Saturday June 22, 2024

A big step forward for Pakistan

By Naeem Zamindar
November 11, 2018

Pakistan, after nine years of serious decline in terms of ease of doing business, has turned the corner and has improved by climbing up 11 places to 136 out of 190 countries in the World Bank ranking for the period ending May 2018. Extending congratulations is in order to the team working on the Doing Business reforms across different departments and provinces, and especially my BOI (Board of Investment) team who steered this effort, for their commitment and dedication. This is the biggest jump in over a decade. And this achievement has not been easy. To go forward, let us take a step back. In retrospect, this might be a good moment to look back and gauge how we made this happen, and what is the way forward to reach ranking among the top 50.

I took on the challenge of becoming Chairman of the Board of Investment (BOI) because I felt strongly about creating an environment where entrepreneurs thrived, so that our economy could move towards inclusive prosperity.

My experience as an entrepreneur, venture capitalist, and head of a major publicly listed telco has reinforced the belief that Pakistan’s future depends on innovation and entrepreneurship. The world is going through a disruptive technological revolution that will make education, healthcare, energy, financial markets, and employment accessible to all people – just as the mobile revolution made communication affordable and accessible to the poorest of the poor.

One of the previous government’s major achievements was the launching of 3G and 4G services. Today, approximately 80 per cent of the population has coverage and almost 30 per cent have smartphones. Over the next few years, the percentage is certain to grow by leaps and bounds. In a country where almost two-thirds of the population is under the age of 30, full of aspirations and energy, the smartphone has the capacity to empower their lives in ways we cannot even imagine.

We must unleash our entrepreneurial energy so we can leapfrog to prosperity within a generation. Our current environment has discouraged entrepreneurship – especially the growth of small and medium enterprises (SMEs).

SMEs utilise 80 per cent of the non-rural work force, and their contribution to the GDP is up to 40 per cent - but they get only get 7 per cent of bank borrowings. The challenge for them is two-fold: ease of doing business, and access to capital. By solving these two problems we can unleash an entrepreneurial revolution for Pakistan, where innovative start-ups and existing SMEs can participate in building a new, prosperous, and progressive economy. This progress can be spurred on by Pakistani diaspora entrepreneurs, who are keen to invest in Pakistan, but remain wary due to the difficulties of doing business.

As Chairman of BOI, I made improving the investment environment my primary focus. Emphasis was made on the ease of doing business initiative and developing Special Economic Zones (SEZs) for massive re-industrialisation by leveraging CPEC. The SEZs were to be controlled environments where ease of doing business would be enabled through a one-window operation, giving access to affordable land and significant tax incentives, making them globally competitive for industry (including information technology and services). We set up a special unit around this initiative and worked with the provinces and federal government to ensure that most would become operational by 2020.

The World Bank benchmarked all key activities that impact the ease and cost of doing business at a global level. The ‘Doing Business’ project looked at domestic small and medium-size companies and measures the systems, processes, and regulations applying to them through their life cycles. ‘Doing Business’ encouraged economies to compete towards more efficient regulation and offers measurable benchmarks for reform. It also gave us a clear view of where Pakistan stood and how we could observe the best regulations from around the world as role models. The how basically meant re-engineering processes through simplification and digitalisation.

The first step was to get the PM’s full backing. India has been very focused on ease of doing business and within four years had improved 66 ranks to stand at 77, primarily due to their PM’s backing. Shahid Khaqan Abbasi, our then-PM, was very excited about this and agreed to chair the Steering Committee and took strong personal interest. The Steering Committee included all the leaders of key federal agencies and provincial governments of Punjab and Sindh, and the notification of this committee gave it the importance it required. We brought in an outstanding Executive Director General (EDG) who coalesced an experienced an energetic team to work with her on this initiative.

The entire BOI, starting with the Secretary, Additional Secretary, and myself, completely backed this team and worked as a larger unit to enable this initiative. This included us personally visiting the leadership of all the federal departments and provincial governments to get their buy-in and partnership – we were building a collaborative model. Several women assumed key leadership roles in this initiative – including the Secretary, EDG, and the Section Officer, plus the Chairperson of Sindh BOI and many others – and this may have been one of the reasons for the spirit of collaboration that ensured the success of this initiative. We made sure that there were champions appointed in each organisation that would work with us. One thing I realised during this experience is that we have good people in our bureaucracy who just need to be engaged on the value and vision for doing something, given their due respect, and appreciated for delivering results.

In consultation with all stakeholders and technical expertise of the World Bank, we developed an action plan, which we designed to roll out in the form of 100-day sprints to ensure we could put concentrated energy behind it. In the first sprint, a total of 68 key initiatives were outlined by the World Bank, of which 52 have been completed. The remainder were segregated for the next phase. We did a second 100-day sprint as well, completing a total of 75 initiatives. We first acted on the low-hanging fruits, where we easily made visible change in the shortest possible time to build confidence and muscle. We launched a website to provide transparency and shared responsibility around the initiative. Most importantly, it created a sense of constructive competition, especially between Punjab and Sindh, which eventually led to a lot of collaboration and shared learning. Both provinces showed extraordinary leadership and did a great job, but special recognition is due to Punjab for its efforts towards digitalisation, and for openly sharing its know-how with the other provinces.

The second major initiative was around educating the business community on the improvements being done, as they are the ones who provide the feedback for the rankings. For that purpose, we developed a complete campaign to use advertisements, articles, meetings with trade bodies, and symposiums to educate them. This also had the added affect of creating pride in the improvements being brought about by the implementing departments and more ownership for the change. We also created enough awareness for the initiative to become a national cause, where for the first time all the major political parties included ease of doing business in their manifestos, making it a calling point to the public.

Our rankings have risen in a short time because of a systematic approach towards change, by getting clear on the why, inspiring leadership through this process to deliver on the what, and how to make it happen. We need to maintain the momentum and build more muscle and knowledge within the team to do the heavy lifting required to get us to the top 50 within the next four years. This team can do it; we just need to keep them together. The greatest risk is that there are constant changes and very little continuity. The Chairman BOI should be an outstanding business professional, selected by the Board and not a political appointee. It should be a tenured position for between 3-5 years, giving a clear mandate and space to bring about more lasting changes and building relationships with the investor community. A complete unit should be built around ease of doing business in the BOI, which brings in people for longer tenures and with specialised skill sets. Digitalisation and simplification are the way forward.

I especially want to highlight the sincere efforts of the World Bank as our partner in change. They provided us with not just technical, but moral support. The latest World Bank report has only taken into account the reforms carried out till May 2018. There are many other reforms that have already happened, but need gestation and stabilisation time before they are taken into account by the World Bank. I am sure that together we can transform Pakistan so that the dreams and aspirations of our people take flight.

The author is the former Chairman of the Pakistan Board of Investment. He has also served as the CEO for Acumen and Wateen Telecom (Pub) Ltd.