Importance of Small Business according

to economic condition of Pakistan

In today's modern world Information Technology and Globalization have changed
the way of business in the 21st century. As the developing nations and developed
nations compete for greater market share in the global market Pakistan too must
act up so as not to fall behind nations such as China, India and Brazil.

Being an agricultural country, Small and Medium size (SME) firms play a vital role
for earning foreign exchange, employment, social uplifting and achieving welfare
status for Pakistanis. According to Small and Medium Enterprise Development
Authority (SMEDA) of Pakistan, SMEs constitute nearly 90% of all the enterprises in
Pakistan; employ 80% of the non-agricultural labour force; and their share in the
annual GDP is 40%.

Firstly, they can help these firms gain access to a larger market by means of the
Internet and lower rates of advertising as compared to television. SMEs are not only
beneficial to themselves but also to a growing IT industry in Pakistan. As the number
of IT firms that initially open are also small in size then with contracts obtained from
SMEs, these firms can also grow in size and stature. Local IT firms also have the
distinct advantage of attaining contracts for MIS and ERP systems at lower rates as
compared to international firms.

Pakistan has one of the highest SME starting rates in the world around 8.5% but it
also has one of the sharpest decline rates with around 50% of SMEs that started in
their initial year begin to lose customers and hardly survive for 5 years.

MIS and ERP systems can allow SMEs to have better knowledge about their
respective industries on an international level by communicating with SMEs in other
countries. Recently, SMEDA and JICA (Japan International Cooperation Agency) have
initiated an Industry Support Program in Pakistan.