Ease of doing business in Pakistan

In what must have shocked the PML-N government that the World Bank in its publication titled Doing Business Report 2014 lowered Pakistan's ranking in ease of doing business from 106 in 2012-13 (the last year of the PPP-led coalition government's tenure as well as the three months of the caretakers) to 110 in 2013-14. Frequent claims by the incumbent government that promoting private sector is its forte and that business activity has picked up since it took over the reins of government in the first week of June 2013 would now be challenged.
The report adds, that the incumbent Pakistani government did not introduce any reform that would have facilitated doing business in the country while the other regional countries including Afghanistan took measures to improve the climate by reducing the time and cost to obtain a business licence through eliminating inspection of premises of newly-registered companies and strengthening its secured transaction system by implementing a unified collateral registry. However, the regional leader was Sri Lanka and facilitated payment of taxes by companies as well as facilitating issuance of construction permits by eliminating the required tax clearance and the fees.
According to the findings of the report, Pakistan performed poorly on seven out of the ten indicators that determine a country's position on the Doing Business Index. These include: (i) electricity supply worsened in 2013-14 relative to 2012-13 resulting in a loss of 3 points - from 172 ranking in 2012-13 to 175 in 2013-14. Exclusive reports by this newspaper that have not been refuted by the government indicate that the claim of Nandipur power plant generation being on line is incorrect as the cost of producing per unit electricity from the plant is considered economically unviable at 22 rupees per unit. Guddu power plant also remains non-operational with a technical fault developing in the turbine a few days after Prime Minister Nawaz Sharif inaugurated the plant; (ii) starting a business index requires 21 days which led to a fall in our ranking from 99 the year before to 105; (iii) ranking on softening border trade rules fell - from 91 last year to 90 this year with a cost of importing a container estimated at 725 dollars while exporting a container cost 660 dollars with both importers and exporters having to complete 8 documents for purposes of trade; (iv) ranking declined from 34 to 32nd place in protecting investors; (v) enforcing contracts ranking declined from 158 in 2012-13 to 159 in 2013-14; and (vi) registering property ranking declined from 125 to 122 in 2012-13.
The ranking was the same during the two years under review with respect to index of paying taxes - at 166th place out of a total of 189 nations - with a taxpayer typically making 47 payments a year, which consume 577 hours and paid on average 34.7 percent of profits in taxes. However, credit for foreign investors ranking improved from 75 to 73.
A look at the PML-N election manifesto shows that in this area too the party has ignored its own commitments made prior to the 2013 elections. The section on industry and trade in the manifesto identifies specific measures for industrial revival that include an export-led growth supported by large foreign direct investment with the necessary ingredients to attract foreign investment missing from our policy reforms to date. Further given the major impediment to investment, domestic and foreign, remains law and order the PML-N allocated only 92 million rupees for implementing a 32 billion rupee National Internal Security Policy in the current year. The International Monetary Fund in its third staff review recently uploaded on its website also acknowledges that security conditions remain difficult and constitute a significant downside risk to the economy.
It is indeed unfortunate that what was long regarded as PML-N's strong suit in comparison to the party's political rivals, particularly the PPP, namely its pro-business policies is no longer factually correct. One can only hope that the Prime Minister begins to carefully look at data that is being released by multilaterals on the performance of the economy as well as research by independent think tanks in the country that is at odds with the data released by the Pakistan Bureau of Statistics to form an informed opinion then perhaps he would understand the enormity of the economic problems that prevail.