BACKGROUND OF THE PROJECT
Small and Medium Enterprise
sector development is one of the key issues in developing and developed
countries in the world. SME is the
playing the important role of the national economy. But there is no proper
model in Small Medium Enterprises in Sri Lanka. Government and Private and
institution are following various method. It is based on individual
institution’s interest and policy and their regulation. There are 70% of the
production are made by SME in Sri Lanka.
Future of this industry is dependents on the development of the new
model. In Sri Lanka no basic law in SME, lack of integration among the
industry, lack of management reform, lack policy reforms are in facing in SME sector.
Sri Lanka Small and Medium
enterprises (SMEs) constitute 80 – 90 % of the total number of establishment
and 20% of industrial value added. They account for 70% of employment generated
in the business sector and have a key role to play in the economic development
of the country. The Sri Lankan government had commission a task force in 2001
to study and recommendation to simulate the SME sector. This resulted in the
presentation of a White Paper in 2002 and the establishment of an SME Authority
by an Act of Parliament in March 2006. Regional wise Japan started to growth in
1960s, well as South Korea, Taiwan and Singapore, China, Thailand and Malaysia
are very good attention.
Sri Lanka does not have a
national definition of SMEs resulting in a lack of sufficient data on SMEs.
Different organization use different parameters to define SMEs. Its define by
a) Employee b) Annual turnover c) total asset. Small medium firms with net assets of more
than LKR: One million and less than LKR: 20 million, while medium sized
enterprises are Firm with net assets of more than LKR. 20 million and less than
LKR. 50 million. This value is to be adjusted for inflation once in 5 years
based on the implicit GDP deflator. Industrial
Development Board use less than 4 million Capital investment. Department Small industries capital
investment less than 5 million and covering 50 employees.
National Development Bank define less than LRK: 20 million and excluding land
and buildings. Export development Board defines annual turnover LKR: 40 million
to 100 million and excluding land and buildings. White paper defines Micro means five employee,
Small means 5 – 29 employee Medium Means 30 – 149 and Large means 150
employees.
2. PROBLEM STATEMENT
Sri Lanka literacy rate is over
90% and the Country is endowed with ample resources. The new wave of promising
SMEs have to be knowledge based plugged in the global system and able to move
rapidly with the ever changing business environment. In Sri Lanka context there
are 70% of the production are made by SME in Sri Lanka. Future of this industry is dependents on the
development of the new model. In Sri Lanka no basic law in SME, lack of integration
among the industry, lack of management reform, lack policy reforms are in
facing in SME sector. There are limited
access to finance, technology and markets, lack of information, inadequate
capacity for compliance with standards and certification and lack of
innovation.
3. JUSTIFICATION
Especially Sri Lankan is one of
the historically agricultural country in South Asia region[1].
Employment rate in Sri Lanka (2012) agriculture 31%, Industry 26.1% and 42.9 %
service sector. In south Asia region Indian 48.9% Bangaladesh 47.5%, Buttan 62%
and Pakistan 45% agriculture is sector contributing national economy. National
Labor and employment growth is Sri Lankan agriculture sector in 2012 31.4% and
29.70% in 2013 respectively. While Labor Force and unemployment rate in 2012
2.9 males and 6.2 females. Specially aged 20 – 40 aged unemployment rate was
increased in 2012 13.8% and 2013 15.7%. As a country should recover labour
force to utilize and creates new job market also.
Agriculture sector was key role
of the economy in Sri Lanka. In Sri
Lankan GDP it was contributes 718 million (2010), 792 million (2011), 833
million (2012), and 933 million (2013). This statics show it was a growth
sector in country. As well in agriculture exports income contribution of
millions of 279466 (2011), 297715 (2012) and 333942 (2013) in Country.
Generally SMEs focus in
Agriculture Sector defines is very complex in Sri Lanka. Some farmers have big
lands for cultivating but some are having small lands assets but production is
high and turnover also going to up. In
rural areas farmer are having big land assets and expenditure and labor force
also high but very less turnover. It is based on the crops, annual turnovers
and employee. This is straggling to define the SMEs in agriculture sector in
Sri Lanka.
4. GOAL:
Introduce the new business model on SME in for Sri Lanka
5. OBJECTIVES:
·
To promote agriculture enterprises
·
To improve access to capital
·
To Labor force absorption
6. METHODOLOGY
This
study is based on current policy and business model reform in Sri Lanka. As well form the resource panel to discuss and
collect the relevant data to analysis the gap in SMEs in agriculture Sector for
introduce the new model.
7. DATA COLLECTION
·
Conducting Individual Interviews who are
Specialists for get outline and ideas on SME in public and private sector of
Sri Lanka.
·
Organizing conference to collect ideas from
specialist for develop the business Module on SME.
·
Review and analysis the past and current
business module to collect the data.
·
Develop the new module and examine the model
8. ANALYSIS
Analysis the current business module and
collecting data from expertise to conclude the descriptive model.
9. OUTPUT
·
Develop the business module to contribute the
national economic though fulfill the gap among the SME industry.
·
Introduce the new model to use bridging the gaps
between SMEs holders and financial Institution.
·
Build the capacity for agriculture sector growth
on SMEs in Sri Lanka.
10. BUDGET
|
No
|
Key Activities
|
Financial Allocation for the year 2015 Rs. Mn
|
|||
|
1
|
Conduct Initial
discussion/KIIs with Banks, govt.
Officials, Academia, Industrials and Chamber of Commerce in order to develop
a vision and Strategy for the SME
sector
|
Unit
|
Rate (RS.)
|
Amount
|
|
|
8
|
1000.00
|
8,000.00
|
|||
|
2
|
Formation of the Task
Force to give the responsibility to inquire in to the needs, problems and
Future of SME in Sri Lanka
|
1
|
70000.00
|
70,000.00
|
|
|
3
|
Analysis the contribution
of SMEs to the Sri Lanka Economy
|
5
|
10000.00
|
50,000.00
|
|
|
4
|
List the objectives and
fundamental principles that under Pin the National Strategy.
|
2
|
50000.00
|
100,000.00
|
|
|
5
|
Policies an action plan
that identify short-Medium and long term goal.
|
2
|
10000.00
|
20,000.00
|
|
|
6
|
Identify coordinating and
implementing agencies and source of
funding
|
6
|
2000.00
|
12,000.00
|
|
|
7
|
Develop the final Model
|
4
|
60000.00
|
240,000.00
|
|
|
8
|
Examines the presentation
and discussion on the new model
|
1
|
50000.00
|
50,000.00
|
|
|
9
|
Prepare the final report
and obtaining the council approval and handing over to the Hon. Minister
|
50
|
5000.00
|
250,000.00
|
|
|
|
Total
|
|
800,000.00
|
||
[1]
Sources: Key Indicators for Asia and the Pacific 2013, ADB Human Development
Report 2013, UNDP Department of Census and Statistics.
REFERENCE
i.
Annual report of the Ministry Of Finance and
Planning 2012
ii.
Sri Lanka Socio – Economic Data, June: 2014,
Central Bank OF Sri Lanka
iii.
Results of the Survey on the SMEs in Sri
Lanka -2006
iv.
White Paper 2002 in Sri Lanka.
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