Doing Business in Pakistan

I happened to come across this report when going through my brother’s blog archives (http://alchemya.com/wordpress2/2008/03/24/ease-of-doing-business-in-pakistan/) yesterday, searching for his entry on the Fatimah Jinnah Girl’s School. Needless to say, what I saw in this blog entry interested me as a prospective small business owner, even though the role may be a few years away.

However, it wasn’t until today, when I was doing research on the Pakistan wind energy paper for my professor, that I decided to followed the link to the World Bank Report, and was even more excited to see that:

“If each Pakistani region
adopted Lahore’s regulations on starting a business,
Peshawar’s regulations on dealing with licenses, employing
workers and contract enforcement and Karachi’s
regulations on bankruptcy, taxes and property, Pakistan’s
ranking would jump from 74th to 52nd on the ease of
doing business.”

This is a very positive sign. And among all Pakistani cities, Karachi ranks the highest. I have always known that the Pakistani people, especially Karachiites, are very resilient, that all our political instability does not stop business from going on as usual. But this is the first time I have seen it all put into words, or rather numbers in this case.

Now, I do not want to take a little air out of the bubble, but when I searched for the latest edition of the report, which is still a working paper, I was a little disappointed to see that Pakistan’s rank fell 2 points to 76, whereas India jumped from its 132nd rank to 120. But that is still no reason to lessen the excitement. We have maintained our rank as #2 in South Asia, behind Maldives. It just means that other countries have introduced a larger number of business reforms over the past couple of years, resulting in their jump in rankings. If it is any consolation, many of the countries we may have felt are in better circumstances than us, have lower rankings in reality, e.g. China, Jordan, India, Croatia, Greece, Russia, Indonesia, Algeria, Egypt, and Philippines.

So, what is my point? My point is that we still need to bring in a lot of reforms to improve our rankings, including cutting the number of steps required to register a business from 11 to the OECD level of 6, and reducing costs of starting a business from 21% of income per capita to the OECD average of 5% and further reducing the time to export (24 days) and time to import (19 days), even though all of the above have seen drastic improvements in the last few years. Pakistan also needs to improve its performance in enforcing contracts, which, even though it ranks better than India and Bangladesh, is still a very miserable 162, and could be the biggest deterrent to foreign investment.

But, all in all, our situation is nowhere near as horrible as we thought it was. In fact, the World Bank’s report has provided me with a lot of positive data to report in my wind paper, and will allow me to present a much rosier picture than I previously thought possible.