Ease of doing business: Pakistan’s ranking slips to 110th place

Country performs poorly on eight out of ten indicators.

ISLAMABAD:

Pakistan’s global ranking has slipped in ease of doing business, standing at 110th position among 189 nations, as the country’s performance deteriorated on almost all indicators, particularly on benchmarks of getting an electricity connection and paying taxes where it was near the rock bottom.

According to the Doing Business Report 2014 – the flagship report of the World Bank and International Finance Corporation, Pakistan did not introduce even a single business friendly reform and instead slipped on majority of the 10 indicators.

International investors make investment decisions after reviewing a country’s position on the Doing Business Index. The deterioration in eight out of 10 indicators and poor performance in the remaining two highlights the challenges that Pakistan will face in attracting foreign investment, which is expected to be $2.2 billion in the current fiscal year.

In the previous year, the country had ranked 107th among 185 countries. According to the latest report, Pakistan performed the worst on the indicator of getting electricity connection by a business concern where it stood at 175th position, four notches below last year’s ranking.

For getting power connection, the applicant had to follow half a dozen procedures, required five and a half months and had to bear heavy cost.

Similarly, on the index of paying taxes, the country stood at 166th place, also four notches below last year’s level. A taxpayer had to make 47 payments a year, consumed 577 hours to pay taxes and on average paid 34.7% of his profit in taxes.

The business community complains about bureaucratic hurdles to getting utility connections in addition to problems even in paying their liabilities.

Pakistan also slipped on the index of starting a business, standing at 105th place compared to 98th rank last year. On average, 21 days were needed to complete about a dozen procedural requirements.

Though the country performed better compared to other indicators, it also slipped on the parameter of protecting investors and dropped to 34th position against 32nd last year.

Contrary to the perception that Pakistan had made significant progress on softening border trade rules, the report put it at 91st position against 85th the previous year. Cost of importing a container stood at $725 while cost of exporting a container was $660. Both importers as well as exporters required eight documents for trade purposes.

On the indicator of enforcing contracts, the country performed poorly and ranked 158th against 155th the previous year. Despite buoyancy of the country’s financial sector, Pakistan ranked 73rd, three places below last year’s level.

However, the country made some progress on the index of resolving insolvency and rose to 71st position against last year’s ranking of 78. On the indicator of registering property, it stood at 125th position compared to 126th last year.

The report stated that in South Asia six out of eight economies completed 11 reforms, simplifying the process of starting a business, strengthening access to credit or easing the process of paying taxes. Pakistan was not among these six countries.

Sri Lanka was the regional leader in implementing regulatory reforms. In 2012-13, the Sri Lankan government took steps to simplify access to electricity for firms, reduce fee on construction permits and implement electronic systems for filing taxes and paying for port services, the report stated.

Even Afghanistan strengthened access to credit by implementing a unified collateral registry and reduced time and cost of obtaining a business licence.

Bhutan improved access to credit information by passing regulations that govern the licensing and operation of its credit bureau.

Bangladesh and Nepal made business start-up faster by reducing administrative processing time. The Maldives made paying taxes easier by introducing electronic systems for filing corporate income taxes, sales taxes and pension contributions.

Published in The Express Tribune, October 30^th, 2013.

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