PRIME Minister Shehbaz Sharif’s plan to launch the first digital registry of the country’s business laws and rules is billed to be the “largest reform programme of ease of doing business” to “attract investment” to Pakistan. That is a welcome step. But how exactly it will make it easier for firms to invest or do business in the country remains unclear. The details around the initiative remain sketchy, as the government seems to be searching for international funds to implement the programme. This is not the first time that a government has pledged to make it easier for investors to risk their capital in Pakistan. Every time a new administration takes over, it makes similar promises to create a business-friendly environment to make the country a destination of choice for investors. Ironically, business conditions have only worsened, with the investment-to-GDP ratio plummeting to a 50-year low of 13.1pc. This is in spite of the creation of the army-backed SIFC by the last government to provide a one-window solution to address the concerns of Gulf investors. Nothing has changed despite the initial enthusiasm shown by some Gulf officials.

What our policymakers refuse to understand — or ignore — is the fact that no initiative, no matter how well-intentioned or comprehensive, can change the business environment in isolation. Thus, it is not surprising that starting a business in Pakistan, especially for small investors, remains a long and tedious process, as business persons have to deal with scores of federal, provincial and local government departments and agencies to complete documentation. The magnitude of the deterioration in the business environment in Pakistan can be gauged from the fact that even powerful multinationals are exiting this market, or scaling down their operations here. Improvements in the business and investment milieu require far more than a digital registry of laws and rules. They require wide-ranging economic, financial, judicial, policy, and civil service reforms. Investors need political and economic policy predictability and stability. Pakistan’s score on these counts has never been enviable, and we have always struggled to attract foreign investment. Conditions have worsened over the last couple of decades, and no investor is prepared to bring their capital here unless offered high-risk premium on their investments. Hence, a whole-of-government approach must underpin business and investment reforms. Otherwise, nothing will work.

Published in Dawn, August 11th, 2024