Ayesha Saba

Pakistan’s economic landscape needs to be transformed through comprehensive market regulatory framework reforms to create a transparent, investor-friendly environment and ensure long-term growth. This was stressed by Dr Abdul Rashid, Director General of the International Institute of Islamic Economics, International Islamic University, Islamabad (IIUI). Talking to WealthPK, he said: “A strong regulatory system inspires confidence among investors. When investors believe their rights will be safeguarded, they are more likely to commit capital. This leads to increased investment flows into the country.” He said that strengthening Pakistan’s market regulatory system further would require a comprehensive approach that addresses longstanding structural weaknesses and fiscal imbalances. “The country needs to focus on enhancing product diversification and opening its market further.”

He suggested this could be achieved by adopting certain administrative and legal reforms that could considerably lessen the burden on businesses and help lower the costs of exogenous factors. “The main reforms needed to promote competitive and vibrant markets must be initiated at the commerce level.” Abdul Rashid highlighted that Pakistan’s competition regulation was still evolving. “Though the Competition Commission of Pakistan (CCP) has made significant strides, it still faces limitations in terms of resources and jurisdiction. The government should empower the CCP by providing it with more resources and granting it expanded jurisdiction, including oversight of state-owned enterprises and regulatory bodies.”

Dr Ali Kemal, a chief economist at the Sustainable Development Goal Unit of the Ministry of Planning and Development, pointed out that excessive governments’ protectionist policies had impeded the development of competitive markets, causing significant inefficiencies. “These policies are often lengthy and cumbersome, causing businesses to grapple with excessive paperwork, high transaction costs, and extended lead times.” “This regulatory burden hinders the ease of doing business and leads to rent-seeking behaviour,” he underscored, emphasising the need for reducing bureaucratic hurdles, eliminating unnecessary regulations, and improving transparency. “Pakistan should develop and implement comprehensive competition policies that actively monitor market competition, prevent anti-competitive practices, and encourage market entry,” he stressed.

Ali Kemal maintained: “Foreign investors are often particularly sensitive to the regulatory environment in a country. A transparent and predictable regulatory framework can attract foreign direct investment, which can be a significant source of capital and technology transfer.” “In Pakistan, major reforms are required in light of the dismal state of market competition. The government needs to reduce the cost of doing business and remove policy distortions to investment, competition and trade. Competition law and policy should be effectively implemented so that economic actors can freely and fairly compete for the ultimate benefit of consumers and society,” he asserted.

Credit: INP-WealthPk