|SMEs part of renewed efforts to develop economic growth
|According to a recent study by the UN Economic and Social Commission for Western Asia, the number of SMEs in Jordan makes up about 98 percent of the total working enterprises. |
JORDAN (Star) - Small and medium enterprises (SMEs) are, without doubt, the bedrock of any developing economy. In Jordan, SMEs are the basis upon which future economic and employment growth can be built.
There is no specific definition for SMEs. However, these enterprises need to be profit-making businesses, fully owned by the private sector and not a subsidiary of a company, employing no more than 250 workers, having regular accounting records and producing standard financial statements.
According to a recent study by the UN Economic and Social Commission for Western Asia, the number of SMEs in Jordan makes up about 98 percent of the total working enterprises. About 92 percent of these are small and unregistered at the Ministry of Trade and Industry. Officially approved enterprises make eight percent, employing some 12 percent of the overall workers in the Kingdom. The study warned the government is paying less attention to the SMEs, preferring instead larger enterprises.
Jordanian SMEs are certainly different from those in other developing countries. In Europe, SMEs are considered a dynamic and heterogeneous group, which face many challenges in the European single market and global market in general. But SMEs everywhere need to survive, grow and be constantly innovative by developing themselves technologically.
Economists believe SMEs in Jordan have the potential to grow well through extensive cooperation between the private and public sectors. They note the significance of these enterprises varies from one sector to another. About 55 percent of the Kingdom\'s GDP is processed through SMEs.
Jordanian researcher Rabee\' Al Dajani said most of the Jordanian SMEs lack the required orderly structure in their daily transactions. \"Most of the SMEs find in the local markets a haven to sell their products by making easy and direct profits. This, eventually, impedes these enterprises to expand the scope of their services and products to regional markets,\" he explained.
Al Dajani said the local markets provide a moderate capacity for the SMEs, something which makes these enterprises veer towards specific types and quality of products. Most of the SMEs in Jordan run as family affairs, traditional subcontractors or through medium-sized niche firms. And they are mainly directed to making small types of goods rather than having a strong industrial capacity in local and regional markets.
\"The specificity of SMEs is fixed firmly on strategies based on niches. These enterprises are also lacking the financial and human resources support,\" said Salim Tlatli, an SME expert at the EJADA (Euro-Jordanian action for the Development of Enterprise) program. \"Any small and medium enterprises have short-term strategies. They definitely pursue an intuitive decision-making process,\" he said in a recent workshop at the University of Jordan.
The Arab expert added the new global economy imposes tough challenges on Jordan\'s SMEs, and makes it impractical for them to cope with the international competition that TNCs (transnational corporations) demand for the open-market policies.
That is why EJADA is primarily dedicated to supporting the SMEs in Jordan. The European project, which launched in July 2001, is a four and half year program worth 41.6 million euros (JD 26 million). It is an integrated program mainly targeting SMEs in Jordan through four components: Technical support, financial support, vocational training, and policy support. These components aim to enhance the capacity of Jordan\'s private sector and increase its GDP allotment. The project also targets a gradual increase in the annual per capita income for Jordanians.
\"To make the SMEs grow means to integrate their businesses through fruitful partnerships among themselves and enhance the \'mutual team-work\' network to be aligned with large scale firms,\" said Tlatli, who added that the public sector should simplify the bureaucratic procedures, ease the financing procedures and loan guarantee schemes, and help the SMEs have access to national and regional markets.
The government is implementing an industrial policy that strengthens the part of SMEs in the two-year socio-economic transformation plan. The policy is supported by the Industrial Development Fund, to provide technical assistance to stakeholders in designing the development fund.
\"Privately-owned businesses in Jordan are worth some JD 3 billion and make about 85 of the overall investments in the Kingdom,\" noted Al Dajani, who said the Kingdom needs renovation in its investment environment to help its SMEs overcome the upcoming challenges.
A clear and rapidly developing industrial policy, replied Tlatli, is a must for any SME to conform to the global economy\'s requirements. He said the policy should target selected sectors that can promote Jordan\'s economy and its foreign exports. \"The significance of the industrial policy lies in its programs and mechanisms. With this, SMEs can develop rapidly and efficiently.\"
Ghassan Joha, Star Staff Writer