ISLAMABAD: At a time when the new government is striving to re-strengthen institutions, Pakistan has slipped down to 133 on competitiveness ranking among 148 countries reflecting weaknesses in its institutions and capacity of the economy to create space for innovation.
The competitiveness ranking is part of the Global Competitiveness Report 2013-14, which was released here on Wednesday by Mishal Pakistan, a local partner institute of the World Economic Forum.
Pakistan was ranked at 124 in 2012-13 and 118 in 2011-12.
The gradual slipping of Pakistan’s rank shows the areas of public and private partnerships for cooperation for improving competitiveness are also diminishing as well. This indicates increasing mistrust between the public and the private sector due to increase in corruption and policy instability issues.
The report for the year 2013-14 also includes views of more than 14,000 business leaders globally to measure competitiveness of 148 countries.
More than 200 business leaders in Pakistan identified corruption as the most problematic factor for doing business, followed by policy instability, access to financing, inadequate supply of infrastructure, inefficient government bureaucracy and high inflation.
Pakistan has lost on almost all indicators of the Global Competitiveness Index (GCI), which measures competitiveness of an economy on the basis of 12 major indicators.
In terms of institutions performance, Pakistan has shown poor performance on governments’ use of diversion of public funds from 76 in 2012 to 103 in 2013. It further states that the wastefulness in government spending has also increased and the rankings have dropped from 96 last year’s to 116 this year.
Similarly, the burden of government regulation has also deteriorated from 62 to 82 in 2012 and 2013, respectively. The efficiency of legal framework in challenging regulations, which means, how easy is it for private businesses to challenge government actions and/or regulations through the legal system has fallen 11 points since last year and ranks at 108 this year. This depicts a SRO culture has been prevalent in the country for economic decision making instead of legislations through legal frameworks.
The biggest impact on the pillar of institutions has been due to law and order and Pakistan’s fight in the war on terror, where Pakistan ranks among the least 10 in the world; business cost of terrorism 144, business cost of crime and violence 138 and organised crime 141 among 148 countries globally. Pakistan has shown improvements on judicial independence, improving from 57 to 55 Government’s budget balance as percentage of GDP has fallen to an alarming 138 place as compared to 125 last year. Similarly, the gross national savings has also dropped to 125 from 107 in 2013 and 2012, respectively.
Both the financial market regulators have shown great improvements, while the incumbent regulator of the securities market, the Securities and Exchange Commission of Pakistan has shown significant improvements this year, improving seven points and securing the rank of 48 on the regulations of securities exchanges from 55 last year.
The State Bank of Pakistan has also shown solid improvements in the soundness of the banking sector in the country. Improving to 71 this year to 85 in the last year. However this gain has not been able to improve the constantly declining state of venture capital in Pakistan from slipping down to 77.
Pakistan has shown significant gains on the technical readiness pillar, with the availability of latest technologies (79), firm-level technology absorption (81). An improvement in the international Internet bandwidth has been a catalyst for businesses to move towards a more knowledge-based economy, with ranks gaining from 108 last year to 101 this year. While the mobile broadband subscriptions per 100 population has fallen from 121 to 126.
Pakistan is maintaining its regional competitiveness advantage on the domestic market size index at 27. The businesses have shown restrain on delegation of authority, shown corporate insecurity from large investors to professional managements, especially in the family owned businesses, the rank fell from 94 in 2012 to 122 in 2013.
The overall infrastructure in the country has deteriorated from last year, where Pakistan stands at 119 as compared to 105 last year among 148 countries.
On goods market efficiency pillar, the extent of market dominance has lost 12 points from 65 to 77, the effectiveness of the anti-monopoly policy has decreased from 75 to 85 and the effect of taxation on incentives to investment from 72 to 82 in this year.
The buyer sophistication has also declined from 78 to 88 in 2013, indicating a more price conscious business environment instead of quality, thus creating more space for imports from other countries for large consumptions.
The report’s Global Competitiveness Index (GCI) places Switzerland at the top of the ranking for the fifth year running. Singapore and Finland remain in second and third positions respectively. Germany moves up two places (4th) and the United States reverses a four-year downward trend, climbing two places to fifth. Hong Kong SAR (7th) and Japan (9th) also close the gap on the most competitive economies, while Sweden (6th), the Netherlands (8th) and the United Kingdom (10th) fall.