Ease of doing business

Razzak Dawood, Advisor to the Prime Minister on Commerce, Textile and Investment - critical sectors with the capacity to deal with the ongoing economic impasse - stated during a press conference that the Khan administration's target is to improve Pakistan's ranking from the current 133 to 100 on the ease of doing business index. It is relevant to note that the fourth and fifth Letter of Intent (LoI) uploaded on the International Monetary Fund (IMF) website on 23 December 2014 submitted by the government under a three-year Extended Fund Facility programme (September 2013-2016) noted that with respect to improving business climate "in consultation with international partners we finalized a time-bound detailed implementation plan in October 2014 that identified legislative and administrative actions, institutional roles and responsibilities and resource requirements of the reform program. Our focus is on six indicators - constructions permits, paying taxes, enforcing contracts, starting businesses, trading across borders, and getting credit." Implementation of this detailed time-bound plan did pay dividends in that Pakistan's ranking in ease of doing business improved by 11 last year in comparison to the year before.
The LoI further claimed that based on the findings of studies the government would expedite liquidation of insolvent entities through (a) Corporate Restructuring Companies Act allowing companies to take over assets of bankrupt companies and (b) Corporate Rehabilitation Act as well as establishing Alternate Dispute Resolution mechanisms in Karachi and Lahore, extended to Islamabad and Rawalpindi by June 2015 and other provincial capitals thereafter. The Federal Board of Revenue (FBR) in coordination with SECP and EOBI and other stakeholders approved a plan to simplify procedures and costs for setting up businesses while a review was envisaged to reduce the number of existing processes and forms for sales and income tax and integrate end-to-end IT solutions to serve all streamlined business taxpayer-related processes as well as allow access to poor and marginalized segments of society including micro small and rural enterprises. In other words, the blueprint for improving ease of doing business was available to the Khan administration; however, the challenge lay in implementation as always in this country.
The chairman of the key agency for improving ease of doing business, Board of Investment (BoI), revealed during a press conference that BoI in cooperation with provinces had reduced the number of tax payments by investors from 47 to 16. This claim is not borne out by facts and independent tax experts maintain that the number of tax payments remains at 47 though investors would no longer be required to file withholding taxes payable every month but twice a year. The BoI Chairman also took credit for reducing the time required to get electricity connections by 50 percent - a claim that again cannot be credited to the present administration. And announced establishing ease of doing business centres in the four capitals and Islamabad though it is unclear what support if any the government would receive from capitals where PTI does not have a majority government other than to raise the total number of civil servants. It is important to acknowledge that Sindh's performance is critical in this regard as it has a 65 percent weightage in total results towards the ranking, while Punjab accounts for 35 percent.
The Chairman BoI gave extremely ambitious targets, like his predecessors, and given the claims he made one would be hesitant to accept them as having been achieved during his tenure which began mid September 2018. Much was made during the press conference of facilitating visas to prospective investors. This is a good step however again it is advisable not to count one's chickens before they are hatched.