Pakistan has dropped on the World Bank's Doing Business 2016 ranking, placing at 138 out of 189 countries, with a Distance to Frontier (DTF) score of 51.69, which is marginally higher than last year's score of 51.62.
The ranking reveals performers with good rules which allow efficient and transparent functioning of businesses and markets while protecting public interest, the report says.
The five countries it is easiest to do business in, and their DTF scores:
- Singapore, 87.34
- New Zealand, 86.79
- Denmark, 84.40
- South Korea, 83.88
- Hong Kong SAR, China, 83.67
The report says estimated losses in Pakistan due to power outages cost up to 34 per cent of the annual revenue. In comparison, businesses in the Central African Republic only reported losses of up to 25pc of revenue.
Countries are ranked on the basis of the DTF score which is a composite measure of a country's progress along a series of indicators including:
- Starting a business
- Dealing with construction permits
- Getting electricity
- Registering property
- Getting credit
- Protecting minority investors
- Paying taxes
- Trading across borders
- Enforcing contracts
- Resolving insolvency
An analysis of trading patterns reveals that for economies whose top export is an agricultural product, border compliance takes 70pc more time (35 more hours) on average than in other economies, while documentary compliance takes twice as much time. The cost for documentary compliance is almost twice as high as it is for other product categories.
The report attributes these patterns to the product-specific inspections and procedures required by agricultural produce.
Pakistan's main export is agriculture.
Pakistan is among 30 countries where shareholder protection increased over the period 1990-2013, the DB report says.
The World Bank typically studies two major cities from each country with a population over 100 million. The report studies the business environment in both Karachi and Lahore for this reason, attributing weights of 65pc to the former and 35pc to the latter.
Two cities are chosen from countries with a large population which, due to their size and diversity, are more likely to have differences in performance on indicators.
Additionally, the larger the population in an economy, the larger the number of people who can benefit from improvements in business regulation, the World Bank said in its Doing Business 2015 report.
Neighbouring India placed higher than Pakistan on the Doing Business ranking at 130 with a DTF score of 54.68. It was also lauded as the most improved economy in South Asia.
India has recorded the biggest increase in its DTF score since 2004 compared to other South Asian economies.
While it used to take 127 days to start a business in India in 2004, this number dropped to just 29 days in 2015.
One of the reasons for India's improved position is the launch of an ambitious programme of regulatory reform in 2014 aimed at creating a more business-friendly environment, particularly in New Delhi and Mumbai, the DB report says. Other reasons the report cites for India's improved position are shown below.
Why India's performance improved:
- Eliminated minimum capital requirement for starting a local limited liability company in May 2015
- Process for getting new electricity connections simpler and faster
- Dealing with construction permits easier
- Online systems for filing, paying taxes