Bettering conditions of doing business

The World Bank's report on "Doing Business" shows that during the last year beginning in June 2009, two-thirds of the pro-business reforms were implemented in developing countries. Kazakhstan took the first place among 117 economies as the biggest reformer. It amended its company law, introduced regulations to streamline the process of starting up a business, reduced capital requirements, and improved customs information system through automation.
Among the other top ten economies that have shown business environment improvement is Rwanda at second place followed by Peru, Vietnam, Cape Verde, Tajikistan, Zambia, Hungary, Grenada and Brunei. Pakistan, despite facing a serious economic crisis, has made little effort to encourage investment, either local or foreign.
These regulatory changes, it needs to be noted, are not directed mainly at attracting foreign direct investment, which has dwindled considerably in the wake of the international financial crisis and downturn in global demand. Instead, as the Bank's Director for Indicators and Analyses pointed out, the countries focusing on reforms are trying to develop domestic enterprises that serve local markets. As the experience of these countries shows, it is time to focus on the domestic market and undertake reform to develop local businesses and increase growth rate. There are even stronger reasons for Pakistan to improve business environment for local investors, considering that the ongoing war against terrorism is a major disincentive for FDI.
An unending energy crisis has adversely impacted business activity all over the country. Industries Minister Mir Hazaar Khan Bijarani told the Senate on Thursday that as many as 1,579 industrial units folded operations during the last five years. The recent floods have further depressed the prospects for improvement. The State Bank has revised the projected growth rate from 4.5 to 2.5, which will mean fewer jobs and further social unrest.
In developed countries employment rate is used as a major indicator of the health of national economies. Low employment rates can make or break governments. Unfortunately, however, the issue hardly ever finds a mention in a country like Pakistan where poverty is rampant and joblessness causing an alarming increase in crime. The issue must receive the priority it deserves. The government needs to introduce a pro-business reform policy that aims to boost economic growth and job creation.
Rules and regulations governing the setting up of new ventures must be simplified and the much talked about one-window operation made a reality. The existing procedures are not only time consuming, often times they are used by dishonest officials of concerned government departments to extort money from aspiring entrepreneurs. Considering that small and medium enterprises have the biggest potential for expansion and employment generation, this sector must get special attention. SMEs should be provided easy access to bank loans, and also relieved of the many of cumbersome laws that make it hard for them, particularly the small sized ones, to survive. A well thought-out policy to improve conditions of doing business is in order.