LAHORE, Dec 19: Prime Minister Shaukat Aziz on Tuesday underscored the importance of enforcement of commercial laws for encouraging economic agents to engage in market transactions with each other.

“While it is necessary to develop a modern legal framework, we also need to work on the quality of law enforcement. It is the enforcement of good commercial laws, rather than their mere existence which encourages economic agents to engage in the market transaction,” he told economists and students at the inauguration of the 22nd annual general meeting and conference of the Pakistan Society of Development Economists (PSDE). The theme of the conference is: governance and institutions.

He said the government had for some time been working on the ADB–assisted access to justice programme. “Access to justice, including a fair and quick disposal of court cases, is best viewed as a basic constitutional right. Efficient justice systems expedite economic transactions, ensure sanctity of contract, and protect the marginalised groups,” he said.

He further said Pakistan’s legal and corporate governance frameworks too must conform to global norms.

“Commercial laws and regulations define markets and provide sanctity to market transactions while corporate laws define and protect rights of investors in debt and equity markets. These laws need to be constantly updated so that the legal framework facilitates market transactions while protecting rights of all transactors.

“We recognise that corporate and capital reforms provide impetus for sustained growth and have embarked on substantial corporate sector governance and capital market reforms. The SECP has been actively pursuing a reform roadmap to develop an efficient corporate sector and capital market based on sound regulatory principles. Code of corporate governance is being adopted and monitored across all public companies.”

The prime minister also spoke about government’s achievements on economic front during the last seven years, saying it had through prudent economic management and first generation reforms of fiscal consolidation, debt reduction, deregulation, privatisation, liberalisation and transparent governance brought the economy to a stage where it was growing at an average rate of seven per cent for the last four years.

As a result of economic progress achieved, he said, Pakistan no longer needed to consult IMF as investment as a percentage of GDP had grown to 20 per cent, the highest ever in the last two decades, and foreign direct investment (FDI) reached the highest level ever in the country’s history last fiscal year.

“I might also add that high economic growth has also started making impact on all segments of society. Employment has continued to increase and poverty has declined significantly by as much as 11 per cent in rural areas and eight per cent in urban areas over the last five years.

We are also seeing a growing middle class and a substantial rise in per capita income. Our financial reforms and privatisation strategy have led to a vibrant financial sector that is empowering the consumer for the first time,” Mr Aziz said.

He said the government had achieved this transformation of Pakistan through deliberate policy and prudent management. The prime minister claimed that the government is committed to good governance through transparency and accountability. “Democratic institutions are strengthening while a deep-rooted process of decentralisation has been set in motion. We have a vibrant opposition, an independent judiciary and a free media,” he maintained.

“We are committed to a continuing process of reforms and have embarked on a second generation of reforms covering infrastructure upgradation, institution building and human resource development.”

He explained that the government had undertaken the second generation structural reforms to encourage and improve market based economy.

“To this end, we have been deregulating markets as well as improving supervision and regulation of markets to ensure greater competition.”

Further, he said, the second prong of the second generation reforms was linked to developing policies and regulatory mechanisms that were aligned to global norms and also supportive of efficient markets.

“We, therefore, have adopted measures for better tax and tariff policy, including change in tax administration. Our Fiscal Responsibility and Debt Limitation Act of 2005 puts a check on the mismanagement of fiscal policy, which is a classical example of institutionalization of reforms. The law can only be changed by the Parliament, which is sovereign.”

The third and last prong of the second generation reforms sought to build better governance through institutional strengthening of the public sector, he said.

“While privatisation gets government out of the areas it should not be in, we also have to build a more capable and transparent government. As part of the drive to strengthen institutions, the government has already launched initiatives to modernise several of the key agencies of government. These include judiciary, civil service, Monopoly Control Authority, and police. This will be done by deepening decentralisation, developing greater transparency, utilising the latest technology and relying on a high degree of professional and technocratic management.

The prime minister said the economic transactions were facilitated by the rule of law that required a clear and transparent legal framework and efficient institutions for law enforcement.

Land reforms: The premier also said that out system of property rights and land titling is in urgent need of reforms. Lack of clear land titles is a critical barrier to access credit.

I have recently issued instructions for computerisation of land records in the rural and urban areas of Islamabad Capital Territory so that it can serve as a model for the rest of the country. Such an effort is in progress on pilot basis in Lahore and few other districts of Punjab.

“Automation of land records and enforcement of clean and clear land titles will encourage use of land as collateral and generate economic activity.”

He said: “In Pakistan we would like to develop strong and hardy institutions in all spheres – legal, economic, social, political and administrative, that will put our economy on strong growth foundation.”Institutions are essential not only for economic growth but also for reducing inequality and poverty. The poor and the middle income groups are most likely to benefit from well functioning institutions.”