‘No clear definition of SME’

THERE are no clear definitions to what a small-medium enterprise (SME) really means in the local context and standards, says Investment Promotion Authority (IPA) managing director Clarence Hoot.
Since the SME policy was released in 2016, there has not been a clear indication and institutions such as IPA were still confused, he said.
Hoot said the number of SMEs announced was 49,000 and that had doubled since then but, in fact, the businesses counted as SMEs where actually micro small-medium enterprises (MSMEs).
“I have been having problems since the launch of the SME policy,” he said.
“My problem is that I don’t know what the definition of SME is and in what context and PNG standards,”
“The figure that was quoted three years ago was 49,000 SMEs and that was reflective of the number of business name registrations (business registered under a name that can only involve the running of one specific business).
“This year, it has doubled that and has gone up, but if you look at those registrations and what these businesses do, they are not even SMEs but more of a micro business so what does SME refers to.”
“There has also been a study done by the Department of Community Development recently and they had very interesting figures relating to the informal sector.
“The study shows that the informal sector perhaps has not been captured either in taxation or in the banking system.
“That study claims that the informal sector alone is generating about K10 to K12 billion a year.
“These are the street vendors who are the informal sector and if you apply 30 per cent of that tax, that money should be coming to the Government but it is not captured.
“And again, those people are not classified or defined clearly also in the SME policy.
“SME can be defined by the amount of investments, amount of profits, the number of employees or you can combine employees and profits, but those definitions are not yet clear.”