Doing business in Pakistan

Cutting red tape encourages entrepreneurship, generates economic growth and creates jobs.

Over the past six years, the people of Pakistan have had to suffer through moribund economic growth while living through a period of high inflation. Over that same period, the World Bank’s Doing Business Report now informs us that Islamabad has introduced no reforms at all to make it easier to do business in Pakistan. The near-perfect correlation between these two factors is not a coincidence. Economic growth requires an enabling environment, which is the job of governments to create. The previous government was plainly not interested in undertaking any meaningful reforms on that front. And while we remain optimistic, the odds appear to favour the Nawaz Administration following suit. The PML-N may be pro-business, but it also suffers from a serious flaw: the party leadership has a tendency to expect extraordinary individual efforts to substitute for institutional reform. Such an approach is barely suitable for running a small family business. It is disastrously unsuited for running the sixth largest country in the world.



Paying attention to the ease of doing business in Pakistan is not just some academic idea concocted by economists in developed countries. It has real world consequences for the country and its people. Take paying taxes, for instance, where Pakistan is ranked 166 out of 183 countries by the World Bank, and a category where our ranking has slipped almost every year for the past six years. The average business in Pakistan must make 47 separate payments for taxes, a process that takes an average of 577 man-hours. Is it any wonder that most Pakistani business owners do not want to pay their taxes? And here is a figure that should shock the energy-focused Nawaz Administration: Pakistan ranks 175^th in the world in terms of getting an electricity connection, an absolutely appalling ranking. It may seem trivial, but cutting red tape matters. It encourages entrepreneurship, generates economic growth and creates jobs. And it has the added virtue of reducing the cost of running the government. We can only hope that the current government does a better job at improving business conditions than their predecessors.

Published in The Express Tribune, November 4^th, 2013.

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