KARACHI: If you are a foreign investor looking for business opportunities in Pakistan, all you need to do is approach the Board of Investment (BoI), the much-touted one-window operation that aims to help overseas investors navigate the bureaucratic maze.
But there’s a catch: The BoI will refer your case to the Ministry of Interior for visa processing. Its clearance will take around eight weeks and will then be followed by approval from the Ministry of Foreign Affairs and the embassy concerned. Then comes the stage when you will be required to obtain no-objection certificates from the Ministry of Industries, provincial boards of investment and other myriad departments.
The whole process is hardly a one-window operation. This is why Dr Vaqar Ahmed, an economist associated with the Sustainable Development Policy Institute, an Islamabad-based think tank, used this anecdote on Friday to illustrate a fundamental point: structural reforms in the areas of economic governance, trade competitiveness and energy are key to growth and sustainability of private enterprises in Pakistan.
Speaking at the Karachi School of Business and Leadership (KSBL), Dr Ahmed said dividends from infrastructure development under the China-Pakistan Economic Corridor (CPEC) will remain unrealised if Pakistan does not move towards expediting macro-level reforms that reduce the cost of doing business for private enterprises.
He said his recent book titled “Pakistan’s Agenda for Economic Reforms” discusses four key linkages between governance and growth. One, weak rule of law that hampers long-term economic growth prospects. Two, delays in legal and judicial reforms, which accentuate governance challenges and threaten the sustainability of growth. Three, a lack of public administration or civil service reforms, which decreases efficiency and effectiveness of taxation and public expenditure. Lastly, corruption in institutions of economic governance, which affects businesses and ultimately government revenues.
“Most economic institutions don’t talk to each other,” he said, adding that he personally witnessed a serious lack of inter-ministerial coordination during his 10 years in a federal body. Quoting a senior bureaucrat, Dr Ahmed said high-ranking officials spend three out of five weekdays in court. Facing probes by internal committees, Federal Investigation Agency, National Accountability Bureau and superior courts leaves decision-makers with little time to focus on their real jobs, he quoted the senior bureaucrat as saying.
“There’s a disconnect between executive, regulatory and accountability institutions,” he said.
Dr Ahmed discussed several case studies that are part of his book. One of them related to the tax regime in Pakistan. Overlapping tax policies by the federal and provincial governments have resulted in a multiplicity of taxes in Pakistan, he said.
“Pakistani SMEs have to pay as many as 56 taxes annually. They have to do monthly filing with 13 revenue authorities,” he said, adding that the four provincial revenue bodies have different tax rates and rules. “An SME can’t hire a fleet of chartered accountants,” he stated.