DOING BUSINESS 2016:

A COMPARATIVE ANALYSIS
PAKISTAN

Research & Development Department

The Lahore Chamber of Commerce & Industry

TREND IN PAKISTANS RANKING: LAST 5 YEARS

2012

2013

2014

105

107

110

2015

2016

128
138

PAKISTANS RANKING IN EACH FACTOR

1
2
3
4
5
6
7
8
9
10

FACTOR
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

2016
122
61
157
137
133
25
171
169
151
94

OBJECTIVE

To bring Pakistan among

the top 50 countries by
2018.

METHODOLOGY
To compare procedures of
Pakistan with the best ranked
countries in each factor
To identify the gaps between the
procedures of Pakistan and the
best ranked countries
To formulate recommendations
in consultation with stakeholders
To lobby for implementation

Factor 01

STARTING A BUSINESS
PAKISTAN 122
VS
NEW ZEALAND 1

COMPANIES REGISTERED IN PAKISTAN AND

NEW ZEALAND
50,000

47,261
44,045

45,000
40,000
35,000
30,000
25,000
20,000
15,000
10,000
5,000

4,587

3,953

2012-13

2013-14

Pakistan

New Zealand

PROCEDURE FOR INCORPORATION OF A COMPANY

Lahore, Pakistan
1

Reserve a company name online via SECP

New Zealand

Apply online
2 Pay the name reservation/Incorporation at MCB for
registration
3 Obtain a digital signature from NIFT
with the
4 Complete registration form on the SECP eCompanies
portal
Office New
Zealand
5 Obtain NTN online from FBR
6 Apply for Sales Tax Registration No. online from (including
Inland
FBR
Revenue
7 Registration for Professional Tax with E&T Dept. Department
8 Registration with PESSI
(IRD) number
application
9 Registration with EOBI
and
10 Registration with Labor Department
registration
for GST)

COMPARISON OF GOVT./OTHER AGENCIES

INVOLVED IN STARTING A BUSINESS
Lahore, Pakistan
1

Security and Exchange Commission of Pakistan

(SECP)

National Institutional Facilitation Technologies (NIFT)

Tax Facilitation Center of the Regional Tax Office

(RTO), Federal Board of Revenue (FBR) and Punjab
Revenue Authority

Excise and Taxation Department of the District

Punjab Employees Social Security Institution (PESSI)

Employees Old Age Benefits Institution (EOBI)

Labor Department, Government of Punjab

New Zealand

New Zealand
Companies
Office

COST AND TIME INVOLVED IN

REGISTERING A COMPANY
Pakistan
Regular

New Zealand

Fast Track

Online In person

Online

In person

Online

12,610

23,200

44,000

11,407.82

25,010

(Amounts in PKR)

Lahore, Pakistan

New Zealand

19 Days

0.5 Day

RECOMMENDATIONS
Establish a One-Portal for implementation of all the
departments involved in registering new businesses.
The One-Portal should enable SECP to collect all the required
information and disseminate to all the concerned
Federal/Provincial Govt. departments through an online
portal. However, registration with each department should be
made need-based.
The One-Portal should also enable SECP to take a one-time
lump sum payment in their online bank account which can
then be transferred to the accounts of the relevant
Federal/Provincial Govt. departments.
All required payments should be made online through
credit/debit card and bank accounts.
The timeframe for establishing the One-Portal should be
before 30th May 2016.

STAKEHOLDERS
Federal Ministry for IT and Punjab Information Technology Board
(PITB)
Security and Exchange Commission of Pakistan (SECP)
Agent Bank
Tax Facilitation Center of the Regional Tax Office (RTO), FBR
Excise and Taxation Department of the District
Punjab Employees Social Security Institution (PESSI)
Employees Old Age Benefits Institution (EOBI) (Already automated)
Labor Department, Government of Punjab
Lawyers, Chartered accountant firms, Tax consultants, business
houses, representatives of trade bodies, etc.

FACTOR 02

Dealing with Construction

Permits
Pakistan 61
VS
Singapore 1

PROCEDURE
Lahore, Pakistan

Singapore

Obtain letter from concerned authority confirming

the land title

Obtain written permission from the Urban

Redevelopment Authority

Obtain a building permit

Obtain structural plan approval and building

commencement permit

Notify the Lahore Development Authority (LDA)

in writing of the completion of foundations

Obtain building plan approval from the Fire Safety &

Shelter Department (FSSD) of the Singapore Civil
Defence Force

Receive foundations work inspection from the

Lahore Development Authority (LDA)

Hold technical consultation with the Central Building

Plans Unit of the Ministry of the Environment and
Water Resources

Request assessment copy of property unit from

the Excise and Taxation Department

Hold technical consultation with the Land Transport

Authority

Receive inspection from the Excise and Taxation

Department and obtain the assessment copy of
property unit

Obtain building plan approval

Request water and sewerage connection

Make an online declaration of risk management

implementation and notify the Commissioner for
Workplace Safety and Health

Apply for occupancy permit and request final

inspection

Obtain water and sewage connection

Receive final inspection

Receive final inspection and approval

10

Receive completion certificate from the Lahore

Development Authority (LDA)

Obtain certificate of statutory completion

GOVT. AGENCIES INVOLVED IN GETTING

CONSTRUCTION PERMITS
Lahore, Pakistan

Singapore

(1) Lahore Development Authority

(LDA)

(1) Urban Redevelopment Authority

(2) Excise & Taxation Department,

Govt. of Punjab

(2) Building & Construction Authority (BCA)

(3) Water and Sewerage Authority

(WASA)

(3) Fire Safety & Shelter

Department/LTA/MEWR
(4) National Environment Agency
(5) Land Transport Authority
(6) Occupational Safety and Health Division,
Ministry of Manpower
(7) Singapore Power Services
(8) Registered inspector, affiliated with BCA
and BuildCo/FSSD

TIME & COST INVOLVED IN

GETTING CONSTRUCTION
PERMITS
Pakistan

Singapore

250.4 Days

26 Days

Pakistan

Singapore

PKR 230,000

SGD 10,063
(PKR 757,095.29)

RECOMMENDATIONS
Registered property agents of Lahore should have an access to the
Land Record Management Information System (LRMIS).
LRMIS should clearly announce any court proceedings or stay
orders.
All rules and regulation should be placed on ONE WEBSITE for
dealing with construction permits.
Commercialization of land be eliminated and zoning be clearly
demarked.
Civil society and stakeholders be added in a committee which
decides zoning for commercial and social activities.
Water and Sewerage connection be provided automatically within
30 days of approval of construction permits.
Completion certificate be provided within 15 days of final inspection.

STAKEHOLDERS
Lahore Development Authority
(LDA)
Excise & Taxation Department,
Govt. of Punjab

The Urban Unit

Lawyers
Consultants

Board of Revenue

Environment department

Water and Sewerage Authority

(WASA)

Civil Defence

City District Government

Municipal committee
LESCO
Architects
Town planner

Competition Commission of
Pakistan
Construction
Companies/builders/contract
ors

FACTOR 03

GETTING ELECTRICITY
PAKISTAN (157)
VS
REPUBLIC OF KOREA (1)

PROCEDURE INVOLVED IN GETTING

ELECTRICITY
Lahore, Pakistan

Republic of Korea

Submit application to Lahore

Electricity Supply Company
(LESCO) and await site
inspection

Request and receive internal wiring

inspection by Korea Electrical
Safety Corporation (KESCO)

Obtain site inspection by LESCO

and await and receive estimate

Customer submits application to

Korean Electric Power Corporation
(KEPCO) and signs contract

Obtain wiring test form through

licensed electrical contractor

Receive external works, meter

installation and electricity flow

Pay estimate and submit internal

wiring test report to LESCO

Await external works, meter

installation and electricity flow
from LESCO

TIME AND COST INVOLVED IN

GETTING ELECTRICITY
Pakistan

Republic of Korea

178.3 Days

18 Days

Pakistan

Republic of Korea

PKR 1,777,186.23

PKR 1,090,682.0087
(KRW 11,807,572.94)

RECOMMENDATIONS
An E-Portal should be established for the new connections and
other services
This E-Portal should provide the facility of not only submission of
application but submission of all relevant documents online.
This E-Portal should be integrated with SECP, LRMIS and
NADRA database for the verification of companys information.
It should also collect fee online through online banking.
After submission of verified safety inspection report, demand
notice should be generated through E-Portal.
Currently, internal wiring inspection is being conducted through
Electric Inspector, Punjab. LESCO should accept the internal
wiring report of private certified and registered contractors.
The Electric Inspector should be able to submit the Internal
Wiring report on this E-Portal within 10 days.

RECOMMENDATIONS [CONT.]
Review the Timeframe of New Connections as described
in Customer Service Manual (Annexure VI, Page 59).
Set a new target of 15 days after receipt of internal
wiring test report and monitor its implementation.
All infrastructure cost up to the point of connection
should be borne by the government/LESCO.

STAKEHOLDERS

LESCO
NEPRA
Ministry of Water and
power
Electrical Inspector
Punjab
Electrical Contractors
Builders
Industrial Estates
Commercial buildings
Consultants

Municipal corporations
LDA
Town Municipal
Administered (TMAs)
Meter/wire and other
electrical equipment
manufactures
Fabricators and pole
manufactures
Electronics industry
Civil defense

Factor 04

REGISTRATION OF
PROPERTY
Pakistan (137)
Vs
New Zealand (1)

Comparison of top countries

in Registering Property
Cost
(% of the
property value)

Ranking

Comparison

Procedures

Time
(Days)

New Zealand

2.0

0.10%

Lithuania

3.0

2.5

0.80%

Georgia

1.0

0.10%

137

Pakistan

6.0

50

7.6%

Score in Quality of Land

Administration Index 2016
Quality Index (Score)

Pakistan

New Zealand

Quality of Land Administration Index (0-30)

26

Reliability of Infrastructure Index (0-8)

Electronic database for Recording Land

Boundaries

None (paper
recording)

Yes

Transparency of Information Index (0-6)

1.5

3.5

Geographic Coverage Index (0-8)

Land Dispute Resolution (0-8)

RECOMMENDATIONS
Good practices of land ownership and
transfer from DHA should be adopted.
Tax on land transfer be reduced to 0.10%.
LRMIS should become the primary source of
confirming the title and ownership
LRMIS should be linked directly with NADRA
database.
All court proceedings and stay orders should
be recorded on LRMIS

STAKEHOLDERS
Land Registry Departments

Land Revenue
Department Board of
Revenue

Lawyers

Government Treasury
National Bank

Builders

Stamp Office of
Government
Sub Registrar of
Conveyance
Excise and Taxation
Department Punjab

Property dealers
Industrial Estates
Federal Board of Revenue
(FBR)
Town Municipal Authorities
District Office/ LDA or DHA
Registrar of Land

Factor 05

GETTING CREDIT
PAKISTAN (133)
VS
NEW ZEALAND (1)

DOMESTIC CREDIT TO PRIVATE SECTOR

(AS % OF GDP) IN 2014
New Zealand

146.2%

China

141.8%

Singapore

131.5

India

51.1%

Pakistan

15.4%

Source: World Bank Indicators

RANKING IS DONE ON THE BASIS OF

Strength of Legal Rights Index (0=Weak to 12=Strong). This
measures the degree to which collateral and bankruptcy laws protect
the rights of borrowers and lenders and thus facilitate lending.
Depth of Credit Information Index(0=Low to 8=High). Scope and
Accessibility of Credit Information distributed by Credit Bureaus and
Credit Registries.

Index-Wise Score Summary

Pakistan

New Zealand

Strength of Legal Rights Index (0=Weak to

12=Strong)

12

Depth of Credit Information Index (0=Low

to 8=High)

RECOMMENDATIONS
Credit Insurance Guarantee Fund (CIGF) be
created
Local Made Machinery (LMM) loan for SMEs to
be covered by CIGF.
Banks should have the access to the LRMIS and
SECP for easy verification of company data and
its asset.
5% of the total loan portfolio should be allocated
by the SBP for SMEs lending.
Set up DFIs and instruments for long term capital
investments

RECOMMENDATIONS
Better legal rights for secured creditors so that in case of
liquidation of a business, they should be paid first (before
tax claims and employee claims). The law should allow
public and private auctions and also permit the secured
creditor to take the asset in the satisfaction of debt.
Borrowers should have the right to access their data online
in the Credit Information Bureau (CIB).
The credit report of a borrower should also have data
related to utility companies.
The credit report of a borrower should have at least 2 years
of historical data.
The CIB should offer credit scores to the Banks as a value
added service to help them in assessing the
creditworthiness of borrowers.

STAKEHOLDERS

Government Departments
Ministry of Finance
SECP
SBP
Banks ( Islamic/Other)
Asset Management
Companies
Insurance Companies
Leasing Companies
Modarbas
Treasury banks e.g. NBP
Provincial Banks

Lawyers
Equity investors
Stock brokers
Chartered accountant
firms
Industrial
associations/Chambers/tra
de bodies
Federal Board of Revenue
(FBR)
Banking courts
Bank ombudsmen

Factor # 6

PROTECTING MINORITY
INVESTORS
PAKISTAN (25)
VS
SINGAPORE (1)

RANKING IS DONE ON THE BASIS OF

Index

Pakistan

Singapore

Extent of Disclosure Index (010)

10

Extent of Director Liability Index (010)

Ease of Shareholder Suits Index (010)

Extent of Conflict of Interest Regulation Index (010)

9.3

Extent of Shareholder Rights Index (0-10)

Extent of Ownership and Control Index (0-10)

Extent of Corporate Transparency Index (0-10)

Extent of Shareholder Governance Index (010)

7.3

7.3

Strength of Minority Investor Protection Index (0-10)

6.7

8.3

RECOMMENDATIONS

Pakistan is already leading in this indicator.

No new proposals at this time.

Factor 07

PAYING TAXES
PAKISTAN (171)
QATAR & UAE (01)

PAYING TAXES - COMPARISON WITH

LEADING COUNTRIES
Time
Number of Payments
(hours per
(per year)
year)

Ranking in
Paying Taxes

Economy

157

India

33

243

Ireland

82

Singapore

83.5

Hong Kong

74

168

Vietnam

30

770

31

Malaysia

13

118

171

Pakistan

47

594

158

Sri Lanka

47

167

TAX / MANDATORY CONTRIBUTIONS PAKISTAN

Tax / Mandatory Contributions
Corporate Income Tax
Social security contributions
Employer paid -Pension contributions
Education cess
Property tax
Tax on interest
Professional tax
Vehicle tax
Fuel tax
Employer paid - Pension contributions
(paid jointly)
Employee paid - Pension contributions
(paid jointly)
Goods and Sales Tax (VAT)
Stamp duty
Totals:

No. of
Payments
(per year)
5
12
12
1
1
0
1
1
1

Time
(hours per
year)
40
40

0
0
12
1
47

514
594

Relevant Ministry / Department(s)

Tax / Mandatory Contributions
Corporate income tax

Relevant Department
Federal Board of Revenue - Federal

Social security contributions

PESSI - Federal

Employer / Employee - Pension

contributions

EOBI - Federal

Education cess

E&T - Provincial

Property tax

E&T - Provincial

Tax on interest

Federal Board of Revenue - Federal

Professional tax

E&T - Provincial

Vehicle tax

E&T - Provincial

Fuel tax
Goods and sales tax (VAT)
Stamp duty

Revenue Department - Federal

Federal Board of Revenue - Federal
E&T - Provincial

RECOMMENDATIONS
Number of taxes and frequency of paying taxes
must be reduced. Taxes may be paid quarterly
instead of every month.
All Para Tariffs must be merged in the main tariff.
Withholding Agents must be compensated for their
efforts.
Workers' Profit Participation Fund (WPPF) and
Workers Welfare Fund (WWF) should either be
merged in income tax or be given to industrial
associations to benefit their workers.
Electronic communication between taxpayers and
tax departments. Mandatory electronic filing and
online payment for all departments.

STAKEHOLDERS

Federal Board of Revenue (FBR)

Ministry of Finance

Ministry of Commerce

EOBI

Excise and Taxation Department

Ministry of Finance, Punjab

PESSI

Board of Revenue, Punjab

Punjab Revenue Authority

Chambers/associations/trade bodies

Lawyers

Chartered accountants

Banks

Stock brokers

State Bank

Ombudsmen

Factor 08

TRADING ACROSS BORDERS

PAKISTAN (169)
16 EU COUNTRIES (01)

Regional Economies Comparative Analysis

[EXPORTS]
Trading
Across
Borders
Ranking

Economy

174

Border Compliance

Documentary
Compliance

Time
[hours]

Cost
[US$]

Time
[hours]

Cost
[US$]

Afghanistan

48

511

243

344

172

Bangladesh

100

408

147

225

21

Bhutan

59

50

133

India

109

413

41

102

137

Maldives

42

596

48

300

60

Nepal

64

226

19

85

169

Pakistan

79

426

62

307

90

Sri Lanka

43

366

76

58

RegIonal Economies Comparative Analysis

[IMPORTS]
Trading
Across
Borders
Ranking

Economy

174

Border Compliance

Documentary
Compliance

Time
[hours]

Cost
[USD]

Time
[hours]

Cost
[USD]

Afghanistan

96

850

336

900

172

Bangladesh

183

1294

144

370

21

Bhutan

110

50

133

India

287

574

63

145

137

Maldives

100

981

61

180

60

Nepal

30

156

48

80

169

Pakistan

141

957

153

786

90

Sri Lanka

72

300

58

283

RECOMMENDATIONS

Streamlining/Standardization of Import / Export process

flows

Combining Documents; like in Singapore where only

FOUR documents are required

If infrastructure, particularly RAILWAY CARGO, is made

effective, it will bring time and cost efficiency.

Comprehensive improvements in processes, services and

infrastructure in addition to customs reforms.

Collaborative Border Management through Electronic

Single Window Implementation / automation to improve
services
Improve the quality of logistics services and increase
border agency coordination

STAKEHOLDERS
Customs Department, FBR
Pakistan Revenue Automation Pvt. Ltd. (PRAL)
Ministry of Commerce
Ministry of Finance
Port Authorities
International Air cargo
Importers
Exporters
Trade Bodies/Associations/Chambers
State Bank of Pakistan
Commercial Banks
Freight forwarders
Chartered Accountants

Factor - 9

Enforcing Contracts
Pakistan (151)
Vs.
Singapore (1)

Time and Cost for Resolving a

Standardized Commercial Dispute
Country
Ranking
Comparison

Time
(Days)

Cost
(% of value of
claim)

Singapore

150

25.80%

Rep. Korea

230

10.30%

Lithuania

300

23.60%

Pakistan

151

993.20

23.0%

Procedure Comparison
Indicators

Singapore

Total Time (Days)

Lahore,
Pakistan
1,025

Filing and Service

60

Trial and Judgment

600

118

Enforcement of Judgment

365

26

Cost (% of claim)

32

25.8

Attorney cost

15

20.9

Court cost

2.8

Enforcement cost

10

2.1

150

RECOMMENDATIONS
The Number of Judges should be increased in the
lower courts to facilitate speedy justice
The lower courts should automate their legal
process. The parties to a case should be able to
file, pay court fee and access their case history and
status online.
A Pretrial Conference mechanism should be
incorporated. In this conference both parties are
presented in front of the judge to discuss the issues
of the case, list of evidence, witnesses, tentative
timetable to dispose of the case and the settlement
of the case is looked into, to save time.

RECOMMENDATIONS (CONT.)
Adjournments (Order 17 of the Civil Procedure Code) should
be limited to only special circumstances. The parties of a
case should be heavily penalized after requesting the third
adjournment. A judge should not grant a date in a case
which exceeds a week from the previous hearing.
Judges should be given yearly targets to dispose of a case
and should be allocated a tentative time frame - depending
on the nature of a case.
All judgments should be enforced within a year and penalties
for non-compliance should be introduced.
Enforcement Agency should be identified and given authority
for automatic enforcement of judgment after the decree has
been issued.

STAKEHOLDERS

All court judges (Supreme court Lower courts)

Law firms
High Court Bar Association
Trade bodies
Registrar or societies and firms
SECP
Auditors
Banks
Non banking financial companies
Banking Courts
Alternate Dispute resolution Systems
Law Ministry
Ministry of Commerce
Foreign office
NAB
FIA (commercial Crime wing)

Factor 10

RESOLVING INSOLVENCY
PAKISTAN (94)
VS
FINLAND (1)

RANKING DETAIL
1. Recovery Rate

PAK

FIN

Recovery Rate (Dollars recovered by secured

creditors on a loan of 1 dollar through
insolvency proceedings)

39.2

90.1

Time (years on average)

2.7

0.9

Cost (% of Debtors Estate)

5.6

PAK

FIN

1. Commencement of proceedings index (0-3)

2. Management of debtors assets index (0-6)

3. Reorganizing proceedings index (0-3)

2.5

4. Creditor participation Index (0-4)

14.5

2. Strength of Insolvency Framework

Index(0=weak to 16=strong)

Total Score

RECOMMENDATIONS
The
bankruptcy
laws
should
allow
the
debtor/creditor to also file for reorganization instead
of only liquidation, whereby the debtor can propose
a reorganization plan in accordance with the
bankruptcy laws to keep the business alive and pay
creditors over time. An example is Chapter 11 in
USA.
The reorganization plan should allow the
continuation of contracts, supplying essential goods
and services to the debtor.
The reorganization plan should allow the debtor to
obtain credit after commencement of reorganization
proceedings.

RECOMMENDATIONS (CONT.)
The bankruptcy laws should ensure greater creditor
participation in bankruptcy proceedings by:
Requiring the approval by the creditors for
selection or appointment of the insolvency
representative.
Giving creditor the right to request information
from insolvency representative.
Giving creditors the right to object to decisions
related to creditors claims.
The debtor in possession may use, sell, or lease
property of the estate in the ordinary course of its
business, without prior approval, unless the court
orders otherwise.

STAKEHOLDERS
Government Departments

Corporations registered with

SECP

Securities and Exchange Commission Banks

of Pakistan (SECP)
Legal Framework

Lawyers

Labor department

Chartered accountants

Chambers/trade associations

Banking courts

Office of Attorney General

Utility providers

FBR