The report maintained that out of the six major Pakistani cities covered by the report, Karachi has the most business-friendly regulations as measured by the Doing Business reports, while Quetta imposes the most complex and costly administrative barriers. Faisalabad, Lahore, Peshawar and Sialkot rank in between.
The report compares business regulations in the World Bank's South Asia region with 175 economies around the world. Pakistan, the runner-up reformer in South Asia, implemented reforms to simplify cross-border trade and reduce corporate tax rates.
THE TOP RANKED COUNTRIES IN THE REGION ARE: Maldives (53) and Pakistan (74), followed by Bangladesh (88), Sri Lanka (89), Nepal (100), India (134), Bhutan (138) and Afghanistan (162).
According to the report, recent reforms have resulted in a drop in the number of days required to import in Pakistan: from 39 to 19 days. Pakistan now ranks 51st world-wide in time to import, based on a concerted effort to complement trade liberalisation with improved trade logistics. Pakistan also reformed positively in the area of taxation by steadily reducing its corporate tax rate, from 39 percent in 2004 to 37 percent in 2005 and 35 percent in 2006.
Like most other countries in the region, Pakistan scores well on the indicators related to starting a business (54th out of 175) and protecting investors (19th out of 175).
It observed that despite these improvements and recent reforms, Pakistan could do better on the overall ease of doing business. It finds that the greatest remaining obstacles for the country include enforcing contracts through courts, labour regulations, and paying taxes.
"For example, it takes 880 days or about 2.5 years in Karachi to resolve a commercial dispute. Despite the reduced tax rate, businesses must still spend about two months per year or 560 hours to comply with all tax regulations. And an employer who is faced with less demand for the products he sells must pay an average of 90 weeks of salary to make a worker redundant," the report said.
"Different provincial and municipal level regulatory requirements, as well as differences in the implementation of national-level regulations, either enhance or constrain local business activity.
This explains, for example, why in Sindh (Karachi), it only takes six procedures and 50 days to register property, whereas it takes 12 procedures and 96 days in Balochistan (Quetta), with the provinces of Punjab (Faisalabad, Lahore, Sialkot) and NWFP (Peshawar) falling in the middle," World Bank stated this in its report.
According to it, the provinces could learn from each other in the areas of business regulation where there are important regional variations. In Lahore, for example, starting a business is easiest; in Peshawar, resolving a commercial dispute through court is easiest and in Karachi, registering property could serve as best practice.
"One of the most interesting findings of the report is how Pakistan could improve significantly if it simply adopted the best practices in business regulation that already exist within the country. Pakistan could jump from its current position at 74th to 52nd on the Doing Business rankings," said Caralee McLiesh, one of the authors of the report.
Meanwhile, 'Doing Business in South Asia 2007' is the third report in a series of South Asia regional reports based on the methodology of the annual global Doing Business report.
Doing Business tracks a set of regulatory indicators related to business start-up, operation, trade, payment of taxes, and closure by measuring the time and cost associated with various government requirements. It does not track variables such as macroeconomic policy, quality of infrastructure, currency volatility, investor perceptions, or crime rates. This year's report covers six Pakistani cities in four different provinces.
The Doing Business project is based on the efforts of more than 5,000 local experts, business consultants, lawyers, accountants, government officials and leading academics around the world, who provide methodological support and review.