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Introduction and Instructions to Offerors 

1.         Introduction:

USAID Small and Medium Enterprise Activity (SMEA) would like to engage a specialized institution (a  research organization with technical and data collection expertise) that can help in developing and piloting a customized Business Enabling Environment (BEE) Index for SMEs in Pakistan. SMEA has been working with SMEs over the last 4 years to understand the constraints that they face on the policy, process and regulatory side. For purposes of analysis and to establish benchmark, the World Bank Cost of Doing Business (CODB) is usually taken as a reference point. However, the CODB is a very high level exercise and does not capture the real cost and ease of doing business for SMEs in Pakistan and as reflected in SMEA’s multiple  research and policy studies do not capture the diversity of SMEs and SME related issues in Pakistan. As part of this subcontract, an effort will be made to develop a BEE index for SMEs ( representative of geographical diversity by gathering information from SMEs across Pakistan in particular Karachi, Hyderabad, Lahore, Gujranwala, Sialkot, Rawalpindi, Peshawar and Quetta) , with a pilot done in a suitable region perhaps in the golden triangle region of Punjab or could be done in the 4-5 most populated SME clusters of Punjab to assess the actual cost and ease of doing business for small and medium sector.  The sub-contractor is required to design the methodology for a representative index and only pilot to see what sort of results come. The design will give a full methodology including what will be a national representative sample and one that can also be used to make city level analysis. The sub-contractor will be required to propose the location for running the pilot.  Moreover, the data collection for the index will actually be from SMEs rather than a record of legally established processes, thus will present a more realistic position of on ground situation. A benchmark may be set, where these industrial estates or provinces then compete to reform their index and support SMEs. This exercise will in effect provide a blue print for industrial clusters within different provincial jurisdictions to compete against each other using the index. The same could be used in evaluating effectiveness of special economic zones in terms of the cost and opportunity of setting up and running businesses within these zones.

The subcontracted company will work closely with SMEA’s technical team for completion of this work.  The index thus developed should be representative of SMEs’ cost and ease of doing business regardless of the locational advantage or disadvantage given the location of a business. It should capture the BEE issues across the board but also make distinction for any factors that vary across provinces/regions based on the type and location of business.