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October 25, 2019

WB Ease of Doing Business ranking: Pakistan lands in 10 best bets

Top Story

October 25, 2019

ISLAMABAD: Pakistan has left behind 28 economies on its World Bank’s ranking of Ease of Doing Business (EODB) by sizably improving its business regulatory reforms that jumped it up to 108th place from last year’s ranking of 136th, and for next year, Islamabad is eyeing to secure its place among top 50 economies of the world.

Pakistan has secured sixth place among world’s top 10 business climate improvers, leaving behind other Asian economies, even China and India for being fast improver.

The report, which was released on Thursday and which covers data from 2018-19, found that the enactment of six regulatory reforms has landed Pakistan among the world’s top 10 business climate improvers, the World Bank Group’s Doing Business 2020 study says.

The improvement in Pakistan’s ranking does in no way indicate that Pakistan’s economy has turned the corner, as inflationary trend and reduction in growth still hold.

According to another World Bank report, the growth rate will dwindle to 2.4 percent in 2020 and there’s a likelihood of an increase in inflation.

Ease of Doing Business means that how easy it is to enter a market or start a business in a country. Foreign investors generally consider this ranking before making an investment in any country.Ease of doing business ranks economies from 1 to 190, with first place being the best. Low numerical rank indicates that the particular economy has regulatory environment conducive to business operations. It averages the country's percentile rankings on 10 topics covered in the World Bank's Doing Business.

The report says, “Those economies that score well on doing business tend to benefit from higher levels of entrepreneurial activity and lower levels of corruption.”

Although doing business does not capture corruption and bribery directly, inefficient regulation tends to go hand in hand with rent-seeking. There are ample opportunities for corruption in economies where excessive red tape and extensive interactions between private sector actors and regulatory agencies are necessary to get things done. Economies that have adopted electronic means of compliance with regulatory requirements -- such as obtaining licenses and paying taxes experience a lower incidence of bribery.

The ranking measures 10 areas including starting a business, dealing with construction permits, getting electricity, registering property, getting credit, protecting minority investors, paying taxes, trading across borders, enforcing contracts and resolving insolvency.

On starting a new business, Pakistan improved its ranking by 58 notches to 72nd place from last year ranking of 130. It made starting a business easier by expanding procedures available through the online one-stop shop. This reform applies to both Karachi and Lahore. Furthermore, Pakistan (Lahore) abolished the Labour Department registration fee. It made end to end automation of companies’ registration and one can register a company in four hours.

On dealing with construction permits, Pakistan improved by 54 points to 112th place from last year ranking of 166th place. Pakistan (Karachi) made obtaining a construction permit easier and faster by streamlining the approval process and also made construction safer by ensuring that building quality inspections take place regularly. Pakistan (Lahore) also made obtaining a construction permit easier and faster by streamlining the approval process and by improving the operational efficiency of its one-stop shop for construction permitting. In Karachi, the time required for the process has been reduced from eight months to three months, while in Lahore it has been cut down from eight months to two months.

On getting electricity connection for business, it has improved by 44 notches to 123rd place from earlier 167th place. Pakistan made getting electricity easier by enforcing service delivery timeframes and by launching an online portal for new applications. Pakistan also increased the transparency of electricity tariff changes. This reform applies to both Karachi and Lahore.

On property registration, Pakistan improved 10 points to 151 from earlier 161 by making land registration process simple and cost-effective and digitalisation of land records. Pakistan (Karachi) made property registration faster by making it easier to execute and register a deed at the office of the sub-registrar. Pakistan (Lahore) made registering property easier by increasing the transparency of the land administration system.

On paying taxes, Pakistan’s ranking has been upgraded by 12 points to 161st place by introducing online payment of taxes and end to end automation, last year Pakistan’s ranking was 173rd place. Pakistan made paying taxes easier by introducing online payment modules for value added tax and corporate income tax, and less costly by reducing the corporate income tax rate. This reform applies to both Karachi and Lahore.

Besides, the country also improved its ranking on the trading across the borders by 31 notches to 111 from last year 142nd position among 190 economies. It made trading across borders easier by enhancing the integration of various agencies in the Web-Based One Customs (WEBOC) electronic system and coordinating joint physical inspections at the port. This reform applies to both Karachi and Lahore.

Interestingly, on other areas under study in this report including getting credit, protecting minority rights, enforcing contracts and resolving insolvency, the country did not perform well, however, senior officials of all the departments including Board of Investment (BoI), SECP, federal and provincial top representatives resolved that there is much room for improvement and they would work on it hard to improve it significantly.

“The economies with the most notable improvement in Doing Business 2020 are Saudi Arabia, Jordan, Togo, Bahrain, Tajikistan, Pakistan, Kuwait, China, India, and Nigeria,” the reports says.

Of these 10 top improvers, Saudi Arabia was the top performer by improving on doing business score by 7.7 points followed by Jordan 7.6 points, Togo 7 points, Bahrain 5.9 points, Tajikistan 5.7 points, Pakistan 5.6 points, Kuwait 4.7 points, China 4 points, India 3.5 points and Nigeria improved its score by 3.4 points over last year.

On overall EoBD ranking, Saudi Arabia’s ranking improved to 62th place from last year ranking of 92, Jordan at 75 (last year 104), Togo 97 (137), Bahrain 43 (62), Tajikistan 106 (126), Pakistan 108 (136), Kuwait 83 (97), China 31 (46), India 63 (77) and Nigeria improved its ranking to 131 from last year’s 146th place among 190 economies of the world.

These economies implemented a total of 59 regulatory reforms in 2018/19 -- accounting for one-fifth of all the reforms recorded worldwide. Their efforts focused primarily on the areas of starting a business, dealing with construction permits and trading across borders.

The report says, “Pakistan, another top improver, developed an ambitious reform strategy, setting up a national secretariat as well as a prime minister’s reform steering committee to ensure progress. Most of the programmed reforms evolved around the doing business indicators. Doing business working groups have been set up at both municipal and provincial levels.”

While launching the report, Advisor to Prime Minister on Commerce, Textile, Industry and Investment Abdul Razak Dawood said, “It’s a wonderful day for Pakistan, wonderful news, good happening and this would not be possible without team work of Punjab, Sindh and federal governments’ cooperation.”

“Ranking is important; investors see it (prior investing in an economy). Pakistan is on the move in right direction,” he said, adding, “In coming days and months, we would have a lot on our plate. We would break the 100 barrier (on doing business ranking).”

Chairman BoI Zubair Gilani said that apart from other departments and federal government, the credit goes to Sindh and Punjab.

“In coming days, we would see the visible difference. Our target is now to introducing technology-backed reforms in years to come. Prime Minister Imran Khan has tasked us to make more and more regulatory improvements to get for Pakistan a place among top 50 economies on the World Bank’s doing business ranking,” Zubair Gilani said.

Meanwhile, Prime Minister Imran Khan said on Twitter, “Another of our manifesto commitments fulfilled. Pak achieves biggest improvement in its history in World Bank’s EODB rankings. Over last decade Pak’s ranking had slipped more than 50 places. Now we have improved 28 places -- from 136 to 108.”

He further said, “I want to congratulate all the people in our govt who worked hard to make this happened. But we still have a long way to go. Inshallah before the end of 2020 Pakistan will become one of the top places for investment.”

Meanwhile, the World Bank’s Country Director for Pakistan Illango Patchamuthu in a statement said, “This rise is significant and made possible by collective and coordinated actions of the federal government and provincial governments of Sindh and Punjab over the past year.” He added, “The accelerated reform agenda has many noteworthy features to improve quality of regulations, reduce time and streamline processes. This momentum needs to be sustained in the coming years for Pakistan to continue to make progress.”

New Zealand topped the ranking. United States ranking improved by two notches to sixth place, UK improved by one place to 8th, Malaysia improved by three notches to 12th place, Australia at 14th from last year’s 18th place, Germany at 22nd from last year’s 24th. In South Asia, Bhutan, Nepal and Sri Lanka were ahead of Pakistan. On the new ranking, Bhutan was ranked at 89 against 81 last year, Nepal has been placed at 94th place against last year’s ranking of 110th place, while Sri Lanka has been placed at 99th against 100th place last year. Ranking of Afghanistan deteriorated to 173 against last year’s 167th place. India is also ahead of Pakistan by securing 63rd place against 77th last year. Turkey is at 33rd place.

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