A prerequisite to starting a business and keeping it a going concern is a good set of rules that help establish and simplify regulations regarding property rights, dispute resolution, related costs, partnerships, contractual arrangements, and economic viability.
Doing business in Pakistan has not been less than a challenge. From start-up to wind-up, various factors decide the life-cycle of businesses in the country. Doing Business is one initiative by the World Bank and International Finance Corporation that multi-dimensionally ranks 183 countries on the ease of doing business.
What does it take for a start-up? The co-publication shows that starting a business in Pakistan requires at least 10 procedures that take on average 21 days and costs 11.2 percent of income per capita.
Pakistan stands at 90th rank compared to regional average of 81 for starting a business venture. The recent couple of years have had no reforms regarding startups. However, the removal of the requirement to declare compliance and introduction of online sales tax registration in 2010 reduced the number of procedures and halved business startup processing costs.
Amongst the basic indicators highlighted in the publication, another important one is getting power and electricity connection for the business activity. From application, inspection and permit to wiring test and payment, getting electricity for a new business is plagued with numerous procedures, countless days and bureaucratic dealings.
Quite interestingly, lending and borrowing for doing business in Pakistan ranks higher than many of its peers in the region due to some initiatives to deepen the accessibility and coverage of credit information. However, a lack of reforms since 2009 has put progress to halt.
Rather surprisingly, protection to the investors is one indicator that lifts up the overall ranking massively for Pakistan. On the other hand, tax paying weighs heavy on entrepreneurship, evident from the rampant tax evasion and the increase in profit tax rate for small firms in recent times.
An issue worthy of mentioning is a standstill situation of reforms in the country. There has been no progress in this regard since at least 2009, whether it is the ease of paying taxes, setting up or acquiring credit. An issue that remains unanswered by the global ranking is the regulation for law and order and security situation that has serious repercussions on doing business within the country.
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