Ease of doing business

Ease of doing business
Ease of doing business

Pakistan's global ranking in Ease of Doing Business (EoDB) improved to a position of 136 out of 190 countries in 2018 as against 147 out of 190 countries in 2017. But it is still far behind its peers in the region and far from being considered as a destination favourable for investment.

India ranked 77 out of 190 countries in 2018 from its ranking of 100 in 2017. The government of Narendra Modi, a favourite of business community of India, is aiming for a ranking of 50 to position India at par with front-rank global economies. 

The incumbent government in Pakistan has at least recognised the importance of EoDB as a catalyst to mobilise investments and exports by creating efficient, time and cost-effective enabling business environment.

The Board of Investment (BoI) has been designated as the Secretariat of Steering Committee on Doing Business Reforms. BoI, in collaboration with the World Bank Group and provincial agencies, is reported to have rolled out various reform drives in Punjab and Sindh. 

The reforms under focus are business registrations, licenses, permits, fees, taxes and NOCs (no-objection certificates) issued or being issued by various departments. 

"We intend to extend these reform efforts across Pakistan. Therefore, it is necessary to review all federal and provincial regulations with a view to rationalizing, modernizing and automating business regulations in Pakistan. Through this initiative, investors/businesses will be facilitated by reducing unnecessary regulations, cost and entry barriers for new businesses." These directives are reported to have been sent to the Export Processing Zone Authority, Competition Commission of Pakistan, Intellectual Property Organization, Commerce Ministry, Pakistan Engineering Council, Pakistan Medical & Dental Council, Pakistan Bar Council, Frequency Allocation Board, Pakistan Electronic Media Regulatory Authority, Pakistan Telecommunication Authority, Institute of Chartered Accountants of Pakistan, Pakistan Software Export Board, Sui Northern Gas Pipelines Limited and Sui Southern Gas Company Limited.

Although the government's efforts to address EoDB is admirable, it is mostly on paper unless some serious make or break issues are not effectively addressed. 

BoI, in its present shape, is itself riddled with incompetence, lethargy and laid-back mindset. It is no longer a one-window operation to facilitate and mobilise investments in Pakistan. It is restricted to act as a regulator for issuance of NOCs rather than play the role of an investment facilitator. This is reflected in its delivery. The FDI in 2018-19 is the lowest in the last ten years. To start with, BOI itself needs massive restructuring, reforms and change management to manage the demanding portfolio of Investment and EoDB.

The same goes for entities like Securities and Exchange Commission of Pakistan (SECP), Export Processing Zone Authority (EPZA), Pakistan Engineering Council (PEC) and similar. They all have assumed the role of regulators; they are not acting as service providers to facilitate businesses and investments in Pakistan. The mindset is to subject the entrepreneur to multiple bouts of checks and remands rather than towards issue resolution and facilitation. 

To bring around a meaningful result on ground in EoDB this mindset has to be reformed or eliminated.

In one case, a foreign investor is running around since over two years just to get the name of his company and board of directors changed on account of his acquiring 100 percent of the company shares which is in operation in EPZA since 1992. During the period of two years the investor was made to move in circles between EPZA, BOI and SECP each exposing its incompetence and laid-back mindset. 

Over the last one decade in particular, the performance and delivery of entities in the government and public sector has gone to the dogs. They all need to be pulled up in these testing times of Pakistan under economic stress.

Furthermore, the requirement of seeking NOCs appears meaningless in these times. NOCs should be totally abolished except those which are sensitive in nature. They are more of hurdles than of any meaningful benefit. The removal of NOC hurdles and automation of our processes and systems will certainly bring around a significant improvement in the Ease of Doing Business.

The onus of responsibility should rest with entrepreneurs - who in case of default can be penalised - which will prove to be a better deterrent than NOCs. 

Source: Business Recorder