Modernising economic governance

Pakistan’s recent decision of going for a comprehensive Regulatory Reform Package for the period between 2025 and 2030 comes at a crucial juncture in the country’s economic trajectory. For several years, the business community has been concerned about the cost of compliance, the time it takes to start and run a business, and the ambiguity caused by having disparate procedures in the different tiers of government.

These are not just concerns; they have translated into lack of investor confidence and a business environment that has not been able to keep up with the changing requirements of modern commerce. Against this backdrop, the new reform package is a timely and encouraging effort to ease regulatory friction and chart a new path forward that is more investment friendly.

Many studies demonstrate the magnitude of the challenge from within Pakistan. PIDE’s study “Time to Deregulate” gives a good picture of how overlapping layers of rules and permissions have created a complex environment for businesses. The study highlighted that regulatory burden, as it is, when combined across all levels of government, comprises a significant portion of national output, and is a major barrier to innovation. Another significant report “The State of Commerce in Pakistan” analysed the international and domestic constraints, and it revealed how extensive paperwork, multiple government interface and inconsistent procedures discourage formalization and add cost mostly to small and medium-sized enterprises.

The cost of this environment is reflected in a number of indicators. International assessments continue to place Pakistan low on ease of doing business, and domestic surveys consistently find that companies of all types view regulatory complexity as a primary impediment to investment and growth. The case of small and medium enterprises is particularly disturbing. The lack of support has been a limiting factor for them to grow, innovate and make their full contribution to export diversification and productivity gains. In this increasingly globalizing economy, these constraints are a heavy burden for the future of the country.

For these reasons, the new Regulatory Reform Package must be acknowledged as a positive step for the future. The decision to create a National Business Registry has the potential to resolve one of the most common complaints from the private sector, which is the need to visit multiple offices and complete several parallel processes, just to start operations. Simplifying account onboarding for small and medium-sized businesses is an attempt to help overcome one of the key barriers that prevent small and medium-sized businesses from participating in formal credit markets. The plan to repeal obsolete company laws and modernise procedures for regulations reflects a welcome recognition that rules need to change with time. Additionally, transparency in regulatory processes is essential to building trust between the businesses and the government.

There are lessons to be drawn from countries that have managed to modernise their regulatory set-ups. Estonia is one of the most-cited examples, where the government invested early in digital public services and developed a system in which new businesses could register in minutes instead of weeks. The country did not make this transformation overnight. It set consistent investments in digital infrastructure, ensured robust coordination between agencies, and the focus on citizen and business convenience was at the centre of its reforms. While the context in Pakistan is unique, the key theme that clear rules, simple procedures, and digital efficient platforms are part of unlocking the private sector energy is true in many contexts. The experience of such countries shows that sustained focus on implementation can help achieve permanent economic benefits.

For Pakistan, the long-term impact of the reform package will be dependent on disciplined execution. Strengthening institutional coordination is important because regulatory authority is dispersed at the federal, provincial and local levels of government. Digital platforms must be designed with user experience in mind, as well as supported by good infrastructure to enable firms in smaller cities and towns to benefit equally. The private sector, particularly small and medium enterprises, should be involved in a continuous relationship through consultation and feedback in order for the reforms to reflect the challenges facing businesses in practice. Transparent monitoring and open reporting will help to reassure the public that reforms are moving ahead and that obstacles emerging are being responded to in time.

Pakistan has a huge economic potential and its entrepreneurial spirit is well recognized. A more efficient regulatory environment can help unlock that potential through reduced costs, formalisation, and investment.

The Regulatory Reform Package can provide a promising basis for this change. With constant dedication and clarity in implementation, it can contribute towards shaping the business environment and facilitating a better and stronger economic future.

Copyright Business Recorder, 2025