ISLAMABAD: The government is to swiftly gear up implementing a comprehensive strategy for improvement in Pakistan’s business climate to recoup its international ranking that slipped two notches to 138 this year.

Finance Minister Ishaq Dar presided over a meeting of laws review committee on Monday to update various business related laws, some of them centuries old, according to world standards.

The meeting followed recent conclusion of 36-month programme under the $4.15 billion Extended Fund Facility of the International Monetary Fund (IMF) that required the government to aggressively reverse its declining ranking on the World Bank’s Doing Business Index.

Most of the lending agencies including the IMF believed Pakistan’s weak business climate continued to constrain private investment and economic growth. “Despite several measures to improve the business climate, Pakistan’s position in the World Bank Doing Business ranking further slipped to 138 in 2016 (out of 189 economies) from 136 in 2015, reflecting Pakistan’s slower pace of reforms compared to other countries,” the IMF concluded in its assessment last week.

The meeting was informed that the draft of new companies bill 2016 had been prepared in extensive consultation with all stakeholders. An official statement quoted Finance Minister Ishaq Dar as saying that it was government’s priority to facilitate business and make it easier for them to operate. The new companies’ bill, he opined, would lead to adoption of best international practices in the field.

The meeting was attended by the government’s entire legal team including Law Minister Zahid Hamid, State Minister for Information Technology Anusha Rehman, Attorney General of Pakistan Ashtar Ausaf Ali, Prime Minsiter’s Special Assistants Barrister Zafarullah Khan and Khawaja Zaheer Ahmed.

The government has already assured the IMF of advancing its new business climate reform strategy that would play a key role in fostering private sector investment and higher growth. This would include completing the automation of Virtual One-Stop-Shop (VOSS), expanding the physical One-Stop-Shop (OSSs) and amending the 1984 Companies Ordinance to reduce start-up procedures for small-sized companies.

On top of that, the government expects that consolidating payments at the provincial level and facilitating the use of digital signatures would ease the creation of new businesses. Also, completing the roll-out of electronic tax filing and new simplified tax forms, and implementing an associated electronic payment system would ease paying taxes.

“Enacting the amendments to the Credit Bureau Act 2015, licencing private credit bureaus under the new Bureau Act, and enacting and developing secondary regulations to implement the Secured Transaction Act would support better access to credit,” the IMF has reported to have been assured by the government.

Moreover, expediting the execution and registration of a deed, digitalising maps and providing online access to land records would facilitate registering a property while further expanding the use of alternate dispute resolution (ADR) mechanisms, rolling out case management systems in district courts, establishing specialised commercial courts, and enacting the Corporate Rehabilitation Act to strengthen the bankruptcy framework would improve contract enforcement.

This is important given IMF’s assessment that Pakistan’s ranking in starting a business, getting credit, and trading across borders worsened had worsened when compared to last year as identified by the world bank. “Thus, lengthy procedures and high costs for opening a new business and paying taxes, limited access to credit notably for small and medium enterprises (SMEs), complex border trading requirements, constraints in accessing electricity, and weak contract enforcement continue to weigh on Pakistan’s business climate, which ranks below the South Asia average and comparator emerging markets countries”.

The government had adopted an action plan in 2014 and a series of measures to improve business climate were implemented under the program during 2014-15 but Pakistan was outpaced by others. For example, an integrated virtual VOSS for investors was launched allowing to streamline procedures for new business registration and physical OSSs became operative in Lahore and Islamabad.

The number of procedures for paying taxes was reduced by introducing an integrated web-based platform (IRIS) covering the full spectrum of business processes, and tax filing for traders was simplified. Pilot ADR mechanisms were introduced to facilitate the resolution of commercial disputes.

The strategy finalised with technical assistance from the World Bank defines specific time-bound measures (short-term, medium-term and longer-term), both at the federal and provincial level, to tackle constraints to business creation, expansion and operations and targets the 10 areas covered by the World Bank’s Doing Business indicator.

Already, the utilisation and accessibility of VOSS has been enhanced and the fee structure rationalised to reduce the costs to open a new business. The capacity of the IRIS web portal was strengthened and a new electronic tax filing procedure was developed. The Secured Transaction Act to use movable property as collateral for getting credit and amendments to the Credit Bureau Act 2015 were approved by the National Assembly, regulations for credit bureaus were issued, the Corporate Restructuring Companies Act to set up companies to take over assets of bankrupt firms was enacted and the Corporate Rehabilitation Act to establish a mechanism for the organization and rehabilitation of distressed companies was submitted to the parliament. Furthermore, an electronic form for imports was rolled out and the Real Time Electronic Data Exchange to facilitate trade with China has become operational.

Published in Dawn October 18th, 2016