Islamabad Chamber of Commerce Corruption Survey

Survey Findings Ali Salman Young Entrepreneurs ForumIslamabad Chambers of Commerce and Industry

 Young Entrepreneurs Forum and CIPE Purpose of Survey “to find the opinions of the business community on the perceptions, manifestations, causes, effects and remedies of corruption” Survey Sample and Methodology  Structured Questionnaire , mostly close-ended  Face to Face  On-line Issues in Data Collection

 95 valid responses:  services sector including professionals (35%)  trade sector (15%)  manufacturing (17%) and  administrative heads of Chambers of Commerce (33%). Geographically  Islamabad city (40%);  the representatives of 35 Chambers of Commerce from across the country did add some diversity (33%).  Remaining 27% respondents submitted their response using our on-line survey and they came from Karachi (16%), Lahore (11%) and Mardan (5%). In terms of size, small size companies constituted 29%, medium scale 59%, and large scale comprised 12% of the sample.

Five Most Important Obstacles in Doing BusinessBangladesh India Pakistan Nepal Sri LankaInadequate Inadequate Government Government Tax ratessupply of supply of instability/coup instability/coupinfrastructure infrastructure s sCorruption Corruption Corruption Inefficient Tax regulations government bureaucracyInefficient Inefficient Policy instability Policy instability Inflationgovernment governmentbureaucracy bureaucracyPolicy instability Tax regulations Inadequate Corruption Inefficient supply of government infrastructure bureaucracyAccess to Inflation Inefficient Inadequate Policy instabilityfinancing government supply of bureaucracy infrastructureSource: Global Competitiveness Report 2011-12

 Unfair, unethical means to gain business resulting in profitability Illegal means of fulfilling desires Illegal ways to get things done; could be in monetary terms as well as in personal favours etc. Using resources to get unfair advantage over others. Dishonest or fraudulent conduct by those in power, typically involving bribery. Use of office for illicit gain Corruption means gaining something by means forbidden by Allah Almighty and Islam. Seeking undue return for performing ones duties; unfairly leveraging a position of power for personal gain When holder of an office or power gets Illegal price to bend the rules of the game! Use of public/institutional resources for private gain

 Any acts to derail justified actions, processes or deals, to abuse powers entrusted with an intention to achieve alternate objectives or stop justified acts by using bribery, fraud, resources or relationship Corruption is misuse of public money or authority to benefit someone illegally Any kind of income which earned from illegal means utilizing authority Using unethical, dishonest means to extort money. Deviant action is corruption either from norms or laws Immoral ways to attain benefits Any unethical means used to get more than the right which they deserve Exploitation of rules and laws, unethical practice to perform ones duty Getting undue benefits from your power

Complex and unpredictable regulations and laws 100 80 60 Non Poor 40 Competetive standards of 20 incentive Entrepreneurspublic morality 0 structure Chambers Weak and Insufficient selective law levels of fines enforcement and penalties

50%45%40%35%30%25%20% Entrepreneurs15% Chambers10%5%0% Regulation is very Compliance cost is Compliance complex high procedure is complicated

Increases cost of doing business because of bribery etc. 80 70 60 50 Gives unfair 40 advantage to specificDestroys morality 30 player in a market 20 and erodes 10 Entrepreneurs competition 0 Chambers Controls time delays and brings more Weakens rule of law efficiency in transactions

Commission/kickba ck paid to a government official 100 80 60 40 Non-monetary 20 Birbery to an Entrepreneursexchanges such as 0 inspector for gifts etc. compliance Chambers Commission paid to another private sector executive

Under- invoicing 100 80 60 40 20 Entrepreneurs 0 ChambersNon-transfer Non-payment of charged of duties RGST (VAT)

Entrepreneurs Chambers 82% 47% 37% 16% 11% 7%Remains Hidden/Informal Formalized/Accounted for Does not Apply (We do not pay bribe)

Entrepreneurs ChambersMost likely conduct No. %age No. %ageI’ll refrain from paying commission togovernment officials for contractsonly if I know that my competitors are 20 32% 7 26%also refraining.I’ll refrain from paying commission togovernment officials for contracts even 7 11% 2 7%if I know my competitors are payingcommissions.I’ll refrain from paying commission togovernment officials for contracts 36 57% 18 67%under any circumstances. 63 100% 27 100%

Loss of sales due to a denied business opportunity 100 80 60 Ethical standards 40 Victimization bywithin the company 20 government official are enhanced Entrepreneurs 0 Chambers Enhancement of Enhancement of reputation among reputation among government business agencies community

Reforms in rules and regulations 100 80Black-listing 60 Introduce and public 40 competitivedefamation 20 wages and … Entrepreneurs 0 Chambers Uniform and Prohibitively strong high level of enforcement… fines or …

No bribes 80 75 70Work with 65 Improve their Entrepreneursother civil 60 systems andsociety… compliance Chambers Advocate through chambers …

 The most important message is that corruption is viewed as a governance issue, which includes poor law enforcement, archaic regulations and weak internal compliance system. Thus it calls for improving both public administration and corporate governance.

 Improving internal compliance by devising smarter and customized Codes of Corporate Governance for SMEs; Advocating regulatory reforms after identifying problematic regulations and; Building pressure on the state apparatus to exercise uniform and predictable enforcement of law

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Islamabad Chamber of Commerce Corruption Survey

by Hammad Siddiqui on Jul 20, 2012

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