SME growth needs more than tax breaks

Editor, RE: “Igniting the SME engine” (The New Times, March 23). While much of the opinion in this article is relevant and valid, I disagree with the core of the author’s argument. Without much of explanations, let me say that: The Government needs taxes to operate and provide the basis for even setting up an SME. I opine that even the tax incentives and tax breaks accorded by RDB to the “big investors” (above 80 million) is counterproductive. This “tax incentive for every person recruited” you propose may sound good but it is nothing but a time-bomb; it is a policy practiced by China but, while it can provide immediate and superficial benefits, it doesn’t guarantee sustainability of the SME sector. Research the facts further yourself. The Government should only provide a conducive environment and regulatory support to the SMEs. A separate government body (of the RGB or WDA type, as you suggest) for cluster assessment and supervision would not yield much benefits and, in fact, it may become another passive barrier to the development of the SME’s. An alternative would rather be to fundamentally and completely redesign the Private Sector Federation (and also wean it off government involvement) to take up the responsibilities of nurturing the SME’s sector while the government only provide infrastructure and regulatory framework. However, this should go hand in hand with restructuring the financial and banking sector as well. We can’t afford to perpetually depend on foreign capitals, it expensive to do so. The beauty of all this is that people should debate and debate extensively before any long term policy path is embraced. The holy-ghost-guardian, top-down approach is no longer working, it has failed for so long for every one of us to see. Muvunandinda

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SME growth needs more than tax breaks