Pakistan Drops to 147th in World Bank’s Ease of Doing Business Index

Pakistan has dropped to 147th on the “Ease of Doing business Index” list recently published by the World Bank. Last year Pakistan stood at 144th but things didn’t go well this year either despite the efforts made by the government. World Bank assessed economies of 190 countries and Pakistan stood among the bottom few.

South Asia

Bhutan was placed at 75th place and it was recognized as the best country for doing business in South Asia. Notable mentions amongst the South Asian countries are listed below:

  • Bhutan at 75th
  • India at 100th
  • Nepal at 105th
  • Pakistan at 147th
  • Bangladesh at 177th
  • Afghanistan at 183rd

India has carried out the most reforms in the region in the past 15 years, with 37 reforms, followed by Sri Lanka (22) and Pakistan (19).

Areas Surveyed

Doing Business index measures regulations affecting 11 areas related to businesses. Ten of these areas are included in this year’s ranking on the ease of doing business: starting a business, dealing with construction permits, getting electricity, registering property, getting credit, protecting minority investors, paying taxes, trading across borders, enforcing contracts and resolving insolvency. Doing Business also measures labor market regulation, which is not included in this year’s ranking.

World Bank concluded the results based on the surveys held in Karachi and Lahore. However, there were some positive changes that took place over the year.

Improvements Over 2016

Pakistan made progress in the following categories, as revealed by the World Bank report.

  • ‘ease of registering property’,
  • ‘strengthened minority shareholders protection’,
  • ‘start a business’
  • ‘Do trade across the border’.
Pakistan increased minority investor protections by making it easier to sue directors in case of prejudicial transactions with interested parties. Pakistan made importing and exporting easier by developing a new container terminal and enhancing its customs platform for electronic document submission.
Construction Permits

Pakistan jumped up 9 places in this category coming in at 141st place. Acquiring a construction permit requires 252 days and 15 different types of procedures to be followed.

Trade Across Border

Pakistan is placed at 171st place in this list. The ranking went up by one place as compared to the last year.

For Exports

For clearing border compliance procedures, exporters need to pay $457. Documentary compliance costs $257 and 75 hours are required to get through the procedure.

For Imports

For imports, documentary compliance costs $735 and border compliance cost is $939.

Overall Ranking

Pakistan’s ranking for “Easy of Doing Business” in various areas remained as following:
  • Overall ranking: 147,
  • Starting a business – 142,
  • Dealing with construction permits – 141,
  • Getting electricity – 167,
  • Registering property – 170,
  • Getting credit – 105,
  • Protecting minority investors – 20,
  • Paying taxes – 172,
  • Trading across borders – 171,
  • Enforcing contracts – 156
  • Resolving insolvency – 82.
Paying taxes, getting electricity, trading across borders and enforcing contracts are the worst issues in doing business in PakistanPakistan received the lowest rank, 172 on paying taxes, 171 on trading across borders, 167 on getting electricity as it takes 180 days to get an electricity connection, 170 on registering property and 156 on enforcing contracts.

Factors Behind Deterioration

On the other hand, Pakistan’s standings took a serious hit in the following categories:

Getting Credit for Doing Business

Pakistan was ranked 82nd last year in the list of getting “credit for doing business”. Things didn’t go Pakistan’s way as Pakistan dropped down to a 105th spot in the latest rankings.

Tax Indicator

Pakistan slipped to 172nd place, down from 156th last year. This fall in rankings is mainly due to the increased tax rates this year. The tax rates have been increased to 33.8 percent of total profits. However, the overall corporate tax was decreased to 30 percent.

This increased tax resulted in consumption of 311.5 hours as companies and individuals made 47% tax payments.

Getting Electricity

Pakistan stands at 170th on the index of “Getting Electricity”. Last year Pakistan was at 167th in this list. There are six steps that need to be followed to get an electricity connection in Pakistan. As per reports, there was no progress made in the “reliability of supply and transparency in electricity tariffs.

Progress in the Region

The region lags in areas such as Registering Property and Resolving Insolvency. It takes on average 112 days to register property in South Asia, compared with the global average of 49.5 days. And, creditors for Resolving Insolvency recover about one-third of the property value, which is less than half of the recovery rate of 71.2 percent in OECD high- income economies.

Via PakistanToday

  • Ltd feature videos

    Watch more at LTD