Mak­ing it easy to do busi­ness

Enterprise - - Contents - In­vest in Pak­istan

Pak­istan’s com­par­i­son with BRIC (Brazil, Rus­sia, In­dia, China) and other emerg­ing mar­kets for ease in do­ing busi­ness can largely be at­trib­uted to the fast de­vel­op­ing en­tre­pre­neur­ial land­scape of the coun­try. De­spite floods, ter­ror­ism and cor­rup­tion, the ben­e­fits of eco­nomic in­vest­ment in Pak­istan have never been found amiss. Claims like ‘Pak­istan is en­tre­pre­neur­ial to the core’, have been es­tab­lished by the coun­try’s busi­ness sec­tor even through tough times.

The web­site lists the top five rea­sons for for­eign in­vest­ment in Pak­istan as be­ing: abun­dant land and nat­u­ral re­sources; hu­man re­sources (huge English speak­ing pop­u­la­tion); a large and grow­ing do­mes­tic mar­ket (a grow­ing mid­dle class); well-es­tab­lished in­fra­struc­ture and le­gal sys­tems (road, rail, sea, IT); and ge­o­graphic lo­ca­tion – as prin­ci­pal gate­way to the Cen­tral Asia Re­publics and con­nec­tions to the Mid­dle East and South Asia.

In other words, labour and raw ma­te­ri­als are cheap in Pak­istan, the pop­u­la­tion is the 6th largest in the world and grow­ing fast with over 50 per cent of the 180 mil­lion peo­ple be­ing un­der the age of 20, and tax and set-up in­cen­tives for for­eign in­vest­ment are good.

For the last seven years, the World Bank has is­sued a re­port called Do­ing Busi­ness, which mea­sures the ease with which pri­vate en­ter­prises can con­duct busi­ness in var­i­ous coun­tries around the world. It mea­sures such met­rics as the amount of time it takes to reg­is­ter a busi­ness, how many pro­ce­dures are in­volved, how many of­fi­cial sig­na­tures and how much would it cost. It does so for dozens of other rel­a­tively sim­ple in­ter­ac­tions be­tween gov­ern­ment and busi­nesses in any given coun­try.

Pak­istan has been an eas­ier place to do busi­ness than the BRIC coun­tries and com­monly thought of as one of the most im­por­tant emerg­ing mar­kets in the world. Pak­istan’s over­all rank­ing is 85 out of 183 coun­tries, which places it some­where in the mid­dle. Of the 10 cat­e­gories, the coun­try does best in the cat­e­gory of “Pro­tect­ing in­vestors,” com­ing in at num­ber 27. This is largely due to the fact that it is rel­a­tively easy for in­vestors to sue man­age­ment in the event of a sus­pected act of fraud. In­deed, the strength of Pak­istan’s in­vestor pro­tec­tion places the coun­try higher than the av­er­age for the OECD, a group of the 30 mostly rich coun­tries. While Pak­istan has some strengths, it also has a num­ber of weak­nesses. In terms of ease of pay­ing taxes and ease of en­forc­ing con­tracts, Pak­istan has con­sid­er­ably poor rank­ing.

While its cur­rent rank­ings may be gen­er­ally low, Pak­istan’s prob­lems in the Do­ing Busi­ness re­port are re­mark­ably easy to fix. In most cases, all that is re­quired is the re­moval of re­dun­dant pro­ce­dures, which would re­duce the time and cost as­so­ci­ated with the in­ter­ac­tion be­tween gov­ern­ment and busi­nesses. The re­port shows that for at­tract­ing for­eign in­vest­ment, a coun­try does not re­quire a mas­sive in­cen­tive scheme. Some­times it can be as sim­ple as just re­mov­ing a lit­tle bit of red tape, which in the case of Pak­istan needs to be done im­me­di­ately.

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