LAHORE: According to the World Bank, in its report on the best and worst countries for doing business, Pakistan is ranked third from the last, while Singapore, closely followed by South Korea remains the best country in which to run a business in Asia.
Pakistan, which further comes under the regional category of South Asia, is classified as a lower middle-income country with a GNI per capita (average income of citizens) of $1,510 per year.
The South Asian region also includes Bhutan, India, Nepal, Sri Lanka, Maldives, Bangladesh and Afghanistan.
In the list of the Global 190 countries ranked for ease of doing business, Pakistan ranks at 147, India at 100, Afghanistan 183, Iran 124, and China 78.
How does the World Bank rank each country?
The ease of business rankings compares economies with one another. Doing Business presents results for two aggregate measures: the distance to frontier score and the ease of doing business ranking, which is based on the distance to frontier score.
The distance to frontier score benchmarks economies with respect to regulatory best practice, showing the absolute distance to the best performance on each Doing Business indicator. When compared across years, the distance to frontier score shows how much the regulatory environment for local entrepreneurs in an economy has changed over time in absolute terms, while the ease of doing business ranking can show only how much the regulatory environment has changed relative to that in other economies.
The distance to frontier score captures the gap between an economy’s performance and a measure of best practice across the entire sample of 41 indicators for 10 Doing Business topics which include:
- Starting a business
- Dealing with construction permits
- Getting electricity
- Registering property
- Getting credit
- Protecting minority investors
- Paying taxes
- Trading across borders
- Enforcing contracts
- Resolving insolvency
For each of these topics, indicators are used to gauge the effectiveness of any topic within a particular country, for example, the number of procedure(s), time (in days), cost (% of income per capita), and minimum required capital for the ‘Starting a Business’ topic.
These indicators are then compared with other economies of a similar income and regional demographics to make the final score.
What makes a country good or bad for doing business?
A country which ranks better in each of the 10 Doing Business Topics when compared to other economies is, therefore, a better place to start a business.
From issues such as poor investment policy, inadequate infrastructure, political/economic uncertainty, corruption, nepotism, and security – Pakistan has failed to develop a positive business environment for investors to pursue businesses in the country.