Since last month, the political leadership of the country is upbeat about the announcement of its improved ranking on the World Bank’s Ease of Doing Business (EODB) Index. This year Pakistan has jumped up 28 places on this index (from 136th to 108th among 190 ranked countries) and secured a place among the top 10 reformer countries.

The civil bureaucracy, especially in the federal Board of Investment, the Planning and Development Board, Punjab, the Board of Investment, Sindh etc has also found a reason to celebrate. They are describing the new ranking as a huge success in times when there are very few good news to hear. In statements made over time, the officials have attributed this success to a comprehensive reforms process carried out aggressively in the country and the political will to remove unnecessary hurdles, regulations and procedural requirements that businessmen have to face.

There can be no doubt that an improved international ranking matters a lot but the fact is that several quarters have questioned its significance, saying it has not translated into improved business and investment climate in the country. Some say it has been an exercise done in isolation and around limited parameters without looking at the overall eco-system in which businesses operate. They ask as to what use such a ranking is when businesses are shutting down, workers being laid off and revenue targets missed by huge margins. The economic slowdown in the country, they say, tells a totally different story.

The question that arises here is whether the EODB index should be reflective of the state of economic activity going in a country at a particular time or are these two separate things that are not necessarily linked. If the latter is true, then what needs to be done to get the desired results?

Before we seek answers to these questions, we need to have a look at the process of working out this index. According to the official document, the doing business project provides objective measures of business regulations and their enforcement across 190 economies and selected cities at the sub-national and regional level. The document mentions the first study, published in 2003, covered 5 indicator sets and 133 economies.

This year’s study covers 11 indicator sets and 190 economies. Most indicator sets refer to a case scenario in the largest business city of each economy, except for 11 economies that have a population of more than 100 million as of 2013 (Bangladesh, Brazil, China, India, Indonesia, Japan, Mexico, Nigeria, Pakistan, the Russian Federation and the United States). Here data is also collected for the second largest business city. In case of Pakistan, data from both Karachi and Lahore has been used to work out its ranking on the index.

The 11 indicators studied this year are about formalities regarding 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 and employing workers.

Imran Sikander Baloch, the secretary of Planning and Development Board, Punjab, who is the focal person for EODB reforms in the Punjab, says the main objective of the exercise was to facilitate businesses while improving business regulations and making processes and procedures simpler and cost efficient. He says the improvement in doing-business ranking helps improve global image of a country and generates foreign direct investment which helps create jobs and spur economic activity. The ranking of any country, he says, takes some time to be reflected in an improved state of affairs.

Baloch adds that doing-business reforms strategy in the province has been formulated on the basis of key fundamentals of efficient public service delivery which include transparency, accountability, responsiveness etc through automation and integration of government systems. “However, we need to be cognizant of the fact that a majority of population in Pakistan is not IT literate. Therefore, these reforms will take their time to be adopted by the masses.”

Mustafa Raza, a businessman dealing in IT-related products and services, says no doubt facilitation for businesses is a good thing but much more than this is needed to revive/boost the economy. He says ease-of-doing-business cannot be meaningful until there is a reasonable fall in the cost-of-doing-business. “What use is the decrease in time to get an electricity connection if its unit price is higher than that in the regional countries that are our direct competitors in global exports market?” he asks.

Public-Private Partnerships, he says, are non-starter in the country because prospective investors fear grilling by the accountability watchdog for crimes not committed by them. Law and order situation, undue harassment by government departments, including labour and FBR, and perception issues haunt Pakistani businesses and must be taken care of as well. Only then will we be justified in celebrating the achievement. “So far we have focused only on simplifying the processes and bringing the number of regulations down.”

The areas in which Pakistan has improved include starting a business, dealing with construction permits, getting electricity, registering property, paying taxes and trading across borders. This has been done mainly by minimising requirements and offering ease of applying through online platforms. However, enforcing contracts and getting credit from financial institutions for businesses are still weak areas for different reasons.

Habib-ur-Rehman Gilani, the chairman of Punjab P&D Board says these reform initiatives pertain to multiple departments, therefore, the biggest challenge was the coordination and ensuring timely implementation of doing-business reform strategy. He tells TNS the coordination role was played by the P&D Board, whereas, the implementation oversight was driven directly by chief secretary through a Provincial Working Group. Another challenge, he says, was the understanding about the methodology of the doing-business assessment by the departments which was overcome with the support of the World Bank Doing-Business Team.

On the significance of the index, Gilani says, the assessment of any country is based upon the feedback of the private sector. The perception of the private sector has changed therefore they have mostly endorsed the reforms that have been taken under this reforms agenda. The World Bank reviewed the reforms and took feedback from the private sector. The doing-business report does not take into consideration the law and order situation, however, it does assess the getting-credit indicator which is being looked after at the federal level.

At the federal level, he says, the reform strategy was spearheaded by the Board of Investment and the Prime Minister’s Office. Gillani says that regular stock-taking meetings are held with the relevant federal and provincial agencies and bottlenecks are removed to ensure seamless implementation of the doing-business reform strategy.

The author is a staff reporter and can be reached at shahzada.irfan@gmail.com

Graphic by Naseem ur Rehman