ISLAMABAD: Pakistan’s ease of doing business (EODB) ranking has jumped by 28 places in the World Bank’s doing business index, remarked Minister for Economic Affairs Hammad Azhar, adding that by next year the country’s ranking would climb further.
Addressing a two-day event titled “Pakistan Innovating Finance Forum”, organised by Karandaaz and the Asian Development Bank (ADB) on Tuesday, the minister said since the index gauged the performance till April, there was hope that the ranking would improve equally or even more rapidly next year because of a number of reforms undertaken in the area of taxation and other related sectors in the budget for fiscal year 2019-20.
Azhar pointed out that in Pakistan, the small and medium enterprises (SME) sector contributed 30% to the national gross domestic product (GDP) and it comprised 90% of all enterprises in the country.
Besides, he said, “80% of non-agricultural jobs are being provided by the SME sector, however, the sector got only 7.5% of all financing in the country.”
Ease of business: Pakistan up 28 places on World Bank index
He informed the audience that the share of credit received by the SME sector had come down from 15% to only 7.5%. However, the government was determined to increase the SME share up to 17% by 2023.
The minister said the government had engaged the Small and Medium Enterprises Development Authority (Smeda) for framing a new policy, which would address the challenges faced by the SME sector.
He pointed out that the prime minister was holding meetings with his economic team regularly in which the SME sector was on top of the agenda.
The minister added that the China-Pakistan Economic Corridor (CPEC) was a huge project, which would have a significant positive impact on the SME sector as well.
Speaking on the occasion, Federal Board of Revenue (FBR) Chairman Syed Shabbar Zaidi said the basic reason behind the small share in financial credit for the SME sector was that a large portion of the sector was not documented and was reluctant to come under the tax system.
He stressed that there was a trust gap between the government and the SME sector, adding that the SMEs had a mindset that “if I am an SME, then I must not be under the tax net”.
In the past, Zaidi said, the government had not created a tax-friendly environment for the SME sector, which caused the trust gap.
SBP Deputy Governor Jameel Ahmed said the bank was committed to promoting the SMEs as developing the sector was the key to creating more jobs, promoting economic activities and reducing poverty in the country.
Also present on the occasion, United Nations Secretary General’s Special Advocate for Inclusive Finance for Development Queen Maxima of the Netherlands said financial inclusion was pivotal for the development of Pakistan, which would create more opportunities for the people.
She said women and the poor segment of Pakistan had great potential to reap benefits of financial inclusion and digitisation in the country. “There is a great potential for rapid change in financial inclusion, particularly for women and the poor people of Pakistan.”
She told the audience that a 2017 survey showed that Pakistan had made remarkable improvement as its financial inclusion had expanded from 13% in 2014 to 21% in 2017. Queen Maxima pointed out that the UN administration had welcomed Pakistan government’s efforts for expanding financial inclusion.
She also welcomed Pakistan government’s efforts to formulate a revised policy to achieve goals of financial inclusion by 2023.
Later, the queen witnessed a signing ceremony for a micropayment gateway. Economic Affairs Minister Hammad Azhar, State Bank Governor Reza Baqir, Syed Ali Mahmood of Pakistan Bill Melinda Gates Foundation and a representative of British aid agency DFID were present on the occasion.
The agreement on micro-payment gateway was signed between the SBP and Karandaaz, according to which a new system would help in resolving the complexities of financial transfers and reduce the time and cost of cash transfers.
Published in The Express Tribune, November 27th, 2019.
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