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State of competition in Pakistan

Syed Asad Hussain

To meet the challenge of maintaining buoyant economy and well being ofconsumers, promotion of concept of free economy is a must. Domestic

markets which form the basis of the economy must be ready to compete athome for integrating effectively in global markets. Ironically, factors limitingcompetition in domestic markets are growing in size thus case of effective

enforcement of competition laws becomes more important in Pakistan.

Broadly speaking, in the absence of effective competitive environment,Pakistani firms are apparently slow to adjust, yield low levels of productivity,

lack energy to innovate and are painfully highly concentrated ones whichhave led to anti-competitive behaviors on the part of firms.

In recent past, the Competition Commission of Pakistan (CCP) has

conducted a number of investigations into alleged cases of anti-competitivebehavior on the part of firms. These cases mostly belonged to firms

operating in sugar, cement, vegetables ghee, poultry, aviation, banking,automobiles and telecom sectors.

If Pakistani firms want to be sturdier, healthy and better, they must

demonstrate high level of efficiency, innovate aggressively and improve

firm-level productivity-all are prerequisites to prepare for the global

competition. Large sized private firms and the SMEs represent the seeds forgrowth for Pakistan economy and hence should be the centerpiece of everypolicy framework.

That said, governments role becomes even more important ifPakistanwants to go globally. Policymakersprimary focus should be on increasingefficiency of factor markets, market governance and infrastructure services.

As a consequence, we expect thriving markets which reward innovation andpunish inefficient firms engaged in anti-competitive behaviors.

To deepen the competition level in Pakistan, active policy formulation and its

implementation along with institutional reform is the need of the hour.Governments role should become limited to facilitating rather than

regulating the markets.

The robust and modern structure of the CCP in partnership with active andindependent judiciary can help ensure protection of competition. The flaws in

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judicial system should be improved which is a major barrier in punishing the

culprits and straightening markets. The CCP claims to have fine Rs 7.3b onvarious firms for violating anti-competitive laws but they yet to receive

single penny due to flaws in our judicial system. The alleged firms are givenstay-orders by courts when are fined by the CCP; hence around 140 cases

are pending in the courts.

The era of heavy protection regime (for example automobile, aviation andtextiles sectors), subsidies and tariff concessions has to go if Pakistanibusinesses want to compete both nationally and internationally. Indeedmuch has been said and written about giving MFN status to India but I think

if Pakistani businesses were efficient, innovative and able to produce at

lower costs, then huge market of 1.2 billion Indian consumers awaits us. Tobe able to compete in Indian markets, cost of doing business at home has tobe lowered in the first instance.

A World Bank survey ofEase ofDoing Business placed Pakistan at the 96thposition (out of 183 economies) in 2011 which has now slipped to 105th

position in 2012. Higher barriers such as dealing with construction permits(104), getting electricity (166), paying taxes (158) and registering property

(125) are some kick-starters which needed to improve to help make theentry of new firms easier and markets competitive.

Pakistani businesses can only compete globally if domestic markets

encourage competition and innovation; businesses demonstrate high levelefficiency and equal opportunities are provided to all the players.

(The author is an Islamabad based freelance contributor, researcher and a

trainer. He can be reached atsyed311@hotmail.com.)

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