Descripción general de los requisitos de la norma NMX-EC-17025-INMC-2006

Policy makers and government agencies recognise t he need for reforms in domest ic commerce. The government has already t aken a few st eps t o improve t he business environment , raising Pakist an’s ranking in Doing Business t o t he highest in Sout h Asia. Use of t echnology has been a major innovat ion in improving business regulations. In 2008, e-Services websit e w as set up by t he Securit ies and Exchange Commission of Pakist an (SECP) and t he e-Government Direct orat e t o facilit at e regist rat ion of companies. Comput erisat ion of land records in Lahore and Sialkot is making it easier for businesses t o regist er. In Sialkot , t he t ime for companies t o regist er w as halved from 13 days in 2006 t o only 6 days in 2009. Tax administ rat ion reforms w ere also init iated t o give businesses more access t o t ax filing aut horit ies99. Privat isat ion of Pakist an Telecommunicat ion Company Limit ed (PTCL) w as anot her major st ep t hat reduced cost s of get t ing a new t elephone by 64.8 per cent , and t he int roduct ion of an advanced elect ronic dat a int erchange syst em w hich made import ing and export ing regulat ions easier. How ever, t here w ere also some measures enforced t hat adversely affect ed businesses. The Finance Law (2009) raised t he capit al value t ax from 2 per cent t o 4 per cent . This t ranslat ed int o an increase of 3.6 per cent in cost of propert y value for businesses.

97

M inist ry of Commerce, Government of Pakist an

98

Sialkot Dry Port Trust , September 2010 Press Release

99

The Government has set up 3 t axpayer unit s and 16 regional t ax offices in large cit ies, along with a Universal Self-Assessment Scheme t o aid businesses in filing t axes and reducing processing t ime

Despit e t hese init iat ives, Pakist an st ill needs t o t ake major st eps t o improve t he funct ioning of it s int ernal market s. Given t he high levels of corrupt ion and a poor law and order sit uat ion, many more reforms are needed t o compensat e businesses for t hese dest ruct ive element s. These reforms can remove inefficiencies from t he market s as well as provide support t o t he businesses t o allow t hem t o funct ion freely and cost -effect ively. While est ablishment and funct ioning of new businesses is essent ial, improvement s also need t o be made in connect ing rural and urban market s, and improving t emporary st orage and long-t erm w arehousing facilit ies, especially for agricult ural (perishable) goods.

As ment ioned in t he report on Doing Business in Pakist an 2010100, t o improve business and domest ic commerce, Pakist an needs t o init iat e and implement reforms in t he areas discussed below .

Initial setup of business

Pakist an st ands w ell w hen compared int ernat ionally t o ot her count ries in t he amount of t ime it t akes t o set up a business. Business in Pakist an t akes 21 days on average compared t o 28 days average of Sout h Asia, 30 days in India and 37 days in China. This is mainly due t o t he e-Services syst em, w hich has helped businesses immensely in set t ing up in Islamabad, Faisalabad, Lahore, Karachi and Peshaw ar. Furt hermore, in Punjab, Punjab Employees Social Securit y Inst it ut ion w as t ransferred from provincial t o local government s speeding up social securit y regist rat ion processes in Lahore and Faisalabad. Islamabad proved t o be t he best place for init ial set t ing up of business, w it h t he least number of days required and ranked 1 by t he Doing Business in Pakist an 2010 report . If ot her cit ies could reduce t heir days in set t ing up a business t o Islamabad’s level i.e. 16 days, t he average saving t o a business w ould be USD 73.3, since a reduct ion of one day w ould lead t o a subsequent reduct ion in cost by 1.51 per cent of GNI per capit a.101

Const ruct ion permit s show similar result s. While const ruct ion permit s are issued relat ively quickly in Pakist an, t he associat ed cost s are high t o businesses. As such, reduct ion in number of procedures and in t he number of days can reduce cost s for businesses. A reduct ion of one procedure in issuing permit s (holding num ber of days fixed) is 3.23 per cent of GNI per capit a and a reduct ion of one day in issuing permit s (holding number of procedures fixed) is 2.1 per cent of GNI per capit a. M ult an is one cit y t hat requires t he least number of procedures t o get a const ruct ion permit , w hile Peshaw ar t akes t he least number of days. If t he pract ices of t hese cit ies w ere used in ot her cit ies, an average cost saving of USD 48.8 can be realised from adopt ing less procedures (as in M ult an), and a saving of USD 845.4 from using few er days (as in Peshaw ar).

Regist ering propert y in Pakist an is out dat ed and cumbersome. Land records are most ly paper-based. Comput erisat ion of land records has t aken place in Sialkot and Lahore, in w hich t he t ime t aken t o regist er is much less t han ot her places in Pakist an. A reduct ion of one day in regist rat ion result s in saving in cost of 0.11 per cent of propert y value w hich can t ranslat e int o a cost saving of USD 612.85 for an average business in Pakist an. If t he best pract ices across all t hese t hree st ages w ere adopt ed, an average of USD 1580 could be easily saved by an average business, as show n in t he t able below .

100

World Bank, Int ernat ional Finance Corporat ion, USAID, UKAID

101

This is calculat ed by looking at t he linear relat ionship bet w een t he cost and t ime t aken across cities to find out how much a change one day can affect the cost of a business

Table 10: Summary table of average amount saved by a business

Indicat or Avg. Am ount saved (US $)

St art ing a business 73.28

Dealing w it h const ruction permit s (bet t er procedures)

48.84 Dealing w it h const ruction permit s

(bet t er time)

845.43

Registrat ion of property 612.85

Tot al 1,580.39

Source: Calculat ions using dat a fr om Doing Business in Pakist an 2010

To bring about t he changes t hat could result in such savings, following are suggest ed reforms:

Using Technology

M ore cit ies should be encouraged t o adopt t echnological t ools, such as e-Services. These can drast ically reduce t he number of days and t he cost s associat ed w it h st art ing and running a business. For t hose regions w here int ernet services are difficult t o access, t he regist rat ion offices should have kiosks t o facilit at e t he online regist rat ion process. This will not only speed up t he process, but w ill minimise chances of corrupt ion due t o lack of personal int eract ion. While use of t echnology (e-Services) has been st art ed by Securit ies and Exchange Commission (SECP) and t he e-Government Direct orat e, furt her collaborat ion w it h M inist ry of Communicat ion and t he Pakist an Telecommunicat ions Aut horit y (PTA) is required t o make t he use of t echnology more w idespread for set t ing up businesses.

M erging and Reducing Procedures

In Pakist ani cities current ly, five offices have t o be visit ed before one can st art up a business. Consolidat ion of t he procedures under eit her t he local regist rar or t he Chamber of Commerce can help reduce t ime and hassle for businesses, making passage int o t he market s easier. In Jordan and Egypt , t ax regist rat ion w as given t o t he regist rars, w hich considerably reduced t ime for businesses. Collaborat ion bet w een t he M inist ry of Commerce and t he local government s w ould help facilit at e t he operat ion of one-w indow cells t o speed up est ablishment of business.

Bet t er Const ruct ion and Planning Regulat ions

In Pakist an, cit ies in Punjab have adopt ed uniform zoning and building regulat ions, w hich have lessened t he t ime t aken by businesses in cit ies like Lahore and Sialkot t o obt ain a const ruct ion permit . Absence of such regulat ions in ot her provinces and cit ies, such as Quet t a, has in some cases increased t he t ime for obt aining a permit. Zoning law s can be improved t hrough act ions by t he local cit y development agencies, such as t he Capit al Development Aut horit y (Islamabad), Lahore Development Aut horit y, Karachi Building Cont rol Aut horit y (KBCA) and t he Cit y Dist rict Government Karachi (CDGK), et c.

Tailoring Procedures for t he Business

Different t ypes of businesses require different procedures. Large cit y-scrapers and manufact uring unit s require ext ra regulat ion since t hey are more risky in t erms of healt h and safet y of employees and t he public. How ever, small ret ail out let s do not need much regulat ion and inspect ion. The procedures for regist rat ion and inspect ion should keep t hese aspect s in mind, making it easier for small ret ailers t o st art and operat e a business. M inist ry of Commerce and t he local cit y development agencies should undert ake t raining of st aff and engineer t heir policies in a w ay t o handle different businesses separat ely.

Training and Capacit y Building of St aff

Capacit y building of st aff w orking at t he offices responsible for regist rat ion and issuing permit s is a must . Their t raining can make t hem significant ly more efficient and aw are of how t o handle different cases. It can also improve coordinat ion wit hin an agency and also across agencies making t he process of st art ing up considerably easier for businesses.

Employment

Pakist an lacks w ell-developed human capit al. Wit h only 57 per cent lit eracy rat e and a large port ion of t he labour force being employed in agricult ure, Pakistan’s market s suffer from a deficiency in skills and appropriat e ent repreneurial ‘t alent ’ required for a t hriving domest ic commerce. Insufficient quant it y of business schools and t raining inst it ut es are unable t o cat er t o t he grow ing demand of employers and as such, most firms are made t o hire unsuit able candidat es. In addit ion, labour law s increase t ime and procedures for businesses t o employ, t erminat e and deal w it h t heir w orkers. For even small t o medium businesses, law s are rigid and can rest rict funct ioning of businesses w hich act as a barrier t o ent ry for new firms and forcing exist ing ones t o evade law s and operat e in t he informal sect or.

Under t he Indust rial and Commercial Employment (St anding Orders) Ordinance 1968, if an employer employs more t han 20 employees, he has t o formally regist er t he relat ionship bet w een employer and employee and t he cont ract of employment , and cont ribut e t o t he Worker’s Welfare Fund. This does not only increase procedures for businesses but also force small businesses t hat are unable t o cont ribut e much t o t he fund t o evade t he aut horit ies and hire w orkers informally. Similarly, Employees Old-Age Benefit s Act 1976 requires regist rat ion of firms wit h more t han 10 employees w it h t he Employees Old- Age Benefit s Inst it ut ion w hich t akes 11 days, delaying est ablishment of businesses and rest rict ing small t o medium businesses. Apart from t hese law s pert aining t o hiring and handling w orkers, employee t erminat ion can also be cumbersome. Pakist ani law s est ablish procedures for t erminat ing employees, alt hough labour unions can resist layoffs creat ing problems for smaller businesses.

Training

Given t he lack of skill development among Pakist ani labour force, t raining is needed t o conform t he w orkers t o t he demands of t he employers. Different firms should collaborat e and set up t heir ow n t raining inst it ut es in w hich t hey can educat e t he st udent s in t he skills desired by t heir organisat ion.

M erging and Devolving Procedures

To cut back delays t he st eps required for a business t o comply w it h t he various labour law s should be st reamlined and reformed so t hat it t akes few er days for businesses t o set up. Giving aut onomy t o t he local government s t o deal w it h t hese employee registrat ion processes can help cut t ime. In t he Punjab

Indust rial Policy 2003, t he Punjab Employees Social Securit y Inst it ut ion regist rat ion w as delegat ed t o t he dist rict levels, speeding up verificat ion of document s in Faisalabad and Lahore by 4 days.

Reforming Law s

Legal requirement s are not friendly t o smaller businesses leading t o an increase in t heir procedures and expenses. To support smaller businesses, t hese labour law s should be relaxed and applied t o firms employing over 100-150 w orkers rat her t han smaller and medium firms w ho have only 20 w orkers.

Taxation

Pakist an ranks 155t h out of 179 count ries in t he amount of t axes collect ed as percent age of GDP102 since most of t he t axes are collect ed from a narrow t ax base. M ost businesses in Pakist an are required t o pay a t ot al t ax rat e of 31.5 per cent (as percent age of profit ) compared w it h 60 per cent in India and t he Sout h Asian average of 40 per cent . Alt hough t his t ax rat e is low er in comparison t o ot her count ries, t he number of days required t o comply w it h t hese t ax requirement s are high. In Pakist an, it t akes an average of 560 hours for businesses t o file t heir t axes. There w ere 75 changes made t o t he business t ax code bet w een 1990 and 2007.103 This makes t he process of filing t axes ext remely difficult for businesses. This is also one of t he major reasons t hat account s for a large informal sect or in Pakist an.

Pakist an has undert aken some reforms in t axat ion. To eradicat e t ax evasion and t o make t he t axat ion process easier, t hree t axpayer unit s w ere set up along w it h 16 regional t ax offices t hat conduct t axpayer sat isfact ion survey. Universal Self-Assessment Scheme w as also int roduced t o limit cont act bet w een t he t axpayers and t he officials, minimising chances of corrupt ion. Despit e t hese reforms, Pakist an can st ill improve it s t ax st ruct ure furt her.

Simplificat ion of t he Syst em

Alt hough Pakist an has a low er overall t ax rat e and a low er profit t ax t han it s Sout h Asian neighbours, t he average t ime t aken t o file t axes in hours per year in Pakist an is almost double t hat of t he Sout h Asian average.104 Pakist an’s Revenue Board can help firms by reducing t he procedures and making t he syst em less complicat ed t hrough few er administ rat ive procedures.

Bet t er implement at ion

While t ax law s are in place, most people do not abide by t hem and t ax evasion is w idespread. Audit ing syst em can be improved t o ensure great er compliance. This can reduce fraud and t ax evasion, and st rengt hen t he t ax syst em and t he market s by lessening t he burden on businesses operat ing formally. The Federal Board of Revenue can t rain t heir st aff and employ more det ailed evaluat ions t o prevent such evasions and fraud.

Aut onomy t o local government s

102

‘Economic Freedom Index’, The Herit age Foundat ion, 2010

103

W Thirsk, ‘Tax Policy in Pakist an: An Assessment of M ajor Taxes and Opt ions for Reform’, Working paper 08-07, Andrew