Among South Asian countries, Pakistan is the second best performer after the Maldives. It is ranked at 76th in the world and 11th in all Asian economies, according to the report released by the State Bank of Pakistan on Saturday.
Pakistan’s ranking in the ease of doing business from regulatory perspectives, though deteriorated slightly during 2007, is still better than most of the economies in the region.
The ranking is based on 10 indicators of business regulation that follows the time and cost to meet government requirements in business start-up, operation, trade, taxation and closure. However, a detailed analysis suggests that the reversal was brought about by the improvement in ranking of other countries as the regulatory indicators of Pakistan either continued to improve or remained largely unchanged, SBP report said.
For instance, starting up business used to entail 21.3 percent of per capita income in 2006; however, in 2007 it costs only 14 percent. Similarly, the total tax rate (as percent of profit) has declined to 40.7 percent in 2007 as compared with 43.4 percent in 2006. Indicators where the Pakistan’s ranking has improved during 2007 include trading across borders and enforcing contracts.
SBP report explained that the improvement in trading across borders followed from the reforms in 2006 that included introducing the electronic data interchange systems, applying risk management techniques and introducing customs administration reforms. In enforcing contracts, however, the ranking remained still quite low at 154. In fact, globally the time to enforce a contract is lengthiest in South Asian countries with India, Sri Lanka and Bangladesh amongst the 10 countries with most difficulties in enforcing contracts in terms of time and cost to resolve commercial disputes.