The initiative taken by PM Abbasi on ease of doing business appears to be moving ahead. A steering committee constituted by Board of Investment (BoI) for the purpose will present its recommendations to the PM by next week. The PM has agreed to head the steering committee. The BoI is reported to have identified 68 initiatives to improve ease of doing business in the country. Fifty-two of these initiatives constitute 'Phase-I' while the rest would be taken up as 'Phase-II.
The Chairman of BoI is reported to have stated that businesses need to deal with more than 12 agencies, including excise and taxation department. "We want to build a centralised portal (website) to reduce procedural burdens," according to him. The steering committee comprises chairmen Securities and Exchange Commission of Pakistan and Board of Investment, secretary Planning Commission, private sector's representatives and all the stakeholders. The Chairman BoI seeks to bring down Pakistan's ranking to a position of 50 within the next three years from its present ranking of 147 in the World Bank's Doing Business rankings.
Pakistan's woeful rating in Ease of Doing Business Index is cited as the principal reason behind dwindling Foreign Direct Investment and exports. It is, therefore, a positive step forward.
But the implementation on ground must be for real and the targets set must be realistic and supported by an equally realistic roadmap with a defined action plan and timelines.
BoI's publicized target of bringing down the ease of doing business to a position of 50 in the next three years appears to be unrealistic, raising a question whether or not its profoundness has really been appreciated by planners.
Pakistan's ranking in the tenure of the incumbent government has slid down from a position of 105 in the year 2012 to a position of 147 in 2018. It means a slide of 7 notches per year. The target of 50 in three years means a yearly jump of around 17 notches per year. Isn't it unrealistic?
The doing business facilitation and ease involve a complicated web of Pakistan's judiciary, provincial and federal administration, taxation and regulatory authorities, etc. It is here where massive reforms are needed to bring about a real change in areas of construction permits, electricity, property registration, access to finance, minority investors protection, payment of taxes, trading across borders, enforcing contract enforcement, resolution of insolvency and labour market regulations.
The reality on ground is that as soon as an investor sets his foot on ground to set up an industry or business, he is thronged by regulatory entities. Their interest is most often vested and not national.
The government will be better off in terms of revenue collection and regulatory compliance if the investor is entrusted with this responsibility and self-accountability under a well-automated process of reporting by the investor and surveillance by the government.
Planning and Development Department Punjab chief economist Dr M Amanullah has said that after making reforms, the building permit issuance period has now been reduced to 21 days from 60 days. Sindh Board of Investment Director Projects Abdul Azeem Uqaili has said that the Sindh Environment Protection Agency (SEPA) is now giving approvals in 15 days instead of 30 days. Similarly, the time required for a new water connection in Karachi has been reduced to 21 days from 61 days.
These reductions in number of days are meaningless optics unless a mechanism is in place to truly monitor the process. It has been noted that objections after objections are raised on investor's submissions. Investors are left no option but to give speed money to get their work done pronto.
The mechanism installed by K-Electric and other institutions to record, monitor and respond to customers' needs throughout the cycle of the issue is a good example for BoI to follow.
The government is quite keen to set up Special Economic Zones throughout the country. This will require government to be generous in areas of construction permits, utilities, environment controls and similar. It should be one-window operation in real, insulating the investor from the government entities and functionaries in true sense of the word terms. This may require parliament to pass a legislation in this regard without any further loss of time.
(The writer is former President of Overseas Investors Chamber of Commerce and Industry)
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