THE STATE OF DOMESTIC COMMERCE IN

PAKISTAN

STUDY 6
WHOLESALE MARKETS






For
The Ministry of Commerce
Government of Pakistan
November 2007











By
Innovative Development Strategies (Pvt.) Ltd.
House No. 2, Street 44, F-8/1, Islamabad


Table of Contents



List of Abbreviations ............................................................................................................... i
Acknowledgments ................................................................................................................ iv


Executive Summary .............................................................................................................. 3

Section 1: Introduction .................................................................................................. 5
1.1. Structure of the Wholesale Market for Fruits and Vegetables .................................... 5
1.2. Barriers to the Development of Wholesale Markets ................................................... 6
1.3. A Model for Wholesale Markets ................................................................................. 6

Section 2: Survey Findings for Wholesale ................................................................... 8
2.1 Establishment of the Business and Owner Characteristics ........................................ 8
2.2 Output and Value Addition Indices ........................................................................... 11
2.3 Market Competition ................................................................................................. 12
2.4 Constraints .............................................................................................................. 14
2.5 Financing ................................................................................................................. 15
2.5.1 Financing for Business Establishment .......................................................... 15
2.5.2 Loan Applications......................................................................................... 17
2.5.3 Loan Applications......................................................................................... 17
2.6 Linkages .................................................................................................................. 18
2.7 Employment ............................................................................................................ 19
2.8 Governance Issues.................................................................................................. 20
2.9 Issues of Expansion ................................................................................................ 21
2.10 Facilities for Wholesale Enterprises ......................................................................... 22

Section 3: Conclusions ............................................................................................... 23
3.1 Policy Recommendations ........................................................................................ 23

List of Tables



Table 1.1: Marketing Margins for Various Vegetables (percent of Consumer Price) ....... 6
Table 2.1: Summary Statistics of Firm Age ..................................................................... 8
Table 2.2: Relative Frequency Distribution of Groups of Firm Age .................................. 8
Table 2.3: Relative Frequency Distribution of Acquisition of Business ............................ 9
Table 2.4: Ownership Type ........................................................................................... 10
Table 2.5: Summary Statistics of Average Monthly Revenue ........................................ 11
Table 2.6: Average Monthly Revenue ........................................................................... 12
Table 2.7: Similar Enterprises Within a Radius of 1 km ................................................. 12
Table 2.8: Greatest Barrier to Market Entry .................................................................. 13
Table 2.9: Most Important Constraint to Growth ............................................................ 14
Table 2.10: Breakdown of Sources of Startup Capital ..................................................... 16
Table 2.11: Breakdown of Sources of Startup Capital by Province ................................. 17
Table 2.12: Percent of Goods Purchased on Credit ........................................................ 18
Table 2.13: Patterns of Full Time Employment ............................................................... 19
Table 2.14: Registration Requirements ........................................................................... 20
Table 2.15: Governance Issues ...................................................................................... 21
Table 2.16: Have you considered expanding your business to other regions? ................ 21



List of Figures



Figure 1: Relative Frequency Distribution of Firm Age .................................................. 9
Figure 2: Relative Frequency Distribution of Acquisition of Business .......................... 10
Figure 3: Relative Frequency Distribution of Ownership Type ..................................... 11
Figure 4: Relative Frequency Distribution of Similar Enterprises
Within a Radius of 1 Km ............................................................................... 13
Figure 5: Relative Frequency Distribution of Rankings of Entry Barriers ..................... 14
Figure 6: Most Important Constraints to Growth .......................................................... 15
Figure 7: Summary Statistics of Sources of Startup Capital ........................................ 16
Figure 8: Relative Frequency Distribution of Number of Full-time Paid Employees ..... 20


Innovative Development Strategies (Pvt) i
List of Abbreviations

ABAD Association of Builders and Developers
ADB Asian Development Bank
ADBI Asian Development Bank Institute
APCA All Pakistan Contractors Association
ATT Afghan Trade Transit
BAF Bank AlFalah
BCI Business Competitiveness Index
BOR Board of Revenue
CAA Civil Aviation Authority
CBM Cubic meter
CBR Central Board of Revenue
CDA Capital Development Authority
CIB Credit information bureau
CMR Contract for the International Carriage of Goods by Road
CPI Corruption Perceptions Index
CPIA Country Policy and Institutional Assessment
DFID Department for International Development
DHA Defense Housing authority
EDF Export Development Fund
EIU Economist Intelligence Unit
EOS Executive Opinion Survey
EPB Export Promotion Bureau
ESCAP Economic and Social Development in Asia and the Pacific
FBS Federal Bureau of Statistics
FCL Full Container Load
FDI Foreign Direct Investment
FIAS Foreign Investment Advisory Service
Ft Foot
FY Fiscal Year
GCI Global Competitiveness Index
GCR Global Competitiveness Report
GD Goods Declaration
GDP Gross Domestic Product
GoP Government of Pakistan
GOR Government Officials Residences
GRT Gross Register Tonnage
GST General Sales Tax
HBFC Housing Building Finance Corporation
HBL Habib Bank Limited
HDR Human Development Report
HFIs Housing Finance Institutions
IFC International Finance Corporation
IFS International Financial Statistics
IMF International Monetary Fund
ISAL Informal Subdivision of Agricultural Land
ISO International Standards Organization
IT Information Technology
ITU International Telecommunications Union
Survey Report on Domestic Commerce

Innovative Development Strategies (Pvt) ii
KBCA Karachi Building Control Authority
KDA Karachi Development Authority
KESC Karachi Electric Supply Corporation
KM(s) Kilometer(s)
KPT Karachi Port Trust
KSE Karachi Stock Exchange
LCL Less Than Container Load
LOA Length Overall
MCB Muslim Commercial Bank
MENA Middle East and North Africa
MOC Ministry of Commerce
MOD Ministry of Defense
MTDF Medium Term Development Framework
NBP National Bank of Pakistan
NCS National Conservation Strategy
NER Net Primary School Enrollment Rate
NHA National Highway Authority
NIE Newly industrialized economy
NIT National Institute of Transport
NLC National Logistics Cell
NTN National Tax Number
NTRC National Transportation Research Center
NTTFC National Trade and Transport Facilitation Committee
NWFP North West Frontier Province
PASSCO Pakistan Agricultural Storage and Services Corporation
PEC Pakistan Engineering Council
PHDEB Pakistan Horticulture Development and Export Board
PIAC Pakistan International Airlines Corporation
PIDE Pakistan Institute Of Development Economists
PIHS Pakistan Integrated Household Survey
PKR Pakistani Rupee
PQA Port Qasim Authority
PR Pakistan Railways
PREF Pakistan Real Estate Federation
PSDP Public Sector Development Program
R&D Research and Development
REER Real Effective Exchange Rate
REITs Real Estate Investment Trusts
RICS Royal Institute of Chartered Surveyors
SAI Social Accountability International
SBP State Bank of Pakistan
SKAA Sindh Katchi Abadis Authority
SME Small and Medium Enterprises
SPS Sanitary and Phytosanitary
SRO Statutory Regulation Order
Std Standard
TEP Total Factor Productivity
TEU Twenty-Foot Equivalent Units
TI Transparency International
TOR Terms of Reference
Survey Report on Domestic Commerce

Innovative Development Strategies (Pvt) iii
TSDI Transport Sector Development Initiative
TTFP Trade and Transportation Facilitation Program
UK United Kingdom
UNDP United Nations Development Program
US United States
USA United States of America
USC Utility Stores Corporation
USD United States Dollars
WAPDA Water and Power Development Authority
WDI World Development Indicators
WEF World Economic Forum
WGI Worldwide Governance Indicators
WTO World Trade Organization

Survey Report on Domestic Commerce

Innovative Development Strategies (Pvt) iv
Acknowledgment

The IDS team owes a debt of gratitude to the officers of the Ministry of Commerce for their
guidance, assistance and feedback during the course of this study. Our special thanks go out,
in particular, to Syed Asif Ali Shah, Secretary; Mr. Naseem Qureshi and Mr. Ashraf Khan,
Additional Secretaries; Mr. Abrar Hussian, Joint Secretary; Syed Irtiqa Zaidi, Consultant and
Mr. Qaseem Subhani, Section Officer, for sparing their precious time and efforts for the
study.

We feel a deep sense of gratitude for the Minister for Commerce. Mr. Humayun Akhtar
Khan, who took out considerable time from his busy schedule to guide us. It was his sincere
and deep conviction which enabled us to conduct and compile this detailed and
comprehensive study on Domestic Commerce of our country. His apt guidance and keen
analytical oversight were extremely helpful in finalizing the study and formulating the policy
recommendations.

This study has benefited from comments received from the following:
1. State Bank of Pakistan, Karachi.
2. Federal Board of Revenue, Government of Pakistan, Islamabad.
3. Planning and Development Division, Government of Pakistan, Islamabad.
4. Trade Development Authority, Government of Pakistan, Karachi.
5. (Management Consultants) Establishment Division, Government of Pakistan,
Islamabad.
6. Finance Division, Government of Pakistan, Islamabad.
7. Pakistan Institute of Development Economics, Islamabad.
8. NTTFC, Karachi.
9. FPCCI, Karachi.
10. Planning and Development Board, Government of Punjab, Lahore.
11. Planning and Development Board, Government of NWFP, Peshawar.
12. Planning and Development Board, Government of Sindh, Karachi.
13. Planning and Development Board, Government of Balochistan, Quetta.
14. Investment and Commerce Department, Government of Punjab, Lahore.
15. SMEDA, Lahore.
16. Statistics Division, Government of Pakistan, Islamabad.


1
WHOLESALE MARKETS*


by


SAFIYA AFTAB
DR. GEORGE BATTESE
DR. SOHAIL J. MALIK














* For detailed survey results, please see separate volume entitled Basic Statistics of the Sample
Survey Data.



Innovative Development Strategies (Pvt) 3
Executive Summary

1. In Pakistan, the only clearly defined wholesale markets that exist are for agricultural
produce, particularly fruit and vegetables. Literature on other sorts of markets is scarce. The
local Mandi (Market) for fruits and vegetables acts as the central link between producers and
consumers. Mandi owners can be characterized as commission agents who charge a fixed
sum from the growers for usage of their facility and services. Wholesalers buy in lots through
an auction conducted under the supervision of the Mandi owner or his designated lieutenant
(sometimes called a Munshi). Having auctioned the goods, the Mandi owner (Ardi/Arti) pays
off the growers after deducting his commission. The wholesaler (Beopaari/Tajir) then sells to
individual retailers ranging from fruit and vegetable vendors (Rehriwaala) to shopkeepers in
retail markets. In bigger cities like Karachi and across the Punjab province, wholesale
markets for fruits and vegetables are controlled by the Agricultural Department through
market committees set up at the district level.
2. In Pakistan, there is very little planning involved in the development of fruit and
vegetable wholesale markets, which are often congested, lack well designed entry and exit
points, and are devoid of basic infrastructure facilities like roads, storage, etc. Limited
provisions exist to minimize wastage of fruits and vegetables caused by poor farm to market
roads; lack of refrigerated transport and warehousing; use of low-quality packaging materials
and faulty methods of loading and unloading.
3. A total of 500 wholesale establishments were included in the sample survey, almost a
fifth of which traded in groceries, while the rest covered a range of establishments including
medical supplies, clothing, books etc. The key findings of the survey are as follows. As is the
case with retail trade, the wholesale market is heavily tilted towards proprietorships, and
almost 90 percent of survey respondents were sole owners of their businesses. The median
monthly revenue of wholesale establishment was estimated at Rs. 300,000. About 66 percent
of firms interviewed reported that they had faced barriers to entry, and 76 percent cited the
need for finance as the most significant barrier. Access to finance came across as the most
important constraint to growth for wholesale enterprises, with 47.8 percent of respondents
citing this as the most important factor restricting expansion. The governments regulation
structure (taxation, systems of licensing etc) were cited as primary constraints in 20.8 percent
of cases, while the quality of public services was cited by almost 18.3 percent of respondents
as the most important constraint.
4. As in the case of retail establishments, wholesalers had, on an average, financed
approximately 83 percent of the costs of establishing the business through own or family
savings. In spite of the fact that access to finance was repeatedly mentioned as an obstacle to
growth, and an impediment when it came to starting a business, an overwhelming 94 percent
of respondents said that they had not considered applying for a loan in the last five years.
When asked to rank reasons why they had considered applying for loans, almost 41 percent
of respondents said they did not need funds, while a similar proportion (42.5 percent)
expressed reservations about contracting loans for religious reasons, or the belief that interest
bearing transactions are prohibited.
5. The wholesale sector does seem to generate a significant amount of employment, with
almost 41 of respondents saying that they employ two or three people full time. Disputes over
late payments appear to be a common occurrence in wholesale trade, in spite of the
understanding of the prevalence of credit based transactions, with over half of respondents
saying that they had been involved in such a dispute in the last year.
6. The wholesale sector is characterized by small proprietors In a wholesale sector where
kinship networks are important for doing business and dispute resolution is almost entirely
informal, the lack of movement towards building business conglomerates and taking
Survey Report on Domestic Commerce

Innovative Devel 4
advantage of economies of scale is very much an expected outcome. Individual business
volumes cannot increase significantly in an environment where business dealings are rarely
rooted in legal agreements.


Innovative Development Strategies (Pvt) 5




Section 1
Introduction




1. The distinction between wholesale and retail markets is sometimes blurred,
particularly for manufactured goods, which do not really go through a reselling process. In
Pakistan, the only clearly defined wholesale markets that exist are for agricultural produce,
particularly fruit and vegetables. Literature on other sorts of markets is scarce, and it is
expected that more information on the nature of wholesale or reselling activities will be
forthcoming from the proposed domestic commerce survey.

1.1. Structure of the Wholesale Market for Fruits and Vegetables

2. The local Mandi (Market) for fruits and vegetables acts as the central link between
producers and consumers. Despite variance in the size of such markets, there exists a
relatively standardized model of transactions with precisely defined roles for key players in
the supply chain and a largely uniform set of rules.
3. In Pakistan, most fruit and vegetable markets are privately owned in the smaller towns
and many cities, particularly in NWFP. Mandi owners can be characterized as commission
agents who charge a fixed sum from the growers for usage of their facility and services.
Wholesalers buy in lots through an auction conducted under the supervision of the Mandi
owner or his designated lieutenant (sometimes called a Munshi). Having auctioned the
goods, the Mandi owner (Ardi/Arti) pays off the growers after deducting his commission. The
wholesaler (Beopaari/Tajir) then sells to individual retailers ranging from fruit and vegetable
vendors (Rehriwaala) to shopkeepers in retail markets.
4. In bigger cities like Karachi and across the Punjab province, wholesale markets for
fruits and vegetables are controlled by the Agricultural Department through market
committees set up at the district level. However, the same system of commission agents and
wholesalers exist as in the former case.
5. The transaction channel between the Ardi and the Beopaari is of central importance.
Whereas the former is assured of a definite profit, the latters profit margin is conditioned by
a higher risk factor inevitably associated with the relative inefficiency emanating from a
greater number of smaller transactions closer to the tail end of the supply chain.
6. Greater risk, however, also means greater payback in terms of high profit margins.
Chaudury and Bashir (2000) showed that wholesalers make more profits than commission
agents in case of vegetables (Table 1.1).
1
The evidence also reflects the conventional logic

1 The Table is reproduced from Muhammad G. Chaudury and Bashir Ahmad, Pakistan in Mubarik Ali (ed.)
Dynamics of Vegetable Production, Distribution and Consumption in Asia, The World Vegetable Center
(AVRDC), 2000, pp. 271-302. Available at http://www.avrdc.org/pdf/dynamics/Pakistan.pdf . The studies
cited at the bottom of the table refer to 1) K. Lodhi, Food Marketing Margins, The Pakistan Economic
Analysis Network Project and the Ministry of Food, Agriculture and Cooperative, Islamabad, 1990; 2) United
Consultants Group Ltd. Agricultural Marketing in Pakistan, prepared for GoP, Lahore, 1984; 3) A.A Kokab
Survey Report on Domestic Commerce

Innovative Development Strategies (Pvt) 6
of a higher per-unit profit margin of selling at the retail end of the supply chain as against
selling at the intermediate wholesale level. This, nevertheless, naturally goes hand in glove
with the even greater risk faced by retailers of fresh fruit and vegetables owing to the short
shelf life of such items.

Table 1.1: Marketing Margins for Various Vegetables (percent of Consumer Price)
Potato Onion Tomato Peas Carrot Brinjal
Lodhi
1
UCL
2
Kokab&
Smith
3
Kokab
4
Lodhi UCL Siddique
5
Lodhi UCL UCL
A B
Grower 56.0 62.1 63.7 49.1 55.0 57.0 55.5 54.9 25.0 56.9 60.6
Commission Agent - 8.5 11.3 1.5 1.7 7.8 3.4 - 9.0 6.9
Wholesaler(Pharia) - 11.5 2.1 21.0 14.8 - 10.0 16.4 - 12.8 12.4
Retailer - 17.9 22.9 23.4 28.5 - 26.7 25.3 - 21.3 20.1
Marketing margin 44.0 37.9 36.3 50.9 45.0 43.0 44.5 45.1 75.0 43.1 39.4
Marketing margin 44.0 37.9 36.3 50.9 45.0 43.0 44.5 45.1 75.0 43.1 39.4
Note: winter onion; b. Stored winter onion; - implies that details are not available.

1.2. Barriers to the Development of Wholesale Markets

7. In Pakistan, there is very little planning involved in the development of fruit and
vegetable wholesale markets, which are often congested, lack well designed entry and exit
points, and are devoid of basic infrastructure facilities like roads, storage, etc. In Lahore, for
instance, only one (Ravi Link Road Fruit and Vegetable Market in Badami Bagh) out of the
four fruit and vegetable markets that were developed more than two decades ago is fully
functional. That too, however, is facing numerous problems including congestion due to high
traffic as well as poor parking, berthing, storage and drainage facilities.
2
Such problems
typify most Mandis in Pakistans major urban centers and towns.
8. One obvious reason for overcrowding is the increase in demand for foodstuffs
following a growth in urban population due to relatively high birth rates and even higher rates
of rural-urban migration. In some cases, city administrations have sought to deal with the
problem by proposing to shift the Mandis out of cities. Such attempts, however, are bound to
be problematic largely because they inevitably increase the cost of redistribution within the
city.
3
Limited provisions exist to minimize wastage of fruits and vegetables caused by poor
farm to market roads; lack of refrigerated transport and warehousing; use of low-quality
packaging materials and faulty methods of loading and unloading.
4


1.3. A Model for Wholesale Markets

9. In Pakistan, as in most of the developing world, where farm structures and ownership
remain fragmented and where cooperatives and farmer groupings are largely underdeveloped,
wholesale markets provide an easy inlet into the market for the great majority of small
farmers. In turn, an efficient Mandi structure is crucial to the proper functioning of local

and A.E. Smith, Marketing of Potatoes in Pakistan, Pakistan Agricultural Resource Council, 1989; 4) A.A
Kokab, Improving Marketing of Potatoes in District Okara, University of Agriculture, Faisalabad,
Unpublished M. Sc. Thesis, 1984; 5) M. Siddique, An Investigation into the Farmers Marketing Problems of
Major Vegetables in Faisalabad Vegetable Market, University Of Agriculture, Faisalabad, Unpublished M.
Sc. Thesis, 1980.
2 See Edward Seidler, Wholesale Market Development FAOs Experience, Paper prepared for the 22nd
Congress of the World Union of Wholesale Markets, Durban, September 2001. Available at
http://www.fao.org/ag/magazine/markets.pdf.
3 See Urban Food Security and Food Marketing in Metropolitan Lahore, Pakistan, Ministry of Food,
Agriculture and Livestock, Report of a Workshop at Town Hall, Lahore, 10th June 1999. Available at
http://www.fao.org/AG/ags/AGSM/SADA/DOCS/PDF/AC2199E.PDF
4 See Pakistan: Improving the Performance of the Housing, Tourism and Retail Sectors, Foreign Investment
Advisory Service - The World Bank, Washington, August 2005, p.29
Wholesale Markets
Innovative Development Strategies (Pvt) 7
economies. The development of such wholesale markets in Pakistan demands a holistic
approach subsuming a whole set of interlinked sectors such as transport, rural infrastructure,
storage, etc.
10. As a starting point, wholesale market development has to be a participatory process
involving inputs from all stakeholders including farmers, transporters, retailers, traders, and
wholesalers. Left to Mandi owners and/or the public sector alone, market development will
fall prey to vested interests and bureaucratic sloth.
11. Wholesale market ownership has also been a much debated issue. In Africa,
wholesale markets are public facilities, owned and managed by municipalities.
5
However,
there is a tendency on the part of the latter to reinvest very little on market maintenance and
development. In Pakistan, whether privately owned or under the administrative control of
Market Committees, there has traditionally been very little by way of reinvestment into
market infrastructure and operations. Moreover, Market Committees are also not sufficient
enough to bring about a meaningful infrastructural improvement. For instance, a total of Rs.
260 million was generated against Rs. 200 million salary and operating cost in the Punjab
province in 2003.
6

12. Besides the lack of adequate finances, corruption is another major bottleneck. The
only Fruit and Vegetable Mandi in Karachi, for instance, is losing out on both counts. Not
only does it have to contend with frequent disruptions in water and electricity supplies due to
nonpayment of dues, many officials in the Market Committee have been consistently accused
of ignoring illegal encroachments.
7

13. Ideally, markets of such nature should be administered as a public good through a
partnership between the public and private sectors where the former has to ensure supply of
utilities and provision of basic road infrastructure. The Market Committees have to involve
the associations of traders and wholesalers into the decision making process. The building of
trust between the two is an essential ingredient for better management as well as for better
regulation of safety and hygiene standards in the market.


















5 Edward Seidler, Ibid.
6 Pakistan: Punjab Economic Report, Government of Punjab, March 31, 2005, p.51
7 See, for instance, Sabzi Mandi Rapidly Degenerating Due to Encroachments, The News, February 16,
2005. See also, Sabzi Mandi Traders Seek Action against Market Committee, The News, May 20, 2004.

Innovative Development Strategies (Pvt) 8




Section 2
Survey Findings for Wholesale




14. A total of 500 wholesale establishments were included in the sample survey, almost a
fifth of which traded in groceries, while the rest covered a range of establishments including
medical supplies, clothing, books etc. The key findings of the domestic commerce survey,
with respect to wholesale establishments are as follows.

2.1 Establishment of the Business and Owner Characteristics

15. The bulk of wholesale enterprises visited (almost 23.8 percent) had started operations
within the last four years, with a further 20 percent having started operations within the last
five to nine years, and 17.6 percent in the last 10 to 14 years. This trend was particularly
marked in Balochistan, where almost 38 percent of establishments visited had come into
being in the last 4 years. The median age of establishments was about 11 years. Thus, as in
the case of retail outlets, most wholesale enterprises were relatively new, indicating a high
rate of turnover.

Table 2.1: Summary Statistics of Firm Age
Province Mean Std. Error of Mean Median Minimum Maximum
Punjab 13.47 .044 10.50 0 58
NWFP 12.09 .087 10.00 0 46
Sindh 16.94 .110 11.00 0 76
Balochistan 9.58 .239 7.00 0 46
Pakistan 13.83 .038 11.00 0 76

Table 2.2: Relative Frequency Distribution of Groups of Firm Age
Frequency Percent Valid Percent Cumulative Percent
Valid 0 thru 4 119 23.8 23.8 23.8
5 thru 9 100 20.0 20.0 43.8
10 thru 14 88 17.6 17.6 61.4
15 thru 19 63 12.6 12.6 74.0
20 thru 24 37 7.4 7.4 81.4
25 thru 29 32 6.4 6.4 87.8
30 thru 34 18 3.6 3.6 91.4
35 thru 39 21 4.2 4.2 95.6
40 thru 44 3 .6 .6 96.2
45 thru 49 6 1.2 1.2 97.4
50 thru 59 10 2.0 2.0 99.4
60 thru 76 3 .6 .6 100.0
Total 500 100.0 100.0

Wholesale Markets
Innovative Development Strategies (Pvt) 9
Figure 1: Relative Frequency Distribution of Firm Age
0 thru 4 5 thru 9 10 thru
14
15 thru
19
20 thru
24
25 thru
29
30 thru
34
35 thru
39
40 thru
44
45 thru
49
50 thru
59
60 thru
76
Firm Age
0
5
10
15
20
25
P
e
r
c
e
n
t

16. Almost three quarters of all respondents had established their businesses themselves,
while about 16.2 percent had inherited the business. Only 8.4 percent of respondents had
acquired the establishment as a running business. These trends were roughly the same
across provinces, but Balochistan stood out as the province where almost 85 of wholesale
businesses had been established from scratch.

Table 2.3: Relative Frequency Distribution of Acquisition of Business
Frequency Percent Valid Percent Cumulative Percent
Valid Established 372 74.4 74.4 74.4
Bought as running business 42 8.4 8.4 82.8
Inherited 81 16.2 16.2 99.0
Other 5 1.0 1.0 100.0
Total 500 100.0 100.0

Survey Report on Domestic Commerce

Innovative Development Strategies (Pvt) 10
Figure 2: Relative Frequency Distribution of Acquisition of Business
Established Bought as running
business
Inherited Other
Methods of acquisition
0
20
40
60
80
P
e
r
c
e
n
t


17. As is the case with retail trade, the wholesale market is heavily tilted towards
proprietorships, and almost 90 percent of survey respondents were sole owners of their
businesses. There were some variations within provinces Punjab had the highest proportion
of partnerships at almost 13 percent, with 87 percent sole proprietorships. Thus the sector is
characterized by the predominance of small, single owner enterprises.

Table 2.4: Ownership Type
Frequency Percent Valid Percent Cumulative Percent
Valid Proprietorship 449 89.8 89.8 89.8
Partnership 51 10.2 10.2 100.0
Total 500 100.0 100.0

Wholesale Markets
Innovative Development Strategies (Pvt) 11
Figure 3: Relative Frequency Distribution of Ownership Type
Proprietorship Partnership
Ownership type
0
20
40
60
80
100
P
e
r
c
e
n
t


2.2 Output and Value Addition Indices

18. As expected, there was significant variation in the reported revenues of the
establishments in this category. The median monthly revenue was estimated at Rs. 300,000
while the mean was estimated at Rs. 899807 per month, but the maximum reported was Rs.
35 million. About 65 percent of establishments had average monthly revenues of up to Rs.
550,000. In general, average monthly revenues for wholesale were thus significantly higher
than for retail establishments. Table 2.5 gives the breakdown of average monthly revenue for
wholesale establishments.

Table 2.5: Summary Statistics of Average Monthly Revenue
Province Revenue
Punjab Mean 1030135.02
Std. Error of Mean 10329.405
Median 450000.00
Std. Deviation 2696322.246
Minimum 5000
Maximum 35000000
NWFP Mean 419353.33
Std. Error of Mean 3645.286
Median 200000.00
Std. Deviation 481955.849
Minimum 15000
Maximum 2223200
Sindh Mean 824027.40
Std. Error of Mean 13629.785
Median 205000.00
Std. Deviation 1890487.113
Minimum 6000
Maximum 15000000
Continued
Survey Report on Domestic Commerce

Innovative Development Strategies (Pvt) 12
Province Revenue
Balochistan 1604
Mean 1508461.54
Std. Error of Mean 69180.445
Median 300000.00
Std. Deviation 2770398.283
Minimum 25000
Maximum 12000000
Pakistan Mean 899807.46
Std. Error of Mean 7192.859
Median 300000.00
Std. Deviation 2346912.572
Minimum 5000
Maximum 35000000

Table 2.6: Average Monthly Revenue
Classes Frequency Valid Percent Cumulative Percent
Up to 100,000 111 20.5 20.5
100,000 to 250,000 117 21.6 42.1
250,000 to 400,000 72 13.3 55.5
400,000 to 550,000 50 9.2 64.7
550,000 to 700,000 34 6.3 71
Over 700,000 157 29.0 100
Total 541 100

19. The data on profits is again evident of a skewed distribution with mean profit
recorded at just over Rs. 80,000 while median profit was Rs. 35,000. As in the case of retail
enterprises, calculated profit was also estimated, and median calculated profit came to just
above Rs. 16,000 per month indicating a tendency to understate revenues or overstate
expenditure when a breakdown is sought.
20. Over half (56.6 percent) of wholesale traders rented their premises, and the median
worth of their premises was Rs. 3 million. The mean value added for wholesalers came to
approximately Rs. 54,000, but once again the provincial disparity was apparent with value
added in Punjab averaging about Rs. 124,000.

2.3 Market Competition

21. Wholesale markets are generally clustered by nature of goods, so market competition was
not surprisingly fairly intense with a third of respondents saying that there were more than 25
similar outlets in the vicinity. Such clustering was particularly evident in NWFP, where 33.2
percent of respondents said that up to 25 similar enterprises could be found in a radius of one km.

Table 2.7: Similar Enterprises Within a Radius of 1 km
Frequency Percent Cumulative Percent
1 to 5 133 26.6 26.6
6 to 11 85 17.0 43.6
12 to 25 92 18.4 62.0
More than 25 166 33.2 95.2
Dont know 24 4.8 100.0
Total 500 100.0

Wholesale Markets
Innovative Development Strategies (Pvt) 13
Figure 4: Relative Frequency Distribution of Similar Enterprises Within a Radius of 1 Km
1 to 5 6 to 11 12 to 25 more than 25 Do not know
Number of competing firms
0
10
20
30
40
P
e
r
c
e
n
t

22. About 66 percent of firms interviewed reported that they had faced barriers to entry,
and 76 percent cited the need for finance as the most significant barrier. The need to have
personal contacts in the proposed business was cited as the most important barrier by 7.6
percent of respondents, while almost a third of respondents cited it as the second key barrier
to entry. Government regulations and tariffs were cited as the second and third ranked
barriers by about 20 percent of respondents. These results were more or less consistent
across provinces with some minor variations, for example in Balochistan the proportion of
respondents citing lack of finance as the most important entry barrier was 65 percent, but a
range of other issues such as lack of market information and lack of demand were cited as
barriers also.

Table 2.8: Greatest Barrier to Market Entry
Frequency Percent Valid Percent Cumulative Percent
Valid Large amount of capital/finance needed 248 75.4 75.4 75.4
Government regulations/tariffs 12 3.6 3.6 79.0
Corruption in registration agencies 11 3.3 3.3 82.4
Mafia or cartel restricts entry 3 .9 .9 83.3
Must have personal contacts in industry 25 7.6 7.6 90.9
Others 30 9.1 9.1 100.0
Total 329 100.0 100.0

Survey Report on Domestic Commerce

Innovative Development Strategies (Pvt) 14
Figure 5: Relative Frequency Distribution of Rankings of Entry Barriers

Large amount of
capital/finance
need
Government
regulations/tariffs
Corruption in
registration
agencies
Mafia or cartel
restricts entery
Must have
personel contacts
in industry
Others
Most difficult issue
0
20
40
60
80
P
e
r
c
e
n
t

2.4 Constraints

23. As in the case of retail enterprises, access to finance once again came across as the
most important constraint to growth for wholesale enterprises, but in case of such enterprises,
45.6 percent of respondents cited this as the most important factor restricting expansion. The
governments regulation structure (taxation, systems of licensing etc) were cited as primary
constraints in 19.3 percent of cases, while the quality of public services was cited by almost
18.9 percent of respondents as the most important constraint. Corruption and law and order
problems were cited as the third ranked constraints to growth by 27 percent and 19.5 percent
of respondents, but were rarely cited as primary constraints.

Table 2.9: Most Important Constraint to Growth
Frequency Percent Valid
Percent
Cumulative
Percent
Valid Taxation and regulation systems 95 19.0 19.3 19.3
Quality of public services (Electricity, roads,
etc)
93 18.6 18.9 38.1
Lack of access to finance 225 45.0 45.6 83.8
Lack of clear regulations for property
agreements
20 4.0 4.1 87.8
Corruption 19 3.8 3.9 91.7
Law and order situation 41 8.2 8.3 100.0
Total 493 98.6 100.0
Missing System 7 1.4
Total 500 100.0

Wholesale Markets
Innovative Development Strategies (Pvt) 15
Figure 6: Most Important Constraints to Growth

Taxation and
regulation
system
Quality of
public
services
Lach of
access to
finance
Lack of clear
rgulation for
property
rights
Corruption Law and
order
situation
Most important constraint to growth
0
10
20
30
40
50
P
e
r
c
e
n
t


24. There was some interesting variation across provinces, particularly with regard to
Sindh, where the proportion of respondents who said that lack of finance was the most
important constraint was just under 40 percent, but the quality of public services was cited as
an issue by almost 19 percent of respondents and the law and order situation was cited as the
prime constraint by almost 18 percent. In Balochistan, the quality of public services ranked
equally with lack of access to finance as the prime constraint to growth of enterprises both
being cited by 28 percent of respondents as the most important constraint. Similarly, the law
and order situation and taxation issues also came out strongly as constraints in Balochistan,
both being cited as prime issues by 16 percent of respondents approximately. Thus in at least
two provinces of the country, recent socio-political scenarios have not been conducive to
business, and this negative trend is reflected in the responses of the business community.

2.5 Financing
2.5.1 Financing for Business Establishment

25. As in the case of retail establishments, wholesalers had, on an average, financed
approximately 84.8 percent of the costs of establishing the business through own or family
savings. Sale of assets had, on an average, financed 5.9 percent of the costs while loans from
family members had financed a further 5.24 percent.

Survey Report on Domestic Commerce

Innovative Development Strategies (Pvt) 16
Table 2.10: Breakdown of Sources of Startup Capital


N Mean Std. Deviation
Statistic Statistic Std. Error Statistic
Own/Family savings 500 84.8 1.2 27.5
Remittances from abroad 500 2.01 .51 11.28
Sale of Assets 500 5.90 .80 17.85
Bank Loan 500 .96 .35 7.87
Loan from fam/friends 500 5.24 .69 15.49
Private money lenders 500 .17 .11 2.54
Others 500 .90 .33 7.48
Valid N (listwise) 500

Figure 7: Summary Statistics of Sources of Startup Capital
0
10
20
30
40
50
60
70
80
90
Own/Family
savings
Remittances
from abroad
Sale of
Assets
Bank Loan Loan from
fam/friends
Private
money
lenders
Others
Wholesale Sources of startup capital
P
e
r
c
e
n
t


26. The tendency to use own savings was particularly strong in Sindh, where almost 95
percent of businesses had been established as such. Some other provincial anomalies also
stand out. In Punjab, the sale of assets accounted for about 9 percent of the costs of setting
up the business, where as in NWFP this source accounted for less than 1.5 percent. Bank
loans figured to any degree of prominence only in NWFP, where, on an average, 4 percent of
establishment costs were said to come from bank loans a somewhat unexpected result.
Loans from family and friends constituted almost 12 percent of establishment costs in
Balochistan, but only 2.5 percent in Sindh. Interestingly, the role of private money lenders
was practically non-existent in three of the provinces, but in Balochistan almost 2 percent of
establishment costs came from this source.

Wholesale Markets
Innovative Development Strategies (Pvt) 17
Table 2.11: Breakdown of Sources of Startup Capital by Province
Province
Own/Family
savings
Remittances
from abroad
Sale of
Assets
Bank
Loan
Loan from
fam/friends
Private
money
lenders Others
Punjab Mean 80.20 2.94 9.04 .81 6.39 .13 .48
Std. Error
of Mean
.115 .050 .084 .021 .065 .006 .018
Std.
Deviation
30.326 13.206 21.998 5.651 17.198 1.634 4.650
NWFP Mean
84.82 3.75 1.43 3.57 3.75 .00 2.68
Std. Error
of Mean
.235 .129 .058 .145 .108 .000 .115
Std.
Deviation
30.000 16.536 7.423 18.558 13.831 .000 14.699
Sindh Mean
94.56 .00 2.36 .07 2.53 .00 .47
Std. Error
of Mean
.103 .000 .075 .006 .061 .000 .041
Std.
Deviation
14.343 .000 10.486 .819 8.453 .000 5.735
Balochistan Mean
77.31 .00 3.08 1.92 11.92 1.92 3.85
Std. Error
of Mean
.786 .000 .275 .240 .616 .240 .333
Std.
Deviation
31.457 .000 11.017 9.618 24.662 9.618 13.328

2.5.2 Loan Applications

27. In spite of the fact that access to finance was repeatedly mentioned as an obstacle to
growth, and an impediment when it came to starting a business, an overwhelming 94 percent
of respondents said that they had not considered applying for a loan in the last five years.
Sindh and Balochistan fell a little below the average on this count with 90 percent and 88
percent of respondents saying that they had never considered applying for a loan, while
Punjab and NWFP the proportion who had never considered the option was over 95 percent.
28. When asked to rank reasons why they had considered applying for loans, almost 41
percent of respondents said they did not need funds, while a similar proportion (42.5 percent)
expressed reservations about contracting loans for religious reasons, or the belief that interest
bearing transactions are prohibited. Interestingly, in NWFP where religious sentiments are
generally believed to dominate, only 36 percent of respondents cited the religious issue as the
most important one for not taking a loan. Almost 40 percent respondents in NWFP stated
that they simply did not need the loan, and 12 percent cited possible high interest as a
deterrent. The interest rate consideration tied with the religious consideration in NWFP
when respondents were asked to cite the second most important reason for not taking a loan,
but both these reasons being cited by 30 percent of respondents as the second major reason.
The relative convenience of getting financing from family or friends was also cited as the
prime reason for not applying for loans by 6.6 percent of respondents.

2.5.3 Loan Applications

29. Only 34 wholesalers interviewed reported having applied for a loan in the last three
years. Of those who had made such an application, 46.7 percent had approached a
commercial bank, and a similar 46.7 percent had approached a relative or friend. 46.7
percent of loans were applied for to invest in expansion of the existing business, while in
almost 27 percent of cases, the intent was to start up a new enterprise. The applications of 30
persons were approved, and these were divided almost equally between applications to
commercial banks and applications to friends and relatives. For the six cases where loan
Survey Report on Domestic Commerce

Innovative Development Strategies (Pvt) 18
applications or requests were not approved, in 3 cases no explanation was given, while
insufficient collateral and bad credit history were also cited as reasons.
30. Average loan amounts sought by wholesalers were, predictably higher than those
applied for by retailers given the larger size of the average business. The average loan
amount requested was in the range of Rs. 467,000, while the amount actually received was
about Rs. 351,000. The median amount asked for was Rs. 300,000, while the minimum
amount asked for and the minimum received was Rs. 25,000.
31. Like retail trade, wholesale trade also depends heavily on the extension of credit,
wherein sales or purchases of goods are affected with payment delays being implicit in the
transaction, although no interest is charged. Almost 70 percent of wholesalers said that they
purchase goods on credit as a routine in business transactions. Almost 25 percent of
wholesalers claimed that up to 65 percent of their purchases were made on credit. Table 2.18
gives the complete breakdown.

Table 2.12: Percent of Goods Purchased on Credit
Percent of Goods
Purchased on
Credit
Frequency Valid Percent Cumulative Percent
1 through 10 16 4.8 4.8
11 through 20 29 8.7 13.5
21 through 30 45 13.5 27.0
31 through 40 43 12.9 39.9
41 through 50 84 25.2 65.2
51 through 60 24 7.2 72.4
61 through 70 18 5.4 77.8
71 through 80 28 8.4 86.2
81 through 90 7 2.1 88.3
91 through 100 39 11.7 100.0
Total 333 100.0

2.6 Linkages

32. The hypothesis for Pakistan was that wholesalers, even in urban centers, tend to
restrict the scale of their businesses to their environs, and rarely venture beyond their
hometowns. The data bears this out to some extent. On average wholesalers purchased 41
percent of their entire stock of merchandise from the same town, and on average sold 59
percent of their entire stock to retailers in the same city. This was most pronounced in Sindh,
where almost 61 percent of respondents procure their products from the same city, and a
further 20 percent from the same province. This effect seems to have become most
pronounced because of the significant representation of Karachi in the sample for Sindh,
Karachi being a largely self-contained market. NWFP and Balochistan were the least self
contained provinces with approximately 35 percent of wholesale goods traded coming from
other provinces.
33. With regard to the use of business related services, 88 percent of respondents had
never used engineering services, 94 percent had never used management consultants, 78.5
percent had never used marketing services, 92 percent had never used accounting services
and 95 percent had never used IT services, and 90 percent had never used legal services.
This points to the informal nature of transactions in the wholesale sector, and the small scale
of individual businesses.

Wholesale Markets
Innovative Development Strategies (Pvt) 19
2.7 Employment

34. The hypothesis was that as the services sector grows, it is increasingly absorbing
both unskilled and semi-skilled labor. However, given the small size of the average business,
17.5 percent of respondents did not employ any full-time paid employees at their outlets. A
further 22 percent employed one person full time, while over a quarter of respondents
employed two people full time. Only 9.8 percent of enterprises employed 5 to 10 persons,
while less than 2 percent employed more than ten persons. NWFP had the lowest level of
employment generation in the wholesale sector, with a quarter of establishments not using
any full time paid labor, and a further one third employing only one person. On an average,
wholesale traders in Sindh and Punjab employed two persons at their premises. The data for
Balochistan showed an average of 5 persons employed per establishment, but the data may
have been biased by the small size of the sample.
35. About 91 percent of enterprises did not retain any part time employees (where part
time was defined as employees working less than five hours a day). Over 30 percent of
employees worked 10 to 12 hours a day. Of the total respondents, 43 percent said that none
of their employees had finished primary school.
36. The table below summarizes employment characteristics in the wholesale sector. The
sector does seem to generate more employment than retail, with almost 41 of respondents
saying that they employ two or three people full time. 91 percent of establishments had no
part time employees.

Table 2.13: Patterns of Full Time Employment
Frequency Percent Valid Percent Cumulative Percent
Valid .00 88 17.6 17.6 17.6
1.00 110 22.0 22.0 39.7
2.00 131 26.2 26.3 65.9
3.00 72 14.4 14.4 80.4
4.00 39 7.8 7.8 88.2
5.00 23 4.6 4.6 92.8
6.00 11 2.2 2.2 95.0
7 thru 10 15 3.0 3.0 98.0
11 thru 24 10 2.0 2.0 100.0
Total 499 99.8 100.0
Missing System 1 .2
Total 500 100.0

Survey Report on Domestic Commerce

Innovative Development Strategies (Pvt) 20
Figure 8: Relative Frequency Distribution of Number of Full-time Paid Employees

.00 1.00 2.00 3.00 4.00 5.00 6.00 7 thru 10 11 thru
24
Number of full-time paid employees
0
5
10
15
20
25
30
P
e
r
c
e
n
t

2.8 Governance Issues

37. About 48.4 percent of wholesale establishments were not registered at all, while the
majority carried some form of registration. Of those who had not registered, almost 71.5
percent of wholesalers said that registration was not required. A further 4.1 percent cited
high registration fee as the reason for not registering the business. However, a little over 72
percent of enterprises were observed to provide receipts to customers, indicating that the vast
majority of wholesalers bear some form of tax liability.

Table 2.14: Registration Requirements
Frequency Percent Valid Percent Cumulative Percent
Valid No 242 48.4 48.4 48.4
Yes 258 51.6 51.6 100.0
Total 500 100.0 100.0

38. About 91 percent of respondents agreed, or strongly agreed with the statement that
they relied on the reputations of those that they entered into contracts with. Business
reputation was particularly important in Balochistan where 88 percent of respondents
strongly agreed with the need to ensure that a potential business partner has a good
reputation.
39. About 83 percent also agreed or strongly agreed with the statement that contracts
would prevent them from being cheated. Balochistan was also the province where a high
degree of confidence was expressed in contracts, with 52 percent of respondents strongly
agreeing with the statement that contracts prevent businessmen from being cheated. Alost
68.7 percent agreed or strongly agreed (with almost 16.6 percent strongly agreeing) with the
statement that the legal system was functional, in that they had confidence that their contracts
Wholesale Markets
Innovative Development Strategies (Pvt) 21
and property rights would be upheld in a business dispute. More half of respondents (59.3
percent) disagreed with the statement that people from other baradaris or ethnic groups were
likely to cheat them, while 7.7 percent agreed with this statement.

Table 2.15: Governance Issues
Strongly
agree
Agree Disagree Strongly
disagree
I must rely on the reputation of those I enter into agreement
with.
% 47.4 44.0 8.5 .2
A contract will protect me from being cheated. % 23.0 60.4 15.4 1.2
The legal system will uphold my contract and property rights
in business disputes
% 16.6 52.1 26.9 4.4
People from other communities/baradaris are more likely to
cheat me.
% 7.7 33.0 50.2 9.1
People from other cities are more likely to cheat me. % 6.7 34.8 46.4 12.1

40. Disputes over late payments appear to be a common occurrence in wholesale trade, in
spite of the understanding of the prevalence of credit based transactions, with 53 percent of
respondents saying that they had been involved in such a dispute in the last year. The
incidence of serious crimes was relatively low, although about 17 percent of respondents also
reported theft cases. Perhaps due to the petty nature of disputes, the police is almost never
called in over half (54 percent) of even theft related issues were dealt with through
negotiation. In case of late payments, 91.3 percent of these were settled by negotiation.

2.9 Issues of Expansion

41. A little over half (51.8 percent) of wholesalers had considered expanding their
businesses within the same city, and almost 68 percent claimed that financial issues had
prevented them from putting their plans into operation. The lack of a reliable network of
partners was also cited by almost 17 percent of respondents as a reason for the restriction of
the business.

Table 2.16: Have you considered expanding your business to other regions?
Frequency Percent Valid Percent Cumulative Percent
Valid Yes, to same city 259 51.8 51.8 51.8
Yes, overseas 5 1.0 1.0 52.8
No 236 47.2 47.2 100.0
Total 500 100.0 100.0

42. As in the case of retailers, the proportion of respondents who claimed to have
considered entering into a partnership for business was very low at just 11.3 percent, with
almost 88.7 percent of respondents saying that they did not trust non family members when it
came to entering into partnerships. About a quarter of respondents said that they were
content with the current scale of the business and did not wish to expand. Only 10 percent of
respondents claimed to have any interest in entering into a franchise agreement with a foreign
owned business. For the majority who had not considered the option, 45.5 percent felt that
the type of franchises operating in the country did not work in areas relevant to their line of
work, while almost 20 percent did not want to enter into business dealings with strangers.
Almost 20 percent felt that franchise requirements were too difficult to fulfill, and almost 11
percent said that they did not know how to go about acquiring a franchise.
Survey Report on Domestic Commerce

Innovative Development Strategies (Pvt) 22
2.10 Facilities for Wholesale Enterprises

43. About 73 percent of respondents said that the space they were operating in was
adequate for their needs, but 57.1 percent pointed out that additional space was not available,
even if they wanted to expand. In terms of conditions in shopping areas, enumerators noted
that in about 62.6 percent of cases, the road leading to the shopping area was in average
condition, while in 18 percent of cases the road was poor. The provision of parking space
was generally not up to standard, with enumerators recording that no parking space was
provided outside the shopping area in 37 percent of the locations, while in a further 34.6
percent of cases, parking space provided was inadequate to accommodate peak hour
shoppers. In 61.2 percent of cases, no encroachments were found outside shops.


Innovative Development Strategies (Pvt) 23




Section 3
Conclusions




44. While the average revenue of wholesale businesses is higher than that of retail, the
wholesale sector in Pakistan, like the retail sector, is dominated by relatively small players.
As is the case for the retail sector, lack of access to finance was cited as a major constraint for
the expansion of individual businesses in the wholesale sector, but unlike retail, the low
quality of public infrastructure, and complications in the taxation system also figured quite
frequently in the responses. The lack of financing opportunities figures most prominently as
a barrier to entry and the excessive reliance on own or family savings restricts opportunities
in the wholesale business, and promotes a culture wherein only families with business
experience spawn new entrants. The sector does generate significant employment though,
particularly in Punjab and Sindh.
45. Wholesalers in Punjab and Sindh tended to trade in goods either produced in nearby
towns or villages, or obtained from nearby ports. Wholesalers in NWFP and Balochistan
had, of necessity, wider linkages outside their provinces. In addition, wholesale
establishments rarely use business services, relying instead on formal and informal kinship
networks for market intelligence and advertising. Similar networks are relied upon also for
dispute resolution.
46. In a wholesale sector where kinship networks are important for doing business and
dispute resolution is almost entirely informal, the lack of movement towards building
business conglomerates and taking advantage of economies of scale is very much an expected
outcome. Individual business volumes cannot increase significantly in an environment where
business dealings are rarely rooted in legal agreements.

3.1 Policy Recommendations

47. Key recommendations for the support of the wholesale sector include.
The banking sector has largely ignored trade and domestic commerce and at a time when
liquidity is high in the sector, banks must be encouraged to address the financial needs of
the trading community. Islamic finance institutions, which may use instruments more
palatable to stakeholders in this sector may be particularly well placed to service the
needs of the sector, given that many Islamic instruments of finance were designed
specifically to facilitate trading. This may involve devising somewhat innovative
instruments for financing, but given the size of the sector, and its growing importance in
the economy, this could potentially be a profitable venture.
It is imperative to develop small claims courts and enhance the capabilities of business
tribunals generally, to facilitate contract enforcement for domestic commerce. In the
absence of adequate measures for such enforcement, there is excessive reliance on
personal and family contacts, and dispute resolution, particularly for late payments, takes
Survey Report on Domestic Commerce

Innovative Development Strategies (Pvt) 24
up time and effort on the part of the trading community as disputes are rarely taken to
legal authorities. The legal system is the cornerstone of the enabling environment for the
private sector to do business.
There is a need to facilitate the growth of business support services in the country for both
retail and wholesale markets. While some progress has been made in this regard in the
retail sector with the publication of business advisory reports on the retail sector in recent
years, there is very little information on the wholesale sector, given that foreign investors
are not primarily interested in wholesale trade. However, business support services are as
crucial, if not more so, for the wholesale sector as for retail, and the Ministry of
Commerce can encourage business support services by preparing databases of business
support services in key areas such as IT, accounting etc, and making such databases
available to export oriented enterprises as well as chambers of commerce and industry.
The Market Committee Act needs to be amended to allow a greater role for the private
sector in determining the day to day functioning of fruit and vegetable markets, expansion
plans etc.