Culture of licences, permits & NOCs

ARTICLE: In these times when countries around the globe are competing to excel in economic growth, perhaps, none of them has a culture riddled with so much application of licences, permits and NOCs to conduct routine business as in Pakistan. Recognising the menace, just recently, PM Imran Khan directed to abolish unnecessary taxes and inspections. Around 150 licences are required for small shopkeepers and businessmen. He also directed all the provincial governments to eliminate 74 different licences of this nature. At present, around 150 kinds of licenses are required in the existing system in different metropolitan corporations, municipal corporations, town committees and other departments for business.

This week, the Board of Investment (BOI) also announced that it will present a roadmap in collaboration with the World Bank on reduction of requirement of unnecessary licenses under its Pakistan Regulatory Modernization Initiative (PRMI) to eradicate undue impediments placed upon by such licences.

This is a welcome step, as at present, a key role, if not the only role, BoI appears to be engaged in, is grant of licences and NOCs. BoI has to do much more than this to once again position itself as a meaningful promoter and facilitator of investment in the country. Doing away with the regime of licences and NOCs will invariably reduce the cost of doing business and significantly contribute to ease of doing business.

The discretionary power for grant of licences and NOCs resting with one individual or a chain of civil servants is one of the biggest source of corruption in the structure of bureaucracy in Pakistan. Their abolition will limit this widespread source of corruption. Many of the licences and NOCs applied on business particularly construction and real estate sectors are superfluous, meaningless and of no financial or compliance value to Pakistan as, with speed money , the defaulters have their way with ease, while the ones who are sincere in compliance with rules are stuck for months and years. What is needed is clearly defined rules and regulations and its wide spread publicity as against the present practice of keeping ambiguity to give way to exercise of discretion.

The responsibility of full application of rules and regulations must rest with the business community. There should however be a regime of heavy penalties for defaulters. The success of the new regime of self accountability rests on authorities' ability to enforce rules and regulations.

A licence and NOC-free regime will not entirely wipe out corruption from the system, but it will significantly limit it by blocking the multiple and superfluous channels now in place. Moreover, the even-handed regime will provide the rule abiding businessmen an opportunity to conduct their business on even grounds.

The initiative of the government to bring in a governance system devoid of licences and NOCs is a step which will usher in significant improvements in ease and cost of doing business, enhance revenues for the government and limit corruption. Its enforcement is challenging but doable.

(The writer is former President, Overseas Investors Chambers of Commerce and Industry)

Copyright Business Recorder, 2020