Saddam Hussein
The Overseas Investors’ Chamber of Commerce and Industry (OICCI) recently released its annual Security Survey 2020. Pakistan ready to attract investment, The survey captures the perceptions of the 200-member foreign companies regarding the security environment and critical assessment of operating conditions in Pakistan.
The 2020 survey concludes that the law and order situation, especially in the two major business centers of Karachi and Lahore, has improved as reflected by the increasing number of trips to Pakistan by
a) OICCI member firms’ senior management from their headquarters
b) members from regional offices, and
c) the number of their board meetings held here in the last one year.
The findings of this survey are taken seriously by potential foreign investors and diplomats. The very fact that the OICCI security surveys have for the last few years recorded positive sentiments expressed by foreign investors about continuously improving security conditions is helping mend Pakistan’s international image that will also help Pakistan ready to attract investment.
The initiatives implemented in the last five years under National Action Plan (NAP) to tackle security challenges after the December 2014 Army Public School (APS) attack in Peshawar have helped improve security across the country. Consequently, many countries including the US, UK, Portugal and Norway have significantly eased travel advisories for their citizens planning to visit Pakistan.
British Airways also resumed its flight operations in Islamabad last year as Pakistan was declared the best holiday destination for 2020 by a reputable British travel magazine. The number of tourists from abroad had been rising in the last few years because of improved security conditions until the COVID-19 pandemic struck the world, forcing countries everywhere to impose lockdowns to halt the spread of infection.
Besides the security equation, Pakistan also climbed up the ranking in the ease of doing business index. In the World Bank’s 2020 report on ease of doing business. Pakistan stands at 108th rank with a score of 61.0. It is the first time since the launch of the report back in 2002, that Pakistan has jumped 28 points in one year with 06 reforms.
According to the report, Pakistan made it easier to start a business by giving online access to expanding procedures, so that anyone who is interested in doing business can access required information easily. It has also made acquiring a construction permit easier by streamlining the approval process. Moreover, construction business/activity is now more secure and safer by making sure that building inspections happens regularly. Getting electricity connection has been made easier by enforcing service delivery time frames and online portals for the new connection applications. The country has also increased the transparency of electricity tariff changes. When it comes to registration of property, Pakistan has made registration faster and easier to register a deed at the office of Sub Registrar. The country increased transparency in land administration system, as well.
Pakistan has also started online payment system for tax collection such as Value Added Tax (VAT) and corporate income tax. As trading is one of the major components of the economy, Pakistan has made it easier to trade across the borders by increasing the integration of various agencies in the Web-Based One Customs (WEBOC) electronic system and coordinating joint physical inspections at the port.
This is good news, as previously, absence of these reforms would impede the economic activity due to higher transactions cost and thus limiting new organizations to enter into the market, which paved way for an extra-legal market. General perception about the extra-legal business in the developing countries is that they do so as to evade taxation. The reality is however very different. Hernando de Soto Polar – a renowned economist from Peru is known for his brilliant work on the informal economy. After his comprehensive study across many developing countries, he is of the opinion that the cost of doing business legally is so high that people are compelled to avoid it. The cumbersome procedures and red-tapism raise the transaction cost to an extent that operating extra-legally sounds more tempting and easier.
Indeed, the country is in much better position today than it was a few years ago; however, challenges such as systemic resistance to reform still loom large. The bureaucratic status quo still seem to digging its heels, averse to reform and unwilling to make way for professional technocrats. Despite the government’s push, the British era Planning Commission regime, which puts the civil servant at the centre of planning and execution is very much omni-present.
The author Saddam Hussein is a Development Economist, while he serves as a Research Fellow at Center for Research and Security Studies (CRSS), and Program Officer for CRSS’ sister organization – Afghan Studies Center, Islamabad. He tweets @saddampide.
