LAHORE: The Punjab government is developing a smart regulatory framework as part of a massive exercise undertaken to unclutter business-unfriendly regulatory environment to help investors cut their costs, remove the barriers to entry and reduce potential risks and uncertainties.

“Over the years we have collected piles of regulatory clutter in the shape of excessive, overlapping, redundant and flawed regulations and laws, which are a big burden on the provincial economy and hamper private investments and business growth,” Mian Aslam Iqbal, the provincial industries, commerce and investment minister, told Dawn on Tuesday. “The exercise has been taken to create ease of doing business in the province and improve competitiveness of the industry.”

The job is being handled by the Punjab Board of Investment and Trade (PBIT) and may take several months before it is completed. “At this stage we are not aware of the exact size of this problem; that’s the complexity we are faced with… but it surely is massive and widespread,” he said. “We plan to move in baby steps to build the credibility of the exercise and secure the buy-in on the regulatory reforms from the bureaucracy.”

Some changes require revocation of piles of notifications issued by different provincial line departments through executive orders and the others may require legislation. “Once the regulations and laws that need to be discarded or changed are identified, we plan to develop and put before the provincial legislature a Punjab Smart Regulations Act to give legal protection to the reforms,” Mr Iqbal asserted. He was hopeful to table the bill by the end of 2019 after finishing initial review of the provincial regulatory structure.

Prime Minister Imran Khan is backing the effort and International Finance Corporation (IFC), a member of the World Bank Group focused on the private sector in developing countries, has expressed its willingness to support the initiative.

“We have developed objective criteria to evaluate a regulation or law and decide if it needs to be removed or changed. Any regulation or law that is not legal and properly documented or is not necessary and business-friendly will either be done away with or modified according to the requirements of the business and economy. The criteria and legislation are needed not only to clear the regulatory clutter from the past but also to prevent future accumulation of deadwood,” the minister argued.

The model of smart regulatory reforms has so far been adopted by 15 countries around the world. Normally, it takes 18 months to 36 months to reform the existing regulations and replace them with smart regulatory framework depending on the political backing, administrative buy-in and size of the problem. However, some countries like South Korea have completed the job in less than a year.

According to the World Bank, Vietnam had cleaned up regulations in three years that helped it save $1.4 billion a year and improve its position on Ease of Doing Business index. Kenya took 18 months to clear its mess. South Korea was able to attract additional foreign direct investment (FDI) of $36.5 billion in five years after switching to smart regulations. Pakistan’s position at 136th on Doing Business index that ranks 190 economies and 107th slot among 140 countries ranked by the World Competitiveness index is in dire need for a clean-up of its regulatory environment to boost economic growth.

The minister said the project of development of smart regulatory framework would be completed in four steps starting with the listing of existing laws, regulations, rules and procedures, followed by identification of issues and impediments. From there recommendations to keep the necessary business-friendly regulations would be made and guillotine applied on the rest of them, he added.

Published in Dawn, March 27th, 2019