Daily Times

KARACHI: Pakistan’s position in the global Doing Business rankings has slipped three notches to 147 out of 190 countries, from last years 144th position. Experts term the findings of the World Bank’s Doing Business 2018 report “a setback” to government’s business friendly impression.

Professor Dr. Athar Ahmed, senior economist, termed the WB report a “matter of shame” and expected outcome of the current situation. “The report depicts the true picture of the economy. Pakistan should have been among the top 47 economies but unfortunately it is the matter of shame for us. It would definitely dent the government of PML N”, Ahmed lamented.

“How can the ranking improve in situation where country’s finance minister can not even maintain his own account”, Professor Dr. Athar Ahmed questioned adding that the credibility of the country has been questioned with the release of the report.

Shamim Ahmed Firpo, former President of KCCI commenting on the report said that the concerned government officials including ministers instead of protecting national interests are engaged in securing their seats. “Every one in the business community feels insured in the current political situation”, Firpo commented.

Due to current political turmoil the investors are not willing to increase their stakes. “As long as the current status-quo is maintained the business and economy of the country will continue to suffer”, former KCCI president warned.

However, the World Bank report has also acknowledged implementation of reforms. Pakistan implemented four reforms and made it easier to register a new business, transfer commercial property and facilitate cross-border trade,” the global lender said in the Doing Business 2018 report, which monitors the ease of doing business for small and medium enterprises around the world.

Pakistan made starting a business easier by replacing the need to obtain a digital signature for company incorporation with a less costly personal identification number. This change applies to both Karachiand Lahore.  Besides, Pakistan (Karachi) improved the transparency of the land registration process by making the fee schedule and list of documents to submit for property registration available online.

Protecting minority investors

Pakistan increased minority investor protections by making it easier to sue directors in case of prejudicial transactions with interested parties. This reform applies to both Karachiand Lahore.

Trading across borders Pakistan made importing and exporting easier by developing a new container terminal and enhancing its customs platform for electronic document submission. These changes apply to both Karachi and Lahore.

The World Bank’s Doing Business flagship report uses 11 indicator sets to measure aspects of business regulation that matter for entrepreneurship. The indicators include starting a business, dealing with construction permits, getting electricity, registering property, access to finance, protecting minority investors, paying taxes, trading across borders, enforcing contracts, resolving insolvency and labour market regulations.

On the other hand India has carried out the most reforms in the region in the past 15 years, with 37 reforms, followed by Sri Lanka (22) and Pakistan (19). South Asia is the only region not represented in the top 50 ranking for ease of doing business. However, India stands out this year as one of the 10 economies that improved the most in the areas measured by Doing Business.

The region’s top-ranked economies are Bhutan, (75), India (100), and Nepal (105). South Asian economies carried out a record 20 business reforms in the past year, bringing to a total of 127 the number of reforms introduced in the region over the last 15 years.

The World Bank said a major focus of reforms in the past year were in the area of protecting minority investors, with half of the region’s eight economies implementing measures to strengthen protections for minority shareholders.

The reforms included enhanced remedies to address cases of prejudicial transactions between interested parties in India; rules to clarify ownership and control structures in Bhutan; greater corporate transparency in Nepal; and facilitating legal action against directors in case of prejudicial transactions with interested parties in Pakistan. “With three-quarters of regional economies making positive reforms, it’s no surprise that this is a record year for regional reforms,” the Bank said

The WB says that governments around the world have embraced and nurtured advances in information technology to reduce bureaucratic hurdles and increase transparency. “Today, in 65 of the 190 economies covered by Doing Business, entrepreneurs can complete at least one business incorporation procedure online, compared with only nine of the 145 economies measured in Doing Business 2004. Furthermore, in 31 economies it is now possible to initiate a commercial dispute online. This kind of progress can also be observed in the other areas measured by Doing Business”, the bank added.

Slight improvement in ‘Distance to Frontier’

Even though Pakistan dropped to 147th from its previous position 144th in the Ease of Doing Business Index by the World Bank, it has shown improvement albeit slower than the South Asian average towards the Distance to Frontier (DTF).

The World Bank describes DTF as “The distance to frontier score helps assess the absolute level of regulatory performance over time. It measures the distance of each economy to the “frontier,” which represents the best performance observed on each of the indicators across all economies in the Doing Business sample since 2005.”

On DTF, Pakistan stands at 51.65 out of 100 compared to last year’s 50.94.

The ranking index also notes that Pakistan made improvement in becoming an attractive economy for investors by making it easier to do business. With overall score 147, here’s how the breakdown of it looks on the Index:

142 for “Starting a Business”

141 for “Dealing with construction permits”

167 for “Getting electricity”

170 for “Registering property”

105 for “Getting credit”

20 for “Protecting Minority Investors”

172 for “Paying taxes”

171 for “trading across borders”

156 for “enforcing contracts” and

82 for “Resolving insolvency”

*The Web Desk contributed to this story