Abstract
SMEs play a vital role in the process of industrialisation in developing countries because of their ability to adapt to the changing environment. In view of the multiple constraints and complexity of investment decision-making process, a study was undertaken to analyse the investment structure/practices of SMEs in Mauritius.
The results of the study reveal that of the SMEs with an investment of over Rs. 1 million, 76% are corporates, and of those with an investment of more than Rs. 3 million, 90% are companies. Similarly irrespective of their year of formation, 64% of SMEs in the corporate sector are willing to re-invest more than Rs. 1m in plant and machinery, but even government incentives like raising the qualifying investment limit and duty concessions have not encouraged SMEs to invest over Rs. 3m in plant and machinery. A sectoral analysis reveal that SMEs in the metal product and workshops were willing to reinvest but those in the textile product group were not. As far as sectoral investment since 1990 is concerned, the two sectors which have witnessed increased investment in Plant and Machinery are food and beverages and chemical, rubber and plastics.
The growth and modernisation of SMEs warrant considerable government support in the form of tax and duty concessions and soft-term loans.
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