Conducive business environment essential - Laugfs Chairman

Sanjeevi JAYASURIYA

The SME sector could benefit immensely by having a conducive environment to do businesses.

The Government needs to create an enabling environment to do businesses by providing necessary policy and regulatory framework. Its focus should be to encourage the private sector rather than to actively engage in businesses where the sector could perform significantly, Laugfs Holdings Limited Chairman W.K.H. Wegapitiya told Daily New Business.

The access to funding is not the main concern of the SME sector, but the key is to having an enabling environment to conduct businesses.

Therefore, the Government should make arrangements to create a business friendly environment to produce more entrepreneurs, he said.

The SME sector contributes 80 to 90 percent of the country’s economic development where this trend could be seen in the other developing countries in the region. In Japan too there is a vibrant SME sector.

The interest rates applicable for SME sector loans are still at a higher level and this discourages many emerging entrepreneurs. The loan application procedure should be made simple and hassle free. Currently this process is time consuming and the collateral requirement is an issue for the sector.

Though there are viable business proposals, the banks are reluctant to provide financial assistance without excessive collateral, Wegapitiya said.

According to a recently conducted survey, nearly 20 to 25 percent of the SMEs said that the main issue they face is not the access to funding.

They stressed the importance of having an enabling environment. This will ensure the harnessing of emerging opportunities by the sector, the survey said.