Private sector growth: High cost of doing business limits competitiveness: ADB

ISLAMABAD: A robust private sector is critical to Pakistan’s goal of achieving upper-middle-income status, but the high cost of doing business limits its competitiveness, said the Asian Development Bank (ADB) Country Director for Pakistan, Xiaohong Yang.

“Unreliable access to basic infrastructure is also a significant constraint for private sector activities, while access to finance remains limited for women entrepreneurs, small businesses, and other underserved segments,” said the ADB official in questions and answers: “Boosting Growth, Resilience, and Competitiveness in Pakistan” uploaded on the Bank website.

Pakistan has the potential to become a regional hub for trade and economic activity, but greater cooperation is impeded by weak connectivity and trade links.

Through its membership of the CAREC and other regional platforms, Pakistan can continue improving connectivity, developing multimodal transport systems, and strengthening cross-border trade, she added.

She said that the ADB would support the government in implementing tariff and tax reforms.

The streamlined import tariff and tax procedures will help private businesses thrive and facilitate export diversification.

The ADB target reforms that boost competitiveness and private sector development create jobs and drive market innovation.

Pakistan has struggled with boom-and-bust cycles in previous years due to low export capacity, weak domestic revenue, and other systemic challenges.

This has been exacerbated by the coronavirus disease (Covid-19) pandemic, which caused a sharp downturn in 2020 and is likely to push more people into poverty, noted the article.

She said around a quarter of the population lives below the poverty line, while a further 20 million are near-poor and highly vulnerable to shocks.

The country also has the second-highest number of out-of-school children in the world, while there is significant divergence in health outcomes among the population.

The ADB will seek to enhance productivity and well-being by improving education, nutrition, health systems, clean water and sanitation, affordable housing, and social protection.

The ADB will promote system-wide reforms on skills development, and investments in secondary education with a special emphasis on increasing girls’ enrollment.

The challenge of out-of-school children will also be addressed through support for Ehsaas Kafaalat conditional cash transfers for primary education, targeting children, particularly girls, from poor and vulnerable households.

Gender inequities continue to be a significant challenge in Pakistan with low literacy rates and labor force participation for women.

The Covid-19 has heightened the risk of increased gender disparities in the country. Yet if Pakistan can close the gender gap, it could raise GDP by as much as 30 percent, the bank official added.

The ADB is currently working with Pakistan to access the ADB’s Asia Pacific Vaccine Access Facility – a $9 billion resource envelope with country-specific allocations, accessible in line with our members’ readiness. These APVAX resources are in addition to the regular country allocation.

Copyright Business Recorder, 2021