Targeting ease of doing business

In a recent development, the Board of Investment (BoI) has prepared a business improvement plan with the objective of ensuring a more conducive business environment. Going by the news, the governments commitment to improving the business climate is related to the IMFs EFF. Subsequently, BoI was asked to lead the formulation of a plan, with a technical committee constituted to work on Ease of Doing Business (DB).
There are a few important qualifications to be made here though. First, if the DB rankings are being used as a benchmark to gauge improvements in the business environment, then the rankings limitations have to be acknowledged.
For example, issues like the quality of infrastructure services, security of property from theft and looting, transparency of government procurement, and macroeconomic conditions or underlying strength of institutions are not directly studied by Doing Business.
Needless to say, many of these aspects have time and again been highlighted by investors and commentators alike for having shooed away even established businesses from the country. Similarly, internal security and law and order are being increasingly cited as important factors hindering business development.
Secondly, while the concerted focus on a select few indicators is understandable (these include starting a business, dealing with construction permits, paying taxes, trading across borders and enforcing contracts), one cannot discount the importance of the other indicators which require just as much attention. These include, getting electricity, registering property, getting credit, protecting investors and resolving insolvency.
In fact, Pakistan has much lower ranking in two of these: getting electricity and registering property. As far as the benchmark rankings are concerned, all the indicators carry equal weight in the rankings.
Third, the pilot project is to be run in Karachi during the initial phase of the plan. However, business dynamics differ remarkably across the country, even though Karachi may have the highest business quantum. With the parameters already available in the form of DB indicators, the pilot can be extended to other districts that constitute the countrys sample. This way, a national business needs-assessment can also be pursued simultaneously.
Pakistans position in the World Banks 2014 DB rankings has come down to 110 from 106 a year before. Evidently, the governments pro-business stance itself is not enough in the face of DB challenges. While the governments intent may well be clear, only time will tell whether it has the capacity to rejuvenate business development and economic growth as it is proclaimed. Towards that end, the BoI exercise is a start!