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Progress in ‘doing business’ rank – a challenge to test

International experts revealed that an economy cannot thrive without a healthy private sector. When domestic businesses flourish, they create job opportunities and generate income that can be spent and invested domestically. They were also of the view that any rational government that cares about the economic well-being and advancement of its constituency pays special attention to laws and regulations affecting local SMEs. Effective business regulation affords micro and small companies the opportunity to raise, innovate and, when applicable, move from the informal to the formal sector of an economy.

The present World Bank (WB) annual flagship report 2020 on Doing Business Index captures 294 regulatory reforms implemented between May 2018 and May 2019. Worldwide, 115 economies made it easier to do business. In the report statistics showed that the economies with the most notable improvement in Doing Business 2020 are Saudi Arabia, Jordan, Togo, Bahrain, Tajikistan, Pakistan, Kuwait, China, India and Nigeria. During 2018-19, these countries implemented one-fifth of all the reforms registered globally. The World Bank’s (WB) Ease of Doing Business Index recorded that Pakistan has jumped up 28 places and secured a place among the top 10 countries with the most enhanced business climate – a development that will greatly enhance the government’s image. According to the WB’s annual report, Pakistan carried out 6 reforms that assisted enhancing its ranking from 136 to 108. It turned out to be the 6th worldwide reformer and first in South Asia that brought ease in doing business in the previous one year.

The WB’s officials monitor a country’s business related regulations on 10 benchmarks that are as broad as from starting a business, to getting electricity connection, securing construction permits, paying taxes, dispute resolution, business insolvency and protecting minority shareholders’ rights. The experts also urged that the report measures how close each economy is to the best worldwide practices in business regulations. On the measure of absolute progress towards best practices, statistics showed that Pakistan has enhanced the score to 61 from 55, suggesting the country did some remarkable work this time around and built on the reforms introduced in the last year also. While India remained top among South Asian nations, up 14 spots to 63, Pakistan also made a mark by climbing 28 positions and securing a place among the top 10 worldwide business climate reformers and enhancing 28 positions in a year. It is said that the Government of Pakistan developed an ambitious reform strategy, setting up a national secretariat also a prime minister’s reform steering committee to ensure progress.

Pakistan’s situation report was based on surveys carried out in Lahore and Karachi, and the consequences are based on work done from November 2018 to May 2019. Statistics also identified that the Government of Pakistan made biggest gain on the indicator of starting a business where its ranking enhanced by 58 spots to 72. The earlier ranking was 130.

 

The experts mentioned that there is a need to enhance business environment more in Pakistan, counting the availability of educated and skilled manpower, ancillary industries and utility services. Continuous increase in the prices of petroleum products, electricity, gas and other utilities are also adversely affecting the business environment. They have also identified that the Government of Pakistan must need to enhance the infrastructure facilitations to make the business environment more conducive. On the index of construction permits, the position enhanced from 116 to 112 — a big gain of 54 points within a year.

Karachi made obtaining a construction permit easier and faster through streamlining the approval process and also made construction safer by ensuring that building quality inspections take place frequently. Lahore also made obtaining a construction permit easier and faster through streamlining the approval process and by enhancing the operational efficiency of its one-stop shop for construction permits.

The report also showed that on the index of getting electricity, the Government of Pakistan enhanced its position by 44 points to 123 because of improvement in power supplies to households and businesses by Lahore and Karachi power distribution companies. The old ranking was 167.

Pakistan made getting electricity easier by enforcing service delivery time frames and also increased the transparency of electricity tariff changes. This reform applies to both Karachi and Lahore. The experts also calculated that on the index of paying taxes the ranking enhanced by 12 points to 161. But it was still the poorest ranking that the Government of Pakistan obtained on any indicator.

Pakistan also made paying taxes easier by launching online payment modules. This reform applies to both Karachi and Lahore. Pakistan also got a jump of 31 positions on the rank of trading across border where its standing improved from 142 to 111. The Government of Pakistan made trading across borders easier through improving the integration of various agencies in the Web-Based One Customs (WEBOC) electronic system and coordinating joint physical inspections at the port. This reform applies to both Karachi and Lahore. Similarly, on the indicator of registering a property, the ranking was enhanced by 10 points to 151. Pakistan (Karachi) made property registration faster by making it easier to execute and register a deed at the Office of the Sub-Registrar. Pakistan (Lahore) made registering property easier by increasing the transparency of the land administration system.

Conclusion

No doubt, improvement in index ranking is just one aspect of an overall business environment that does not fully guarantee the foreign investment in Pakistan. For that there is need for consistency in economic and taxation strategies and economic political stability in Pakistan.

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