PAKISTAN has lagged behind in development and investment-driven growth. This sluggish development could be attributed mostly to capital constraints, an underdeveloped bond market, directionless bank support for infrastructure construction and ad hocism in fiscal management.

A constant ray of hope and a propelling force in the country’s growth story has been its private sector. The business community seems ready to re-industrialise Pakistan and we may have an opportunity to make up for the lost decades.

Despite all the apprehensions people may have about the China-Pakistan Economic Corridor (CPEC), business is on the move because Pakistan has somewhat closed infrastructure gaps in infrastructure through mega projects. Criticism of CPEC is mainly based on our expected inability to pay back loans and the imminent balance-of-payments crisis.

Ironically, the solution to this impending issue lies with the very beneficiary of this build-up, i.e. business.

A simple message, therefore, for policy makers is that unless we support business, we won’t have the money to pay back the loans we have taken.

Hence, the ease of doing business, a concept now synonymous with World Bank’s $1-million-per-year project in Pakistan, is a way to avoid a fiscal crisis in the medium to long term.

We certainly do not owe all new business opportunities to CPEC. There is now a resurgence of foreign investment interest in Pakistan on account of greater stability, a growing middle class and an urbanising society.

However, globalisation has introduced unparalleled competition, and the country’s market size and location advantages can dissipate if we do not act swiftly to improve our business environment.

Globalisation has introduced unparalleled competition, and Pakistan’s market size and location advantages can dissipate into nothingness if we do not act swiftly to improve our business environment

Recently, a friend representing one of the world’s largest community development funds told me that they select their next investment destination singularly on the “respect” shown for their money.

And the principal way of showing respect for people’s money, whether domestic or foreign, is by making the environment business friendly.

Of late, Pakistan’s ranking in the World Bank’s ease of doing business index has not been encouraging. In the Doing Business Report 2018, the country declined to 147 from 144 a year ago out of 190 countries.

Our distance to frontier score — which helps assess the absolute level of regulatory performance of an economy over time — was 51.65; a far cry from the best score of 100.

In Pakistan, regulations evaluated in three areas — registering property, getting building permits and enforcing contracts — are in the provincial domain. Two other areas — starting a business and paying taxes — partially fall within the provinces’ purview.

In Sindh, recent developments spell out the provincial government’s commitment to this agenda. A steering committee is overseeing the reform plan in collaboration with the World Bank.

A dedicated unit — the Sindh Investment Climate Improvement Cell — is responsible for ensuring that the number of procedures and time are reduced.

Over the last decade, Sindh has been quicker to introduce administrative and economic reforms compared with other provinces. The Land Record Management Information System (Larmis) was first deployed in Sindh.

Under the project, 90 per cent of the land records of all 29 districts in the province — maintained since 1985 — have been computerised and verified by deputy commissioners of districts.

Similarly, the Sindh Revenue Board has led the way in collecting sales tax in the country after the 18th Constitutional Amendment.

With the help of the Punjab Board of Information and Technology, Sindh also plans to automate business registration via a portal which will link all provincial and central databases and authorities for starting a business. The idea is to integrate all departmental procedures online so that entrepreneurs can get required provincial registrations from a single place in real time.

This facility will be launched in a pilot form in key government departments and will also be placed in the Karachi Chamber of Commerce and Industry office soon. Business facilitation or customer services centres will also be set up in Karachi at as many locations as possible.

The Sindh government also plans to set up arbitration centres to mitigate undue delays in settling business matters and to lessen the burden on district courts. The World Bank is collaborating with the Sindh Judicial Academy and the office of the Attorney General Sindh to draft a plan to make such centres operational quickly.

Studies show that high start-up costs can result in lower overall productivity. Inefficient incumbent firms are more likely to continue operating despite poor productivity because there is little competition from new, more productive firms.

There may be some merit in tax amnesty schemes in the short term, but these are mere quick fixes for a problem which can only be solved through encouraging businesses to enter the formal sector.

The Sindh government is committed to embracing global best practices and forging meaningful partnerships with all stakeholders, while holding in place our values and priorities. Unless there is more and bigger business, there cannot be more prosperity.

The writer is chairperson of the Sindh Board of Investment

Published in Dawn, The Business and Finance Weekly, January 22nd,2018