World Bank report finds improvement in Pakistan’s ‘doing business environment’

Pakistan’s position in the Doing Business global rankings improved to 144 out of 190 economies this year, as against 148 in 2016 under the latest methodology.

Pakistan made some important progress towards the ease of doing business for small and medium-sized enterprises, the latest edition of the World Bank Group’s Doing Business report found. Pakistan is among this year’s global top 10 improvers, says Doing Business 2017, Equal Opportunity for All, released on Tuesday.

Pakistan announced a three year road map to improve its global ranking on doing business earlier this year. Consistent with that, the country completed three reforms in the past year in Registering Property, Getting Credit and Trading across Borders, which is the highest number in a single year over the past decade.

In Lahore, transferring property was made easier by improving the quality of land administration through digitising ownership and land records, and making land administration more reliable than before.

Cross-border trade was eased by updating electronic customs platforms in Lahore and Karachi.  It now takes less time for an exporter to comply with border regulations.

Pakistan improved access to credit information by legally guaranteeing borrowers’ rights to inspect their own data.  The credit bureau also doubled its borrower coverage, thereby increasing the amount of creditor information and providing more financial information to prospective lenders.

As a result of these reforms, Pakistan’s Distance to Frontier score, a measure of distance each economy has moved towards best practice expressed as frontier at 100, in Doing Business Report also improved from 49.48 in 2016 to 51.77 this year.

“These improvements provide important building blocks for a more efficient business environment that will encourage local entrepreneurs in the country,” World Bank Country Director for Pakistan Illango Patchamuthu said.  He added that Pakistan needs to accelerate reforms towards better regulatory practices for a more conducive business environment for higher growth and job creation.

While Pakistan’s recent improvements are encouraging, the report finds that local entrepreneurs still face difficulties in many areas such as enforcing contracts and getting electricity.  For instance, it takes almost three years to settle a commercial dispute in Pakistan, compared to the global average of 637 days.  And firms in both Karachi and Lahore experience power outages on a daily basis.

This year’s report includes, for the first time, a gender dimension in three indicators: starting a business, registering property and enforcing contracts.

The Paying Taxes indicator set has been expanded as well to include measures of post-filing processes relating to tax audits and Value Added Tax refund.  Tax audit compliance in Pakistan takes 29 hours, which is considerably less than the regional average of 48 hours, but higher than the global average of 17 hours.