Karachi: The Union of Small and Medium Enterprises (UNISAME) has proposed the adoption of "pay-as-you-earn" (PAYE) leasing schemes to address the financial challenges faced by small and medium enterprises (SMEs) in Pakistan. This financing method enables businesses to lease assets such as land, machinery, or buildings, making payments in installments from the income generated by those assets, thereby eliminating the need for significant upfront cash or traditional bank collateral.

According to Union of Small and Medium Enterprises, UNISAME and its president, Zulfikar Thaver, emphasize that PAYE offers asset-based Islamic financing, allowing businesses to acquire commercial property, warehouses, and machinery on a rent-to-own basis. This approach benefits SMEs as only a small percentage of private-sector credit reaches them, with traditional banks often hesitant due to standard collateral requirements.

The organization highlights that the PAYE scheme can alleviate the initial financial burden on SMEs, which face challenges such as high power costs and input expenses. This leasing method enables small businesses to expand and modernize without draining their working capital on substantial purchases. However, UNISAME also underscores the need for broader reforms, such as affordable energy, tax reliefs, and global marketing support, to reduce the overall costs of doing business in the sector.

Zulfikar Thaver has submitted a comprehensive proposal via email to Prime Minister Shebaz Sharif, advocating for the establishment of an institution dedicated to implementing the PAYE scheme. The proposal aims to launch the initiative for a significant uplift of the SME sector.