PESHAWAR, Aug 11: A study recently conducted by the NWFP government on ‘private investment: growth and development” has termed poor road network, power outages, delays in clearance by the customs, inadequate agriculture base and tough regulations concerning registration of firms as the reasons responsible for slow private sector development in the province.

The study, conducted by NWFP’s member on the National Finance Commission (NFC) Dr Mohammed Zubair Khan with the financial assistance provided by the World Bank, underlines factors hindering private sector investment.

Apart from the constraints which are the result of the federal government’s policies, the study pinpoints numerous other drawbacks affecting the private sector’s growth because of the provincial government’s policies and inadequate resources.

With regard to the customs clearance system, the study mentions that regional disparities exist in customs clearance at various dry ports and seaports.

“Firms in Sindh report shorter delays than those in the Punjab, whereas, the NWFP-based firms report longest delays,” says the study, adding that it could be due to delays in customs-bonded transportation from Karachi to the dry-port in Peshawar or more intensive inspection in view of potential drug and weapons smuggling in the region.

The study also highlights problems faced by the NWFP-based exporters who experience delays in receiving sales tax returns, duty drawbacks and export rebates.

“Provincial disparities are not significant but scope for improvement is large and could impact on provincial investment climate significantly,” says the study.

Touching upon the difficulties faced by industrialists and businessmen as a result of inspections by official tax collectors and regulators, the study says that although regulatory standards are economically and socially desirable, discretionary application of laws creates frequent opportunities for corruption and bureaucratic harassment at the cost to economy.

“The burden of regulations seems more or less the same across the provinces, although firms in Lahore spend more time with the officials than in Sindh and the NWFP. Larger firms are visited twice as many times as smaller ones across the country. However, officials demand gifts or other payments from them and the problem has been found to be the worst in the NWFP”.

Though measures taken by the government of Sindh and the federal government, the study says, helped bring down the ratio of average number of days in registering a firm, the NWFP has not taken any significant step in this area as yet.