The State of Domestic Commerce in Pakistan Study 10 - Synthesis Report

THE STATE OF DOMESTIC COMMERCE IN
PAKISTAN

STUDY 10
SYNTHESIS REPORT

For
The Ministry of Commerce
Government of Pakistan
November 2007

By
Innovative Development Strategies (Pvt.) Ltd.
House No. 2, Street 44, F-8/1, Islamabad

Table of Contents

List of Abbreviations ............................................................................................................. i
Acknowledgments .............................................................................................................. iv

Executive Summary ............................................................................................................ 3

Introduction . ............................................................... 7
Section 1: Sample Size, Data Collection Methodology and Sector Characteristics .. 8
1.1: Survey ...................................................................................................................... 8
1.2: Areas of Inquiry ......................................................................................................... 9
1.3: Sampling Technique by Sector .................................................................................. 9
1.3.1 Retail and Wholesale Markets...................................................................... 10
1.3.2. Storage and Warehousing .......................................................................... 11
1.3.3 Real Estate ................................................................................................. 13
1.3.4 Transport .................................................................................................... 13

Section 2: Firm Level Characteristics ........................................................................ 16
2.1 Firm Size ................................................................................................................. 16
2.2 Registration Status .................................................................................................. 17
2.3 Employment Patterns .............................................................................................. 18
2.4 Human Capital ......................................................................................................... 19
2.5 Access to Financial Services ................................................................................... 20
2.6 Use of Other market Services .................................................................................. 23

Section 3: Competitiveness and Efficiency of the Domestic Commerce Sector ..... 24
3.1. Market Competition ................................................................................................. 24
3.2. Barriers to Entry ...................................................................................................... 25
3.3. Value Addition and Profitability ................................................................................ 26
3.4 Infrastructure: Bottlenecks ....................................................................................... 29
3.5 Constraints to Growth .............................................................................................. 29

Section 4: Governance ................................................................................................ 31
4.1. Contract Enforcement .............................................................................................. 31
4.2. Corruption & Law and Order .................................................................................... 32
4.3. Regulation ............................................................................................................... 32
4.4. Taxation .................................................................................................................. 35
4.5. Associations and Collective Action .......................................................................... 35

Section 5: Conclusion and Areas of Policy Focus .................................................... 36
Appendix 1 .............................................................................................................. 39
Appendix 2 .............................................................................................................. 42
Appendix 3 .............................................................................................................. 44
Appendix 4 .............................................................................................................. 46
Bibliography ............................................................................................................ 48

List of Tables

Table 1.1: Sector-wise break up of the sample ............................................................... 8
Table 1.2: Representativeness: Error Margins at the 90% Confidence Level* ................ 8
Table 1.3: Areas of Inquiry .............................................................................................. 9
Table 1.4: The distribution of the samples within cities ................................................... 9
Table 1.5: The retail markets covered in each city ........................................................ 10
Table 1.6: Province- and city-wise division of wholesale establishments covered by the
survey .......................................................................................................... 11
Table 1.7: Types of Storages ........................................................................................ 12
Table 1.8: Province- and city-wise break-up of the sample ........................................... 12
Table 1.9: Province- and city-wise division of the sample ............................................. 13
Table 1.10: Province- and city-wise division of the sample ............................................. 14
Table 1.11: Details of interviews conducted for each sub-sector ..................................... 15
Table 2.1: Quantum of Start up Capital (Rs.) ................................................................ 16
Table 2.2: Registration Levels ...................................................................................... 18
Table 2.3: Employment Levels ...................................................................................... 18
Table 2.5: Employees Education Levels ...................................................................... 20
Table 2.6: Details the sources of loans taken across sector......................................... 21
Table 3.1: Competition Within a Given Radius .............................................................. 24
Table 3.2: Relative weights to compute output index .................................................... 26
Table 3.3: Total, Freight and passenger indices ........................................................... 27
Table 3.4: Relative weights for value added index ........................................................ 27
Table 3.5: Cost of Infrastructure as a Proportion of Total Cost (%). .............................. 29

Appendixes

Table 1.1: Retail Sample (divided across four provinces) and margin for error (e) ........ 39
Table 1.2: Wholesale sample (divided across four provinces) and margin for error (e) . 40
Table 1.3: Storage Sample (divided across four provinces) and margin for error (e) ..... 40
Table 1.4: Real Estate Sample (divided across four provinces) and margin for error (e)40
Table 1.5: Transport sample (divided across four provinces) and margin for error (e) .. 41
Table 1.7: Annual growth rates of transport output index and national GDP ................. 43
Table 1.8: Retail: Average Monthly Revenue ................................................................ 43
Table 1.9: Wholesale: Average Monthly Revenue ........................................................ 43
Table 1.10: Business Services ........................................................................................ 44

List of Figures

Figure 1: Firm Age/Start-up Capital Groups .................................................................... 17
Figure 2: Loans from Commercial Banks in Retail and Wholesale. ................................. 21
Figure 3: Loans from Commercial Banks in Storage and Transport. ............................... 22

Innovative Development Strategies (Pvt) i
List of Abbreviations

ABAD Association of Builders and Developers
ADB Asian Development Bank
ADBI Asian Development Bank Institute
APCA All Pakistan Contractors Association
ATT Afghan Trade Transit
BAF Bank AlFalah
BCI Business Competitiveness Index
BOR Board of Revenue
CAA Civil Aviation Authority
CBM Cubic meter
CBR Central Board of Revenue
CDA Capital Development Authority
CIB Credit information bureau
CMR Contract for the International Carriage of Goods by Road
CPI Corruption Perceptions Index
CPIA Country Policy and Institutional Assessment
DFID Department for International Development
DHA Defense Housing authority
EDF Export Development Fund
EIU Economist Intelligence Unit
EOS Executive Opinion Survey
EPB Export Promotion Bureau
ESCAP Economic and Social Development in Asia and the Pacific
FBS Federal Bureau of Statistics
FCL Full Container Load
FDI Foreign Direct Investment
FIAS Foreign Investment Advisory Service
Ft Foot
FY Fiscal Year
GCI Global Competitiveness Index
GCR Global Competitiveness Report
GD Goods Declaration
GDP Gross Domestic Product
GoP Government of Pakistan
GOR Government Officials Residences
GRT Gross Register Tonnage
GST General Sales Tax
HBFC Housing Building Finance Corporation
HBL Habib Bank Limited
HDR Human Development Report
HFIs Housing Finance Institutions
IFC International Finance Corporation
IFS International Financial Statistics
IMF International Monetary Fund
ISAL Informal Subdivision of Agricultural Land
ISO International Standards Organization
IT Information Technology
ITU International Telecommunications Union
Survey Report on Domestic Commerce

Innovative Development Strategies (Pvt) ii
KBCA Karachi Building Control Authority
KDA Karachi Development Authority
KESC Karachi Electric Supply Corporation
KM(s) Kilometer(s)
KPT Karachi Port Trust
KSE Karachi Stock Exchange
LCL Less Than Container Load
LOA Length Overall
MCB Muslim Commercial Bank
MENA Middle East and North Africa
MOC Ministry of Commerce
MOD Ministry of Defense
MTDF Medium Term Development Framework
NBP National Bank of Pakistan
NCS National Conservation Strategy
NER Net Primary School Enrollment Rate
NHA National Highway Authority
NIE Newly industrialized economy
NIT National Institute of Transport
NLC National Logistics Cell
NTN National Tax Number
NTRC National Transportation Research Center
NTTFC National Trade and Transport Facilitation Committee
NWFP North West Frontier Province
PASSCO Pakistan Agricultural Storage and Services Corporation
PEC Pakistan Engineering Council
PHDEB Pakistan Horticulture Development and Export Board
PIAC Pakistan International Airlines Corporation
PIDE Pakistan Institute Of Development Economists
PIHS Pakistan Integrated Household Survey
PKR Pakistani Rupee
PQA Port Qasim Authority
PR Pakistan Railways
PREF Pakistan Real Estate Federation
PSDP Public Sector Development Program
R&D Research and Development
REER Real Effective Exchange Rate
REITs Real Estate Investment Trusts
RICS Royal Institute of Chartered Surveyors
SAI Social Accountability International
SBP State Bank of Pakistan
SKAA Sindh Katchi Abadis Authority
SME Small and Medium Enterprises
SPS Sanitary and Phytosanitary
SRO Statutory Regulation Order
Std Standard
TEP Total Factor Productivity
TEU Twenty-Foot Equivalent Units
TI Transparency International
TOR Terms of Reference

Innovative Development Strategies (Pvt) iii
TSDI Transport Sector Development Initiative
TTFP Trade and Transportation Facilitation Program
UK United Kingdom
UNDP United Nations Development Program
US United States
USA United States of America
USC Utility Stores Corporation
USD United States Dollars
WAPDA Water and Power Development Authority
WDI World Development Indicators
WEF World Economic Forum
WGI Worldwide Governance Indicators
WTO World Trade Organization

Innovative Development Strategies (Pvt) iv
Acknowledgment

The IDS team owes a debt of gratitude to the officers of the Ministry of Commerce for their
guidance, assistance and feedback during the course of this study. Our special thanks go out,
in particular, to Syed Asif Ali Shah, Secretary; Mr. Naseem Qureshi and Mr. Ashraf Khan,
Additional Secretaries; Mr. Abrar Hussian, Joint Secretary; Syed Irtiqa Zaidi, Consultant and
Mr. Qaseem Subhani, Section Officer, for sparing their precious time and efforts for the
study.

We feel a deep sense of gratitude for the Minister for Commerce. Mr. Humayun Akhtar
Khan, who took out considerable time from his busy schedule to guide us. It was his sincere
and deep conviction which enabled us to conduct and compile this detailed and
comprehensive study on Domestic Commerce of our country. His apt guidance and keen
analytical oversight were extremely helpful in finalizing the study and formulating the policy
recommendations.

This study has benefited from comments received from the following:
1. State Bank of Pakistan, Karachi.
2. Federal Board of Revenue, Government of Pakistan, Islamabad.
3. Planning and Development Division, Government of Pakistan, Islamabad.
4. Trade Development Authority, Government of Pakistan, Karachi.
5. (Management Consultants) Establishment Division, Government of Pakistan,
Islamabad.
6. Finance Division, Government of Pakistan, Islamabad.
7. Pakistan Institute of Development Economics, Islamabad.
8. NTTFC, Karachi.
9. FPCCI, Karachi.
10. Planning and Development Board, Government of Punjab, Lahore.
11. Planning and Development Board, Government of NWFP, Peshawar.
12. Planning and Development Board, Government of Sindh, Karachi.
13. Planning and Development Board, Government of Balochistan, Quetta.
14. Investment and Commerce Department, Government of Punjab, Lahore.
15. Industries, Production & Supplies Initiatives, Government of Pakistan, Islamabad.
16. SMEDA, Lahore.
17. Statistics Division, Government of Pakistan, Islamabad.

1

SYNTHESIS REPORT

by

DR. ASAD SAYEED

Innovative Development Strategies (Pvt) 3
Executive Summary
Introduction

1. The Domestic Commerce Survey was commissioned by the Federal Ministry of
Commerce to reduce a research gap that exists in the sector. Policy planning in this sector has
taken place without adequate economic research backup and consideration of the critical
linkages across sectors. The survey, conducted across five areas of domestic commerce, i.e.
retail, wholesale, transport, storage and real estate, aims to provide the necessary backup for
explicit, integrated policy planning and this synthesis report attempts to present a holistic
picture of the key results from the studies.
2. The survey was carried out in a selected number of large, medium and small cities.
Markets in small towns were used as proxies for rural markets since organized markets
generally do not exist in rural areas and small/medium towns are considered feeding areas to
the rural markets. In all, 2000 establishments in retail and wholesale markets, transport, real
estate and storage and warehousing were surveyed. The main areas of inquiry in the studies
related to firm level characteristics, competitiveness, protection, subsidies and incentive
schemes and regulation.

Firm Level Characteristics

3. The survey finds that capital invested in the firm at the time of its initiation is an
important indicator of firm size. The level of start up capital appears generally low for all
sectors (median start up capital is reported to be Rs. 200,000), indicating that the size of firms
across all sectors is small. Disaggregating firms according to their age indicates a discernable
difference in start up capital between firms established more than 10 years ago and those
established in the last five years. However, the difference between firms established in the
last 5 years and between 5-10 years is not substantial. In the retail and wholesale sectors we
see that roughly 55-60% of the firms consistently start their businesses with less than Rs.
200,000. In real terms, one can conjecture that firm size at the time of initiation of business
has declined in the last ten years. The only sector where firm size appears to have increased
over time is storage; however, the increase does not seem significant once real prices are
used.
4. Registration is a proxy for the formal nature of the enterprise. Roughly half of the
establishments surveyed across the sectors were registered. Registration, it appears, is closely
correlated to firm size. As such, the lowest level of registration is found amongst retail
outlets. In all other sectors, the level of registration is over 50%, with the highest share in the
storage sector.
5. Employment level at the firm is low in all the sectors surveyed with the mean full
time employment levels in establishments across all sectors of about 3 persons. No sector has
mean level of employment higher than 9. Part time employment appears fairly low across all
sectors as well (less than one in the retail and storage sectors). Despite all this, given the
relatively labour intensive nature of this segment of the economy, it is nonetheless a potential
employment generator for low skilled segment of the population.
6. With regards to human capital, only 10.7% of owners in the storage sector (and 1% in
transport) had been to a technical college or university. 27% owners in storage and 34.4% in
transport had gone through on-the-job training, working as employees elsewhere. The
remaining, more than half of the owners said they had learnt their vocation either from
friends and relatives or were self taught. This is an impediment for firm growth. In wholesale
and retail trade more than half of full time employees and 96% of part time employees had

not finished primary schooling. The nature of work as its is done today does not require high
level of skills and literacy making these sectors an important absorber of low skill workers.
7. Access to formal sector financial services is an important area of concern. More than
91% of the sources of startup capital were family savings and sale of assets. Only in the
transport sector is the share of those who used formal bank credit as part of the startup capital
relatively high. Use of loans from informal money markets is also low at less than 2% of the
aggregate sample. The aggregate level of borrowing from all sources in the last five years
was a mere 8.75% of the surveyed firms with commercial banks and family and friends the
most common sources of loans. Additionally, larger firms (those with start up capital in
excess of Rs. 500, 000) have a greater propensity to borrow from banks but the difference is
not large. The data implies that the threshold at which bank borrowing becomes feasible in
Pakistan is perhaps higher than that at which sectors in domestic commerce surveyed here
operate.

Competitiveness and Efficiency of the Domestic Commerce Sector

8. Efficient use of resources is an important prerequisite for sustained growth and
conventional economic wisdom is that a competitive environment is an important condition
for efficiency. Market competition is intense in all sectors. In the retail sector 52 percent of
firms said that up to 11 similar enterprises existed within a radius of 1 kilometer. A third of
wholesalers reported more than 25 similar outlets in the vicinity. And 51 percent of storage
owners had up to 5 similar enterprises within a radius of 1 kilometer.
9. The trucking industry faces minimal entry barriers, as is evident from the extremely
large number of existing operators and frequent new entrants. More than 25 percent of the
companies surveyed were established in the last five years and an additional 25 percent were
less than ten years old. In the retail sector, however, almost 58 percent of firms interviewed
reported that they had faced barriers to entry of which 68 percent ranked capital requirements
as the most important barrier. Need to have personal contacts and government regulations and
tariffs were other important barriers. Wholesale firms and storage owners reported similar
barriers.
10. With regards to infrastructure, 23% of the reported total cost of the enterprises goes
towards electricity, water and telephone charges in the retail, wholesale and storage sectors.
For the storage sector, the infrastructure cost is significantly higher at 34.39% of total
expenditure. The cost of electricity generally dominates. One reason for this high cost of
electricity is that the commercial and industrial sectors cross-subsidize the consumer and
agricultural sectors. Further, roughly half of the respondents claimed that on average they lost
2 to 6 hours in a day due to poor road infrastructure.
11. Among constraints to growth, limited access to finance figures prominently with 50%
of retail respondents, 40% of wholesale respondents and 35% of storage respondents citing
this as a primary constraint. Absence of collateral and unavailability of credit history cause
small establishments to be left out of formal credit markets. Taxation and regulation are seen
to pose a constraint as well especially in the transport sector. Sales tax is an active
disincentive to growth where remaining small allows retailers to avoid taxes.
12. Quality of public services is cited in many cases as a primary or secondary constraint
to growth. Poor condition of roads leading to the establishments, inadequate parking space
and no additional space on which to expand, are cited frequently. The transport sector faces
problems due to inadequate attention to the maintenance of highways and roads. Corruption
and law and order are largely cited as third ranked constraints to growth in most cases.

Synthesis Report

Governance

13. The survey concentrated on contract enforcement, law and order, taxation, regulation
and collective action with regards to governance.
14. More than 90% of the sample agreed on having to rely on the reputation of those they
enter into contracts with. However, more than 80% of the respondents in each of these sectors
agreed that a contract would protect them from being cheated while over 60% agreed that the
legal system would uphold their contracts and property rights in business disputes.
Furthermore, almost 40% of the respondents agree with the suggestion that people from other
baraderies/communities are more likely to cheat them and over half of the respondents agree
with the suggestion that people from another city are likely to cheat them. These
inconsistencies suggest that perception based data may not be a good guide for analysing
contract enforcement, as factual data (that is the incidence of resorting to police intervention
in dispute resolution) depicts a low degree of confidence in the formal justice system.
15. Corruption and law and order have been frequently reported in the surveys as the third
ranked constraints to growth. In the road transport sub-sector, it is the second most important
constraint. In rail transport, there is a high incidence of pilferage and switching of items such
as live animals and rigid rules make it difficult to obtain compensation. In the storage and
wholesale sectors the large majority of disputes appears to be over late payments and is
resolved through negotiation. Formal justice is not sought. In the wholesale sector, a common
contravention of the law is illegal encroachments which are ignored by corrupt officials in
Market Committees. The incidence of serious crimes was higher in wholesale with 27
respondents reporting murder and 121 mentioning serious theft. However, only 37-39% of
the total number of any type of crime cases were reported to the police and dispute resolution
was generally sought through negotiation.
16. All five sectors cite regulation systems as one of the main constraints to growth,
where zoning regulations are the most frequently cited constraint though the lack of clear
regulation on property rights is not seen as an impediment. Regulation regarding access to
finance is reported to be unfriendly towards small enterprises in all sectors. Another
important aspect of regulation is reported to be the tough import tariff regime in the past,
which has resulted in underdevelopment in all four sectors. Lastly, registration is an aspect of
regulation that is not adhered to in a large number of enterprises in the sample.
17. Taxation is considered one of the key constraints to growth by 16-25 percent of
respondents. Given the low level of registration, it may seem as though tax liability is
assumed by few establishments. However, in the retail and wholesale sectors where
registration is as low as 38 percent and 42 percent respectively, 50 percent of retail
establishments and 72 percent of wholesale establishments provide a receipt to customers,
indicating that they bear some form of tax liability.
18. Collective action through industry associations is highest in the transport sector with
75.5 percent of the sample being members of transport associations. 45.8 percent of real
estate establishments are members of associations, 47.3 percent and 26.2 percent of storage
establishments are members of market based associations and city wide associations
respectively and 58.7 percent and 18.8 percent of wholesale establishments are members of
market based associations and city wide associations respectively. Data are not available for
the retail sector. Transport unions, while active, are not effective. There is a tendency to
observe strikes which results in temporary compromises, but at an immense cost to the
economy. Prevalent opinion is that the countrys trade associations have failed to develop
successful institutional relations with the government.


Conclusion and Areas of Policy Focus

19. The retailing and wholesaling business is the front end of commerce and the main
finding of the survey is the small size of enterprises implying that value-addition and profit
margins are low. The smallness in size and the lack of collateral create problems of moral
hazard and high transaction cost so far as conventional banking practices are concerned. In
the regard the newly introduced SME and micro credit banks that do practice unconventional
banking should be encouraged.
20. Urban land use policy and recently high land prices also create a serious disincentive
for growth. Direct interest by the MOC in matters of land use policy and zoning laws as part
of an over-arching commerce policy can potentially create the requisite clout on the
provincial and local governments to develop capacity and prioritize this critically important
growth impediment.
21. Contract enforcement and dispute resolution requires that the capacity of small claims
courts and business tribunals be enhanced.
22. Development of the storage and warehousing sector, being endogenous to the
wholesale, retail and international trade development, will take place once these chains
develop. However, urban zoning and planned linkages with the transport infrastructure are
critical. Also, appropriate regulation and licensing of insurance companies that are certified
can help in creating a pool of reputable insurers in the market.
23. For the transport industry as a whole, a supply chain management approach should be
adopted with an inter-modal transport system where the different modes of transport adapt
their operations to one another. The new road transport legislation seeks to address many of
the bottlenecks highlighted: its implementation should be strengthened with utmost urgency.
Furthermore, the shear volume of road freight traffic carried by trucks warrants that trucking
be recognized as an industry by itself. A revision of the current restrictive industrial and
import policies for vehicles and auto parts is also in order but the domestic truck assembly
plants also need to be modernized. One way of bringing the industry into the formal economy
is by mandating a carrier registration policy.
24. The change in the structure of the industry from a large number of small-scale
enterprises to well organized large entities competing against one another requires attention
to soft management issues such as automation, marketing, and availability of a well trained
labor force. The government could follow up the registration drive by creating a nation wide
database of freight and passenger services. The relatively high level of education of transport
owners should make such a transition simple on the technical front. Meanwhile, the non-
government sector could take the lead in setting up driver training centers, where customer
relations trainings are accorded at affordable costs. With regards to access to formal credit in
the transport sector, a World Bank report has outlined concrete steps: (i) developing a Truck
Leasing Concept with banks; (ii) establishing a revolving National Guarantee Fund in order
to give incentives to decrease interest to banks; and (iii) developing a fund to buy and scrap
old but operational two-axle trucks in order to provide truckers with down payments for
newer vehicles. These options need to be evaluated in greater detail.


Introduction

1. The domestic commerce sector has been termed as the front end of the economy
(Haque, 2006). It is through this vital link that production of goods and services as well as the
gains from international trade reach th e consumer.
2. In spite of the fact that the domestic commerce sector contributes roughly one third
to national GDP and 10% of aggregate employment, it has not been the subject of research
and explicit policy planning. Perhaps this is because it is assumed that the development and
proliferation of domestic commerce is endogenous to expansion in the commodity producing
sectors and international trade. As such, policy planning on this sector has first of all taken
place without much economic research backup, but also without keeping in view the critical
linkages across sectors that constitute the domestic commerce economy and the commodity
producing sectors. For instance, explicit cognizance is not taken of how, for instance, the road
and rail infrastructure links up with the wholesale and retail markets or planning for storage
and warehousing within the ambit of urban zoning. The same can be said about regulatory
policies as well as the incentives and subsidies regime.
3. The Domestic Commerce Survey, commissioned by the Federal Ministry of
Commerce, seeks to reduce this research gap in the hope that it will provide the necessary
backup for explicit and integrated policy planning for this sector. This synthesis report
attempts at taking a holistic picture of the survey conducted across five areas of domestic
commerce, i.e. retail, wholesale, transport, storage warehousing and real estate.
4. The report is divided in five sections. Section 1 explains in detail the sample across
which the survey was undertaken, its representativeness and the methodology of data
collection in each sector. Section 2 looks at firm level characteristics for the sample as a
whole and for each sector. Firm size, employment levels, human capital levels and access to
financial and other auxiliary markets provide a description of the nature of establishments in
the sector. Section 3 then delves into the structure of the markets that prevail, i.e. the level of
competition in the sectors and the entry barriers they face. It also makes some preliminary
forays into levels of profitability and value addition in the domestic commerce area. Finally
in this section we also look into the infrastructure side of cost of doing business that can
have an impact on future growth prospects of this sector. In section 4, we delve into
governance issues of contract enforcement, the regulatory environment, issues of law and
order and the nature of collective action. Section 5 concludes.


Section 1
Sample Size, Data Collection
Methodology and Sector
Characteristics
1

1.1: Survey

5. The Domestic Commerce Survey was conducted across four sectors: retail and
wholesale markets, storage and warehousing, transport and real estate. The survey was
carried out in a selected number of cities (including large, medium and small cities). As
organized markets generally do not exist in rural areas and small/medium towns are
considered feeding areas to the rural markets, markets in small towns were used as proxies
for rural markets. The survey was integrated at city level for the four sectors. Below is a
sector-wise break up of the sample (which comprised in all 2000 establishments).

Table 1.1: Sector-wise break up of the sample
Sector Sample
Retail 1000
Wholesale 500
Real Estate 200
Storage and warehouses 200
Transport 100

6. With respect to the representativeness of the data, the margin of error at the 90%
confidence level is given in Table 1.2.

Table 1.2: Representativeness: Error Margins at the 90% Confidence Level*
Sector Error Margin (%)
Retail 2.71
Wholesale 3.72
Storage 0.35
Real Estate 5.82
Transport 8.23
Note: * Refer to Appendix 1 for details on sampling, the raising factor used and error margin
calculations.

1 Tables in this section draw upon Innovative Development Strategies, "Basic Statistical Analyses of the
Sample Survey Data on Domestic Commerce"(2007).
Synthesis Report

1.2: Areas of Inquiry

7. The Domestic Commerce Survey was conducted across four sectors namely: retail
and wholesale markets, storage and warehousing, transport and real estate. Within the sectors
the main areas of inquiry were regarding competitiveness, protection, subsidies and incentive
schemes and regulation. More specifically the areas of inquiry are given in Table 1.3.

Table 1.3: Areas of Inquiry
1. Firm Characteristics
- Registration Status
- Size (paid up capital, employment levels).
- Employment (part time, full time, family, wages)
- Human capital
- Sources of Finance
- Business services used
2. Competitiveness and Efficiency
- Level of Competition (firms within a distance)
- Barriers to Entry
- value addition and proftiability
- Cost and access to infrastructure
- Constraints to Growth
3. Governance
- contract enforcement
- law and order
- taxation
- regulation (zoning, other issues)
- collective action (association, etc).

1.3: Sampling Technique by Sector

8. The sample sizes for the different sectors within domestic commerce had a minimum
value of 100. For this sample size, a population proportion can be estimated by the sample
proportion within about eight percent with probability of at least 0.90. The sample sizes for
the surveys of the other sectors of domestic commerce were
multiples of that for transport, as indicated in Table 1.4.
9. The distribution of the samples within cities is given in the following table.

Table 1.4: The distribution of the samples within cities
City Retail Wholesale RealEstate Storage Transport
Faisalabad
Gujranwala
Lahore
Rawalpindi
Multan
Okara
Hyderabad
Nawabshah
Karachi
Sukkar
Peshawar
Abbotabad
Quetta
Islamabad
90
60
140
60
60
40
60
40
180
50
60
40
60
60
45
30
70
70
30
20
30
20
90
25
30
20
30
30
15
10
30
10
10
10
10
10
40
10
10
10
10
15
15
15
25
10
15
15
15
5
35
10
10
5
15
10
10
5
15
5
5
5
5
5
20
5
5
5
5
5


10. Details of the total sample, the cities and localities in which each survey was
conducted and the selection methodology adopted within these cities for each sector are
discussed below.

1.3.1 Retail and Wholesale Markets
1.3.1.1 Total Sample

11. Literature suggests that the retail sector is dominated by small, sole proprietorships
with a predominance of all-purpose grocery stores; therefore these categories have formed the
bulk of the retail sample. The retail sample consisted of 1000 establishments of which 138
were grocery stores (83 of which were medium-sized establishments), 105 clothing stores (46
of which were medium sized), 78 were electronics stores, 49 were bookshops, 47 were
medical stores while the remaining stores dealt with jewelry, computer hardware and
software, fruits and vegetables, baked items, toys, etc. 92% of the establishments in the
sample were sole proprietorships and only 20% of the establishments were classified as large.
12. Within the wholesale sector, the only clearly defined market is for agricultural
produce, particularly fruit and vegetables. Out of the 543 establishments comprising the
sample, a fifth traded in groceries, while the rest dealt in commodities including clothing,
books and medical supplies.

1.3.1.2 Cities and Localities

13. The survey was carried out in a selected number of cities (including large, medium
and small cities). As organized markets generally do not exist in rural areas and
small/medium towns are considered feeding areas to the rural markets, markets in small
towns were used as proxies for rural markets.
14. The retail markets covered in each city are given in the following table.

Table 1.5: The retail markets covered in each city
City Market
Faisalabad Ghanta Ghar, Satyana Road and Ghulam M.Abad
Gujranwala Gujranwala City
Lahore Anarkali, Shah Alam, Ichra, Baghanpura, Gulberg
Rawalpindi Saddar Market, Satellite Town, Muslim Town
Multan Bohar Gate, Haram Gate ,Cantt
Okara Okara City
Hyderabad Shahi Bazar, Latifabad No. 7, Phuleli
Nawabshah Shahi Bazar
Karachi Saddar, Landhi, Liaquatabad, Shah Faisal,
Sukkar New Sukkar, Old Sukkar
Peshawar Cantt, City, University Town
Abbotabad Main Saddar
Quetta City, Satellite Town
Islamabad Aabpara Market, Karachi Company, Super Market

15. The following table gives a province- and city-wise division of wholesale
establishments covered by the survey.

Synthesis Report

Table 1.6: Province- and city-wise division of wholesale establishments covered by the
survey
Provinces/Cities Number of establishments
surveyed
Punjab 275
Faisalabad 45
Gujranwala 30
Lahore 70
Rawalpindi 30
Multan 30
Okara 20
Federal 30
Islamabad 30
NWFP 50
Peshawar 30
Abbotabad 20
Sindh 165
Hyderabad 30
Nawabshah 20
Karachi 90
Sukkur 25
Balochistan 30
Quetta 30
Pakistan 520

1.3.1.3 Selection Methodology

16. In the retail and wholesale sector, if there was more than one sample market in a city,
then an equal number of sample establishments were selected from each market, depending
on the required sample size. The center of the market was taken as the starting point for the
sample and every tenth establishment from thereon was selected until the required sample
size was achieved.

1.3.2. Storage and Warehousing

17. There are few sources of secondary information on storage and warehousing in
Pakistan. Storage issues may be divided into two major categories: those to do with
agricultural storage (storage of grains as well as of fruits and vegetables) and storage of
manufactured products for distribution to retailers.
18. A total of 200 storages were sampled in the survey. Of the total storages sampled, 39
were in the form of godowns, used mainly for agricultural storage. Ten of the storages were
open stores, used again primarily for grain, but also, in one case, for wood. The sample
included 65 cold storages, 24 storages belonging to distributors as well as storages affiliated
with wholesale and retail outlets. The table below gives the complete breakdown.


Table 1.7: Types of Storages
Type of Storage Number
Grain Storage
Godown 39
Open storage 10
General Storage
Cold storage 65
Distributor's storage 24
Storage for retail outlet 15
Storage for wholesale outlet 47
Total 200

1.3.2.2 Cities and Localities

19. The storage and warehousing survey was conducted across 14 cities. Below is given a
province- and city-wise break-up of the sample.

Table 1.8: Province- and city-wise break-up of the sample
Provinces/Cities Numbers of establishments surveyed
Punjab 105
Faisalabad 15
Gujranwala 15
Lahore 25
Rawalpindi 10
Multan 15
Okara 15
Federal Area 10
Islamabad 10
NWFP 15
Peshawar 10
Abbotabad 5
Sindh 65
Hyderabad 15
Nawabshah 5
Karachi 35
Sukkur 10
Balochistan 15
Quetta 15
Pakistan 200


20. Identifying storages for the survey was not a straightforward exercise as commercial
storage facilities, other than cold storages, which typically are located near fruit and vegetable
wholesale markets, are often not advertised as such. In many cases storages are not run
commercially, but are maintained by distributors or wholesalers and sometimes also by retailers.
21. The eventual method of selection was thus: in each city, areas where storages are located
were identified and the requisite sample was randomly selected by sampling every second or
third establishment (as the case and need may be). Other than the questionnaires specifically
designed for storage outlets, a brief section on storage modalities was also included in the
questionnaire on wholesale and retail trade, as it was surmised that many wholesalers and
retailers might not be using dedicated storages for their goods. The findings of that section are
also helpful for the purposes of analysis of the storage and warehousing sector.

Synthesis Report

1.3.3 Real Estate

22. Real estate markets, as opposed to the foundation stages of real estate issues (such as land
rights, etc), have received little attention from researchers and therefore there is a lack of reliable
information on real estate values, yields and returns. Nevertheless the available literature,
including Housing Census Reports and various other government publications, has been studied.
Furthermore a country-wide survey has been conducted, covering 200 establishments. Various
stakeholders have been covered in this survey including real estate agents and key property
developers.

1.3.3.2 Cities and Localities.

23. The survey was conducted in 14 cities. The table below gives a
province- and city-wise division of the sample.

Table 1.9: Province- and city-wise division of the sample
Provinces/Cities Number of establishments surveyed
Punjab 100
Faisalabad 15
Gujranwala 10
Lahore 30
Rawalpindi 10
Multan 10
Okara 10
Federal Area 15
Islamabad 15
NWFP 20
Peshawar 10
Abbotabad 10
Sindh 70
Hyderabad 10
Nawabshah 10
Karachi 40
Sukkur 10
Balochistan 10
Quetta 10
Pakistan 200


24. While selecting the sample, real estate agents were randomly selected from within
markets, while key property developers in a city were identified, and a sample was selected
from amongst the known group. Focus group discussions form the basis for a great part of
the analysis of real estate markets.

1.3.4 Transport

25. The four sub-sectors within transport discussed herein are road, rail, aviation and ports.
There was some existing literature on this sector; qualitative data was readily available on the
road (freight) and rail (passengers and freight) sub-sectors, but was scant on aviation and ports.
On the other hand, sufficient quantitative data to conduct the required statistical analysis was

only available for rail. Virtually no detailed data sets existed for road transport, a fact that
necessitated undertaking an extensive survey exercise. A sample of 100 establishments was
determined upon and was divided among freight (68 surveys; receiving greater weight, due to its
higher commercial significance) and passenger services (44 surveys). The sample size was
determined with the help of national level industry data acquired from the Federal Bureau of
Statistics.

1.3.4.2 Cities/Localities

26. The survey was conducted in 14 cities. The table below gives a province- and city-
wise division of the sample.

Table 1.10: Province- and city-wise division of the sample
Location Number of structured questionnaires
Freight services Passenger services
Punjab
Faisalabad 8 5
Lahore 15
Multan 3 2
Okara 4 3
Rawalpindi 4 5
Gujrawala 2 4
Sindh
Karachi 5 10
Hyderabad 4 2
Nawabshah 3 2
Sukkur 4 2
NWFP
Peshawar 4 3
Abbotabad 4 2
Balochistan
Quetta 4 3
Federal Area
Islamabad 4 1
Total 68 44
Total 112
2


27. The sampling technique employed in the transport sector presents a deviation from the
other sectors. Samples were selected as before in the same 14 cities and were divided among
freight (receiving greater weight due to its higher commercial significance) and passenger
services. Within each identified location, respondents were selected using the snowballing
technique, keeping in mind the need to conduct the exercise in multiple markets within a
selected city as well as to ensure variation among the size of the firms interviewed. A random
sampling technique was not feasible, as no universe for the transport sector exists for any of
these locations. Moreover, the diversity of the selected locations and the transient nature of
most transporters (especially those without any physical hub) would have made mapping a
cost-prohibitive exercise. However, the data obtained from the survey, while useful for topics
including governance and institutions, was fairly weak in the areas of revenue, profit margins,
volumes and costs. This is often the case in the transport sector in Pakistan due to the

2 The sigma total is higher than the sample size since 12 respondents dealt both with passenger and freight
services.
Synthesis Report

informal nature of the sector and agents unwillingness to reveal information on revenues and
costs.
28. Thus for the road sector, instead of the domestic commerce survey, an existing
primary data set collected from transporters of coniferous timber for 2004-05 and 2005-06
was used. The data contains variables dealing with price, costs, and profit margins for the
major timber routes in the country. The sample size for the data set was 62, which was
representative of the timber industry in Pakistan. A total of 5 hubs of timber trade in the
country were surveyed. As with the data set collected specifically for the domestic commerce
exercise, respondents for the timber survey were selected through snowballing.
29. Analysis of the rail, aviation and ports sub-sectors primarily draws on secondary
literature. Key informant interviews were only utilized to substantiate existing information
and fill gaps. Due to the small number of interview respondents, information from secondary
literature was treated as sacrosanct wherever the two sources of information differed.
Interview respondents were selected purposively, the selection criterion being relevance of
respondents to the required information. The table below gives details of interviews
conducted for each sub-sector.

Table 1.11: Details of interviews conducted for each sub-sector
Number of
interviews
Location
Rail 8 Lahore, Islamabad
Aviation 3 Karachi
Ports 11 Karachi, Lahore


Section 2
Firm Level Characteristics

30. Firm level characteristics provide the micro view of the structure of the market for
domestic commerce in Pakistan. For this purpose, capital invested in the firm at the time of
its initiation provides an important indicator of firm size. Given that firms in the wholesale
and retail sectors are largely owner driven, experience in the business is an important
indicator of human capital development through learning by doing. This is also an indirect
indicator of productivity improvements. Different avenues through which capital was
acquired throws light on the extent to which formal and informal capital markets are accessed
by entrepreneurs in and across these sectors. Moreover, it also provides an important
indication of the importance of own or family savings are brought to bear in starting a
business. Finally, in this section we also look at the level of access to other business services
for the sectors that were surveyed.

Table 2.1: Quantum of Start up Capital (Rs.)
Mean (Rs.) Median Minimum Maximum Number of
firms
Retail 610, 039 150, 000 500 70, 000, 000 972
Wholesale 776, 603 200, 000 1, 000 30, 000, 000 493
Storage 5, 757, 154 1, 000, 000 1, 000 300, 000, 000 175
Transport 2, 403, 444 575, 000 10, 000 35, 000, 000 90
Total 1, 232, 979 200, 000 0 3.0E + 08 1995

2.1 Firm Size

31. The median start up capital of firms is reported to be Rs. 200, 000. As expected, the
highest median start up capital is in the transport sector at Rs. 575,000. Because of the higher
level of capital investment in the transport sector, i.e. investment in a vehicle makes the
sector more capital intensive than the other sectors surveyed. However, the level of start up
capital appears generally low for all sectors. For sectors other than transport, capital
requirement will be concentrated around renting or purchasing the premises and furnishing it.
Although it is expected that at the time of the initiation of the business inventory cost will be
minimal, the amount of start up capital is low for all the sectors. Once we discount the
possibility of underreporting, this data indicates that the size of firms across all sectors is
small.
3
Smallness of firm size is further corroborated by low levels of full time employment
also (see section 2.3.). The following table provides statistics on levels of start up capital
across sectors.
32. For the retail and wholesale sector the cut off is taken to be firms with start-up capital
of Rs.200, 000 or less. Since firm size is larger in transport and storage primarily because of

3 Since firm age is low, it is not the case that in terms of real prices there will be much difference either.
Synthesis Report

greater capital outlays the cut off is taken to be firms with start-up capital of Rs.1 million or
less.

Figure 1: Firm Age/Start-up Capital Groups

0
10
20
30
40
50
60
70
80
90
%age of Firms
Retail Wholesale Storage Transport
Sectors (Start-up capital for retail and wholesale: < Rs.200,
000; for Storage and Transport: < Rs.1 million.)
Upto 5 years
6-10 years
10 + years

33. We further disaggregated firms according to their age to check if there is a pattern
over time with regard to the size of firms. In Figure 1 we present data of firms in four sectors
according to the age of firm and startup capital less than Rs.200, 000 in the retail and
wholesale sectors and less than Rs.1, 000, 000 in the storage and transport sectors. While the
real value of startup capital in todays prices will be somewhat higher for older firms, there is
a discernable difference across all sectors between firms established more than 10 years ago
and those established in the last five years. However, difference in the number of firms
established in the last 5 years and between 5-10 years is not substantial in the aggregate. This
is particularly pronounced in the retail and wholesale sectors where we see that roughly 55-
60% of the firms consistently start their businesses with less than Rs. 200,000 at their
disposal. In real terms, therefore, one can safely conjecture that on the whole firm size at the
time of initiation of business has declined in the last ten years. Similarly, in the transport
sector our data shows that firm size has actually declined. The only sector where firm size
appears to have increased over time is storage where a natural progression over time appears
to have occurred. Even in this sector, however, the increase in size of firms does not seem
significant once real prices are used.
34. The data thus does not paint a promising picture so far as firm size is concerned. Over
time, as incomes have increased, firm size at the time of initiating the business has remained
at best stagnant.

2.2 Registration Status

35. Registration is a proxy for the formal nature of the enterprise. Roughly half of the
establishments surveyed across the sectors were registered. Registration, it appears, is closely
correlated to firm size. As such, the lowest level of registration is found amongst retail
outlets. Amongst all other sectors, the level of registration is over 50%, with the highest share
in the storage sector. Perhaps because of the high share of capital intensive nature of
activities such as cold storages and those operated by large distributors in urban centres,

levels of registration were high in this sector. Given a higher proportion of smaller firms in
the wholesale and transport sector, the level of formalization through registration is low. The
following table depicts the level of registration across sectors.

Table 2.2: Registration Levels
Number of firms Percentage of total sample
Retail 394 39.4
Wholesale 258 51.6
Storage 142 72.8
Transport 58 59.2
Total 852 47.5

36. Those who had not registered were asked about reasons for not registering. More than
two thirds (76%) responded that there was no requirement for registration. The next largest
category (15%) was those who said that since there was no penalty for non-registration, they
did not register. The number of procedures for registration (4%) and high tax rates (3%) also
featured in descending order.

2.3 Employment Patterns

37. Table 2.3 provides descriptive data on employment. Mean full time employment
levels across all sectors is 3. While there is a large variation in employment levels across
sectors, as mentioned above, given the overall smallness in the size of firms in no sector is
the level of mean employment higher than 9. As expected, the mean level of full time
employment is 3 times higher in the transport and storage sector compared to that in
wholesale and retail. Not only are transport and storage facilities larger in size, the nature of
the vocation is such that a higher number of full time employees is required in both sectors.
Drivers and cleaners are required to operate a transport business while watchmen, book
keepers and loaders are a necessary component of the storage business.

Table 2.3: Employment Levels
Mean full time employees
(number)
Mean part time employees
(number)
Retail 2 0
Wholesale 2 0
Storage 9 2
Transport 8 1
Total 3 0

38. The average retail and wholesale outlet in Pakistan, on the other hand, is a family run
affair, perhaps with some part time help. This is borne out by the data also. Roughly 37% of
retail and 18% of wholesale outlets have no permanent employee.
4

39. Part time employment, contrary to expectations, appears fairly low across all sectors.
Mean part time employment is less than one in the retail and storage sectors but somewhat
higher in the transport and wholesale sectors.
40. The data above indicates that those domestic commerce sectors surveyed have overall
low employment generation capacity at present. However, given the relatively labour
intensive nature of this segment of the economy, it is a potential employment generator at the
lower end of the skill segment of the population.

4 It is expected that in retail there is unpaid family help but there is no data available on this.
Synthesis Report

2.4 Human Capital

41. Information on human capital endowments is available, albeit partially, for both
owners as well as workers. Detailed information on education and training for owners is
available for the storage and transport sectors. Only 10.7% of owners in the storage sector
(and one in transport) had been to a technical college or university. Bulk of the owners in
both sectors (27% for storage and 34.4% in transport) had gone through on the job training,
working as employees elsewhere. The remaining, more than half of the owners said they had
learnt their vocation either from friends and relatives or were self taught. While the
requirement for higher endowments of human capital in these sectors is not very stringent, it
appears that the low level of education and formal training will pose an impediment for firm
growth. Given the lack of skill specificity required in wholesale and retail trade, it is expected
that educational attainments will be even lower in these sectors. The following table describes
education attained by mangers/owners in the storage and transport sectors.


Information for educational attainment of employees was obtained for the retail, wholesale
and storage sectors. In aggregate, more than half of the full time employees and 96% of part
time employees had not finished primary schooling. Table 2.5 provides the number of
permanent employees across sectors who have not finished primary schooling.

Table 2.5: Employees Education Levels
Percentage of sample that have not finished
primary school
Retail 62.2
Wholesale 42.8
Storage 16.3
Total 51.2

42. Low levels of education attainment is to be expected amongst employees from both
supply and demand sides. On the demand side, the nature of work does not require high level
of skills and literacy, whereas the supply of individuals with low levels of literacy and
educational attainment is large. The domestic commerce sector is an important absorber of
this segment of the workforce.

2.5 Access to Financial Services

43. Access to formal sector financial services is perhaps one of the most important
prerequisites for the growth and efficiency of an enterprise. Data collected on this important
area of concern was on sources of finance used for starting the business and subsequently
those who sought access to financing in the last five years for purposes of either initiating a
business, further investment or working capital. We also explore data for reasons that
entrepreneurs could not access the financial sector.
44. The predominant form of startup capital has been family savings and sale of assets.
More than 91% of the resources raised in the sample across all sectors were from these
sources. There was little variation across the sectors. Use of formal sector bank credit in
startup capital was very low in the aggregate. Across different sectors also, resort to formal
sector credit for business startup was low across all sectors. Only in the transport sector is the
share of those who used bank credit as part of the startup capital relatively high. Loans from
the informal money markets are also miniscule at less than 2% of the aggregate sample.
Interestingly the only sector where the role of informal credit is high at 17.2% is real estate.
Perhaps the use of black money in real estate trading is reflective of this relatively high
share of informal financial markets in this sector.
45. Data was collected on borrowing from different sources in the last five years from the
retail, wholesale, transport and storage sectors. The aggregate level of borrowing from all
sources in the last five years was a mere 8.75% of the surveyed firms. No major variation was
found across sectors, only a slightly higher than average trend of borrowing in the transport
and storage sectors is observed. Higher capital requirements have necessitated this relatively
higher level of borrowing in these sectors.
46. As to the source of borrowing, roughly half borrowed from the commercial banks.
The next most prevalent source of borrowing was from the family and friends and not from
the informal financial market. In fact, borrowing from the informal money market was
miniscule with only 2 retail and wholesale establishments and 3 storage firms borrowing
from this source.

Synthesis Report


Table 2.6: Details the sources of loans taken across sector.
Retail Wholesale Storage Transport Total
Source
Count
(% of sample)
Count
(% of sample)
Count
(% of sample)
Count
(% of sample)
Count
(% of sample)
Commercial bank
49
(4.9)
17
(3.40)
10
(5.10)
10
(10.10)
86
(4.79)
Money lender
2
(0.2)
2
(0.40)
3
(1.53)
0
(0)
7
(0.39)
Friends/relatives
38
(3.8)
13
(2.60)
10
(5.10)
0
(0)
61
(3.39)
Other
3
(0.3)
0
(0)
0
(0)
0
(0)
3
(0.17)
Total
92
(9.2)
32
(6.40)
23
(11.74)
10
(10.10)
157
(8.75)
Sources of Loans Taken in the Last Five Years

47. From this data, we can tentatively conclude that in an overall context of low levels of
borrowing, access to the formal financial sector was not uncommon. More important is the
observation of extremely low levels of access to the informal financial market.

Figure 2: Loans from Commercial Banks in Retail and Wholesale.
0
1
2
3
4
5
6
7
%
a
g
e

o
f

f
i
r
m
s

t
a
k
i
n
g

l
o
a
n
s

f
r
o
m

c
o
m
m
e
r
c
i
a
l

b
a
n
k
s
500000 500001 +
Start-up Capital (Rs.)
Retail Wholesale


Figure 3: Loans from Commercial Banks in Storage and Transport.

0
2
4
6
8
10
12
14
%
a
g
e

o
f

f
i
r
m
s

t
a
k
i
n
g

l
o
a
n
s
1000000 1000001 +
Start-up Capital (Rs.)
Storage Transport

48. We further checked if firms that are larger in size tend to access the formal financial
sector compared to smaller firms. A priori we would expect this to be the case given the
greater ability of larger firms to provide for collateral and meet the criteria for accessing the
formal financial sector.
49. Using start up capital as a proxy for firm size, we see in Figure 2 that firms with a
startup capital of more than Rs. 500, 000 have a greater propensity to borrow from banks than
smaller firms in the wholesale and retail sector, but the difference is minimal. It is also
interesting to note that the wholesale sector (which, in principle should have a greater capital
outlay than the retailers) accesses the banks for financial services less than the retail sector. A
similar picture emerges for the storage and transport sectors (Figure 3), where the proxy for
startup capital has been taken to be Rs. 1 million and above for large firms. The ratio of firms
borrowing from banks improves but similar to the retail & wholesale sectors, the difference is
not significant. This data implies that the threshold at which bank borrowing becomes
feasible in Pakistan is perhaps higher than that at which sectors in domestic commerce
surveyed here operate.
50. Procedural problems of acquiring loans also kept away some 27 firms from acquiring
loans from the formal financial sector. More than half of this sample who were denied loans
after having applied for them were from the retail sector. In retail the most prevalent reason
for credit denied from the banks was the lack of collateral. If access to the formal financial
credit market is to be developed then policy will have to devise procedures to provide credit
to small businesses in general and retail outlets in particular.
51. Data on the purpose for which loans were acquired demonstrates that the bulk of the
borrowing took place for expansion of businesses rather than for working capital
requirements. Since working capital is an important requirement for the retail and wholesale
Synthesis Report

sectors, we find that their mode of borrowing for this purpose is predominantly in the form of
acquiring credit from suppliers.
5

2.6 Use of Other market Services

52. An important indicator of a robust domestic commerce environment will be the use of
support services. The need for and use of these services not only informs us about the level of
awareness and scale of activity of the firms surveyed but also of the availability of such
services in the market. Data for these variables was collected for the retail, wholesale, storage
and transport sectors.
6

53. Engineering services will be most relevant for the transport and storage sectors, with
the use of trucks and lorries, etc. as necessary components of the business. Consequently the
demand for engineering services was highest amongst the transport and storage sectors.
However, given the engineering intensive nature of these sectors especially transport the
levels of demand is low. Since there is not much difference in the level of services, the
market for engineering services appears well developed.
54. Demand for management consultants was low across all sectors. One fourth of the
storage firms, however, demanded these services. It is most likely that those storage firms
that demanded management services were the larger urban distributors. The demand for
marketing services, on the other hand, is much more prevalent amongst all sectors; however,
the supply of demand services, measured through their use, appears lower than that for other
services. Demand for accounting services is significant only for storage, necessitated by
requirements for inventory management. The use of legal services was most prevalent in the
transport sector. Perhaps the interface with the police necessitates greater access to legal
services. Demand for legal services in the storage sector is 28.1%. A priori one would expect
this demand to be higher, since losses and damage is expected to be more frequent. The gap
between the use of legal services by the storage sector is also larger than that for other
sectors. Perhaps the cost of these services is too steep for storage enterprise owners to access
them.
55. The demand for insurance services is again low, considering that it is an important
service for all four sectors, both in terms of their fixed assets as well as inventory. Again
demand for insurance is high for transport and storage. Because of the high capital cost
involved in vehicles, use of insurance services is the highest in the transport sector. However,
the gap between demand for and use of services varies a great deal. Perhaps the cost of
insurance is inhibits higher levels of insurance in the transport sector. The use of information
technology, as expected, is minimal. The only sector which expresses demand for it is
storage, though usage in this sector is also fairly low.

5 Although supplier-buyer credit was strictly speaking borrowing, it was not included in the loans acquired
question in the survey.
6 For detailed data description, refer to Appendix 3.1.


Section 3
Competitiveness and Efficiency of
the Domestic Commerce Sector

56. Efficient use of resources in domestic commerce is an important prerequisite for
sustained growth in the sector. Based on conventional economic wisdom, a competitive
environment is an important condition for efficiency. Linked to the level of competitiveness
is that of barriers to entry which is an important indicator of market competition. Levels of
profitability and value addition provides us with information on efficiency at the firm and
sector level. Based on survey data as well as secondary information, this section will analyse
these conditions. Both the cost of and access to infrastructure is an important cost of doing
business. The survey provides some information on this important aspect of competitiveness
and efficiency also which is analysed in section 3.4. Section 3.5 provides survey results on
perceptions of constraints to growth that the respondents provided.

3.1. Market Competition

Table 3.1 presents results of the level of competition for firms in the retail, wholesale and
storage sectorys based on survey data. Competition is measured on the basis of similar
enterprises with a certain radius of the firm that was surveyed. Information on the transport
sector presented in Table 3.1 is culled from the background paper on the transport sector.

Table 3.1: Competition Within a Given Radius
Retail Wholesale Storage Transport
Number of similar enterprises
within a radius of 1 km
1 to 5 297 115 96
On average enterprises
transporting goods have
to deal with more than 25
competitors in their area
of operation. Competition
for inter-city passenger
services is less severe.
Pakistan Railways is a
monopoly
6 to 11 198 77 33
12 to 25 168 85 16
More than 25 259 141 14
Dont Know 24 18 29
Total 946 436 188

Synthesis Report

57. As we see in the above table, market competition was intense in the retail sector with
52 percent of firms saying that up to 11 similar enterprises existed within a radius of 1
kilometer. The responses were roughly similar across revenue categories, indicating that both
large and small enterprises faced similar competition. Wholesale markets are generally
clustered by nature of goods, so market competition was fairly intense with a third of
respondents saying that there were more than 25 similar outlets in the vicinity.
58. Market competition was intense in the storage sector also with about 51 percent of
storage owners saying that up to 5 similar enterprises existed within a radius of 1 kilometer.
The responses were roughly similar across revenue categories, indicating that both large and
small enterprises faced similar competition.
59. Competition in the trucking sector is also intense.
7
The trucking industry faces
minimal entry barriers, as is evident from the extremely large number of existing operators
and frequent new entrants. More than 25 percent of the companies surveyed were established
in the last five years. The age of an additional 25 percent of the firms was less than ten years.
The vast majority of businesses have been established from scratch, with only a minor
proportion either being inherited or bought as a running business.
60. Majority of the competition for transport enterprises comes from both small and large
private-owned transport companies. On average, enterprises transporting goods have to deal
with more than 25 competitors in their area of operation. Competition for inter-city passenger
services of comparable quality is less severe. Competition levels are reportedly greater in
Punjab as compared to Sindh. The National Logistics Cell (NLC) is the only public sector
company in the road transport sub-sector and enjoys preferential treatment from the
government, despite its poor services and relatively higher rates. Notwithstanding, it is a
minor player in the market, accounting only for about 5 percent of the total intra-country
freight volume.

3.2. Barriers to Entry

61. In the retail sector, almost 58 percent of firms interviewed reported that they had
faced barriers to entry, and when asked to rank the most important barriers, in order of
importance, a significant 68 percent ranked capital requirements as the most important
barrier. The need to have personal contacts in the proposed business was cited as the most
important barrier by 10 percent of respondents, while almost 33 percent of respondents cited
it as the second key barrier to entry. Government regulations and tariffs were also cited as
important barriers to entry, with 18 percent of respondents ranking this at no. 2, and 19
percent at no. 3.
62. In wholesale, about 65 percent of firms interviewed reported that they had faced
barriers to entry, and 76 percent cited the need for finance as the most significant barrier.
The need to have personal contacts in the proposed business was cited as the most important
barrier by 7 percent of respondents, while almost a third of respondents cited it as the second
key barrier to entry. Government regulations and tariffs were cited as the second and third
ranked barriers by about 20 percent of respondents.
63. In the storage sector, roughly 77 percent of storage owners interviewed reported that
they had faced barriers to entry, and when asked to rank the most important barriers, in order
of importance, almost 60 percent ranked capital requirements as the most important barrier.
The need to have personal contacts in the proposed business was cited as the most important
barrier by 5.6 percent of respondents, while almost 24 percent of respondents cited it as the

7 This and the next paragraph draws mainly from the Transport Sector background Paper.

second key barrier to entry. Government regulations and tariffs were also cited as important
barriers to entry, with 20 percent of respondents ranking this at no. 2.
64. In road transport, although barriers to entry are minimal in absolute terms, minor
irritants include large capital requirements, corruption and government tariffs are the major
ones. In Sindh, the level of required capital was reported to be an especially important
concern, perhaps because an extremely high proportion of the provinces enterprises are
small and are thus capital constrained. A few companies surveyed stated that personal
contacts in the industry were necessary to enter. Even fewer reported that the transport
mafia played a role in restricting new firms from joining the business. However, such
seldom experiences are seldom
8
and could be discounted in the macro picture.

3.3. Value Addition and Profitability

65. Due to an unavailability of comprehensive data across time on prices as well as
operating revenues and expenditures, an analysis of value addition across all sectors was not
possible. Thus our analysis has been restricted to retail, wholesale and transport sectors only.
While figures for average monthly value added have been calculated for the retail and
wholesale sectors, a longitudinal study and forecasting was not possible due to lack to time
series data. Only in the transport sector, was a proper analysis on value addition possible. The
importance of this sector for both domestic and international commerce is immense and
hence its output and value addition indices are of significance across sectors and regions.
Below is a sector wise analysis of different sectors.
3.3.1 Transport

66. Within the transport sector, it has been difficult to obtain data on prices, operating
revenues and expenditures. However, output indices for the sector (excluding aviation, due to
lack of the above mentioned data) have been calculated while weights for value added index
have been calculated for the road sector only (owing to availability of data in this sub-sector).

Table 3.2: Relative weights to compute output index
9

Road
Passenger 0.5101
Freight 0.4145
Rail
Passenger 0.0452
Freight 0.0301
Total 1.00

8 The proportion of respondents suggesting this was very small.
9 For details on calculation of weights refer to Appendix 2.1.
Synthesis Report

Table 3.3: Total, Freight and passenger indices

Table 3.4: Relative weights for value added index
Road
Passenger 0.5284
Freight 0.4715
Total 1.00

67. Table 3.2 reflects the relatively higher weight of passenger services compared to
freight in both road and rail sub-sectors.
68. A steadily growing transport index is depicted in Table 3.3, where the total, passenger
and freight indices follow extremely similar trajectories. Growth rates in the late 1990s for
the sector were high, however these declined dramatically in 2000-01; then, onward while the
growth rate has picked up somewhat it is still not at the late 1990s level. An explanation for
this may be discerned in the relationship between the transport output index and the national
GDP growth rate
10
. The relation is inverse as observed in two cycles in the past two decades;
in the late 1990s GDP growth rates plummeted while the transport output index was at its
peak while in 2000-01, when GDP growth accelerates, the transport output index slumped.
This relation may be observed earlier as well (in the 1980s) and suggests an average 3-5 year
lag period between the movement in the transport index and GDP growth.
69. Forecasts for the transport output index up till 2009-10 suggest a significant upturn in
the sector, given the high GDP growth rates since 2002-03 and the presence of a 3-5 year
lag.
11
Secondly, passenger services are likely to grow at a higher rate than freight; such a
trend in fact is already under way as confirmed by survey results. As there is little difference
in per unit prices between passenger and freight carriers, the divergence may be attributed to
rising passenger volumes.
70. Table 3.4 gives relative weights for a value added index for the road sub-sector,
revealing passenger services to be higher than freight.
12
As the difference is minimal, the
value added potential of the two services is likely to be comparable. Due to unavailability of
data, weights could not be calculated for the rail sub-sector. A cursory examination of the
sub-sector reveals that freight services cross-subsidize passenger services while the core
commercial network cross-subsidizes the non-commercial network. Both passenger and
freight cover their direct train-related operating costs and produce a surplus; core freight
produces a surplus towards access and infrastructure costs; services on the non-core network
operate at a loss, however and; overall both core and non-core networks operate at a loss if

10 GDP growth rates are given in Appendix 2.2.
11 For details of forecasting techniques, refer to Appendix 2.3.
12 The index cannot be calculated due to unavailability of time series data.
Years Total
Output
Index
Passenger
Output
index
Freight
Output
Index
1995/96 67.28 66.67 68.77
1996/97 71.16 70.60 72.55
1997/98 75.49 74.90 76.97
1998/99 80.36 79.76 81.84
1999/00 85.30 84.64 86.98
2000/01 90.33 89.66 92.02
2001/02 91.10 90.14 93.51
2002/03 93.45 92.96 94.68
2003/04 96.59 95.94 98.20
2004/05 100.00 100.00 100.00

train and track depreciation costs are added. As far as rails prospects go, the bulk of its
operations constitute passenger traffic, though it is the most cost-effective in terms of
containerized cargo (compared to road) however clients appear to prefer paying higher prices
for more efficient container transport.

3.3.2 Retail

71. Value added in this sector is calculated through use of the data on revenues,
expenditures and profits obtained from the survey. There was significant variation in reported
revenues and profits. The median monthly revenue was approximately Rs.127, 750 while the
mean was Rs.413, 610 and the maximum reported was over Rs.31 million. Furthermore, 70
percent of all establishments had average monthly revenues under Rs.250, 000.
13
Data on
profits reflects a similarly skewed distribution; median monthly profit is recorded at
approximately Rs.20, 000 while mean monthly profit is Rs.72, 000.
14
The average computed
profit figure (Rs.11, 000 was median profit and Rs.54, 000 was mean profit) was lower than
the directly reported profit, reinforcing the view that respondents typically overstate
expenditures and understate revenues. Due to this likely misreporting of profits, estimates of
value added must be considered with caution. Average monthly value added was estimated at
almost Rs.95, 000; however, the distribution was significantly skewed as reflected by median
value added, estimated at Rs.20, 000. Average value added in Punjab (Rs.113, 000) and
Sindh (Rs.111, 000) was higher than average while in NWFP (Rs.48, 000) it was lower than
average, reflecting disparities in commercial activity.

3.3.3 Wholesale

72. Value added in this sector is calculated through use of the data on revenues,
expenditures and profits gained from the survey. Significant variation was found in reported
revenues and profits, much like the retail sector. The median monthly revenue was
approximated at Rs.300, 000 while the mean was Rs.921, 048 and the maximum reported was
over Rs.40 million. Furthermore, about 65 percent of the establishments had average monthly
revenues up to Rs.500, 000.
15
In general, wholesale and wholesale cum retail establishments
exhibit higher revenue figures than retail.
73. Data on profits reflects a similarly skewed distribution; median monthly profit was
recorded at approximately Rs.35, 000 while mean monthly profit was Rs.73, 000.
16
One again
the computed profits (median computed profit was Rs.16, 000) were lower than the directly
reported figures. Due to this likely misreporting of profits, estimates of value added must be
considered with caution. Average monthly value added was estimated at almost Rs.54, 000;
however, the provincial disparity was again reflected by the higher than average value added
in Punjab (Rs.124, 000).
74. The only conclusion that can be drawn for the wholesale and retail sectors on survey
information is that profitability, on average, is low perhaps due to a highly competitive
environment in which these establishments operate. Perhaps this is to be expected given the
variety in firm size in this sector. If growth in this sector is to be promoted, it will have to be
based on depth rather than breadth; i.e. it will require firms to increase their size rather than
merely smaller firms entering the fray to meet existing demand. This is where linkages with

13 Refer to Appendix 2.4 for a detailed table on retail establishments revenues.
14 Profit was recorded in two ways; through a direct question as well as by computing the difference between
the average monthly revenue and expenditure figures.
15 Refer to Appendix 2.5 for a detailed table on wholesale establishments revenues.
16 As in the case of the retail sector, profit was recorded by means of a direct question as well as through
computing the difference between average monthly revenue and expenditure figures
Synthesis Report

efficient and accessible infrastructure and other market services most importantly the
financial market will be critical.

3.4 Infrastructure: Bottlenecks

75. One important component of the cost of doing business is the cost at which
infrastructure is provided to the commercial sector. Added to this are issues of the cost of the
time to access infrastructure as well as the losses incurred due to inadequate provisioning of
infrastructure.
According to survey results, about 23% of the total cost in the aggregate foes towards
electricity, water and telephone charges for the retail, wholesale and storage sectors. For the
storage sector, the infrastructure cost is significantly higher at 34.39% of total expenditure.

Table 3.5: Cost of Infrastructure as a Proportion of Total Cost (%).
Retail Wholesale Storage Total
Electricity 9.86 7.09 31.51 17.27
Water 0.56 0.22 0.60 0.50
Telephone mobile internet fax postal 4.81 10.84 2.27 5.22
Total 15.23 18.14 34.39 22.99

76. The cost of electricity dominates among the three infrastructure items, except of the
wholesale sector where the cost of telephony is somewhat higher. Given the high electricity
intensive nature of the storage sector, a part of the sample for which consists of cold storage,
the cost of electricity as part of total expenditure is as high as roughly one third. The storage
sector was also asked about the time it took to obtain an electricity connection. 29%
responded that this connection was obtained within one week, whereas 60% said that it took
between 2 to 4 weeks to get an electricity connection. For the rest of 11% it took more than 4
weeks.
17

77. The cost of electricity in Pakistan, especially for commercial enterprises costs, is
much higher than that in the region. Part of this high cost of electricity is that the commercial
and industrial sectors cross-subsidize the consumer and agricultural sectors. While this may
be due to large political economy considerations of the state, if growth in these sectors is a
priority then the government will have to find a more rational approach to cross-
subsidization.
18

78. Infrastructure related losses due to the state of the road network are most constraining
for the road transport sector. Roughly half of the respondents claimed that they lost 2 to 6
hours on average due to poor raid infrastructure in a day. This was further corroborated by
their opinion where about 60% of the respondents in the road transport sector. Given the
priority that is being given to road construction and road works in the last few years, it is
hoped that the situation on this front will improve.

3.5 Constraints to Growth

79. Chief among constraints to growth is limited access to finance across all sectors. 50%
of retail respondents, 40% of wholesale respondents and 35% of storage respondents consider
limited access to finance to be a primary constraint. Only in the transport sector taxation and

17 Significantly for 10% of the respondents it took 20-30 weeks to get the electricity connection.
18 Increasing the cost of manufactures and the commercial sector eventually is passed on to the consumer in
the form of higher prices. The net subsidy to the consumer is therefore likely to be minimal.

regulation are seen to pose a greater constraint.
19
Small establishments are left out of the loop
of formal credit markets due to the absence of collateral and unavailability of credit history.
Furthermore even in the informal credit market, the need for personal contacts or the lack of
collateral disadvantages small establishments. Even government extended support for Small
and Medium Enterprises (SMEs) often do not reach small establishments (in particular retail)
due to the specification that SMEs must have at least 10 employees.
80. Taxation and Regulation are also oft-cited primary constraints to growth. The sales
tax is an impediment and in fact an active disincentive to growth in the retail sector where
remaining small allows retailers to evade taxes. Furthermore a tough tariff regime has led to
problems for all sectors, making machinery necessary for cold storage and distribution as
well as vehicles very expensive. Also after sales care or maintenance has become a problem
for all four sectors due to the lack of after sales service among local manufacturers of
machinery.
81. Quality of public services is cited in many cases as a primary or secondary constraint
to growth. In the retail, wholesale and storage sectors, the condition of road leading to the
establishment was in poor condition in 16.8 percent of the sample, 18 percent of the sample
and 28.57% of the sample respectively. In the retail sector, 65% of the sample did not have
adequate parking apace, while in the wholesale this number rose to 71.6%. In 60-62% of the
cases, in both retail and wholesale, encroachments were not observed. All three sectors face
problems in terms of expansion; while 56-60% of the retail and wholesale establishments said
there was no additional space on which to expand. The storage sector faces costs in terms of
conversion fees when the decision to build a storage is made; as no land is assigned for
storages, rather, industrial plots are converted into warehousing lots. The transport sector
faces problems with respect to the maintenance of the highways and roads in general; while
the road network is expanded by the government, inadequate attention is paid to maintenance.
82. Corruption and law and order are largely cited as third ranked constraints to growth in
most cases. Lack of confidence in the formal justice system is betrayed by the fact that in
both serious criminal and business disputes, the large majority are resolved through
negotiation in all four sectors. Furthermore corruption leads to bribery costs, in particular for
the transport sector.
83. Regulation on property rights ownership is the least frequently cited constraint to
growth in all four sectors.

19 22.5% of respondents in transport considered taxation and regulation as constraints as opposed to 20%
who considered access to finance the biggest constraint.


Section 4
Governance

84. Governance, succinctly defined as the method and nature of the interface with the
state or public agencies is now acknowledged as the critical ingredient in sustained growth
and productivity improvements (Kauffman, et.al. 2002). Governance issues within the five
sectors on which the survey concentrated were: contract enforcement, law and order,
taxation, regulation and collective action. Unavailability of survey data for real estate
restricted analysis; however the remaining four sectors are discussed at length below.

4.1. Contract Enforcement
20

85. Details on the nature of the contract were only available for the transport and storage
sectors. About 60 percent of the storage sample said that the only form of contracts in storage
were simple receipts given by the storage owners to the customers; 20 percent said that
records were computerized and electronic receipts were given out while 18 percent said they
worked with more formal contracts. Similarly in the road transport sector the majority of
respondents (almost 50%) said contracts were simple statements written on plain paper and
signed by both parties. Other contract forms included receipts, arrangements written on stamp
paper and signed by both parties. In a small minority of transport enterprises, no contracts are
used at all. In such cases either the two parties enjoy an established professional relationship
or the transaction is certified by a system of honour or by a payment in advance. In the retail
and wholesale sectors, the only detail on contract forms is regarding the receipt that is given
to customers in 50 percent and 72 percent of the cases.
86. Data on contract enforcement provides conflicting results. More than 90 percent of
the sample in the retail, wholesale, storage and transport sectors agreed (or strongly agreed)
upon having to rely on the reputation of those they enter into contracts with (Appendix 4.1);
however, more than 80% of the respondents in each of these sectors agreed (or strongly
agreed) that a contract would protect them from being cheated (Appendix 4.2) while over
60% agreed (or strongly agreed) that the legal system would uphold their contracts and
property rights in business disputes (refer to Appendix 4.3).
87. The results depict contradiction in that if the contract provides protection than the
reputation of those entered into contracts with should be immaterial. Furthermore almost 40%
of the respondents in the aforementioned sectors agree (or strongly agree) with the suggestion
that people from other baraderies/communities are more likely to cheat them (Appendix 4.4),
while over 50 percent of the respondents agree (or strongly agree) with the suggestion that
people from another city are likely to cheat them (Appendix 4.5). The lack of trust in people
from different communities or cities for a substantial protion of the sample belies the data
suggesting high incidence of faith in the legal system and contracts. Moreover, the

20 For details of survey responses on contract enforcement refer to Appendix 4.

contradiction in data recurs when across the four sectors a very low incidence of seeking
police intervention in disputes (whether of criminal or business nature) is observed.
88. These inconsistencies suggest that perception based data may not be a good guide for
analysing contract enforcement, as factual data (that is the incidence of resorting to police
intervention in dispute resolution) depicts a low degree of confidence in the formal justice
system.

4.2. Corruption & Law and Order
89. In all four sectors, corruption and law and order have been strongly cited as third
ranked constraints to growth. In fact in the road transport sub-sector it is the second most
important constraint. The routine interface with the police perhaps one of the more visibly
corrupt and arbitrary state instruments serves to create this constraint for transporters.
90. Inn rail transport, there is a high incidence of pilferage and switching of items such as
live animals (whose description cannot be exact on paper). While there is a formal system of
compensation if the loss can be proven, the complaint that rigid rules make it difficult to
actually obtain compensation is common.
91. In the storage and wholesale sectors the large majority of disputes appear to be over
late payments, with 53 percent of the respondents in both sectors reporting facing this issue in
the last one year. Over 85% of the disputes were resolved through negotiation in both sectors
and formal justice was not sought. The incidence of serious crimes was low in these two
sectors though about 17 percent of the wholesale sample reported theft cases; 54 percent of
these cases were dealt through negotiation, without police intervention.
92. Within the wholesale sector, another common contravention of the law is illegal
encroachments which are ignored by corrupt officials in Market Committees. In the retail
sector, the incidence of serious crimes was higher with 27 respondents reporting murder and
121 mentioning serious theft. However in both instances only 37-39% of the cases were
reported to the police and dispute resolution was achieved largely through negotiation. While
the law and order situation is of considerable concern for all four sectors (being one of the
highest ranked constraints to growth), respondents displayed a lack of confidence in formal
justice and a strong tendency to resort to negotiation.

4.3. Regulation

93. All five sectors cite regulation systems as one of the top ranked constraint to growth.
Though the lack of clear regulation on property rights is not seen as an impediment to growth
among the majority of the sample, zoning regulations are the most frequently cited constraint
across sectors. Regulation regarding access to finance is unfriendly towards small enterprises
in all sectors. Another important aspect of regulation is tough import tariff regime, which has
resulted underdevelopment in all four sectors. Lastly registration is an aspect of regulation
that is not adhered to in a large number of enterprises in the sample. Below we discuss
regulation issues pertinent to the different sectors.

4.3.1 Retail

94. A tough import tariff regime has negatively impacted retail in both directions of the
link in the supply chain. Cold storage machinery and refrigerated vehicles necessary for
transporting goods from the wholesale market to retail outlets are subject to a 25 percent
import duty and a 15 percent sales tax. While some locally manufactured substitute
machinery does exist, in the absence of after sales service, maintenance costs are high.
Synthesis Report

Secondly, machinery used at the retail outlet such as chillers and deep freezers is also subject
to the tariff regime, again adding to costs.
95. Formal credit facilities are usually denied to retail establishments owing to their small
size. Even informal sources require either a collateral or personal contacts. Government
initiated financing schemes are one possible source for these establishments but the
classification of Small and Medium Enterprises (SMEs) as establishments having at least ten
employees has meant that several retail establishments have been left out of the loop even
when financing options are made available for small enterprises.
96. Lastly, urban zoning is particularly unfriendly to small retailers. There is an excess of
demand for retail space in market places and for the poor retailer, lacking capital, it is
impossible to enter structured expensive retailing.

4.3.2 Wholesale

97. Wholesale markets are ill planned in Pakistan, whether they be privately owned or
under the administrative control of Market Committees. Typically these markets are
congested, lack well designed entry and exit points and other infrastructural facilities (such as
roads, storage, etc). Overcrowding is one major problem which city administrators, in some
areas, have tried to solve by locating wholesale markets out of cities. This has resulted in
other problems such as an increase in distribution costs within the city.

4.3.3 Storage

98. Storage is in many cases a highly seasonal business yet 92 percent of those who
reported seasonality said they did not convert their facility to any other use during the off
season. While most of them cited a lack of need or the impossibility of conversion, 15
percent cited regulations as not permitting use of storage facility for any other purpose.
99. Zoning regulations do not specify land for warehousing purposes but industrial plots
may be used for warehousing (in the case of Karachi and Islamabad, on the payment of a
conversion fees). In these cases, when storage facilities are built from scratch, considerable
delay can occur in acquiring utility connections
21
City authorities do however provide land
for cold storages near fruit and vegetable markets.

4.3.4 Transport
22

100. A major concern with regard to the regulatory framework is the dated transport
regulations. Regulations that are pertinent to transport carriers are the National Highway
Safety Ordinance, the 2000 Road Safety Act, and till a few months back, the 1865 Carriers
Act. Underlying most regulatory bottlenecks in the road transport sub-sector are dated
legislations. The Carriers Act 1865, which governed the carriage of goods by roads in
Pakistan till April 2006, was in dire need of reform. Liability ceilings had remained fixed at
PKR 100 per item
23
, while the Act lacked any incentive structures designed to ensure
conformance with laws and to enhance efficiency levels of carriers. A draft law, modeled on
the CMR Convention 1956 is being considered since some time. The draft law attempts to
introduce legislation that provides road carriers sufficient protection in terms of definite

21 Median time taken to get an electricity connection was 3 weeks but mean was 90 weeks. Median time taken
to get a natural gas connection was 3 weeks and mean was 9 weeks. Median time taken to get a water
connection was 2 weeks mean was 6.2 weeks.
22 This section draws on Domestic Commerce Survey: An Overview of the Transport Sector (2007).
23 Zahid Jamil and Shahid Jamil, Modernizing Pakistans Carriage of Goods Legislation, National Trade and
Transport Facilitation Committee, 2003. <http:// www.nttfc.org/proceed03/proc03-jamil.htm>.

limits on their liabilities. The draft also pushes for the issuance of electronic documentation.
24

The Carriage of Goods by Roads (Liabilities) Act No. 21 has now taken over from the 1865
Act
25
. However, for all practical purposes the regulations of the 1865 Act remain in place.
The government has not only delayed updating of legislation but has persistently failed to
disseminate information on changes in legislation governing the industry; naturally this has
had negative impacts on conformance levels and fair implementation practices.
101. Another aspect of regulation with respect to transport is gender related; given the low
rate of mobility of women in Pakistan, regulation has a pivotal role to play in the transport
sector. Regulation to eliminate any gender bias, thus, is essential for greater contribution of
women as clients of the transport sector, as well as to the overall economy.
102. Contravention of regulation is regularly observed in the road transport sub-sector,
particularly with respect to road safety protocols. In 1992, Pakistans road fatality rate stood
at 18.62 fatalities per 1,000 vehicles, reflecting the highest rate in Asia
26
. Economic losses
due to lack of safety measures are estimated at over 2 percent of GDP
27
. Forty-three percent
of rear axle trucks regularly indulge in exceeding the 12 tons legal axle-load limit mandated
by the Road Safety Act 2000. Local truck manufacturers produce wider and elevated truck
bodies in order for truck owners to be able to overload and consequently minimize haulage
costs. The primary adverse effects of overloading include loss of transport time for trucks
having to be off road for repairs and overloading fines. The National Highway and Motorway
Police, though authorized to prevent commercial vehicles from overloading, lack retention
powers and usually evade participation in enforcement issues in which retention and/or legal
proceedings appear to be involved.
103. The transport industry, too, is equally guilty of not participating in a process to redress
the institutional bottlenecks that cause poor governance practices. As the industry perceives
lax implementation of laws to be in its favor, many enterprises overlook the potential losses
due to laxity in terms of efficiency losses, and thus higher costs for operators.
104. Zoning has resulted in travel routes being restricted for transporters both within urban
towns and on inter-city routes, amounting to both monetary and time losses. The average
additional costs incurred due to restrictions are higher for inter-city route restrictions and are
higher in Punjab than in Sindh. Transporters of non-agriculture goods face the greatest
number of restrictions in urban towns followed by transporters of agricultural goods though
additional costs because of the restrictions were reported to be higher on average for
agricultural commodity transporters. With regard to constrained movement in inter-city
routes, transporters of both agriculture and non-agriculture goods faced much more
restrictions than passenger services. Permissible times for traveling for goods transporters are
also restricted in both urban towns and inter-city routes. These hindrances on average cause
about 17 hours to be lost per carrier per month. This estimate needs to be treated cautiously
given the variance in the type of service, routes traveled and the internal variation in the data.
Again transporters in Punjab lose significantly greater time on average than transporters in
Sindh.
105. Lastly the tough tariff regime has resulted in an aging truck fleet. Replacement and maintenance
of the fleet is severely restricted due to this aspect of regulation.

24 Ibid.
25 ENHESA, Pakistan Monitoring Reports, 2007.
<http://www.enhesa.com/enhesa/en/global/country.asp?CountryCode=PK> (accessed on 20 December,
2006).
26 Asian Development Bank, Technical Assistance for Regional Initiatives in Road Safety, Manila.
27 Ibid.
Synthesis Report

4.4. Taxation

106. Taxation is considered one of the key constraints to growth by 16-25 percent of
respondents in the aggregate sample. Given the low level of registration, it may seem as
though tax liability is assumed by few establishments. However, in the retail and wholesale
sectors where registration is as low as 38 percent and 42 percent respectively, 50 percent of
retail establishments and 72 percent of wholesale establishments provide a receipt to
customers, indicating that they bear some form of tax liability. In the storage sector,
registration is observed to be high (72 percent of the sample), therefore it may be assumed
that tax liability is assumed across much of the sector. While data on the transport sector
suggests low registration (59.2 percent of the sample was registered) there is no specific
information on taxation obtained from the survey at all.
107. Within the retail sector sales tax (GST) is considered to be a disincentive to growth as
small retailers can easily evade taxes while more visible supermarkets are under regulatory
scrutiny.

4.5. Associations and Collective Action

108. While data is not available for the retail sector, collective action through industry
associations in the transport sector is the highest with 75.5 percent of the sample being
members of transport associations.
28
While 45.8 percent of real estate establishments are
members of associations, 47.3 percent and 26.2 percent of storage establishments are
members of market based associations and city wide associations respectively and 58.7
percent and 18.8 percent of wholesale establishments are members of market based
associations and city wide associations respectively.
29

109. Trade union data is available only for the transport sector. Transport unions, while
active, are not effective. There is a pronounced tendency among transport unions, especially
passenger carrier unions, to observe strikes to soften the governments stance on any
particular issue. This often results in temporary compromises, but at an immense cost to the
economy in terms of stalled economic activity. The strikes however are not of an extended
duration. The mean time per strike calculated from the survey responses comes to less than a
week in duration.
110. Prevalent opinion is that the countrys trade associations have failed to develop
successful institutional relations with the government, which would present a formal channel
for influencing policies.
30

28 Moreover, 4.1 percent of establishments are also members of the chamber of commerce
29 Owing to the possibility of overlap these numbers may not be added
30 World Bank, Trade and Transport Facilitation Project, 2001.


Section 5
Conclusion and Areas of Policy
Focus

111. This survey, the first of its kind, has brought forth a number of preliminary
conclusions from which we can draw on a number of areas where the Ministry of Commerce
can take policy initiatives in conjunction with other federal, provincial and local government
ministries and departments.
112. The retailing and wholesaling business is the front end of commerce. The most
important result we draw from the survey with regard to this sector is the small size of
enterprises. Smallness in size implies that value-addition and profit margins are low at this
end. As such, enterprise level growth is primarily a function of the levels of income in that
particular area and in the economy in general. In that sense, the conventional hypothesis that
the growth of the retail and wholesale sectors is endogenous to the size of the market appears
to be borne out by the survey.
113. This is not to say that policy does not have a role to ease out pressures that enterprises
in the sector face. As discussed earlier, access to formal sector credit is a constraint. The
smallness in size and the lack of collateral create problems of moral hazard and high
transaction cost so far as conventional banking practices are concerned. The newly
introduced SME and micro credit banks that do practice unconventional banking should be
encouraged to reach out to this segment of entrepreneurship also.
114. Urban land use policy and recently high land prices also create a serious disincentive
for growth. Artificial and spurious land transactions have created an asset price bubble in
land and real estate markets which negatively affect various sections of society, including
small businesses. A rational land use policy, coupled with appropriate zoning laws that are
enforced will go a long way in the planned growth of not only the retail & whole sectors but
other areas of domestic commerce also. Direct interest by the MOC in these matters as part of
an over-arching commerce policy can potentially create the requisite clout on the provincial
and local governments to develop capacity and prioritize this critically important growth
impediment.
115. Contract enforcement and dispute resolution also requires that the capacity of small
claims courts and business tribunals is enhanced. Also the creation of consumer courts is
important for protection of consumer rights. This will also provide a fillip to qualitative
competition amongst the wholesale& retail businesses.
116. The development of the storage and warehousing sector is endogenous to the
wholesale, retail and international trade development. As such, much of its development will
take place once the other two chains develop. However, the development of the sector is
critically dependant on issues of urban zoning and planned linkages with the transport
Synthesis Report

infrastructure. Rational urban planning and zoning laws are, as mentioned earlier, critical for
the development of this sector.
117. Another area that is important for this sector (as well as transport) is that of insurance
services. Predictable and affordable insurance of goods and assets will not only increase
demand for these services but will reduce risk and uncertainty for the entrepreneur also.
Appropriate regulation and licensing of insurance companies that are certified can help in
creating a pool of reputable insurers in the market.
118. For the transport industry as a whole, a supply chain management approach with an
intermodal transport system attaining optimal productivity, and with each of its segments
adapting their operations to one another should be adopted. There is considerable scope for
revision of the regulatory framework directing the sector. The new road transport legislation
seeks to address many of the bottlenecks highlighted in the preceding discussion.
Implementation of the legislation should be strengthened with utmost urgency. There is also a
need for the authorities to ensure wide dissemination of any changes in the regulatory
framework. This could be done through distribution of leaflets/booklets sent directly to
offices of transport agencies, distributed during Transport Association and Chamber of
Commerce meetings, or supplied through any other means.
119. Moreover, measured steps should be undertaken to integrate trucking into the formal
economy. Currently, the governments approach does not seem to recognize trucking as an
industry by itself. The shear volume of road freight traffic carried by trucks warrants such
recognition. In order to enhance functional efficiency, a revision of the current restrictive
industrial and import policies for vehicles and auto parts is in order. The Government of
Pakistan (GoP) applies excessive customs duties on Complete Built Units and Completely
Knocked Down kits. Moreover, import of second hand trucks is not allowed. Not only does
the import policy need to be relaxed, but the domestic truck assembly plants also need to be
modernized. A simultaneous approach on both fronts is required.
120. One way of bringing the industry into the formal economy is by mandating a carrier
registration policy. Through this process, the road sub-sectors services could be standardized
with relative ease. The governments ability to ensure quality control would also be
strengthened through such a process. Collection of up-to-date data to feed into future policies
is another advantage of the sector shift to the formal economy. This said, realistically, a
registration drive would have to provide sufficient incentives to the transport entities to
register themselves. An incentive mechanism where benefits from registering would
outweigh the costs would be essential for successful implementation of a registration plan.
121. The change in the structure of the industry from a large number of small-scale
enterprises to well organized large entities competing against one another requires attention
to soft management issues such as automation, marketing, and availability of a well trained
labor force. The government could follow up the registration drive by creating a nation wide
database of freight and passenger services. Under an integrated domestic commerce structure,
clients of the transport industry could be incentivized to utilize automated services to interact
with transporters. Transport firms could also be provided incentives to automate services,
perhaps by subsidizing their transition. The relatively high level of education of transport
owners should make such a transition simple on the technical front. Meanwhile, the non-
government sector could take the lead in setting up driver training centers, where customer
relations trainings are accorded at affordable costs. Alternatively, this task could be placed
under the Trade and Transportation Facilitation Program (TTFP), which has been
instrumental in conducting trainings for freight forwarders in the past.
122. Road industrys growth is severely hampered by lack of access to formal sector credit.
A World Bank report has outlined concrete steps that can be taken to redress the situation in
this regard: (i) developing a Truck Leasing Concept with banks; (ii) establishing a revolving

National Guarantee Fund in order to give incentives to decrease interest to banks; and (iii)
developing a fund to buy and scrap old but operational two-axle trucks in order to provide
truckers with down payments for newer vehicles
31
. All of these are pertinent. In addition,
given the high incidence of loss to goods, the effective role of the insurance industry by
developing cargo, third party, and collision insurance into an industrial norm needs to be
increased.

31 World Bank, Trade Competitiveness, 2006.
Synthesis Report

Appendix 1

Precision of Estimation and Sample Sizes

If we want to estimate an unknown proportion, p, using the sample proportion, p , such that
p is within the distance, c, of the true proportion, p, with probability at least 0.90,
i.e., 90 . 0 ) ( > s c p p P
then from page 2 of the Statistical Appendix, the sample size rule is expressed by:
) 1 (
645 . 1
2
p p n
|
.
|
\
|
>
c

Using the fact that
2
) 5 . 0 ( ) 1 ( s p p , the recommended operational sample-size rule is
expressed by:

2
2
) 5 . 0 (
645 . 1
|
.
|
\
|
>
c
n .
However, for a given sample size, the above result can be expressed with c on the left-hand
side, as follows:
n
2
) 5 . 0 (
645 . 1 > c .
Thus if the sample size, n, is a given value, say n=200, then the above expression implies:
05816 . 0
200
) 5 . 0 (
645 . 1
2
= > c .
Thus we can conclude that for a sample size of n=200, an unknown proportion would be
estimated within 5.8% of the true proportion with probability of at least 0.90.

The above expression could be used to get different c for different sample sizes used in the
surveys.

Table 1.1: Retail Sample (divided across four provinces) and margin for error (e)
ALL UNITS (90%) Retail
Punjab NWFP Sind Balochistan Total
1900000 460000 600000 90000 3050000
P 0.50 0.50 0.50 0.50 0.50
1-P 0.50 0.50 0.50 0.50 0.50
P(1-P) 0.25000 0.25000 0.25000 0.25000 0.25000
Z 1.645 1.645 1.645 1.645 1.645
Z^2 2.706025 2.706025 2.706025 2.706025 2.706025
Z^2[P(1-P)] 0.67651 0.67651 0.67651 0.67651 0.67651
E 0.037157 0.08225 0.045277 0.106184293 0.027117022
E^2 0.001381 0.006765 0.00205 0.011275104 0.000735333
Z^2[P(1-P)/e^2 490 100 330 60 920
490.00 100.00 330.00 60.00 920.00


Table 1.2: Wholesale sample (divided across four provinces) and margin for error (e)
ALL UNITS (90%) Wholesale
70443 14567 21742 1848 108600
P 0.50 0.50 0.50 0.50 0.50
1-P 0.50 0.50 0.50 0.50 0.50
P(1-P) 0.25000 0.25000 0.25000 0.25000 0.25000
Z 1.645 1.645 1.645 1.645 1.645
Z^2 2.706025 2.706025 2.706025 2.706025 2.706025
Z^2[P(1-P)] 0.67651 0.67651 0.67651 0.67651 0.67651
E 0.049598616 0.116319 0.064032 0.150167268 0.037157
E^2 0.002460023 0.01353 0.0041 0.022550208 0.001381
Z^2[P(1-P)/e^2 275 50 165 30 490
275 50 165 30 490

Table 1.3: Storage Sample (divided across four provinces) and margin for error (e)
ALL UNITS (90%) Storage
1045 74 605 61 1785
P 0.50 0.50 0.50 0.50 0.50
1-P 0.50 0.50 0.50 0.50 0.50
P(1-P) 0.25000 0.25000 0.25000 0.25000 0.25000
Z 1.645 1.645 1.645 1.645 1.645
Z^2 2.706025 2.706025 2.706025 2.706025 2.706025
Z^2[P(1-P)] 0.67651 0.67651 0.67651 0.67651 0.67651
E 0.00663 0.0451 0.01038 0.048322 0.00345
e^2
4.39569E-
05
0.002034 0.000108 0.002335 1.19025E-05
Z^2[P(1-P)/e^2 102 15 65 14 56837
50 10 35 5 100

Table 1.4: Real Estate Sample (divided across four provinces) and margin for error (e)
ALL UNITS (90%) Real Estate
6382 847 3168 176 10573
P 0.50 0.50 0.50 0.50 0.50
1-P 0.50 0.50 0.50 0.50 0.50
P(1-P) 0.25000 0.25000 0.25000 0.25000 0.25000
Z 1.645 1.645 1.645 1.645 1.645
Z^2 2.706025 2.706025 2.706025 2.706025 2.706025
Z^2[P(1-P)] 0.67651 0.67651 0.67651 0.67651 0.67651
E 0.08225 0.183917 0.098308 0.260097338 0.05816
e^2 0.006765 0.033825 0.009664 0.067650625 0.003383
Z^2[P(1-P)/e^2 100 20 70 10 200
100 20 70 10 200

Synthesis Report

Table 1.5: Transport sample (divided across four provinces) and margin for error (e)
ALL UNITS (90%) Transport
3312 674 1063 130 5179
P 0.50 0.50 0.50 0.50 0.50
1-P 0.50 0.50 0.50 0.50 0.50
P(1-P) 0.25000 0.25000 0.25000 0.25000 0.25000
Z 1.645 1.645 1.645 1.645 1.645
Z^2 2.706025 2.706025 2.706025 2.706025 2.706025
Z^2[P(1-P)] 0.67651 0.67651 0.67651 0.67651 0.67651
E 0.116319 0.260097 0.139028 0.367833 0.08225
e^2 0.01353 0.067651 0.019329 0.135301 0.006765
Z^2[P(1-P)/e^2 50 10 35 5 100
50 10 35 5 100
32

32 For a detailed explanation of the calculation, refer to Statistical Appendix.


Appendix 2

The Laspeyres fixed-weighted index has been to derive results
33
. Three separate indices have
been generated: the total transport output index, the passenger output index, and the freight
output index. Relative weights for the index have been computed using operating revenue
estimates for passenger and freight services. Data was available for rail, but had to be
computed for road. The aviation sector is not included in the index. While data on the
operating revenue of the air sub-sector is available, but it does not differentiate between
domestic and international output. Data on price per unit, the other necessary variable to
calculate relative weights (in the absence of revenue information) is altogether missing.
Nonetheless, since aviations total share in the transport sector is less than one percent, its
omission should have no significant impact the final index.
To compute the weights for road, the price per passenger-km and ton-km for passengers and
freight services were calculated respectively from the primary data. Mean values for number
of passengers and tons were used to calculate the per unit price wherever such entries were
missing in the primary data. Then, using published output figures for each of the two
services, we arrived at their respective operating revenues.

The formula for the Laspeyres index is as follows
34
:

X
P Q
P Q
P Q
I
i i 0
0 0
0 1

=
=

= ( )
03 3 02 2 01 1
1
P Q P Q P Q
X
+ +

=
3
03
2
02
1
01
Q
X
P
Q
X
P
Q
X
P
|
.
|
\
|
+ |
.
|
\
|
+ |
.
|
\
|

= ( )
3 3 2 2 1 1
Q W Q W Q W + +

where,

I= Index
P
o
= Base year price
Q
o
= Base year output
Q
1,2,3
= Output in other years
W
1,2,3
= relative weights

33 This section is largely drawn from Domestic Commerce in Pakistan: An Overview of the Transport Sector,
Innovative Development Strategies (2007)
34 Lapeyres index is frequently used for intermediate sectors of the economy. Pakistans CPI is also
calculated using this index.
Synthesis Report


GDP Growth

Table 1.7: Annual growth rates of transport
output index and national GDP
(%)
Year
Output
Index growth
GDP
growth
1996/97 5.77 1.7
1997/98 6.08 3.5
1998/99 6.45 4.2
1999/00 6.15 3.9
2000/01 5.90 2.0
2001/02 0.85 3.1
2002/03 2.58 4.7
2003/04 3.36 7.5
2004/05 3.53 8.6

A simple forecasting exercise was conducted for the transport sectors output index till 2009-
10. Two estimates are provided, the first without considering the lag, and the second with the
lag factored in. Forecasts are made separately for the total, passenger and freight indices.
While a static average of the last three years has been taken to forecast growth of the total and
passenger indices (without lag), for the freight index, a moving average of the last four years
has been used to compensate for the fluctuation in the past trend.

Table 1.8: Retail: Average Monthly Revenue
Average Monthly
Revenue Frequency Valid Percent Cumulative Percent
Up to Rs. 50,000 216 22.9 22.9
50,000 - 100,000 210 22.2 45.1
100,000 - 250,000 239 25.3 70.4
250,000 - 400,000 119 12.6 83.1
400,000 and above 160 16.9 100

Table 1.9: Wholesale: Average Monthly Revenue
Classes Frequency Valid Percent Cumulative Percent
Up to 100,000 111 20.5 20.5
100,000 to 250,000 117 21.6 42.1
250,000 to 400,000 72 13.3 55.5
400,000 to 550,000 50 9.2 64.7
550,000 to 700,000 34 6.3 71
Over 700,000 157 29.0 100
Total 541 100


Appendix 3

Table 1.10: Business Services
Engineering
Services
Needed
(count)
149 80 73 47 349
Needed
(percentage
of sample)
14.9% 16% 37.2% 47.5% 19.4%
Used
(count)
134 59 65 42 300
Used
(percentage
of sample)
13.4% 11.8% 33.2% 42.4% 16.7%
Management
Consultants
Needed
(count)
66 61 49 17 193
Needed
(percentage
of sample)
6.6% 12.2% 25% 17.2% 10.8%
Used
(count)
39 36 42 8 125
Used
(percentage
of sample)
3.9% 7.2% 21.4% 8.1% 7%
Marketing
Services
Needed
(count)
222 151 69 37 479
Needed
(percentage
of sample)
22.2% 30.2% 35.2% 37.4% 26.7%
Used
(count)
155 105 52 23 335
Used
(percentage
of sample)
15.5% 21% 26.5% 23.2% 18.7%
Accounting
Services
Needed
(count)
93 70 58 19 240
Needed
(percentage
of sample)
9.3% 14% 29.6% 19.2% 13.4%
Used
(count)
67 41 50 6 164
Used
(percentage
of sample)
6.7% 8.2% 25.5% 6.1% 9.1%
Legal
Services
Needed
(count)
80 75 55 38 248
Needed
(percentage
of sample)
8% 15% 28.1% 38.4% 13.8%
Used
(count)
54 48 43 25 170
Used
(percentage
of sample)
5.4% 9.6% 21.9% 25.3% 9.5%
Continued
Synthesis Report

Insurance
Services
Needed
(count)
110 58 53 41 262
Needed
(percentage
of sample)
11% 11.6% 27% 41.4% 14.6%
Used
(count)
36 17 24 21 98
Used
(percentage
of firms)
3.6% 3.4% 12.2% 21.2% 5.5%
Information
Technology
Services
Needed
(count)
73 44 43 6 166
Needed
(percentage
of sample)
7.3% 8.8% 21.9% 6.1% 9.2%
Used
(count)
51 26 30 2 109
Used
(percentage
of sample)
5.1% 5.2% 15.3% 2% 6.1%


Appendix 4

Count
(% of
Sample)
Count
(% of
Sample)
Count
(% of
Sample)
Count
(% of
Sample)
Count
(% of
Sample)
I must rely on the
reputation of those I
enter into agreement
with.
Strongly
agree
433
(43.4%)
235
(47.4%)
93
(48.9%)
45
(49.5%)
806
(45.4%)
Agree 490
(49.1%)
218
(44%)
83
(43.7%)
37
(40.7%)
828
(46.7%)
Disagree 70
(7%)
42
(8.5%)
14
(7.4%)
9
(9.9%)
135
(7.6%)
Strongly
disagree
4
(0.4%)
1
(0.2%)
5
(0.3%)

Count
(% of
Sample)
Count
(% of
Sample)
Count
(% of
Sample)
Count
(% of
Sample)
Count
(% of
Sample)
A contract will
protect me from
being cheated
Strongly
agree
281
(28.4%)
114
(23%)
60
(31.7%)
22
24.2%
477
(27%)
Agree 552
(55.8%)
299
(60.4%)
106
(56.1%)
51
56%
1008
(57.1%)
Disagree 140
(14.2%)
76
(15.4%)
22
(11.6%)
18
19.8%
256
(14.5%)
Strongly
disagree
16
(1.6%)
6
(1.2%)
1
(.5%)
23
(1.3%)

Count
(% of
Sample)
Count
(% of
Sample)
Count
(% of
Sample)
Count
(% of
Sample)
Count
(% of
Sample)
The legal system will
uphold my contract
and property rights
in business
disputes.
Strongly
agree
192
(19.5%)
82
(16.6%)
25
(13.3%)
11
(12.1%)
310
(17.6%)
Agree 500
(50.7%)
258
(52.1%)
92
(48.9%)
53
(58.2%)
903
(51.3%)
Disagree 257
(26%)
133
(26.9%)
54
(28.7%)
25
(27.5%)
469
(26.6%)
Strongly
disagree
38
(3.9%)
22
(4.4%)
17
(9%)
2
2.2%
79
(4.5%)

Count
(% of
Sample)
Count
(% of
Sample)
Count
(% of
Sample)
Count
(% of
Sample)
Count
(% of
Sample)
People from other
communities/barader
ies are more likely to
cheat me.
Strongly
agree
48
(4.9%)
38
(7.7%)
25
(13.3%)
11
(12.1%)
310
(17.6%)
Agree 243
(24.6%)
163
(33%)
92
(48.9%)
53
(58.2%)
903
(51.3%)
Disagree 573
(26%)
248
(50.2%)
54
(28.7%)
25
(27.5%)
469
(26.6%)
Strongly
disagree
123
(12.5%)
45
(9.1%)
17
(9%)
2
2.2%
79
(4.5%)

Synthesis Report

Count
(% of
Sample)
Count
(% of
Sample)
Count
(% of
Sample)
Count
(% of
Sample)
Count
(% of
Sample)
People from other
cities are more likely
to cheat me.
Strongly
agree
73
(7.4%)
33
(6.7%)
22
(11.8%)
8
(8.9%)
136
(7.7%)
Agree 275
(27.8%)
172
(34.8%)
67
(36%)
24
(26.7%)
538
(30.6%)
Disagree 509
(51.5%)
229
(46.4%)
77
(41.4%)
49
(54.4%)
864
(49.1%)
Strongly
disagree
131
(13.3%)
60
(12.1%)
20
(10.8%)
9
10%
220
(12.5%)


Bibliography

Asian Development Bank, Technical Assistance for Regional Initiatives in Road Safety,
Manila.
Haque, Nadeem-Ul, Awake the Sleeper Within: Releasing the Energy of Stifled Domestic
Commerce, (2006).
Innovative Development Strategies, Domestic Commerce Report: An Overview of the
Transport Sector, (2007).
Retail Markets, (2007).
Wholesale Markets, (2007).
Storage Markets, (2007).
Innovative Development Strategies, Domestic Commerce Report: An Overview of the Real
Estate Market, (2007).
ENHESA.Pakistan Monitoring Reports, (2007).
<http://www.enhesa.com/enhesa/en/global/country.asp?CountryCode=PK> (accessed on 20
December, 2006).
World Bank, Trade and Transport Facilitation Project, 2001.
World Bank, Trade Competitiveness, (2006).
Zahid Jamil and Shahid Jamil, Modernizing Pakistans Carriage of Goods Legislation,
National Trade and Transport Facilitation Committee, (2003). <http://
www.nttfc.org/proceed03/proc03-jamil.htm>.

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