Many other carpenters are hired on seasonal basis. They also charge extra amount to there work in season. Now a day, the work is done by the permanent carpenters and others gone for the harvesting of the wheat. This work is in its peak in weeding season, when any constitution is done. Like hotel and restaurant. The market forces have a little bit effect on the price. They are basically targeting the elite class. So price don’t affect them much. It is almost inelastic. Prices are increases because of cost push inflation and increase in demand by presenting a unique design in the market. There are many seen and unseen factor affect the business like electricity problem, fate, election weather etc. Last year the Government of Pakistan by the collection of SMEDA provides fire machinery on fulfills there certain requirements criteria. But this not given to them because of political clash. Government also imposes many direct and indirect taxes. They have also borrowed some loan from bank on a high rate of interest. According to them that from last two months they deal only with a few customers but they have to pay the same interest no matter they earn enough to pay the installments. There is development in technology and the unique design come day by day government should open some technical institutions in which they teach how to operate that machine and develop new designs. This business can only survive with new design and innovations.

 Sialkot Sweet House

Sialkot sweet house is a very ancient and famous enterprise in Gujranwala. Their owners were Mr. Hajji Ishaq, Mr. Jaji Latif and Mr. Hajji Sharif. It was established in 1951. Its head and main shop was situated in Nika Chowk Gujranwala Bazaar. They started work with a very small branch. At that time they had four or five main sweet product. Now at this time they have more then eight branches in Gujranwala and one in Sialkot. We met with Mr. Rashid Butt grand son of Hajji Ishaq. In fact due to family clashes they have divided into two parties. One party is called Sharif Sons. And second one is called Hajji Ishaq and Hajji Latif Sons. Both parties claim that they are the number one and original sweets house. Nobody, can judge how number one and original is. Because they are enjoying the name of “Sialkot Sweets House”. We met with the owner of first shop. In fact they are earning a lot more market share as compared with Hajji Sharif Sons. Mr. Rashid said that they have five branches.

1. Nika Chowk Branch 2. Main G.T Road Branch 3. Goronanik Pura Branch 4. Sialkot Road Branch 5. Commissioner Road Sialkot Branch

They have more than fifty employees. And their major milk and pure Dassi Ghee’s suppliers are Sandhu dairy farms and Malik dairy farms. They have about one thousand items and two hundred are running very sharply. There is a no season that affects their demand. There products are selling in every season and they generate great market share. They also provide sweets on events like, parties and marriages. They are not anxious about the electricity and gases. Even a lay man anxious about electricity and gas. Sialkot Sweet House express that we are not worried about electricity and gas because these two facilities so we face it. Their major competitors are “Yadgar Sweets, Sulman Sweets, Al-Fazal Sweets, Niralla Sweets and Baba Sweets”. Their business has not fall down yet they don’t get any loan from any band for the development of business. For their success they give priority to their parent’s prayer and after we have working their employees. As matter of fact, they are playing pivotal role for the economy of Gujranwala.

 Rahwali Kali

Hajji Selman is the owner of Rahwali famous Kulfi. It was established in 1957. He himself started business and he is running the business. It is astonishing that he started his business from a simple kiosk and now it is the well established. It has about 18 – 20 workers to handle this business. In fact, the owner of this business is a black horse; he does not show his profit and ingredients that he uses to create very tasty Kulfi. According to him, electricity is the major problem that is affecting his business very deeply. Because Kulfi would remain fresh in original condition in refrigerators in their. So, we have generator to deal with the electricity problem. But the reality is this we have to pay the electricity bills and also face the expanse of oil. He said that prayers play key role for the success of any business. My own business running due to prayers. He said that our main season is summer; we earn a high amount of profit. By him, Government did provide and help and support to us to make our business well and famous. Our Kulfi is famous due to our hard working. We are very careful about it. He said that our major suppliers are Al-Makkah dairy forms Gujranwala. He claims that we sell about 3000 Kulfi in season. No doubt, Rahwali famous Kulfi is very successful. He started business from a very little business. But due to hard working he is very rich person at this time. The matter is this, Government should support them and provide proper facilities to them to earn and contribute for the success of the Gujranwala economy. When we ask him about suggestions to expand his business he said that if government support this business then we can increase it sale & may be then I register it. I have potential to make a lot of kulfies but for this purpose I need very modern & high tech Deep Freezers which I can’t afford. So that Govt. should help us I order to expand this business.

 Muhammadi Sweets

We have been in our traditional Mythoi trade since 1970 and it was founded by our Father Hajji Shaheedin and we are trying our level best to maintain our commitment to continue our ancestral trade. We are not only known amongst our Mithai segment but also other varieties which are widely consumed by the people who have sweet tooth and desperate to taste them.

During manufacturing of our quality products we much care about on the quality and quantity so that end consumer could feel the pride to taste our duly filled and stuffed quality healthy ingredients being used in our products. As far as the edible oil is concerned we do not compromise to cook them in high quality edible Oil (Dhesi Ghee) to the extent of ratio of 40% and the remaining 60% in normal edible oil (normal ghee) which one can digest easily. Our renowned and Branded sweets, cakes, and our other varieties of our traditional sweets, Bakers & confectionery items, give the end consumer the feeling of consciousness of home made Mithai – Halwas.

Our Mithai’s presence has become vital for every occasion – campaign, promotions inauguration of any set up, etc it reminds them to celebrate them with our mithai without which they feel the sense of deprivation. Muhammadi Sweets has been providing its customers a number with different flavors, colors and taste that will make all occasions unforgettable, joyful and precious. Muhammadi Sweets is trustworthy name which has become the guarantee of taste and standard in the world of sweets by the grace of Allah. Conclusion

As we explain the role of SMEs in the development of Pakistan is very high. In Pakistan the SMEs are round about 2 million & it contributes a lot in the development of Pakistan & in the GDP. of Pakistan as well. We survey 6 firms in Gujranwala & surroundings in order to make a conclusion. We dig out that in Pakistan SMEs are facing a lot of problems like 1. Taxation 2. Govt. & SME Interaction 3. Finance 4. Labour Legislation 5. Human Resource Development 6. Technology 7. Market & Industry Information 8. Lack of Infrastructure 9. Environmental issues & compliance 10.Social compliance issues 11.Intellectual Property Rights 12.Electricity Our main emphasis on the development of Gujranwala because of SMEs. Gujranwala is very famous for its industrial & skilled labour. It has also become very famous due to increase in export rate from thus region. Gujranwala is one of the most important industrial cities of Pakistan, and playing significant role in overall growth of the country’s economy. Gujranwala has gained popularity for its small and medium entrepreneurs; approximately 6500 SMEs and 25000 Cottage industry of diverse nature is working for bringing up-ward changes in economy. Exports from this region have shown an ascending trend, statistics available indicate that exports increased several hundreds percent from US 80 M $ to US 780 M $ during last six years due to the liberal polices introduced by Government of Pakistan combined with the efforts of local industrialists. The fundamental matter is this Govt. should support all these SMEs in order to attain development in economy. If Govt. & its institutes would cooperate with these SMEs no doubt they will play a pivotal role for the success of not only Gujranwala but also the whole Pakistan.