Pakistan’s ease of doing business ranking took a turn a for the better by jumping up 11 places and the country is now ranked 147 out of a total 190 countries according to the World Bank’s Ease of Doing Business Index 2019.
The methodology involves incorporating the largest cities according to population and business activity. For Pakistan, Karachi holds 65 percent weightage and while Lahore accounts for 35 percent. Given the new population dynamics, Lahore’s weight might increase in next year’s ranking and the Punjab government has taken up the matter with the WB.
Making it up the ranking requires countries to not only improve aggregate rankings but also their distance to frontier (DTF) score which is the distance of a country from the top performer on each indicator across all countries included in the ease of doing business rankings. An economy’s DTF score is reflected on a scale from 0 to 100, where 0 represents the lowest and 100 represents the best performance.
As the aggregate rankings have been covered in detail in this space (Read: Doing business: a long road ahead published on November 02, 2018), this piece will focus on delving deeper into the provincial rankings and their unfortunate divergences. Lahore’s DTF has increased by 3.17 points from 54.82 to 57.99 points which have been brought about by an increase in two indicators- starting a business which improved by 3.28 points from 78.61 to 81.89 and registering a property which increased by a decent 10.43 points from 55.95 to 66.38 points. Credit where it’s due, the land management reforms undertaken by the Punjab government and its LRMIS system have been pivotal in increasing Lahore’s ranking.
In contrast, Karachi recorded a measly increase of 0.88 in its registering property indicator and is well below Punjab with a DTF of only 34.47 in 2019. Similarly, dealing with construction permits fell for both cities but Karachi’s fall was 7.17 points while Lahore’s was 4.19.
Apart from the need to work on the technical aspects required to improve the individual DTF scores, it is important to work on three things. The first is the monitoring of reforms that are being undertaken which ideally requires a separate body. While Punjab has set up a Program Implementation Unit (PIU) under its Planning and Development Department for this purpose, in Sindh the Board of Investment has been the body looking after this. Perhaps a model following Punjab’s with a separate dedicated unit would be better given the co-ordination and monitoring efforts required across so many different government departments.
The second and third factors are interrelated and involve increasing private sector engagement and improving the dissemination of reforms already done by the government. As the World Bank relies on input from both the government and the private sector, it is imperative to keep the latter engaged in the reforms process. Failure to do so results in the private sector feedback being unaware of the reforms actually carried out by the government and leads to the World Bank not incorporating the results of these reforms in the EOB rankings.
For this dissemination needs to be increased by the government. Sometimes even government officers are themselves not aware of reforms done by another department so private sector awareness will obviously be lacking. In this regard, media briefings such as the one given by Punjab government’s PIU are a good step to showcase the achievements. Other ways to encourage dissemination could be through seminars involving government representation; media and private sector to bridge the communications gap as well increase much need inter-provincial and federal co-ordination as well.
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