Doing business reforms in Punjab

Recently the authorities in Punjab de-notified the requirement of getting the Environment Protection Agency’s NOC for constructing a warehouse posing no risk to environment. While no one knows why the regulation was there in the first place, the simple reform reduced the whole process by 105 days. This reform was aimed at improving Pakistan’s falling ranking in the World Bank’s Doing Business (DB) survey.

Recently, I wrote two pieces on federal and provincial regulations responsible for Pakistan’s dismal ranking. In response, the Punjab government reached out and shared a rather elaborate agenda of reforms to improve Pakistan’s ranking. The fact that the problem is now on the government’s radar and it is listening and responding to constructive criticism is remarkable.

Other significant steps recently undertaken by Punjab, include a portal fully integrated with NADRA and the SECP, making business registration possible within three days, reduced time for building permit issuance from 60 days to 21 days, swifter registration of property within 18 days down from 56 days, etc. The provincial government even has a dedicated website on these reforms. When closely looked at, these efforts are indeed impressive.

The doing business survey recently stirred a global controversy, with reference to the sudden rise of Chile’s and India’s rankings attributed to changes in methodology, followed by criticism regarding ‘lack of scientific rigour and biased policy orientation’. No survey can be perfect and there is always room for improvement. But the mere availability of cross-country data on challenges faced by businesses has generated substantial interest in many governments around the world about reforming the investment climate. The fact that these countries have undertaken targeted reform efforts to improve their ranking manifests the political will and the desire to reform.

Pakistan is a case in point. The DB reforms are not only limited to Punjab. Substantial work is also being done in Sindh and in the federal government. Only last month, the prime minister constituted a high-powered steering committee on DB reforms.

However, it is important to objectively look at these reforms to understand what they can and cannot achieve and what more is needed from the government. Firstly, the benchmark indicators used by Doing Business survey are based on specific case studies to illustrate the problem at hand. The reforms should not be limited to these specific cases as not only will such an approach not yield any meaningful result on ground but will also be susceptible to any changes in methodology. It is ironic that while DB reforms are talk of the town in Punjab and Sindh, these are non-existent in K-P and Balochistan, as these are currently not covered by the survey.

Secondly, the constraints covered by DB indicators only signify the tip of the iceberg. The agenda for improving investment climate is much wider, entailing broader economic and financial conditions in the country.

Thirdly, the 2018 report highlighted 8 reforms by the Indian government making it easier to do business resulting in a rise of 30 positions. The same report captured four reform efforts in Pakistan with a loss of rank by 3 positions. These aspects need to be looked at and addressed. The government also needs to highlight its efforts more, track service delivery time experienced by citizens and publicly report them.

Lastly, keeping up with these rankings is not a one-time effort and rather a continuous race. Pakistan’s DB rank in 2008 was 85, and now 147. Even if we assume that we have not improved, we have definitely not worsened. But these rankings are relative and even if we maintained our performance, others had gone far ahead.

While it is true that merely improving these few indicators is not going to significantly transform the investment climate, they do indeed signify a start. Moreover, these are likely to improve Pakistan’s ranking, signalling positive sentiment to foreign investors. Let’s hope that these efforts bear fruit in the coming years.

Published in The Express Tribune, February 20^th, 2018.

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