The World Bank has published reports since 2007 that identify the ease or hardship of doing business in various countries. They have conducted research over the years and have compared the information over the years in order to understand any changes in the business practices of the country under study. The country that I have chosen is, Pakistan. The first research the World Bank conducted in Pakistan is dated to 2007 and in the report of 2010 they have showed how the economy of Pakistan improved in some sectors; whereas, it deteriorated in others. The 2007 and 2010 reports of Pakistan are similar in nature that allows ease for comparison purposes. The main focus of Doing Business is upon small and medium sized businesses, which comprise a major proportion of the Pakistani economy.
Doing Business 2010 is a quantitative analysis of the national and local considerations that need to be taken into account before commencing business in Pakistan. It is an analysis of 13 major cities of Pakistan and the legal formalities have been compared of all cities to provide a complete picture and allow generalization of the collected information. The considerations that affect the start-up of businesses in Pakistan include; construction permits, registration of property, paying taxes, trade across borders, and contract enforcement. Doing Business does not only measure the impact of rules and regulations on business start-ups rather; it also takes into account the time taken for these regulatory bodies to implement the rules. The time taken provides a critical element for evaluating the efficiency of regulatory bodies to allow business commencement.
Limitation of Doing Business 2010 Pakistan Report
There are certain limitations of the Doing Business 2010 report on Pakistan. The general report of Doing Business analyzes ten factors that are critical for business start-ups; however, they have covered only six of these ten critical factors. Furthermore, the report is unable to take into account those factors that have importance for small firms or investors. Moreover, the global financial crisis has affected economies all over the world; the Doing Business 2010 report of Pakistan does not measure the impact of financial systems and market regulations in relation to Pakistan specifically. The report has also limited itself to the number of regulations they have considered, and during this process they have ignored the impact of technology on businesses today.
Ease and Difficulty of Business Start-up in Pakistan
The time and regulation of commencing business in Pakistan vary across cities within the same country. For example; small firms may need 24 days to start business in Gujranwala and the same process may be 1 week faster in Islamabad. The difference in time taken across cities of Pakistan is largely due to the efficiency and productivity of the local branches of regulatory bodies. Moreover, in the more advanced cities such as Karachi the ease and availability of technology have allowed many business owners to complete the formalities online. The size of the city is also a determinant of the time taken to start business. Metropolitan cities such as Karachi have a higher number of pending applications at the regulatory offices; thus, the time taken to get approval to start business is longer as compared to Gujranwala.
Obtaining a construction permit is a critical step towards business commencement. The area of construction needs to have adequate infrastructure facilities before the business can be formally started. The time taken at this stage may also vary from city to city for instance; it may take 170 days in certain cities of Punjab; whereas, the same procedure would take 223 days in Karachi. Once the construction permit is obtained, businesses need to register their property that further adds to the time taken before business can officially begin. The six procedure step required for property registration is identical across the 13 cities that have been included in this report. However, the costs of registration vary across cities. The major reason for the variance of this cost is the government wants to incentivize business start-up in certain cities to create employment opportunities in those areas. The tax burden is also constant throughout the various cities, but firms related in Islamabad do not have to pay social security. Trade opportunities from any part of the country are equal in nature. The legal formalities required for importing and exporting are similar in the 13 cities that have been taken into consideration. The issues pertaining to resolving conflicts varies across cities. It may take six years to resolve a commercial issue in Peshawar and only two years in Faisalabad and Lahore.
Doing Business Report 2010 on Pakistan’s various cities provides an analysis about the ease and difficulty small-firm owners have to experience. The hardships have comparatively lessened over the years because of improvement in infrastructure and other complimentary businesses. However, with the hardships in the economy and the affect of the global financial crisis the start-up of small firms has been affected. Entrepreneurs have to undergo a number of legal regulations before commencing business, but this is for their own benefit.
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