By Paneetha Ameresekere
Chemonics, a US based consultancy firm, on behalf of the Industrial Development Ministry is currently conducting a field study to ascertain how small and medium scale enterprises (SME) could be developed through the provision of business development services (BDS).

"New skills are required and new needs are emerging in the marketplace. These needs are becoming ‘very’ intensified.Therefore, some sort of a service is required," official sources, explaining the need for a BDS said.

"A continuous ‘business service’ is needed for businesses to survive in a competitive economy, and the scope of work of the consultants includes identifying SME service needs and their present delivery mechanism," they added.

The Consultants terms of reference are *Government policy on SME development, *Institution arrangements for the implementation of the policy, *Problems facing SME, *Whether the present institutional framework effectively adresses these problems and *If the existing institutional framework is not satisfactorily addressing these problems, how to upgrade the institutional framework by applying information technology (IT) tools to help businesses to improve their efficiency.

Chemonics who began their study last October, are expected to submit their report to the Ministry by the end of this month. Their consultancy fees are being paid by the Asian Development Bank (ADB).

"With globalisation and from competition being faced from within and without, and the fact that product life-cycles are becoming shorter due to continuous technological improvements and changes, a constant feedback is needed as to what is happening in the market, in order to survive.

Such feedbacks, which are essential for the very survival of businesses, forms an integral part of those services known as ‘BDS,’ " the sources said. They also said that banks conducted more than 300 parate executions last year. And on an average, 200 for a year, was conducted under the debt recovery act.

Parate execution is a virtual carte blanche for banks to recover their dues at any cost, even at the expense of destroying a business, in that there is no guarantee that the business would be carried out by the new owners who buy the auctioned premises, they said. "If a professional BDS is available to guide businesses, and assist them to build their capacities, that may minimise business failures," they added.

The sources mooted for tailor made products to be offered for businesses, incorporating and providing solutions to issues such as what are the credit and skills needs of a business, and accordingly offering a marketable package.

Some BDS providers are the Industrial Development Board (IDB), the Sarvodaya Economic and Entrepreneurship Development Services (SEEDS), Sri Lanka Business Development Council (SLBDC), the Export Development Board (EDB), Industrial Technology Institute (ITI) and Project SMED (Small and medium enterprises development programme) of the Federation of Chambers of Commerce and Industry of Sri Lanka (FCCISL).

The various chambers provide these services on a subscription basis to their members, while in the case of Government agencies, such services are either generally provided free, or on a cost sharing basis.

Services provided by these agencies are not demand driven, but supply driven. Because of which the quality of service was low and there was no accountability, especially in the case of the Government sector, because, more often than not, such services are provided free to clients, the sources said.

They mooted that BDS should be commercially driven, in that a fee should be levied for the services provided, on the grounds that ‘when the package (BDS) is marketed at a price, there is accountability, and in addition, a wider choice to the customer, thereby, marketing a quality product.’

"Also, in the business development extension services (BDS) provided by the public sector, there is no reward scheme offered to public servants, which otherwise would have spurred them to offer a better service to customers," they said.

With regard to the issue of those SME who are unable to afford to buy the services offered, the sources said that they would be provided with soft loans to tide over such financial diffiulties.