Business Community Problems in Pakistan: An Overview

The business community (small-size entrepreneurs) in Pakistan faces many challenges before and after starting a new business. There are many brilliant business minds with innovative and sustainable business ideas but are unable to sustain their business ventures particularly from last ten years[1]. Following are the top common business community problems of Pakistan, which if could be solved, Pakistan can progress by leaps and bounds.

Weak Contract Enforcement System

The biggest problem for attracting foreign and local investment in Pakistan is the inefficient contract enforcement mechanism. According to the World Bank’s Ease of Doing Business Report 2019, Pakistan stands 156 out of 190 countries in terms of enforcing contracts indicating less priority area for the government. State Bank of Pakistan (SBP) statistics also revealed that investment was shifting out of the country due to the weak contract enforcement system of the country. Due to the weak contract enforcement system in Pakistan, big businessmen exploit the young/new entrepreneurs which is why they are unable to sustain their business. Hence, without an independent and efficient judiciary system the business environment will remain very uncertain and full of risk and will damage the entrepreneurship and investment climate in Pakistan (Haque 2007). The solution to the problem is to make exclusive courts for speedy trials for small-size enterprises.

Product Optimization

Many Pakistani business owners replicate foreign business ideas without having done proper local market research. This creates a big problem when they join the real business world. The solution is to amend foreign business ideas according to the socio-cultural needs of Pakistani society. In this regard handholding of small entrepreneurs by experienced successful business tycoons could solve the problem.

Bureaucratic involvement

Another challenge faced by young entrepreneurs in Pakistan is the bureaucratic involvement in business.  Pakistan lacks innovation and creativity in businesses because of being a controlled economy (controlled by bureaucracy). People are trained to opt for jobs in future not for businesses due to the fear of failure in business because of excessive involvement of bureaucracy.  The solution is that the bureaucracy’s role should be zero or minimal, only then businesses can flourish in Pakistan. For this bureaucratic reform is the need of the hour (Sameen 2023[2].

Role of Educational Institutes

There is a very limited collaboration between industry and academia in Pakistan. This is because academia lacks insight into real business problems. The main focus of most of the higher education institutes (especially public institutes) is to deliver only theoretical aspects of business without going into the practicality of business. This prevents students from thinking innovatively. The solution to the problem is to connect young students/future entrepreneurs with the business community into education institutes so that students learn from their experience (to avoid major mistakes) and become able to think innovatively to work in a competitive environment. Even all vocational centres should be closed or updated with the latest technology training. There should be frequent lectures given by top businessmen in these centres.

[1] The list of defaulting companies has increased sharply in 2023 comparing to previous years, see https://www.psx.com.pk/psx/resources-and-tools/Defaulting-Companies-Profile-Portal

[2] https://pide.org.pk/research/bureaucratic-reform/