List of Abbreviations
BOI Board of InvestmentBOR Board of Revenue
EDE Electronic Data ExchangeEOBI Employees Old-Age Benefit Institution
FBR Federal Board of Revenue
K-E Karachi Electric
LESCO Lahore Electricity Supply CompanyLRMIS Land Record Management Information SystemLTU Large Taxpayers UnitMoF Ministry of FinanceMoWP Ministry of Water & Power
PCA Post Clearance AuditPESSI Punjab Employees Social Security Institution
SBCA Sindh Building Control AuthoritySBP State Bank of PakistanSCADA Supervisory Control and Data AcquisitionSECP Securities & Exchange Commission of Pakistan
SHC Sindh High CourtSESSI Sindh Employees Social Security InstitutionTEPA Traffic Engineering and Transport Planning AgencyTFA Trade Facilitation AgreementTIR International Road TransportsVOSS Virtual One stop ShopWASA Water and Sanitation Agency
WBG World Bank GroupWTO World Trade OrganizationWeBOC Web Based One Customs system
Ease of Doing Business Strategy 2018-21
Board of Investment in consultation with Finance Division, Federal Board of Revenue, Securities & Exchange Commission of Pakistan, State Bank of Pakistan, Provincial Governments, World Bank and the Private Sector.
Prime Minister's Office Board of Investment
Islamabad.
Ease of Doing Business in Pakistan
A conducive investment climate is instrumental in attracting both domestic and foreign
investment by providing a more facilitative institutional, policy and regulatory
environment for businesses to operate. World Bank’s Report on Doing Business (DB)
ranks economies across the world annually on the basis of 10 comprehensive areas in
the life cycle of a business; including starting a business, dealing with construction
permits, getting electricity, registering property, getting credit, protecting investors,
paying taxes, trading across borders, enforcing contracts and resolving insolvency
(formally closing a business). For countries having population of more than 100 Million,
WB takes two cities in the final ranking. In case of Pakistan these include Karachi and
Lahore with ratio of 65% and 35% weightage respectively in total DTF score. Doing
Business Report takes the perspective of domestic, primarily smaller companies and
measures the regulations applying to them through their life cycle. The government of
Pakistan, in order to improve the country’s ranking in the world has taken this report as
a starting point to make changes in the macroeconomic environment. The elements
such as efficiency, quality and transparency in the government procedures make the
doing business reforms pertinent to improve economic governance.
The first plan, developed to improve business climate in October 2014, was a joint effort
by the Board of Investment (BOI) and the Economic Reforms Unit (ERU), Ministry of
Finance (MoF), with the assistance of the World Bank Group. Owing to these efforts at
national and sub-national level, Pakistan improved its ranking from 148 out of 189
countries to 144th out of 190 economies for 2017 on the Word Bank’s Doing Business
(EODB) Index. However, in 2018, Pakistan dropped three ranks and came at 147 out of
a total of 190 economies. The main contributing factor was decline in ranking in two
important areas such as paying taxes and getting credit. Following graph reflects the
changes in Pakistan’s DB Rank since 2007;
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019
74 76 77 85 83105 107 110
128138 144 147
136
Doing business rank (pakistan)
In DB report 2019 Pakistan improved 11 ranks. Since the launch of DB report in 2002, it
is the first time that Pakistan has jumped 11 points in one year with three approved and
many positive data corrections.
Pakistan made starting a business easier by introducing the online one-stop registration
system, replacing several forms for incorporation with a single application and
establishing information exchange between the SECP and FBR the tax authority. For
registering property, Pakistan (Lahore) made registering property easier by
streamlining and automating administrative procedures and by increasing the
transparency of its land administration system. Pakistan (Karachi) made registering
property easier by increasing the transparency of the land registry. In Resolving
insolvency, Pakistan made resolving insolvency easier by introducing the reorganization
procedure and improving the continuation of the debtors business during insolvency
proceedings.
Along with ranking in Doing Business another factor is a Distance to Frontier score.
Distance to Frontier (DTF) score measures the gap between the regulations of low
income profile economies and the high income OECD countries and here Pakistan
stands at an encouraging 55.31 – an improvement of 3.66 over the last year.
Table given below reflects the position of each indicator for the last two cycles:
Indicator DB 2018 DB 2019 DB 2018 DTF
DB 2019 DTF
Overall - out of 190 147 136 51.65 55.31
Starting a business (reform) 142 130 78.61 81.89
Dealing with Construction Permits
141 156 59.72 53.59
Getting Electricity 167 167 42.39 44.15
Registering Property (reform) 170 161 41.41 45.63
Getting Credit 105 (-23) 112 45.00 45.00
Protecting Minority Investors (reform)
20 26 71.67 71.67
Paying Taxes 172 (-16) 173 46.43 47.05
Trading Across Borders (reform) 171 142 41.94 60.12
Enforcing Contracts 156 156 43.49 43.49
Resolving Insolvency 82 53 45.83 59.86
Doing Business Report gives an insight into an ever changing and evolving step that
government take to improve their business climate in business hubs. In a bid to fast
track implementation of reform, the BOI in consultation with stakeholders and World
Bank Group launched an accelerated DB 100 days sprints. Sprint I and Sprint II have
already been completed while Sprint III has been started recently. It is expected that
country’s DB ranking by 2019 would continue to improve. The current government is
firmly committed to reduce the cost of doing business and improve country’s ranking in
the ease of doing business index. The government is aiming to get Pakistan fewer than
100 ranking by extending maximum facilitation and simplification of the procedures.
The idea is to create enabling environment in Karachi and Lahore and replicate the
same in other business hubs.
The Prime Minister Imran Khan in his first speech to the Nation mentioned his
commitment to improve business climate. The “Doing Business Reform Strategy 2018-
21” is the national roadmap for improving Pakistan’s Investment Climate. The Strategy
is designed to create an enabling environment for attracting higher investment (both
foreign as well as domestic) to help boost the country’s growth prospects. In order to
achieve this objective, the Strategy encompasses a set of comprehensive reform actions
not only at the federal government level but also includes provinces in the reform
initiatives falling within their domains. The reforms focus on regulatory changes,
improving technology and simplification of procedures.
In DB report 2019, Pakistan was ranked within the top 100 countries in business
indicators such as protecting minority investors (26th) and Resolving Insolvency
(53rd), among the 190 countries surveyed. Pakistan’s worst rank was in paying taxes,
where it was placed 173rd. It ranked 167th in getting electricity, 161 in registering
property, 156th in enforcing contracts and 142 in trading across borders. The new
strategy will have special focus on areas where Pakistan’s performance remained
poorest.
The timelines for implementation of reform actions range from six months to a year for
the short term, and from one to three years for the medium and long term. The Strategy
also encompasses development of a communication strategy to build effective feedback
mechanisms so that bottlenecks in implementation are identified in a timely manner
and dealt accordingly. The communication strategy is two pronged and covers
communication within the government departments as well as with the general public
and direct beneficiaries of reforms.
Proposed Action plan / strategy for the next three years reflecting reform actions (Short
term- one year, Medium term 1-2 years and Long term 2-3 years ) in various business
areas along with timelines and entities responsible is give below:
STARTING A BUSINESS
This topic measures the number of procedures, time, cost and paid-in minimum capital
requirement for a small- to medium-sized limited liability company to start up and
formally operate in each economy’s largest business city. To make the data comparable
across 190 economies, uses a standardized business that is 100% domestically owned,
has start-up capital equivalent to 10 times the income per capita, engages in general
industrial or commercial activities and employs between 10 and 50 people one month
after the commencement of operations, all of whom are domestic nationals. Starting a
Business considers two types of local limited liability companies that are identical in all
aspects, except that one company is owned by 5 married women and the other by 5
married men. The ranking of economies on the ease of starting a business is determined
by sorting their scores for starting a business. These scores are the simple average of
the scores for each of the component indicators.
COMPARISON OF PAKISTAN WITH SOUTH ASIA & BEST PERFORMER
PLANNED REFORMS
Reform Action Timelines Responsibility
Integration of Federal and Provincial Company Registration Portals
Short Term SECPPITB and Govt. of
Sindh
Availability of online fee payment facility at federal and provincial levels;
Short Term SECPPITB and Govt. of
SindhCreate a set of incentives to ensure uptake of the electronic business start-up in Sindh and Punjab;
Short Term SECPPITB and Govt. of
Sindh
Indicator South Asia
OECD high income
Best Regulatory Performance
Procedure – Men (number)
10 7.6 4.9 1 (New Zealand)
Time – Men (days)
16.5 13.7 9.3 0.5 (New Zealand)
Cost – Men (% of income per capita)
6.8 11.0 3.1 0.0 (Slovenia)
Procedure – Women (number)
10 7.8 4.9 1 (New Zealand)
Time – Women (days)
16.5 13.9 9.3 0.5 (New Zealand)
Cost – Women (% of income per capita)
6.8 11.0 3.1 0.0 (Slovenia)
Paid-in min. capital (% of income per capita)
0.0 0.2 8.6 0.0 (117 Economies)
PAKISTAN
Conducting mapping of business permits and licenses and integrate licensing and permitting with the business startup system in Sindh and Punjab;
Medium to Long term
Punjab Govt.Sindh Govt.
Conduct mapping of agencies authorized to conduct inspections and integrate inspections tracking into the business start-up system in Sindh and Punjab;
Medium to Long term
Punjab Govt.Sindh Govt.
DEALING WITH CONSTRUCTION PERMITS
This topic tracks the procedures, time and cost to build a warehouse—including
obtaining necessary the licenses and permits, submitting all required notifications,
requesting and receiving all necessary inspections and obtaining utility connections. In
addition, the Dealing with Construction Permits indicator measures the building quality
control index, evaluating the quality of building regulations, the strength of quality
control and safety mechanisms, liability and insurance regimes, and professional
certification requirements.
COMPARISON OF PAKISTAN WITH SOUTH ASIA & BEST PERFORMER
Indicator Pakistan South Asia
OECD high income
Best Regulatory Performance
Procedures (number) 18.7 15.2 12.7 None in 2017/18
Time (days) 262.8 165.5 153.1 None in 2017/18
Cost (% of warehouse value)
9.0 13.2 1.5 None in 2017/18
Building quality control index (0-15)
12.3 9.2 11.515.0 (3
Economies)Reform Action Timelines Responsibility
Automation of construction permits at LDA, including electronic submission of applications
Short Term LDA
Link LDA system with Punjab LARIMS Short Term LDA
Establishment of electronic One Window Operation at SBCA
Short Term SBCA
Link SBCA system (currently under development) with Sindh LARIMS
Short Term SBCA
Establishment of electronic One Window Operation at SBCA
Medium to Long term
SBCA
PLANNED REFORM
GETTING ELECTRICITY
This topic measures the procedures, time and cost required for a business to obtain a
permanent electricity connection for a newly constructed warehouse. Additionally, the
reliability of supply and transparency of tariffs index measures reliability of supply,
transparency of tariffs and the price of electricity.
COMPARISON OF PAKISTAN WITH SOUTH ASIA & BEST PERFORMER
PLANNED REFORMS
Indicator South Asia
OECD high
income
Best Regulatory Performance
Procedures (number) 5.4 5.4 4.5 3 (25 Economies)
Time (days) 161.2 98.3 77.2 18 (3 Economies)
Cost (% of income per capita) 1585.3 1054.7 64.2 0.0 (3 Economies)
Reliability of supply and transparency of tariff index (0-8)
0 2.1 7.5 8.0 (27 Economies)
Pakistan
Reform Action Timelines Responsibility
Ensuring that K-Electric notifies its customers of a change in tariff ahead of the billing cycle;
Short Term
K-Electric
Ensuring that LESCO notifies its customers of a change in tariff ahead of the billing cycle;
Short Term
LESCO
Introducing a set of measures to reduce a number of outages to enable Sindh to score on the Reliability of supply and transparency of tariff index;
Medium to Long term
K-Electric
Introduce a set of measures to reduce a number of outages to enable Punjab to score on the Reliability of supply and transparency of tariff index.
Medium to Long term
LESCO
REGISTRING PROPERTY
This topic examines the steps, time and cost involved in registering property, assuming
a standardized case of an entrepreneur who wants to purchase land and a building that
is already registered and free of title dispute. In addition, the topic also measures the
quality of the land administration system in each economy. The quality of land
administration index has five dimensions: reliability of infrastructure, transparency of
information, geographic coverage, land dispute resolution, and equal access to property
rights.
COMPARISON OF PAKISTAN WITH SOUTH ASIA & BEST PERFORMER
Indicator South Asia
OECD high income
Best Regulatory Performance
Procedures (number)
7.3 6.8 4.7 1 (4 Economies)
Time (days) 144.1 114.1 20.1 1 (New Zealand)
Cost (% of property value)
4.2 6.9 4.2 0.0 (Saudi Arabia)
Quality of the land administration index (0-30)
9.5 8.8 23.0 None in 2017/18
PLANNED REFORMS
Reform Action Timelines Responsibility
Complete electronic database for checking for encumbrances (liens, mortgages, restrictions and the like) in Lahore and make it available online;
Short Term PLRA-Punjab/BOR-Sindh
Establish and publish statistics on the number of land disputes
Short Term PLRA-Punjab/BOR-Sindh
Online issuance of Fard Short Term PLRA-Punjab
Online submission of Fard Short Term PLRA-Punjab
Inter-government electronic procedure to obtain non-objection certificate
Medium to Long term Revenue Authorities
GETTING CREDIT
Pakistan
Doing Business assesses the sharing of credit information and the legal rights of
borrowers and lenders with respect to secured transactions through 2 sets of
indicators. The depth of credit information index measures rules and practices affecting
the coverage, scope and accessibility of credit information available through a credit
registry or a credit bureau. The strength of legal rights index measures the degree to
which collateral and bankruptcy laws protect the rights of borrowers and lenders and
thus facilitate lending. For each economy it is first determined whether a unitary
secured transactions system exists. Then two case scenarios, case A and case B, are used
to determine how a non-possessory security interest is created, publicized and enforced
according to the law. Special emphasis is given to how the collateral registry operates (if
registration of security interests is possible). The case scenarios involve a secured
borrower, company ABC, and a secured lender, BizBank.
COMPARISON OF PAKISTAN WITH SOUTH ASIA & BEST PERFORMER
Indicator South Asia
OECD high income
Best Regulatory Performance
Strength of legal rights index (0-12)
2 5.5 6.1 12 (5 Economies)
Depth of credit information index (0-8)
7 4.0 6.7 8 (42 Economies)
Credit registry coverage (% of adults)
10.7 4.8 21.8100.0 (4
Economies)Credit bureau coverage (% of adults)
7.2 18.5 65.3100.0 (25
Economies)
PLANNED REFORMS
Reform Action Timelines Responsibility
Operationalization of e-registry Short Term
SECP and Finance Division
Complete implementation of the Collateral Registry
Medium to Long term
SBP, SECP & FIN DIV
Revise Secured Lending legal framework to ensure compliance with DB methodology
Medium to Long term
SBP, SECP & FIN DIV
Enable collection and distribution of credit data from retailers or utility companies
Medium to Long term
SBP & FIN DIV
PAYING TAXES
Pakistan
This topic records the taxes and mandatory contributions that a medium-size company
must pay or withhold in a given year, as well as the administrative burden of paying
taxes and contributions and complying with post filing procedures (VAT refund and tax
audit).Using a case scenario, records taxes and mandatory contributions a medium size
company must pay in a year, and measures the administrative burden of paying taxes,
contributions and dealing with post filing processes. Information is also compiled on
frequency of filing and payments, time taken to comply with tax laws, time taken to
comply with the requirements of post filing processes and time waiting.
COMPARISON OF PAKISTAN WITH SOUTH ASIA & BEST PERFORMER
Indicator South AsiaOECD high
incomeBest Regulatory
Performance
Payments (number per year)
47 27.6 11.2 3 (Hong Kong SAR,
China)
Time (hours per year) 293.5 274.8 159.4 49 (Singapore)
Total tax and contribution rate (% of profit)
34.1 43.5 39.826.1% (32
Economies)
Post filing index (0-100) 10.49 41.78 84.41 None in 2017/18
PLANNED REFORMS
Reform Action Timelines Responsibility
Reduce a number of payments. Complete implementation of E-payments of social security contributions;
Short Term PESSI & SESSI
Complete implementation of E-payments of pension contributions;
Short Term EOBI-PESSI & SESSI
Reduce time to obtain VAT refund (Federal level reform)
Short Term FBR
Improve risk-management system audits Short Term FBR
Enable filing and payment of all taxes and contributions electronically.
Short Term FBR -PESSI & SESSI
TRADING ACROSS BORDERS
Pakistan
Doing Business records the time and cost associated with the logistical process of
exporting and importing goods. It measures the time and cost (excluding tariffs)
associated with three sets of procedures—documentary compliance, border compliance
and domestic transport—within the overall process of exporting or importing a
shipment of goods.
COMPARISON OF PAKISTAN WITH SOUTH ASIA & BEST PERFORMER
Indicator South AsiaOECD high income
Best Regulatory Performance
Time to export: Border compliance (hours)
75 62.9 12.51 (19
Economies)Cost to export: Border compliance (USD)
356 347.2 139.10 (19
Economies)Time to export: Documentary compliance (hours)
55 74.1 2.41 (26
Economies)
Cost to export: Documentary compliance (USD)
118 160.3 35.20 (20
Economies)
Time to import: Border compliance (hours)
120 95.8 8.50 (25
Economies)Cost to import: Border compliance (USD)
475.7 504.6 100.20 (28
Economies)Time to import: Documentary compliance (hours)
143 100.8 3.41 (30
Economies)
Cost to import: Documentary compliance (USD)
250 276.7 24.90 (30
Economies)
PLANNED REFORMS
Reform Action Timelines
Responsibility
Ensure 50% reduction of customs-related processing time at the border (Karachi)
Short Term
FBR-Customs
Ensure availability of on-line payment facilities at the border of duty, taxes and all other charges
Short Term
FBR-Customs
Complete integration of WeBOC with Plant Protection Department;
Short Term
FBR-Customs
Complete Integration of WeBOC with Animal Quarantine Department;
Short Term
FBR-Customs
Pakistan
Reduce hours to prepare import/export documents from 55 to 20 (export) from 143 to 50 (import) through expansion of electronic document exchanges.
Short Term
FBR-Customs
Establishment of National One Window Long Term FBR-Customs
ENFORCING CONTRACTS
The enforcing contracts indicator measures the time and cost for resolving a
commercial dispute through a local first-instance court, and the quality of judicial
processes index, evaluating whether each economy has adopted a series of good
practices that promote quality and efficiency in the court system.
COMPARISON OF PAKISTAN WITH SOUTH ASIA & BEST PERFORMER
Indicator South Asia
OECD high income
Best Regulatory Performance
Time (days) 10712 1101.6 582.4None in
2017/18
Cost (% of claim value) 20.5 29.8 21.2None in
2017/18Quality of judicial processes index (0-18)
5.7 7.0 11.5None in
2017/18
PLANNED REFORMS
Reform Action Timelines Responsibility
Introduce efficient rules for Commercial Court and accompanying Bench Book for Punjab and Sindh
Medium to Long term
LHC, KHC
Operationalize the Commercial Bench in Punjab and Sindh High and District Courts;
Medium to Long term
LHC, KHC
Introduce provisions limiting adjournments at the Commercial Bench in Punjab and Sindh to improve the Judicial Quality Index;
Medium to Long term
LHC, KHC
Improve case management system at Punjab and Sindh High and District Courts in increase the Judicial Quality Index from 5 to 10.
Medium to Long term
LHC,KHC
SECP in consultation with provincial government will lead the reforms drive for starting
a business, FBR and Ministry of Maritime Affairs will ensure that the cost and time to
export and import gets reduced substantially to bring Pakistan’s rank within top 100
businesses. FBR and provincial governments will work to reduce the multiplicity of
Pakistan
taxes and tax payments. SBP and SECP in consultation with Finance Division will
introduce necessary reforms to improve Pakistan’s position in strength of legal rights
index. Ministry of Energy in consultation with stakeholders will ensure reforms in
getting electricity. Provincial governments (Planning & Development Departments) will
lead reform drive in provincial indicators. BOI will proactively pursue with the federal
institutions and provincial governments as well as the high courts for necessary
reforms.
Communication Strategy
One key issue that has held Pakistan from achieving a bigger change in ranking is weak
Public Sector Reforms Marketing. Board of Investment strongly recommends all
stakeholders both federal and provincial to make sure that every reform is
communicated nationwide not only through print media but also through social media.
There is a dire need of having a communication strategy/framework to build feedback
mechanisms between public and private sectors and to disseminate the reforms
undertaken through each available communication media. The forum should be as high
as the Prime Minister’s Office’s press releases, regular talks/ dialogues between public
officials and private business houses.
BOI, in its capacity as Secretariat of DB Reforms Steering Committee, has started a
dedicated website and a dashboard that monitors the performance of all agencies and
generates final progress online for an online communication tools. BOI will also hold
intensive stakeholder consultation to get their feedback on the reforms undertaken and
also engage with the respondents to ensure that the reforms are felt at the ground level.
Each department will review the progress every week for carrying out the necessary
reforms. The strategy will also include more reforms based on further review and
deliberation with stakeholders including private sector during course of implementing
sprint III. Same process will be followed by updating the strategy annually.
Outcomes
i. Improving the efficiency and effectiveness of investment procedures and enhancement of Transparency of business processes
ii. Reducing procedures, cost and time involved to reduce administrative burden on businesses
iii. Enhancing investor and consumer confidence.
iv. Improving awareness about automation of procedures in relevant departments
v. Strengthening inland clearance facilities, improving electronic data interchange system and inland transportation infrastructure capacity
vi. Enhancing predictability and consistency in investment-related policies
The types of reforms envisaged under the Strategy will facilitate business start up, improve security of title by streamlining land and property procedures, improve access to credit through expanding availability of credit information and enhancing secured lending framework, improve contract enforcement through enhancing judicial case management and capacity building of judiciary. This will facilitate cross border trade and improve tax collection through enhanced tax administration.
Indicators Short Term
Medium to Long term
Total
Starting a Business 3 2 5
Dealing with Construction
Permits
4 1 5
Getting Electricity 2 2 4
Registering Property 4 1 5
Getting Credit 1 3 4
Paying Taxes 5 5
Trading Across Borders 5 1 6
Contract Enforcement 4 4
Total 24 14 38