Earlier last month, Finance Minister Ishaq Dar had announced the constitution of a committee to give recommendations for improving ‘ease of doing business’ in the country.
The decision came in the wake of Pakistan’s fourth trade policy review by the World Trade Organisation (WTO) in March, where several member countries raised their concerns over the lack of transparency and predictability in the government’s economic policies and the problems faced by foreign investors in doing business with and in the country because of a variety of factors.
Pakistan has slipped further to 128th place from 110th in 2013 on the World Bank’s Ease of Doing Business Index. The index ranks 189 economies.
‘The gap between what the government says to get political mileage and policy implementation is a major factor that makes doing business here difficult’
The committee was to be headed by prominent businessman Bashir Ali Mohammad and include representatives of the private sector, commerce ministry, Federal Board of Revenue, Board of Investment and other relevant departments.
“If we want to enhance business activity and generate more revenues, we must take measures to enhance ease of doing business,” the minister had remarked while announcing the formation of the committee.
Regrettably, the committee is yet to hold its debut meeting, as its formation has not been notified even after one month of its announcement.
“I spoke with the minister during his recent Karachi visit and he has promised to shortly notify the constitution of the committee,” Bashir Ali Mohammad told Dawn by telephone. “You know, he [Ishaq Dar] is a very busy man.”
Most businessmen are of the opinion that the delay in the formal notification of the committee supposed to address the concerns of investors reflects poorly on the government’s way of doing things.
“It shows a lack of seriousness on the part of the government to remove the bottlenecks choking existing businesses and hampering fresh [both domestic and foreign] investments in the country,” argues a Lahore-based businessman who declined to be identified because he does not want to be seen publicly criticising the government.
Some even hold that the formation of the committee is an unnecessary step that will only delay the decisions the government must take forthwith to help the business community and manufacturers.
“Do you think that an ambiguity left in a two-year-old FBR order by the bureaucracy needs such a big committee to be removed,” mused a textile exporter on the condition of anonymity.
He was referring to the show-cause notices issued by the FBR last week to major and reputed textile exporters like Nishat, Sapphire, Kohinoor, Gul Ahmed etc for not paying a 5.5pc withholding tax that doesn’t apply on their cotton imports.
“This is in spite of the fact that the industry has repeatedly reminded the FBR to clarify that the exporters are not required to pay this advance tax on cotton imports because it was meant for commercial importers alone. Did the government require a big committee to timely clarify this lacuna from the order?”
“We require timely decisions and policies for the problems that are making doing business difficult and costlier, as well as the implementation of the rule of law and the removal of the wide gap between a policy and its execution.”
A home textile exporter from Faisalabad says inordinate delays in the formulation of policies and their implementation have eroded Pakistan’s export competitiveness.
“Let us talk about the textile policy: the government is yet to implement the promises it had made in the first textile policy, while the second policy announced several months back is yet to be notified. The gap between what the government says to get political mileage and policy implementation is a major factor that makes doing business here difficult.”
Syed Nabeel Hashmi, former chairman of the All Pakistan Business Forum, believes that the incompetent and short-sighted bureaucracy is the major factor blocking the growth of business and investment in the country. “Half of our problems will go away if we fix the bureaucracy.”
He points out that committees have never delivered or helped mitigate the difficulties of businessmen and investors.
“Problems and issues facing each industry are peculiar to it and vary from region to region. An auto vendor in Punjab may have problems that another auto vendor in Balochistan may not have to face. How can one committee look into the problems facing every sector in different regions and come up with recommendations good enough to address them,”
he asks. “You need industry-specific committees manned by people who know about it.”
Akber Sheikh, a leading land developer from Lahore, says appropriate economic policies and the rule of law can fix most problems facing businessmen. He says the government’s policies should help reduce the cost of doing business rather than raise it; restore export competitiveness instead of further eroding it; and protect the domestic industry from unfair competition from the countries it has signed free trade agreements with.
“The challenge for the government is to harness the country’s economic potential through appropriate policies in response to the challenges, and improve the business climate through transparency and policy predictability.”
Published in Dawn, Economic & Business, May 4th, 2015