Pakistan now 138th Among 189 Economies

ISLAMABAD: It might come as a surprise to PML-N supporters, but its pro-business perception received a slight jolt on Wednesday, as Pakistan slid two places to be ranked 138th on the ‘Ease of Doing Business Index’ of the World Bank.

Pakistan improved its distance to frontier (DTF) score, from 51.62 to 51.69, but slid in the list of 189 economies of the world, ranked in terms of the ease it offers to entrepreneurs in doing business.

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The country was originally ranked 128th last year, but the World Bank changed its methodology and repositioned the 189 economies. Effectively, Pakistan was re-ranked 136th for last year, meaning the country slid two places as it witnessed an overall deterioration in the regulatory and enabling environment for starting and doing business.

The report also gauged the efficacy of the bureaucracy and the nature of business governance, finding Pakistan not doing too well in these areas.

The Doing Business 2016 report is the flagship annual publication of the World Bank Group and is considered as the world’s most influential policy publications.

The World Bank’s message

Countries like Bhutan claimed South Asia’s highest spot in the ease of doing business ranking, at 71st, followed by Nepal (99th) and Sri Lanka (107th). India stood at 130th, followed by Pakistan, Bangladesh (174th) and Afghanistan (177th).

The rankings are benchmarked to June 2015 and are determined on the basis of 10 pillars, each consisting of several indicators.

Minor improvement

Out of the 10 pillars, Pakistan’s position improved on only three. It showed a major improvement on dealing with construction permits, improving from 125 to 61, and enforcement of contracts where it improved the standing by 10 points to 151. On the indicator of paying taxes, the country’s position improved by one point to 171.

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Weak points

The major deterioration was in trading across borders where the country slipped from 108th position to 169th. Pakistan’s rank deteriorated in starting a business, getting electricity, registering property, getting credit, protecting minority investors, trading across borders and resolving insolvency.

“The two-point slippage is marginal, but yes, the government needs to work harder and smarter to improve the overall ranking”, said Board of Investment Chairman Miftah Ismail, while talking to The Express Tribune.

He said during the last one year, his department focused mainly on two areas -dealing with construction permits and enforcing contracts and there was improvement on both pillars.

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On the index of starting a business, the total number of procedures required to register a firm remained unchanged at 10. Similarly, the total number of days required to register a firm also remained unchanged at 19.

Getting electricity remained an area of concern and the country’s performance deteriorated. It takes 178.3 days to obtain a permanent electricity connection – worse than last years’ duration of 173 days. On the benchmark of reliability of supply and transparency of electricity tariff, the country was at the bottom.

The total number of days required to register property remained unchanged at 50. There were six kinds of procedures for getting a property registered.

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The country’s position on protecting minority investors deteriorated by four notches to 25 but it remained impressive.

Despite an improvement of one notch to 171, paying taxes remained another area of concern. Businesses were required to make 47 kinds of tax payments, which consumed 594 hours or 25 days. They paid 32.5% of their income in taxes. For enforcing contracts, it took two years and seven months besides consuming 23% of the disputed claims.

On the index of trading across the borders, Pakistan slipped 61 notches. It took 62 hours for documentary compliance, 79 hours for border compliance and 13.5 hours for transportation before exporting a consignment. The cost of documentary compliance was $307, border compliance $456.4 and transport cost was $12.2.

The situation was worse in case of imports where it took 152.6 hours for documentary compliance, 140.6 hours for border compliance and 12.2 hours on transportation of the consignment.

Published in The Express Tribune, October 29th, 2015.


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