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By Ravi Ladduwahetty

The Asian Development Bank (ADB) and the Government of Sri Lanka signed an agreement on March 27 for technical assistance to enable Small and Medium Enterprise (SME) growth in Sri Lanka.

The agreement was signed by the Secretary to the Ministry of Enterprise Development, Industrial Policy and Investment Promotion, Ranjit Fernando and Director, External Resources Department, Ministry of Finance, A. Abeygunasekera signed on behalf of the Government of Sri Lanka while ADB's Country Director, John Cooney signed the agreement on behalf of the ADB.

The technical assistance, for US$1.25 million ( around Rs. 117 million) is funded as a grant by the Japan Special Fund and is a component of the ADB-financed Small and Medium Enterprise Sector Development Program loan of US$86 million which was signed in February.

The technical assistance consists of four components and revolve round

* Supporting the establishment of a SME policy unit which will conduct a SME baseline survey,

*Identifying systemic bases against SMEs supporting the Deregulation Committee in its work to identify impediments to investment by both foreign and domestic firms,

*Improving the consultative process between the private sector and the Government

* Facilitating the process to improving SME access to non-bank finance by preparing a framework for secured transaction, and

* Promoting the use of information technology by SMEs.

The Ministry of Enterprise Development, Industrial Policy and Investment Promotion will be the executing agency for the technical assistance.

Asian Development Bank's Country Director in Colombo John Cooney told the Daily News that this multifaceted program was geared to have a series of beneficial effects for the development of the SME sector, providing consultancy services, creating awareness for how Small and Medium Enterprises in project financing and providing assistance for the benefits of electronic commerce and operational assistance in the SME sector.

The principal areas are in non-banking finance and IT. The funding will also assist in the preparation of a White Paper to assist the Government in the preparation of policy papers in these strategic areas, he said.

Secretary to the Ministry of Enterprise Development, Industrial Policy and Investment Promotion, Ranjit Fernando told the Daily News that this study will highlight the areas which inhibit economic growth and especially the SME sector and will aim to facilitate smooth business operations.

He said that there will be reforms in the Customs and also land alienation policies which are currently archaic which were originally meant for a different era.

The US$ 1.25 million ADB also funding also complements the US $ 86 million credit line which has been for the development of the Small and Medium scale industrial sector, he said.

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