Naeem Y. Zamindar
Pakistan’s economic progress for most part of its existence has remained painfully shaky. Growth, throughout the country’s history, has been mired by a number of missed opportunities, despite promises from successive democratic and dictatorial regimes. Major macroeconomic distortions have kept the country from realizing its true potential in the past. Moreover, in addition to almost insurmountable security concerns, and a country that has traditionally offered little regulatory incentives and sweeteners for new businesses to flourish, potential international investors have more or less been edgy at the prospects of fully devoting their capital to Pakistan.
However, the sentiment now may not be as grim as before, as according to a recent perception and investment survey released by the Overseas Investors Chamber of Commerce and Industry (OICCI), nearly 75 percent of the respondents considered Pakistan as a high potential market for fresh investment. Significant improvements in the energy supply and the security condition were highlighted as the major drivers of this fresh wave of optimism. Enhanced regional cooperation with China, Turkey and the Central Asian States, should also spur interest in the country’s economy.
The current regime has been alive not only to a storm of macroeconomic challenges faced gruesomely by the country over the years, but also to a range of potential investment opportunities promisingly knocking on Pakistan’s doorstep. Being home to an overwhelmingly large labor force and an ever growing population; the government has focused on the revival of its domestic economy, thereby creating more jobs for both its skilled and the under skilled labor. It is also important to note that since the fiscal year 2014, the government has indeed made visible gains, as the real GDP growth has witnessed a consistently upward trend. The GDP growth rate over the past 3-4 years has hobbled in the 4-5 percent range, and in fact presently stations at an impressive 5.28 percent – the highest in 10 years. The country’s monetary and fiscal strategies have also played a stabilizing role, through substantially reducing tax loopholes and exemptions, thereby broadening the tax base and discouraging the age old tax evasion.
In line with the extensive commitment of the incumbent political regime towards improving the domestic investment and the overall macroeconomic climate in the country; the Government of Pakistan has been implementing an action plan to ease the business environment, in the expectation of delivering not only financial stability but also alleviating severe poverty concerns that have recurrently plagued virtually every sector of the economy. This plan, developed in October 2014, was jointly spearheaded by the Board of Investment (BOI) and the Economic Reforms Unit of the Ministry of Finance (MoF), with the assistance of the World Bank Group. The World Bank’s Doing Business initiative is now widely perceived by governments globally as an important measure of the effectiveness of a country’s business regulation framework. The goal is to promote investment friendly business regulations, and the intuition behind the initiative is to strive for an economy where business rules are more transparent and predictable than an economy where such regulations are cumbersome and therefore prove to be a bane for new startups. As per the plan; Pakistan is expected to implement a spate of business regulatory reforms, all of which contribute towards a set of 10 measurable indicators.
According to the Doing Business 2018 report; Pakistan currently ranks at 147 out of a total of 190 global economies, a disappointing three notch slip, from a rank of 144 reported last year. The country’s Distance toFrontier (DTF)score that measures the gap between the regulations of low income profile economies and thehigh income OECD countries, however, stands at an encouraging 51.65 – an improvement of 0.71 over the last year. This statistic nevertheless paints a bleak outlook when compared to other major South Asian economies, as it trails behind India, Bhutan, Nepal, Bangladesh and Sri Lanka. The BOI however, is proactively alive to the challenges faced by the country.
In a bid to fast track its implementation, the BOI has also launched an accelerated DB 100-days sprint plan that culminates in February, with an enduring goal to establish a DB reform secretariat, charged with the responsibility to ambitiously implement the remaining reforms, and improve the country’s DB ranking by 2019.
The Prime Minister has a vision for a prosperous and progressive Pakistan and wants to accelerate our growth rate and investments are a key driver to make that happen. He is personally involved in driving the ease of doing business initiative and wants us to dramatically improve our performance in this area. To achieve this goal, a high powered steering committee, chaired by the Prime Minister of Pakistan, Shahid Khaqan Abbasi has been formed, and the committee plans to convene in March to not only review the progress of the various stakeholders involved but also ensure that Pakistan meets its reform obligations, and sends out a positive message to the international community, thereby cementing the country’s reputation as an attractive destination for new business ventures.
—The writer is Minister of State/Chairman Board of Investment (BOI).