INFONALYSIS MAY Karachi Chamber of Commerce & Industry. Research & Development Cell. The gateway to economic prosperity

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1 INFONALYSIS MAY 2016 Research & Development Cell Karachi Chamber of Commerce & Industry The gateway to economic prosperity 0

2 Table of Contents Cross sectional analysis of Doing Business index...1 Pakistan s standing in Ease of Doing Business...2 Deciphering the Doing Business Index 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...14 The Taiwan Case Fruitful endeavors towards excellence...15 Malaysia Learning from Taiwan s Success...17 The concept of Regulatory Impact Analysis and Statement...19 Pakistan can move up to 72 nd through business reforms

3 Many countries have brought in commendable improvements at the policy and operational levels of doing business. This persistent and farsighted approach towards creating a conducive business environment has led those economies to exhibit astounding growth and prosperity. Such reforms not only led to enhanced business activities but also attracted the much needed investment and jacked up their exports. This report highlights Pakistan s position in the world rankings of Ease of Doing Business vis-à-vis other comparable countries. It also signifies the impact of betterment in the country s business environment on its rankings, and elaborates the benefits arising therefrom, taking the cases of Taiwan and Malaysia as exemplars where these two countries have managed to substantially elevate their rankings through effective reforms. Cross sectional analysis of Doing Business index The World Bank has been assessing the business environment of the world s economies for the past 12 years and has been publishing its assessment in the form of Ease of Doing Business rankings. The rankings lie between 1 and 189, and the country standing in the first position possesses the most conducive regulatory environment for doing business, and hence has the most favorable ecosystem for starting and operating a business at the domestic level. In 2014, the World Bank adopted Distance to Frontier (DTF) methodology for determining the Doing Business index. DTF bases a country s aggregate score on 10 areas of business, namely: 1. Starting a business 2. Dealing with construction permits 3. Getting electricity 4. Registering property 5. Getting credit 6. Protecting minority investors 7. Paying taxes 8. Trading across borders 9. Enforcing contracts 10. Resolving insolvency Each of these areas include further variables accounting for the number of procedures, days and costs incurred in different facets of starting and setting up a business, amongst other things. 1

4 World Bank s Doing Business Rankings Pakistan s standing in Ease of Doing Business The World Bank s Doing Business 2016 index ranks Singapore as having the most favorable environment for business, followed by New Zealand and Denmark. Countries like South Sudan, Libya and Eritrea make the bottom of the list, while the likes of US, UK, Germany, Japan and U.A.E. rank in the top 50. Pakistan is ranked 138 th amongst the 189 countries, declining 2 places from 136 th last year. Unfortunately, Pakistan s position has been on a continuous decline in the ten years from 2007 to 2016, with the exception of In contrast, rankings of regional competing economies like India has remained largely stable over the last decade, while those of countries like Taiwan and Malaysia have dramatically improved. Taiwan ranked 43 rd in 2007, but improved its business environment to the extent that it reached 11 th position in Malaysia stood at 25 th position in 2007 but worked its way up the rankings to reach 6 th in 2014 (before subsequently slipping to 18 th in 2016). The below chart gives a snapshot of Pakistan s slide in rankings of Ease of Doing Business from number 66 to number

5 Pakistan's Ease of Doing Business Rank Note 1: The higher the rank number, the lower the position of the country, and vice versa Note 2: All data in this report has been taken from the World Bank Comparing Pakistan s performance with India in 2016, India jumped 4 places in a year from 134 to 130 in 2015 while Pakistan, lamentably, slid from 136 to 138. India has recorded the biggest increase in its scores since 2004 in the South Asian region, and has hence been recognized by the World Bank as the most improved economy in South Asia. Unfortunately, Pakistan ranked third last in the ranking in the South Asia region, with only Bangladesh and Afghanistan falling below it Ease of Doing Business Rankings (2016) How come many of these countries have improved their rankings while Pakistan has been lagging behind? A cursory glance at the economies standing at the top of the doing business rankings reveal that the best performers are those having effective regulation that allows for efficient functioning of businesses and markets, while at the same time protecting 3

6 public interests. These economies have also brought about appropriate changes in their business regulations, many a times tailored specifically for increasing their position in the Doing Business index. For example, it took 88 days to start a new business in India in 2007; now it takes only 29 days!! In Pakistan, starting a business now takes 19 days as compared to 24 days in 2007, which can be considered only a marginal improvement as compared to India s. Pakistan, thus, has not done much to improve itself on the parameters which the World Bank considers for the index and hence, continues with its downward slide in the global rankings. Doing Business Rankings of SAARC Nations (2016) Afghanistan Bangladesh Pakistan 138 India 130 Maldives 128 Sri Lanka 107 Nepal 99 Bhutan Deciphering the Doing Business Index We now delve individually into the parameters that comprise the index and see where Pakistan stands in the relevant categories. 1. Starting a Business Pakistan stands at 122 nd rank on the ease of Starting a Business. It relatively requires quite a high number of procedures (10) and time (19 days) for starting a business while the cost of 9.4% of income per capita is also on the higher side. In comparison, New Zealand, which tops the rankings in this segment, requires only 1 procedure, takes 0.5 days, and costs only 0.3% of income per capita. The high number of procedures in Pakistan requiring the entrepreneur to run from pillar to post not only increases the startup costs but also increases the time taken for registration; red tapism also proves to be a major deterrent for new businesses, which many a times eventually choose another destination for investment. 4

7 Starting a Business The table below provides a country-wise snapshot of the variables involved in the Starting a Business section of the Doing Business index. Rank and Variables Pakistan South Asia India China Egypt Singapore Rank Procedures (number) Time (days) Cost (% of income per capita) Paid-in min. capital (% of income per capita) It is quite evident that Pakistan needs to provide one stop solutions for starting a business, integrating most procedures into one. For example, registering for NTN and STN with the FBR at the federal level and with the SRB for SSTN, EOBI, SESSI and the Labor department at the provincial level should all be incorporated into a single procedure requiring not more than a few clicks, a couple of days, and a fraction of the costs. Pakistan is making progress by leaps and bounds in Information Technology, therefore, developing such a closely knit IT solution ought not to be a very difficult proposition, provided the will to reform is there. We have conducted sensitivity analyses to study the impact on Pakistan s rankings in each of the segment categories when appropriate measures are taken. From the perspective of starting a business, if the number of procedures are reduced by a single notch, time is lessened by four days, and costs too are reduced marginally, Pakistan s ranking of starting a business could improve by 9 ranks to 113. The analysis reveals how a little more focus and application of targeted efforts from the policy makers could result in a marked betterment in the country s rankings. (For a complete picture of the sensitivity analysis, please see the Annexure at the end of this report). Sensitivity Analysis Presumed Ranking Under Different Improvement Scenarios DB 2016 Slight Moderate High Starting a Business (rank) Procedures (number) Time (days) Cost (% of income per capita)

8 2. Dealing with Construction Permits Pakistan stands at 61 in the ranking of economies in the Dealing with Construction Permits category. As per World Bank workings, a business in Pakistan requires 10 procedures, 250 days and incurs costs of 3.20% of the warehouse value that it presumably needs to construct for its operations. Pakistan fares much better than its regional competitors in this domain, but still needs to improve mainly on the time duration of the permit. Dealing with Construction Permits Rank and Variables Pakistan South Asia India China Egypt Singapore Rank Procedures (number) Time (days) Cost (% of warehouse value) Sensitivity Analysis By taking small improvement steps like reducing the procedures by a single step, the number of days by 5, and by marginally reducing the costs incurred for the construction permit, Pakistan can improve its rank in the category by 12 positions to 49. Presumed Ranking Under Different Improvement Scenarios DB 2016 Slight Moderate High Dealing with Construction Permits (rank) Procedures (number) Time (days) Cost (% of warehouse value) Building quality control index (0-15) Getting Electricity Pakistan has performed very poorly on the ranking of Ease of Getting Electricity. It stands at 157 th position where getting an electricity connection of a specific type requires 5 procedures, takes 178 days and costs 1,225.5% of income per capita (PKR 1.77Mn) in Comparatively, India ranks 70 in this segment as it requires 5 procedures, only 53 days and costs a relatively negligible sum of INR 76,000 in Mumbai. 6

9 Getting Electricity Rank and Variables Pakistan South Asia India China Egypt Singapore Rank Procedures (number) Time (days) Cost (% of income per capita) 1, , Reliability of supply and transparency of tariff index (0-8) K-Electric takes an abnormally long period to provide an electricity connection, even after becoming a private entity. To top that, background checks reveal that connection costs are largely discretionary and depend upon the assessment of the site inspector. Such a system provides open loopholes for corruption and inefficiency. K-Electric enjoys a monopolistic position in the country s largest metropolis. Mumbai, by comparison, has a competitive service environment where at least 4 electricity companies compete to provide 3,000 MW of power every day, resulting in low costs and lesser time for getting a connection. Nepra clearly needs to play a role over here, by actively regulating all aspects of electricity provision in addition to regulation electricity prices. As per our workings, if K-Electric reduces its procedures by only 1, lessens the time taken for providing a connection by 18 days from 178 and reduces connection costs by a tenth, Pakistan s ranking in the category could improve 19 points to 136, marking a major achievement. Sensitivity Analysis Presumed Ranking Under Different Improvement Scenarios DB 2016 Slight Moderate High Getting Electricity (rank) Procedures (number) Time (days) Cost (% of income per capita) 1, ,100 1, Reliability of supply and transparency of tariff index (0-8)

10 4. Registering Property Pakistan, being at the rank of 137 on Ease of Registering Property requires 6 procedures, takes 50 days and costs 7.70% of the property value. New Zealand leads the pack in this category, as it only requires 2 procedures, takes 1 day and costs 0.1% of the property value for a property registration. Registering Property Rank and Variables Pakistan South Asia India China Egypt Singapore Rank Procedures (number) Time (days) Cost (% of property value) Quality of the land administration index (0-30) Sensitivity Analysis While economies have been making property registration easier for businesses by incorporating technology in record keeping to reduce time delays and costs, Pakistan has made little progress. It takes a minimum of 38 days alone for the execution and registration of a sale/conveyance deed before the registration authority and its subsequent issuance which is way too long a time period. It fares poorly on the quality of land administration index (which factors reliability of infrastructure, transparency of information, geographic coverage and land dispute resolution), coming at 5 out of a maximum 30 points. Pakistan surely needs to build up on its technological base, and incorporate it in public utility systems, and re-design new Standard Operating Procedures (SOPs) in line with advancement in IT, so that administration is enhanced in different domains. Our analysis shows that if Pakistan reduces property registration procedures by a single notch, registration time by 5 days, and registration costs by only 0.5% of property value, under our slight improvement assumption, its ranking in Registering Property category could improve by 15 ranks to 122. Presumed Ranking Under Different Improvement Scenarios DB 2016 Slight Moderate High Registering Property (rank) Procedures (number) Time (days) Cost (% of property value) Quality of land administration index (0-30)

11 5. Getting Credit Although the State Bank of Pakistan ( SBP) is endeavoring to facilitate easy availability of credit, Pakistan still lags far behind India (ranking 42) and Egypt (ranking 79), standing at 133 on the ease of Getting Credit. This low ranking underscores the need to bring in further improvement in ease of getting credit. Getting Credit Rank and Variables Pakistan South Asia India China Egypt Singapore Rank Strength of legal rights index (0-12) Depth of credit information index (0-8) Credit registry coverage (% of adults) Credit bureau coverage (% of adults) Sensitivity Analysis Spreading awareness amongst the masses about their legal rights pertaining to credit and banking, increasing availability of credit information, and quick formation of credit bureaus are some steps that can propel Pakistan up the rankings in this category, as shown in the table below. Presumed Ranking Under Different Improvement Scenarios DB 2016 Slight Moderate High Getting Credit (rank) Strength of legal rights index (0-12) Depth of credit information index (0-8) Credit registry coverage (% of adults) Credit bureau coverage (% of adults) Protecting Minority Investors The measure ranks economies based on how strongly minority investors are protected against conflicts of interest and self-dealing by the Board of Directors of a company or its executive staff. Pakistan is ranked at 25 in the Strength of Minority Investor Protection category, and is only second to 9

12 India (ranked 8) in the South Asian region, which is a relatively better performance on its part. Protecting Minority Investors Rank and Variables Pakistan South Asia India China Egypt Singapore Rank Strength of minority investor protection index (0-10) Extent of conflict of interest regulation index (0-10) Extent of disclosure index (0-10) Extent of director liability index (0-10) Ease of shareholder suits index (0-10) Extent of shareholder governance index (0-10) Extent of shareholder rights index (0-10) Extent of ownership and control index (0-10) Extent of corporate transparency index (0-10) Although the World Bank calculates the rankings in this category on the basis of a set of indices that it has developed, Pakistan can improvise on its standings if it is able to record the following positions in some indices: Sensitivity Analysis Presumed Ranking Under Different Improvement Scenarios DB 2016 Slight Moderate High Protecting Minority Investors (rank) Strength of minority Investor protection index (0-10) Extent of conflict of interest regulation index (0-10) Extent of shareholder governance index (0-10) Paying Taxes Pakistan is at a very low rank of 171 in the Ease of Paying Taxes, specifically in comparison with all its regional and competitive economies. Doing Business records taxes and mandatory contributions that a medium size company must pay in a given year as well as measures of the administrative 10

13 burden of paying taxes and contributions. On average, firms in Pakistan make as many as 47 tax payments a year, spend 594 hours a year filing, preparing and paying taxes - which is also way too high a period - and pay total taxes amounting to 32.60% of their profit. In contrast, firms in Bangladesh on average, make just 21 tax payments a year, spend 302 hours a year in filing, preparing and paying taxes and pay total taxes amounting to 31.60% of profit. Paying Taxes Rank and Variables Pakistan South Asia India China Egypt Singapore Rank Payments (number per year) Time (hours per year) Total tax rate (% of profit) Profit tax (% of profit) Labor tax and contributions (% of profit) Other taxes (% of profit) Economies around the world have made paying taxes faster, easier and less costly for businesses, by consolidating payments and filings of taxes, offering electronic systems for filing and payment, establishing taxpayer service centers or allowing for more deductions while Pakistan still lags in improving its tax collection system. Pakistan needs to drastically reduce the number of taxes its corporate citizens need to pay, while also minimizing the efforts needed at the staff level to make those payments. Our calculations mentioned in the table below suggest that asking taxpayers to make quarterly payments of some of the taxes that are needed to be deposited monthly would surely reduce the number of manhours involved in tax workings, free up much time for productive business work, and increase Pakistan s ranking in the Paying Taxes category significantly. Sensitivity Analysis Presumed Ranking Under Different Improvement Scenarios DB 2016 Slight Moderate High Paying Taxes (rank) Payments (number per year) Time (hours per year) Total tax rate (% of profit)

14 8. Trading Across Borders Doing Business records the time and cost associated with the logistical process of exporting and importing goods. Under this segment, Pakistan stands at a low rank of 169, with only Bangladesh and Afghanistan to follow it in the region. Pakistan s low ranking emanates from its slow trade processing at the borders and the exorbitantly higher costs associated with it. Trading Across Borders Rank and Variables Pakistan South Asia India China Egypt Singapore Rank Time to export: Border compliance (hours) Cost to export: Border compliance (USD) Time to export: Documentary compliance (hours) Cost to export: Documentary compliance (USD) Time to import: Border compliance (hours) Cost to import: Border compliance (USD) , Time to import: Documentary compliance (hours) Cost to import: Documentary compliance (USD) In economies around the world, trading across borders has become faster and easier over the years. Governments have introduced tools to facilitate trade including single windows, risk-based inspections and electronic data interchange systems. These changes help improve the trading environment and boost firms international competitiveness. In Pakistan s case, reducing the border compliance costs and time taken in compliance for import and exports would facilitate businesses to a great extent while also increasing its Doing Business ranking. Carrying out only modest improvements in the border processes could move Pakistan 16 positions up in the category. 12

15 Sensitivity Analysis Presumed Ranking Under Different Improvement Scenarios DB 2016 Slight Moderate High Trading Across Borders (rank) Time to export: Border compliance (hours) Cost to export: Border compliance (USD) Time to export: Documentary compliance (hours) Cost to export: Documentary compliance USD) Time to import: Border compliance (hours) Cost to import: Border compliance (USD) Time to import: Documentary compliance (hours) Cost to import: Documentary compliance USD) Enforcing Contracts Enforcing contracts measures the time and cost for resolving a standardized commercial dispute through a local first-instance court. In addition, it includes a new measure, the quality of judicial processes index, evaluating whether each economy has adopted a series of good practices that promote quality and efficiency in the court system. Contract enforcement takes 993 days and costs 23.00% of the value of the claim in Pakistan as per the report of Overall, Pakistan stands at 151, which is too low a ranking, calling for major reforms towards improvement. Enforcing Contracts Rank and Variables Pakistan South Asia India China Egypt Singapore Rank Time (days) 976 1, , , Cost (% of claim) Quality of judicial processes index (0-18) Lessening the number of days and taking steps for cutting the costs incurred in dispute resolution are two measures that would undoubtedly raise Pakistan s position in the rankings, as depicted in the table below. 13

16 Sensitivity Analysis Presumed Ranking Under Different Improvement Scenarios DB 2016 Slight Moderate High Enforcing Contracts (rank) Time (days) Cost (% of claim) Quality of judicial processes index (0-18) Resolving Insolvency 10. Resolving Insolvency Doing Business studies the time, cost and outcome of insolvency proceedings involving domestic legal entities. Resolving an insolvency in Pakistan takes 2.70 years on average and costs 5.60% of the debtor s estate. The average recovery rate is cents on the dollar. Pakistan, securing a rank of in the Ease of Resolving Insolvency, is only second to China in the region, which ranks at 55. Rank and Variables Pakistan South Asia India China Egypt Singapore Rank Recovery rate (cents on the dollar) Time (years) Cost (% of estate) Outcome (0 as piecemeal sale and 1 as going concern) (0-16) Strength of insolvency framework index (0-16) Commencement of proceedings index (0-3) Management of debtor's assets index (0-6) Reorganization proceedings index (0-3) Creditor participation index (0-4) Nonetheless, Pakistan needs to improve the recovery rate from insolvencies, and reduce time and costs related to the resolution of such issues. The table below depicts how Pakistan s position can improve if it takes relevant measures in this category. 14

17 Sensitivity Analysis Presumed Ranking Under Different Improvement Scenarios DB 2016 Slight Moderate High Resolving Insolvency (rank) Recovery rate (cents on the dollar) Time (years) Cost (% of estate) Outcome (0 as piecemeal sale & 1 as going concern) Strength of insolvency framework index (0-16) The Taiwan Case Fruitful endeavors towards excellence Taiwan is placed 11 th worldwide in the Doing Business It has made remarkable progress climbing 50 places in the rankings since Among the 10 categories used by the survey to assess an economy s ease of doing business, Taiwan fared best in getting electricity and trailing only South Korea. Taiwan Ease of Doing Business Rank Taiwan has performed strongly in dealing with construction permits as well, moving up five spots from last year to 6 th, with the Doing Business survey highlighting the efficiency and quality of the local building permit system. The nation has also made impressive gains in other rankings, jumping from 93rd to 16th in Enforcing Contracts, from 30th to 25th in Protecting Minority Investors and from 40th to 18th in Registering Property categories. Over the years, Taiwan brought in several reforms leading to improvements in rankings. The main business environment reforms are outlined below: 15

18 Established the One-stop Counter for Building Permit center. Besides integrating customs clearance, licensing, and harbor information systems to provide one-stop services, the CPT (Customs, port and trade) Single Window also brought together information from government agencies and traders in a central database that gives access to all kinds of import and export information. Once the Counter accepts an application, all of the administrative operating procedures is completed within 52 working days (49.5 days for online applications). Taiwan Ease of Doing Business Ranking The minimum capital requirement for setting up a company was abolished. Made corporate income tax payment more convenient and amended the Tax Law by lowering the corporate income tax rate and establishing an enterprise financial account online tax withholding system. The unified license issuing system for profit-making enterprises was abolished. The Main Points for Work Rule Examination were revised to clearly state examination time. Amended Company Law and the Securities Transaction Act, the Deed Tax Act s reporting standards for unified deed tax reporting and other laws and regulations to protect investors. To allow enterprises (especially SMEs) to be able to conveniently use property as collateral to obtain financing, a Property Secured Transactions Registration Management Information System is implemented. 16

19 The process for applying for additional Labor Insurance and National Health Insurance was simplified and amended to clearly state the time that insurance becomes effective. Various land administration offices were established an integrated real estate registration and tax payment single window. Malaysia Learning from Taiwan s Success Malaysia managed to upgrade its rank by introducing a series of reforms over the years, inspired by Taiwan s success. In this regard, several initiatives were undertaken by the Government of Malaysia through the Government Transformation and Economic Transformation Programmes, as well as the work undertaken by PEMUDAH (the joint public-private sector Task Force to Facilitate Business). Malaysia Ease of Doing Business Rank Malaysia made improvements mainly on five of the indicators namely, Starting a Business; Dealing with Construction Permits; Getting Electricity; Registering Property; and Resolving Insolvency. This is reflected in improvements in: (a) Starting a Business Time was reduced from 17 days in 2011 to 4 days in 2016 while the Cost as % of income per capita was reduced from 17.5% to 6.7% by (b) Dealing with Construction Permits - Time reduced from 261 days in 2011 to 79 days; - Procedures reduced from 25 in 2011 to 15 in (c) Getting Electricity - Cost (% of income per capita) reduced from 49.1% in 2014 to 30.7%

20 (d) Registering Property - Time reduced from 56 days in 2011 to 13 days in (e) Resolving Insolvency - Time reduced from 2.3 years in 2011 to 1 year in 2016; - Recovery rate (cents on the dollar) improved to 81.3 in 2016 from 39.8 in Malyasia Ease of Doing Business Ranking The following measures were taken by Malaysia to improve its rankings: (a) The establishment of New Civil Court (NCC) in Subordinate Court to allow cases registered to be disposed within nine months and for easy monitoring by Managing Judges (b) Setting up of the Regulatory Impact Statement (RIS) Portal which serves as repository and reference source for all regulators (c) Implementation of the OSC 3.0, a system which incorporates international good practices for regulating procedures and regulation for issuance of permits and licenses by the local authorities (d) The introduction of e-filing and e-payment for sales tax to reduce the time taken to file and pay sales tax; and (e) Implementation of new Standard Operating Procedures (SOPs) to improve inspection systems for imports and exports and reduce time taken for Customs clearance processes. 18

21 The concept of Regulatory Impact Analysis and Statement A Regulatory Impact Analysis or Regulatory Impact Assessment (RIA) is a document created before a new government regulation is introduced. The role of a RIA is to provide a detailed and systematic appraisal of the potential impacts of a new regulation in order to assess whether the regulation is likely to achieve the desired objectives. The Risk Impact Statement must be presented to decision makers so that their decision is based on a balanced assessment of the best available information which is then posted for public access. The use of RIA has spread rapidly across the OECD membership, over the past twenty years in particular, and RIA requirements are consequently now almost universal. This concept is more or less alien for Pakistan despite its efficacy and therefore can be considered to be adopted in Pakistan as well. Pakistan can move up to 72 nd through business reforms It is high time now that Pakistan takes concrete steps towards creating a conducive business environment while considerably improving on ease of Doing Business. Considering the success stories of other economies like Malaysia and Taiwan, Pakistan can also implement several reforms and improve its rankings. We have made an attempt to analyze the possible impact on the rankings, taking all else constant assumption into account. Based on our analyses, Pakistan can move up the rankings to 119 th, 92 nd or 72 nd positions if it makes slight, moderate or high modifications to its business environment, respectively. 19

22 Ranks and Variables SENSITIVITY ANALYSIS OF IMPROVEMENT IN VALUES Presumed Ranking Under Different Improvement Scenarios DB 2016 Slight Improvement Moderate Improvement High Improvement Starting a Business (rank) Procedures (number) Time (days) Cost (% of income per capita) Paid-in min. capital (% of income per capita) Dealing with Construction Permits (rank) Procedures (number) Time (days) Cost (% of warehouse value) Building quality control index (0-15) Getting Electricity (rank) Procedures (number) Time (days) Cost (% of income per capita) Reliability of supply and transparency of tariff index (0-8) Registering Property (rank) Procedures (number) Time (days) Cost (% of property value) Quality of land administration index (0-30) Getting Credit (rank) Strength of legal rights index (0-12) Depth of credit information index (0-8) Credit registry coverage (% of adults) Credit bureau coverage (% of adults) Protecting Minority Investors (rank) Strength of minority investor protection index (0-10) Extent of conflict of interest regulation index (0-10) Extent of shareholder governance index (0-10) Paying Taxes (rank) Payments (number per year) Time (hours per year) Total tax rate (% of profit)

23 Trading Across Borders (rank) Time to export: Border compliance (hours) Cost to export: Border compliance (USD) Time to export: Documentary compliance (hours) Cost to export: Documentary compliance USD) Time to import: Border compliance (hours) Cost to import: Border compliance (USD) Time to import: Documentary compliance (hours) Cost to import: Documentary compliance USD) Enforcing Contracts (rank) Time (days) Cost (% of claim) Quality of judicial processes index (0-18) Resolving Insolvency (rank) Recovery rate (cents on the dollar) Time (years) Cost (% of estate) Outcome (0 as piecemeal sale and 1 as going concern) Strength of insolvency framework index (0-16) Pakistan's Overall Ranking Note: The sensitivity analysis is conducted on all else constant basis based on the Doing Business 2016 values. A conservative approach has been applied to derive the values in slight, moderate and high improvement cases. There exists considerable upward potential for improvement which can lead to significant jump in the ranking of doing business in Pakistan. The assumption of tax payments per year has based on converting the monthly payment of three types of taxes to quarterly payments. The payments of taxes are on monthly basis which if shifted to quarterly payments can lead to lower tax payments by

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