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Pakistan ranks 138 on Ease of Doing Business index

Pakistan ranks 138 on Ease of Doing Business index

ISLAMABAD: In the global village, the concept of competitiveness has gained unprecedented importance and international investors and lenders are taking their decisions by relying on rankings of the World Economic Forum (WEF) and the World Bank.

This has forced scores of countries, particularly the developing nations, to float liberal policies and open their economies to the rest of the world for improving their rankings.

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In many ways, the liberalisation has supported the developing countries but there are also cases of extreme deregulation that has started hurting them. The global lenders push for extensive deregulation by exploiting the economic rankings of these countries. They are tying loans with deregulation.

The World Bank’s Ease of Doing Business Report and the WEF’s Global Competitiveness Index (GCI) are the main sources of assessing the competitiveness of economies.

The World Bank report is based on its Enterprise Survey while the GCI is based on the Executive Opinion Survey. At times, the findings appear unrealistic, which is also because of lack of proactive approach by state institutions.

On the Ease of Doing Business Report, Pakistan is ranked 138th in 2016 out of 189 economies, slipping two notches below the previous year’s level. The ranking is based on responses received from two cities – Lahore and Karachi.

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The GCI’s survey is relatively more representative as it captures the perception of people in about half a dozen cities. The surveyors select companies from each of the three main sectors of the economy depending on their share in the overall economy. Yet these findings are subjective.

How rankings are set

The World Bank’s report focuses on the “underlying and embedded characteristics such as the regulatory system, the efficacy of bureaucracy and the nature of business governance.”

It gathers information from 10 areas of business regulation including starting a business, dealing with construction permits, getting electricity, registering property, getting credit, protecting minority investors, paying taxes, trading across borders, enforcing contracts and resolving insolvency to develop the ease of doing business ranking.

However, a 2014 article, “The new shock doctrine: doing business with the World Bank,” written by Dr Jason Hickel, a lecturer at the London School of Economics, blames the World Bank for forcing the developing countries to go for extreme deregulation. He was of the view that the indicators were aimed at advancing the interests of big corporations in the developing world.

“There could be systematic biases in the World Bank rankings but there is no politics involved,” says Dr Miftah Ismail, Chairman of the Board of Investment. However, despite the biases, he adds, Pakistan needs to improve its system.

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Pakistan has recently got a $500-million loan from the World Bank in the name of “Competitiveness and Growth Development Policy Financing”. The government had taken a dozen desperate measures to get the loan including converting the State Life Insurance Corporation (SLIC) into a company through a presidential ordinance.

In the next step, the bank is pushing Pakistan to list SLIC on the stock exchange and preparations are already under way.

Strengths and weaknesses

On the other hand, the GCI focuses on factors that determine economic growth and a country’s level of present and future prosperity. It is aimed at building understanding of an economy’s strengths and weaknesses. Pakistan’s place on the GCI was 126th in 2015-16 out of 140 economies.

“These indicators have propaganda value but cannot be simply ignored,” says Dr Nadeemul Haque, former deputy chairman of the Planning Commission.

He argues diagnostics in the economy is important but these reports are pushing western agendas.

Pakistan’s fundamental problem is that the role of the state is gradually diminishing and the trend can be stopped by implementing and improving the constitution and strengthening the democracy, he says. Ismail and Haque are of the same opinion that competitiveness cannot be gauged exactly due to the weakening bureaucracy that is unable to communicate even the little good done.

“The problem is not that the government is performing bad or good; the challenge is the missing link between the government and citizens,” says Amir Jahangir, CEO of Mishal Pakistan. He works for the WEF in assessing Pakistan’s competitiveness.

He says Pakistan’s performance on the GCI is not as bad as projected and the government is caught in a narrative trap. He held the government institutions responsible for not adequately communicating the achievements to all the stakeholders.

“Of the 114 indices on competitiveness, Pakistan has improved on more than 60 indicators,” says Jahangir.

Pakistan may avoid the pressure from global lenders by itself focusing on areas that affect the rankings. A national competitiveness council may be set up with the task to prepare an annual state of competitiveness report and put in institutional efforts to update the data for the use of global institutions.

Courtesy : Express Tribune



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