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DOING BUSINESS

INDEX:

TRANSFORMING PAKISTAN

A COMPARATIVE ANALYSIS

The Lahore Chamber of Commerce & Industry

Trend in Pakistan’s Ranking in

Ease of Doing Business

-105 -107 -110

-128

-138-148 -144

2012 2013 2014 2015 2016 2016 R 2017

Russia’s Ranking in

Ease of Doing Business

111

92

54

62

51

40

2012 2013 2014 2015 2016 2017

Pakistan’s Ranking in Each Factor

Sr. # FACTOR 2017 2016(Revised)

1 Starting a Business 141 135

2 Dealing with Construction Permits 150 150

3 Getting Electricity 170 163

4 Registering Property 169 173

5 Getting Credit 82 134

6 Protecting Minority Investors 27 25

7 Paying Taxes 156 154

8 Trading Across Borders 172 172

9 Enforcing Contracts 157 156

10 Resolving Insolvency 85 85

Improvements reported in 2017

Pakistan is now in the list of ten economies making the

biggest improvements in their business regulations.

The only from South Asia - having improved its position

under the new methodology.

On the Distance to Frontier metric, Pakistan’s score went up

from 49.48 (DB2016) to 51.77 (DB2017)

Reforms done in 2017

Reform in Property Transfers:

Punjab has launched automated Land

Records Management and Information

Program (LRMIS).

During the five-years, this improved quality

of service provided.

Reforms in Getting Credit

Pakistan improved access to credit

information, giving borrowers right to

inspect their own data.

Reform in Trading Across Borders

Enhancement in electronic customs

platform.

OUR

OBJECTIVE

To bring Pakistan among the top 50

countries by 2022.

Methodology

To compare procedures of Pakistan with the best ranked countries in each factor

To identify the gaps between the procedures of Pakistan and the best ranked countries

To formulate recommendations in consultation with stakeholders

To lobby and engage with government for implementation

Starting a

Business

Factor 01

Pakistan 141

VS

New Zealand 1

Companies registered in Pakistan and New Zealand

3,953 4,5876,200

44,04547,261

50,419

0

10,000

20,000

30,000

40,000

50,000

60,000

2013-13 2013-14 2014-15

Pakistan New Zealand

Procedure for Incorporation of a Company

Lahore, Pakistan New Zealand

1Reserve a company name online via SECP E-Services

Website

Apply online

for registration

with the

Companies

Office New

Zealand

(including

Inland Revenue

Department

(IRD) number

application and

registration for

GST)

2 Pay the name reservation/Incorporation at MCB

3 Obtain a digital signature from NIFT system

4 Complete registration form on the SECP e-portal

5 Open a Bank account for tax registration

6 Apply for NTN and register for Income tax

7Apply for Sales Tax Registration Number at Regional FBR

office

8Registration for Professional Tax with E&T Dept. of the

District

9 Registration with PESSI

10 Registration with EOBI

11 Registration with Labor Department

12 Register CEO at SECP

Comparison of Govt./Other Agencies involved in

Starting a Business

Lahore, Pakistan New Zealand

1Security and Exchange Commission of Pakistan

(SECP)

New Zealand

Companies

Office

2National Institutional Facilitation Technologies

(NIFT)

3Tax Facilitation Center of the Regional Tax Office

(RTO), Federal Board of Revenue (FBR)

4 Excise and Taxation Department of the District

5 Punjab Employees Social Security Institution (PESSI)

6 Employees Old Age Benefits Institution (EOBI)

7 Labor Department, Government of Punjab

Cost and Time involved in Registering a

Company


Regular Fast Track

Online In person Online In person Online

12,800 26,010 23,600 47,300 12,136.088


18 Days 0.5 Day

(Amounts in PKR)

Proposed Reforms –

Provincial

- Online application for

registration

- Lumpsum payment of fees

through debit/credit,

Mobile banking and other

electronic means

Excise &

Taxation Dept PESSI

Labor Dept

Applicant downloads all information from One-Portal

- Registration certificates

and registration numbers

issued by departmentsExcise &

Taxation Dept PESSI

Labor Dept

Proposed Reforms –

Federal

Registration through

One-PortalTo be hosted at Securities and Exchange Commission of Pakistan

- Online application for

registration

- Lumpsum payment of fees

through debit/credit card,

online/mobile banking

and other electronic

means

SECP• Company

Name,

• Digital

Signatures

• Complete

Registration

EOBI

FBR

• NTN

• Sales Tax

Applicant downloads all information from One-Portal

- Registration certificates

and registration numbers

issued by departments

SECP• Company

Name,

• Digital

Signatures

• Complete

Registration

EOBI

FBR

• NTN

• Sales Tax

Factor 02

Dealing with Construction

Permits

Pakistan 150

VS

New Zealand 1

Time and Cost

involved in Getting Construction

Permits

PAKISTAN New Zealand

Lahore

93 Days

332 Days

PAKISTAN New Zealand

Lahore

PKR 4,437,008.14

(NZD 58,018)

PKR 240,150

Comparison of Procedure with LDA

Sr.

No

LDA Procedures according

to World Bank

LDA (Existing) (29+29days) New Zealand (93 days)

Cost: PKR 4,437,008.14

1

Obtain letter from

concerned authority

confirming the land title

(Fard) from LRMIS (2days,

PKR 150)

Submit application with all

required docs and deposit fee at

the bank located at LDA

premises. (7days, PKR 15/sq.ft

of covered area of the building,

Stamp paper of PKR 500)

Obtain resource consent

(planning) from District

Council (30days)

2

Obtain a No-Objection

Certificate from

Environmental Protect

Agency (150days, PKR

10,000)

Obtain a No-Objection

Certificate from Environmental

Protect Agency

Obtain works over CCTV

approval by Watercare

Services (7days)

3

Obtain a building permit

from LDA (60 days, PKR

70,000)

Survey of the plot & verification

of ownership & possession (10

days)

Obtain building consent

from District Council

(30days)

4

Notify LDA in writing of

the completion of

foundations (1day)

Verification of paid challan and

detailed scrutiny of the

drawings (6days)

Receive foundation

inspection by a building

inspector from the Auckland

Council (1day)

Comparison of Procedure With LDA (Cont.)

Sr.

No

LDA Procedures

according to World Bank

LDA (Existing 29+29days) New Zealand (93 days)

PKR 4,437,008.14

5 Receive foundation work

inspection from LDA (1

day)

Sanctioning and issuance of

Construction Permit (6day)

Receive structural inspection

by a building inspector from

the Auckland Council (1day)

6 Submit the 1st floor

Certificate Form to the

LDA (1days)

Application for Completion

Certificate (CC) (1day if

requirements are met.

Ownership docs, LESCO

connection, NOC from Civil

Defence, Form BR-9 if multi-

storey, WASA, E&T’s PT1

form if building period is

expired)

Receive plumbing inspection

by a building inspector from

the Auckland Council (1day)

7 Receive 1st floor slab

casting inspection from the

Lahore Development

Authority (LDA) (1day)

Survey of the plot & issuance

of fee challan for completion

certificate (16days, PKR

12,000)

Receive cladding inspection by

a building inspector from the

Auckland Council (1day)

8 Submit the 2nd floor

Certificate Form to LDA

(1days)

Receive fire protection

inspection by a building

inspector from the Auckland

Council (1day)


Sr.

No

LDA Procedures

according to World

Bank

LDA (Existing 29+29days) New Zealand (93 days)

PKR 4,437,008.14

9 Receive 2nd slab

casting inspection

from LDA (1day)

Payment & verification of

paid fee challan (4days)

Obtain water and sewerage

connection (28 days)

10 Request assessment

copy of property unit

from the Excise and

Taxation Department

(30 days)

Issuance of Completion

Certificate (12days)

Receive final inspection for

a code compliance

certificate (CCC) (25days)

11 Receive inspection

from the E&T Dept

and obtain the

assessment copy of

property unit (1 day)


Sr.

No

LDA Procedures


LDA (Existing

29+29 days)

New Zealand (93 days)

PKR 4,437,008.14

12 Request water and

sewerage connection (60

days , PKR 90,000)

13 Apply for completion

certificate and request

final inspection (7 days,

PKR 70,000)

14 Receive final inspection

from LDA (1 day)

15 Receive completion

certificate from LDA (60

days)

LDA’s proposed plan

Process

Before

Automation

(Existing)

After

Automation

Reduction

in days

Double Exemption Report 3days 1 day 2

Ownership verification Report 3 days 1 day 2

Account Verification Report 3 days 1 day 2

Site Report 3 days 1 day 2

Balloting Report 3 days 1 day 2

Building Plan approval / Completion

Certificate verification3 days 1 day 2

Total No. of Days 18 6 12

Reduction in the No. of days for verification ONLY after improvement of

the Internal Processes of LDA:

Source: LDA

ProcessBefore

Automation

After

Automation

Reduction in

days

Building Plan Approval 24 days 7 days 17

Completion Certificate 26 days 7 days 19

Transfer Process 23 days 2 days 21

No Objection

Certificate12 days 5 days 7

Total No. of Days 85 21 64

LDA’s proposed plan (Cont.)

Source: LDA

Reduction of days in Application Response Time:

Recommendations• Reform program like LDA’s should be designed for

TMAs.

• Representatives from private sector should be included

in TMA’s High Level Design Committee (HLDC) and

its sub committee.

• Weekly meetings of HLDC and its sub committee

should be arranged to deal with the backlog.

• Expedite the automation of urban land record on Land

Record Management Information System (LRMIS).

• LDA and TMA should accept survey and inspection of

sites done by private certified inspectors.

Recommendations (Cont.)

• LRMIS should also display court proceedings or stay

orders, if any.

• All rules, regulations and procedures for dealing with

construction permits be listed and placed on ONE

WEBSITE.

• Commercialization fee of land be eliminated and zoning

be clearly demarked so that conversion is not needed.

• All Stakeholders be added in committee which decides

zoning for commercial and industrial activities.

• Water and Sewerage connection be provided automatically

within 30 days of approval of construction permits.

Getting ElectricityPakistan (170)

VS

Republic of Korea (1)

Time and Cost involved in Getting Electricity

Connection

Pakistan Republic of Korea

Lahore18 Days

117 Days

Pakistan Republic of Korea

Lahore PKR 1,084,239.30

(KRW 11,839263.4)PKR 2,714,567.73

Procedures in Getting Electricity

Procedures of LESCO

according to World

Bank

Consumer Service

Manual, LESCO

(496 days)

Republic of Korea

(18 days)

1 Submit application and

await site inspection

• LESCO:30days, no

charge

Registration of

Application (1day)

Request and receive

internal wiring inspection

by Korea Electrical Safety

Corporation (KESCO) (5

days, KRW 148,740)

2 Obtain site inspection and

receive estimate

• LESCO: 30days, no

charge

Site Survey (15days)

Customer submits

application to KEPCO

and signs contract (1 day,

KRW 11,658,832.94)

3 Obtain wiring inspection

• LESCO:14 days, no

chargeService Cost

Estimation (24days)

Receive external works,

meter installation and

electricity flow (12 days,

no charge)

Procedures in Getting Electricity (Cont.)

Procedures od LESCO & K-Electric


Consumer

Service Manual,

LESCO

(496 days)

Republic

of Korea

(18 days)

4 Pay estimate and submit internal wiring

test report

• LESCO(1day, PKR 2,713,087.73)

Approval of

Service Cost

Estimate (21days)

5• LESCO: Receive external works and

await final inspection (28days, no

charge)

Issuance of

Demand Notice

(7days)

6 LESCO: Receive inspection of external

works, meter installation and electricity

flow (14 days, PKR 0)

Verification of

Test Report

(10days)

Procedures in Getting Electricity (Cont.)

World Bank

Consumer Service

Manual, LESCO

(496 days)

Republic of

Korea

(18 days)

7 Service Connection Order

(3days)

8 Store Requisition and

Issuance of Material

(400days)

9 Installation of Connection

(15days)

Recommendations

• An E-Portal should be established for the new

connections and other services where applicant may

submit his application along with all other required

documents online.

• This E-Portal should be integrated with SECP, LRMIS

and NADRA database for the verification of company’s

information.

• The E-Portal should also allow online banking,

credit/debit card, mobile banking and other electronic

transfers for fee submission.

• After submission of verified safety inspection report,

demand notice should be generated through E-Portal.

Recommendations [Cont.]

• LESCO should accept the internal wiring report of

private certified and registered contractors. Currently,

internal wiring inspection is being conducted by

Electric Inspector, Punjab.

• Electric Inspector should upload the Internal Wiring

report on this E-Portal within 10 days.

• Review and reduce the Timeframe of New

Connections as described in Customer Service Manual

(Annexure – VI, Page 59).

• All infrastructure cost up to the point of connection

should be borne by the government/LESCO.

Pakistan (169)

Vs

New Zealand (1)

REGISTRATION OF

PROPERTY

Factor 04

Comparison of top countries in

Registering Property


Ranking 169 1

Procedures 7.7 2.0

Time (Days) 154.8 1

Cost

(% of the property value)4.6% 0.10%

Quality of Land

Administration Index (0-30)6.8 26.0

Score in Quality of Land

Administration Index 2016

Quality Index (Score) Pakistan New Zealand

Quality of Land Administration Index

(0-30)

5 26

Reliability of Infrastructure Index (0-8) 0 8

Electronic database for Recording Land

Boundaries

None /partial Yes

Transparency of Information Index (0-6) 1.5 4

Geographic Coverage Index (0-8) 0 8

Land Dispute Resolution (0-8) 3.5 6

Equal Access to Property Rights Index 0 0

Procedure for Registration of Property-

Lahore (According to World Bank)

Steps Procedure (Time) Cost (PKR)

1 Obtain Fard (ownership and non-encumbrance)

certificate from LRMIS (Days 2)

150

2 Advertisement of a transaction in newspaper and

inviting objections (Days taken 8)

10,000

3 Hire a deed lawyer or writer to draft sales

purchase agreement (Days taken 3 )

8,000

4 Payment of stamp duty, capital value tax, Town

tax and registration fee (Days 1)

• Stamp duty 3%

• CVT 2% and

• 1% of property

price (registration

fee)

• 1% Town Tax

Procedure for Registration of

Property-Lahore (According to World Bank) Cont.

Steps Procedure (Time) Cost (PKR)

5 Receipt of the payment is submitted to

the Stamp Office (Day: 1)

6 Execution and registration of a deed

before the registration authority (Sub-

registrar) (Days: 38)

500

7 Mutation Process at the relevant land

authority ( by buyer) for transfer of

ownership (Days: 3)

500

Recommendations• Good practices of land ownership and transfer, from DHA should

be adopted.

• Tax on land transfer should be eliminated, one lump sum fee

should be charged

• LRMIS should be linked directly with NADRA database.

• All court proceedings and stay orders should be recorded on

LRMIS

• A Local Commission should only be Hired in exceptional

circumstances as provided by the law. In person attendance should

be mandatory.

• Mutation should also be done through LRMIS.

Getting Credit

Pakistan (82)

VS

New Zealand (1)

Factor 05

Domestic Credit to private sector (As % of GDP)

New Zealand 146.2%

China 141.8%

Singapore 131.5%

India 51.1%

Pakistan 15.4%

Source: World Bank Indicators

Ranking is done on the basis of

• Strength of Legal Rights Index (0=Weak to 12=Strong). This measures

the degree to which collateral and bankruptcy laws protect the rights of

borrowers and lenders and thus facilitate lending.

• Depth of Credit Information Index(0=Low to 8=High). Scope and

Accessibility of Credit Information distributed by Credit Bureaus and

Credit Registries.

Index-Wise Score Summary


Strength of Legal Rights Index (0=Weak to

12=Strong)3 12

Depth of Credit Information Index (0=Low to

8=High)7 8

Recommendations

• Credit Insurance Guarantee Fund (CIGF) be created.

• Local Made Machinery (LMM) loan for SMEs to be covered

by CIGF.

• Banks should have the access to the LRMIS and SECP for

easy verification of company data and its asset.

• Set up DFIs and instruments for long term capital

investments

• Better legal rights for secured creditors so that in case of

liquidation of a business, they should be paid first (before tax

claims and employee claims).

Protecting Minority InvestorsPakistan (27)

vs

New Zealand (1)

Factor # 6

Ranking is done on the basis of:

Index Pakistan New

Zealand

Extent of Disclosure Index (0–10) 6 10

Extent of Director Liability Index (0–10) 6 9

Ease of Shareholder Suits Index (0–10) 6 9

Extent of Conflict of Interest Regulation Index (0–10) 6 9.3

Extent of Shareholder Rights Index (0-10) 8 8

Extent of Ownership and Control Index (0-10) 9 7

Extent of Corporate Transparency Index (0-10) 5 7.0

Extent of Shareholder Governance Index (0–10) 7.3 7.3

Strength of Minority Investor Protection Index (0-10) 6.7 8.3

Recommendations

Pakistan is already leading in this

indicator. No new proposals at this time.

Factor # 7

53

Paying TaxesPakistan (156)

vs

Qatar (1)

What the Paying Taxes Indicators measure?

• Tax payments for a manufacturing company in 2014 (number

per year adjusted for electronic and joint filing and payment)

• Total number of taxes and contributions paid, including

consumption taxes (value added tax, sales tax or goods and

service tax)

• Method and frequency of filing and payment

• Time required to comply with 3 major taxes (hours per year)

• Collecting information and computing the tax payable

• Completing tax return forms, filing with proper agencies

• Arranging payment or withholding

• Preparing separate tax accounting books, if required

What the Paying Taxes Indicators

measure?• Total tax rate (% of profit before all taxes)

• Profit or corporate income tax

• Social contributions and labor taxes paid by the employer

• Property and property transfer taxes

• Dividend, capital gains and financial transactions taxes

• Waste collection, vehicle, road and other taxes

• Post-filing Index

• The time to comply with a VAT or GST refund

• The time to receive a VAT or GST refund

• The time to comply with a corporate income tax audit

• The time to complete a corporate income tax audit

Tax / Mandatory Contributions – Pakistan

Tax / Mandatory ContributionsNo. of Payments

(per year)

Time

(hours per

year)

Corporate Income Tax 5 40

Social security contributions 12 40

Employer paid -Pension contributions 12

Education cess (Omitted through PFA 2015) 1

Property tax 1

Tax on interest 0

Professional tax 1

Vehicle tax 1

Fuel tax 1

Employee paid - Pension contributions (paid

jointly)0

Goods and Sales Tax (VAT) 12 232

Stamp duty 1

Total 47 311.5

Paying Taxes - Comparison with leading countries

Ranking in

Paying TaxesEconomy

Number of Payments

(per year)

Time

(hours per

year)

3 Hong Kong 3 74

8 Singapore 5 66.5

5 Ireland 9 82

61 Malaysia 9 164

172 India 25 241

158 Sri Lanka 47 179

156 Pakistan 47 311.5

Distance to Frontier Scores

Sr. No. Tax / Mandatory Contributions Relevant Department

1 Social Security Contribution PESSI

2 Education cess E&T - Provincial

3 Property tax E&T - Provincial

4 Professional tax E&T - Provincial

5 Vehicle tax E&T - Provincial

6 Sales Tax on ServicesPunjab Revenue

Authority (PRA)

PROVINCIAL TAXES AND RELEVANT

MINISTRIES / DEPARTMENT(S)

RECOMMENDATIONS

• Number of taxes and frequency of paying taxes must be

reduced (Half Yearly/Quarterly)

• Workers' Profit Participation Fund (WPPF) and

Worker’s Welfare Fund (WWF) should either be merged

in income tax or be given to industrial associations to

benefit their workers.

• Electronic communication between taxpayers and tax

departments.

• Mandatory electronic filing and online payment for all

departments. Payments should be accepted through

‘Credit card / debit card, direct debit or using internet /

mobile banking’.

Tax / Contribution Proposed amendments

Property TaxProperty tax should be

collected on the basis of per

square foot rate published on

the website.

Payments should be accepted

through ‘Credit card / debit

card, direct debit or using

internet / mobile banking’.

Professional Tax

Vehicle Tax

EXCISE & TAXATION DEPARTMENTRECOMMENDATIONS

SALES TAX ON SERVICES - PRA

• Section 35(2) of Punjab Sales Tax on Services Act 2012 states that“Notwithstanding anything in sub-section (1), the Authority may,by notification in the official Gazette, require any registered personor class of registered persons to submit returns on a quarterly, sixmonthly or annual basis in lieu of monthly return”.

• Notification be issued to allow filing of returns on six monthlybasis.

• According to section 11(1) of Punjab Sales Tax on Services(Filing ofReturns) Rules 2012, “A registered person filing return electronicallyor otherwise shall make payment of the amount of tax due, if any, inany of the designated branches of the National Bank of Pakistan orany other designated Bank on the prescribed payment challan asspecified in Form PST – 05 or through electronic payment systemdevised for the purpose.”

• Notification be issued to allow payments through ‘Credit card /debit card, direct debit or using internet / mobile banking’.

Trading Across Borders Pakistan (172)

EU (01)

Factor 08

Regional Economies – Comparative Analysis

[EXPORTS]

Trading

Across

Borders’

Ranking

Economy

Border ComplianceDocumentary

Compliance

Time

[hours]

Cost

[US$]

Time

[hours]

Cost

[US$]

175 Afghanistan 48 453 228 344

173 Bangladesh 100 408 147 225

26 Bhutan 5 59 9 50

143 India 106 413 38 92

147 Maldives 42 596 48 300

69 Nepal 56 288 19 85

172 Pakistan 75 426 59 307

90 Sri Lanka 43 366 76 58

Regional Economies – Comparative Analysis

[IMPORTS]

Trading

Across

Borders

Ranking

Economy

Border ComplianceDocumentary

Compliance

Time

[hours]

Cost

[USD]

Time

[hours]

Cost

[USD]

175 Afghanistan 96 750 324 900

173 Bangladesh 183 1294 144 370

26 Bhutan 5 110 8 50

143 India 283 574 61 135

147 Maldives 100 981 61 180

69 Nepal 61 190 48 80

172 Pakistan 129 957 147 786

90 Sri Lanka 72 300 58 283

RECOMMENDATIONS

• Combining Documents; like in Singapore where only

FOUR documents are required for import/export

• If infrastructure, particularly RAILWAY CARGO, is

made efficient, it will bring time and cost down.

• Frequency of physical inspections carried out at ports

should be reduced by introducing scanners

• Post-destination clearance for preapproved

companies, reducing the number of containers subject

to physical inspection

• Addressing internal bureaucratic inefficiencies

Pakistan (157)

Vs.

Korea, Rep (1)

Enforcing Contracts

Factor - 9

Time and Cost for Resolving a Standardized

Commercial Dispute

Country

Comparison Ranking

Time

(Days)

Cost

(% of value of

claim)

Korea, Rep 1 290 12.70%

Singapore 2 164 25.80%

Australia 3 395 21.80%

Pakistan 157 1071.2 20.5%

Procedure Comparison

Indicators Lahore,

Pakistan

Korea, Rep

Total Time (Days) 1,025 290

Filing and Service 60 20

Trial and Judgment 600 150

Enforcement of Judgment 365 120

Cost (% of claim) 25.0 12.7

Attorney cost 15 9.0

Court cost 7 3.0

Enforcement cost 10 0.7

Recommendations

• There should be specialized courts for

commercial disputes (like banking courts).

• The lower courts should automate their legal

process. The parties to a case should be able to

file, pay court fee and access their case history

and status online.

• A Pretrial Conference mechanism should be

incorporated.

Recommendations (Cont.)

• Adjournments (Order 17 of the Civil Procedure Code) should

be limited to only special circumstances. The parties of a case

should be heavily penalized after requesting the third

adjournment. A judge should not grant a date in a case which

exceeds a week from the previous hearing.

• Judges should be given yearly targets to dispose of a case and

should be allocated a tentative time frame - depending on the

nature of a case.

• All judgments should be enforced within a year and penalties

for non-compliance should be introduced.

• Enforcement Agency should be identified and given authority

for automatic enforcement of judgment after the decree has

been issued.

Resolving insolvency Pakistan (85)

VS

Finland (1)

Factor 10

Ranking is done on basis of

1. Recovery Rate PAK FIN

Recovery Rate (Cents recovered by secured

creditors on a loan of 1 dollar through insolvency

proceedings)

43.0 Cents

90.3Cents

Time (years on average) 2.6 0.9

Cost (% of Debtor’s Estate) 4 3.5

2. Strength of Insolvency Framework

Index(0=weak to 16=strong)

PAK FIN

1. Commencement of proceedings index (0-3) 2 3

2. Management of debtor’s assets index (0-6) 3 6

3. Reorganizing proceedings index (0-3) 0 2.5

4. Creditor participation Index (0-4) 2 3

Total Score 7 14.5

Insolvency procedure in Pakistan-According to

World Bank

Step 1

• Creditor would initiate foreclosure proceedings by filing petition at theCivil Court, 3 months after Debtor’s default (3 months).

Step 2

• The Court will then review the case, notify all relevant parties, hold a public hearing and appoint an official receiver.(4 months)

Step 3

• The Court appointed official receiver finalizes Creditor’s claims. (6 months)

Step 4• The final decision of the Court is made (4 months).

Step 5

• The Court would appoint auctioneer to conduct sale of Debtor’s assets.

• Execution of the auction sale until Creditor is repaid.. (12 months)

Reforms in Process

• The Corporate Rehabilitation Bill has been

drafted and is awaiting the approval of the

parliament. This will significantly improve the

score of Pakistan on this indicator.

Recommendations

A proper legal framework for Reorganization should

be added in the bankruptcy laws which would give

the debtor/creditor an option to also file for

Reorganization instead of only liquidation (an

example is Chapter 11 in USA).

Bankruptcy laws should ensure greater creditor

participation in bankruptcy proceedings