Pakistan’s efforts to attract investment and encourage innovation will remain constrained unless businesses can operate within a simpler, faster and more predictable regulatory system, experts warned at a seminar held at the Institute of Business Administration Karachi on Thursday. Titled Transforming the Regulatory State: Pathways to a Dynamic and Competitive Economy, the event brought together representatives from international regulatory reform practice, business and government to examine how overlapping rules, outdated procedures and complex licensing requirements affect the country’s competitiveness. Speakers agreed that the cost of a crowded regulatory environment falls hardest on entrepreneurs and investors who must decide whether the time and uncertainty involved in doing business in Pakistan are worth the potential returns.
Scott Jacobs, managing director of Jacobs, Cordova and Associates and recipient of the Prime Minister’s Regulatory Reform Champion award, said Pakistan had approved 557 reforms across multiple sectors under the Regulatory Guillotine and SMART initiative led by the Board of Investment. He described the approvals as genuine progress in simplifying the regulatory environment, but stressed that the next phase demands a fundamental change in how regulators see their role. In his words, the next phase must change the regulatory DNA of Pakistan’s regulators, from controlling markets to facilitating them. That would mean moving beyond simplifying individual licences and permits towards a broader system of regulatory governance that allows businesses to operate and expand efficiently. He noted that the country’s programme reflects international good practice but is being pursued at a much faster pace and with potentially greater impact. Its ultimate success, he said, will depend on whether it changes investors’ perceptions of the returns and risks of investing in Pakistan. Jacobs also pointed to the limited financial depth available to venture capitalists in Pakistan compared with regional counterparts, which restricts funding for new and innovative firms. Using battery manufacturing as an example, he explained that entrepreneurs must pass through multiple layers of regulations, certifications and licences, turning the setting up of a business into a prolonged administrative challenge. The system, he said, needs to change from an obstacle course into a fast moving highway.
Pakistan Business Council Chief Executive Officer Javed Kureishi highlighted the burden that numerous and complex rules place on companies, citing the foreign exchange manual as a case in point. He described it as badly outdated and a significant deterrent for foreign investors, since stale regulations create uncertainty for those assessing whether to enter or expand in the country. Federal Board of Revenue Member Ambreen Iftikhar said the government needs to play a more constructive role in enabling businesses, and pointed to duplication of regulatory requirements by different agencies established for similar purposes. Such overlapping oversight, she explained, creates additional hurdles for innovative firms that must satisfy several sets of requirements while trying to build and scale their operations. Better coordination among public sector agencies could reduce that duplication and make regulatory processes more effective.
The panellists also emphasised the need for closer engagement between academia, policymakers and the business community. They said universities and researchers should contribute evidence based analysis, examine the effects of existing regulations and engage directly with those responsible for designing and implementing reforms. Academia’s role, they added, should extend beyond studying policy issues in isolation to helping identify practical solutions that reflect the needs of businesses and the wider economy. Regular exchanges among government, industry and academic institutions could help ensure that reforms are informed by evidence and address the problems companies face in practice. The speakers stressed that Pakistan’s ability to improve its competitiveness and create better opportunities for the next generation will depend on fundamentally transforming its regulatory framework, and that a simpler and more responsive system would help businesses innovate, encourage investment and support a more dynamic economy. The seminar concluded with an interactive question and answer session with participants.
Follow the SPIN IDG WhatsApp Channel for updates across the Smart Pakistan Insights Network covering all of Pakistan’s technology ecosystem.
