SOUTH-SOUTH COOPERATION for DEVELOPMENT of SMALL and MEDIUM ENTERPRISES (SMEs)

1. SOUTH-SOUTH COOPERATION for DEVELOPMENT of SMALL and MEDIUM ENTERPRISES (SMEs) Tajammul Hussain Director General (International Affairs) - COMSATS

2. Outline • Introduction • International Cooperation for Sharing Knowledge and Technology • Need for SSC: Shared Goals and Challenges of the South • South-south Cooperation: More Promising and Appropriate? • The Potential of South-south Cooperation • Small and Medium Enterprises Development • Scenario of SME Development in Pakistan • COMSATS’ Activities in South-South Collaboration • Conclusions

3. INTRODUCTION • The concept of South-South cooperation formally emerged as a universal principle during the 1970s . • South-south cooperation can contribute to the achievement of MDGs. • South-South cooperation is about the tremendous force of solidarity, with which we can overcome even the biggest challenges.

4. INTRODUCTION • No single country, even the most advanced among developing countries, has much hope of reaching individually expected growth and development and influencing outcomes of international agenda. • Our countries can collectively play a more effective role in achieving development objectives and in shaping international relations.

5. INTERNATIONAL COOPERATION for SHARING KNOWLEDGE and TECHNOLOGY • The notion of international cooperation came to existence with the UN charter, which pledges to “employ international machinery for the promotion of the economic and social development of all people”. • Technology co-operation enables the sharing of risks, rewards and progress of technology development and enables co-ordination of priorities.

6. International Cooperation…contd. • International Cooperation can focus on: • Sharing knowledge and information, between developed and developing countries • Coordinating R&D priorities in different national programmes • Pooling risk and reward for major investments in R&D, including demonstration projects • International Cooperation can be among South-South countries or North-South countries.

7. NEED for SSC: SHARED GOALS and CHALLENGES of the SOUTH • The countries in the south generally share certain commonalities such as similar developmental experience and are also faced with common challenges such as high population pressure, poverty, hunger, disease, environmental deterioration, brain drain, lack of indigenous research and commercialization etc. • In view of this, south-south cooperation is clearly becoming more relevant.

8. SOUTH-SOUTH COOPERATION: MORE PROMISING and APPROPRIATE? • The private sector of developed countries aims at maintaining their technological edge over the developing countries, and hence is averse to sharing its technology • The interest of many developed countries in helping developing countries seems to be receding • South-south trade has been rising at 11% annually for the past decade. • The LDCs could find economic and sustainable solutions to address their needs and problems, by sharing and learning from the experiences of other developing country counterparts.

9. THE POTENTIAL of SOUTH-SOUTH COOPERATION • The developing countries have many things in common, and their capacities and resources are often complementary and exist at different but relatively close levels of development. • This would facilitate the transfer of technology and exchanges of experience and other resources among these countries.

10. The Potential…contd. • Today several developing countries have diversified their economies and have a large production capacity for goods and services. • The information society revolution has opened up new opportunities for developing world in business especially services from north - south and south – south. However, it needs highly trained human capita

11. The potential…contd. • The accelerating trend towards globalization and trade liberalization has created new opportunities for exchanges of goods, services and information among developing countries. • Today several developing countries have human resources properly trained in institutions of high technical quality. • In addition to Governments, new participants in international cooperation are continually emerging in developing countries, for example, participants from civil society and the private sector, which play a growing role in South-South cooperation.

12. The potential…contd. • Increasingly South-South cooperation is seen as a necessity and fundamental component of international cooperation for development. • South-South cooperation completes North-South cooperation and fits perfectly into triangular cooperation arrangements where the know-how and technology of one or several developing countries are combined with financial support from one or several developed countries to provide assistance and to transfer technology and know-how.

13. Small and Medium Enterprises Development

14. INTRODUCTION to SMALL and MEDIUM ENTERPRISES (SMES) • Small and medium enterprises (also SMEs, small and medium businesses, SMBs, and variations thereof) are companies whose headcount or turnover falls below certain limits. • Two types of SMEs: • Manufacturing, Manufacturing-Related Services and Agro-based Industries • Services, Primary Agriculture and Information & Communication Technology

15. Introduction to…contd. • SMEs have been the backbone of economic growth of an economy as an engine for the industrial development • The potential of SMEs to promote domestic-led growth in new and existing industries and to strengthen the resilience of the economy in a competitive and challenging environment are inarguable • Economic growth in developed countries such as China, Japan, South Korea, Taiwan and many others, were significantly generated by SME activities.

16. THE NEED to DEVELOP SMEs • On several social and economic grounds, small and medium-sized enterprises (SMEs) are of overwhelming importance in most Asian countries. • The SME sector accounts for upwards of 90 per cent of firms outside the agricultural sector of East and South-East Asia, and of Japan as well. • It is also the biggest source of domestic employment, providing a livelihood for over three quarters of the region’s workforce, especially women and the young.

17. The need to…contd. • The SME sector will remain the backbone of virtually every economy in this region and, for that matter, of the world in the foreseeable future. • The SMEs suffer from a variety of structural and institutional weaknesses, which have constrained their ability to take full advantage of the rapidly advancing process of globalization and adjust to the economic liberalization measures.

18. The Need to…contd. • These weaknesses include • the relatively narrow base of the sector and its focus on low value added products • the absence of an adequate information infrastructure • the technological obsolescence of much of the capital stock • the inadequacy of the existing support services for entrepreneurship development and promotion • a relatively low level of integration in global value chains.

19. The Need to…contd. • SMEs also fail to realize their full potential for creating productive employment because of the highly uneven dissemination of information resources. • There is therefore an urgent need to enhance the international competitiveness of developing countries’ SME sector and promoting the increased inflow of foreign investment and technology. • One of the major bottlenecks in this context is the lack of knowledge at the end of SMEs.

20. OPPORTUNITIES for SOUTH-SOUTH CO-OPERATION in SME DEVELOPMENT • The revolution in ICTs has created unprecedented opportunities to narrow the knowledge gap between the North and the South • Through electronic mail and the internet, data can now be instantly transferred across vast distances, providing science-poor countries with the possibility of access to the latest scientific and technological information

21. Opportunities for…contd. • The present information age will help SMEs exchange information on products, technologies, human resources, etc. freely, overcoming obstacles of distance and borders. • Trade via the Internet has now become an intrinsic part of an increasingly large number of SMEs in the developed countries • About one half and one third of the medium- and small-sized enterprises in Europe maintain an e-mail contact address or a presence on the World Wide Web

22. Opportunities for…contd. • There are now greater scope and more opportunities for inter-firm linkages for enhanced collective efficiency, technological and innovation capabilities, and hence competitiveness. • Subcontracting and outsourcing relationships now cover processing and manufacturing activities and services of high value addition and technological sophistication.

23. CHALLENGES to SOUTH-SOUTH CO-OPERATION in SME DEVELOPMENT • One of the most critical challenges facing the developing world is how to bridge the huge gap between the North and the South in the production and utilization of scientific and technological knowledge. • North-South divide in scientific output and technological innovations is constantly widening. • Reducing these disparities will be a major challenge facing South-South co-operation in the 21st century.

24. Challenges to…contd. • Competition has become increasingly difficult among the global and regional economies and enterprises, SMEs included. • Consumer preferences and market standards have become more sophisticated and exacting . • Market demand is constantly changing, a trend facilitated not least by the rapid advances in ICT, bio-engineering and new materials sciences .

25. POLICY IMPLICATIONS and OPTIONS for SME DEVELOPMENT • The new development requires a new or different mindset in the promotion of SME development • SME development can be leveraged through the maintenance of ongoing access to the available store of global information and knowledge • Another is through participation in clusters of firms, or in networks of inter-linkages backward with suppliers

26. SCENARIO of SME DEVELOPMENT in PAKISTAN

27. SCENARIO of SME DEVELOPMENT in PAKISTAN • Pakistan became the slowest- growing economy in South-Asia during the last decade. • The slowdown is due to the trend slowdown in the gross fixed capital formation (GFCF) growth rate which is equally apparent in small and large scale enterprises. • Even more worrying is the lack of structural change, measured by the inertia in the structure of value-added and the size distribution of firms in the SME sector during the last two decades.

28. SCENARIO of…contd. • The Pakistan Economic Survey 2001-02 reported that: “….the foundation of industrialization could not be established without an efficient network of SMEs” • Credit rationing constraints SME growth and investment in Pakistan by increasing both the cost and risk of growth and investment. • Poor infrastructure, particularly in the power sector, increases the cost of growth for SMEs.

29. SCENARIO of…contd. • Low level of skill, training, and education among workers and management hinders the development of SMEs in Pakistan. • High market transaction costs and inefficient formal contract enforcement inhibit the development of SME clusters and subcontracting networks, imposing high inventory costs and, perhaps, forcing SMEs into suboptimal diversification.

30. SCENARIO of…contd. • Lowering the financial constraints, judicial constraints, fiscal and regulatory constraints, infrastructure constraints and human resource constraints would have a significant positive impact on the growth of SMEs in Pakistan. • These constraints can be reduced with the help of other developing countries in the South by experience, knowledge and technology sharing.

31. Role of COMSATS’ in South-South Cooperation

32. Role of COMSATS’ in South-South Cooperation • COMSATS has conducted various capacity building programmes in the developing countries of South • COMSATS launched various programs and projects which include; COMSATS University, Internet, IT Centre in Syria, Telemedicine and more than 70 independent and joint international workshops, conferences, seminars and has sponsored many S&T events for capacity building for its member countries. • COMSATS facilitates the scientists from its member countries by mobilizing technical human resources from both the North and the South

33. Role of COMSATS’ in South-South Cooperation • COMSATS in collaboration with UNESCO initiated South-South Technical Cooperation Programme for its member countries including Egypt, Sudan and Pakistan. ( Jun 07 – Dec 07) • Application of Predictive Maintenance Methods to General Industry • Concept of Technology Parks in the Light of Global Experiences • Human stem cell: Principals and Applications • South-South Technical Cooperation Programme, COMSATS Member Countries – 2008-09

34. Role of COMSATS’ in South-South Cooperation • South-South Technical Cooperation Programme with ISESCO • 8 training workshops and seminars for capacity building will be conducted in Malaysia, Nigeria, Lebanon, Kuwait, Pakistan, Syria, Morocco and Jordan • Trilateral Collaborative Research Programme (2007-2009) for the Project titled, “Effective utilization of Nile Medicinal Plants” • ICCBS (HEJ Research Institute of Chemistry, Karachi , Pakistan • National Research Centre (NRC) – Cairo, Egypt • National Centre for Research (NCR) – Khartoum, Sudan

35. Role of COMSATS’ in SME Development • COMSATS, UNIDO, & SMEDA jointly developed IIN (Industrial Information Network) in Pakistan. • COMSATS and INSME collaborated to stimulate transnational cooperation and public and private partnership in the field of innovation and technology transfer to SMEs in COMSATS member states • COMSATS is a member to this International Network and intends to initiate high growth innovative SMEs in its member states • Industrial Information Network Initiated jointly by United Nations Industrial Development Organization (UNIDO), COMSATS and some other partner organizations in the year 2001

36. CONCLUSIONS

37. Conclusions • The South must intensify co-operative efforts to enhance its indigenous capacity to generate, manage and utilize science and technology in ways that address its own basic needs • For this to take place, regional and inter-regional efforts must be vigorously pursued. • The ultimate goal of these efforts should be to develop collaborative programmes in capacity building for policy formation and building human capital for the development of SMEs.

38. Conclusions • South-South cooperation on issues related to technology cannot be isolated from the wider trends of globalization • South-South cooperation should start with basic units such as regional integration and then be extended to other developing countries as well as the global community. • A well developed SME base is capable of providing immense opportunities for SMEs to become catalyst in the economy

39. Conclusions • Cooperation between the countries of the South should take place to establish a more comprehensive approach towards SME development such as • increasing their access to financing • providing greater access to business facilities locally and abroad • enabling the business infrastructure • enhancing human capital development • Being adaptive in the use of information technology • Access to regional and international market • Sharing and transfer of technology

40. The End Thank you