Property Rights:

Reforms and Challenges in

Pakistan
Motivation

 To understand history of reforms and current

challenges in private property rights in
Pakistan
 To explain existing situation in the light of De
Soto’s framework
 To identify a road map of investigative
research

Property Rights: Reforms and Challenges in

Pakistan 2
Main Results

 Pakistan has remained a heavily under-

capitalized country due to
 Information Failure
 Legal Failure PROPERTY
 Political Failure RIGHTS
 Limited access to capital

Property Rights: Reforms and Challenges in

Pakistan 3
Methodology

 Based primarily on secondary sources

 Review of past reports and articles
 Some Interviews

Property Rights: Reforms and Challenges in

Pakistan 4
THEORETICAL FRAMEWORK
[DE SOTO]
 PROPERTY RIGHTS
 Ownership of Legal Title of an Asset
 Process to convert Asset into capital
 MYSTERIES
 Information
 Capital
 U.S. History
 Political Failure
 Legal Failure

Property Rights: Reforms and Challenges in

Pakistan 5
MYSTERIES EXPLORED

 INFORMATION: the case of 9.3 trillion dollars

…
 CAPITAL: ownership is the iceberg…
 POLITICAL AWARENESS: taking
stakeholders on board…
 U.S. HISTORY: long struggle involving
judiciary and politicians…
 LEGAL FAILURE: merging ‘social contract’
into law…

Property Rights: Reforms and Challenges in

Pakistan 6
Property Rights in Pakistan

Reforms and
Challenges

Property Rights: Reforms and Challenges in

Pakistan 7
Mystery of Information

 World Bank Project worth USD 45 million to

improve:
 Land records service delivery
 Tenure security
 Operations of land market
 Computerization without structural reforms
does not alter the relationship
 Facts finding about millions of small and
informal enterprises remains a very big
challenge
Property Rights: Reforms and Challenges in
Pakistan 8
Mystery of Capital

 The only instrument used by the government

to expand formal sector is by some tax
breaks and tax incentives.
 Pay 2% and white your assets!
 Size of ‘extra-legal’ economy could at least
be 50% and it grows 3% faster than official
economy!
 Challenge is to win the trust of small
enterprises for access to finance…
Property Rights: Reforms and Challenges in
Pakistan 9
Mystery of Political Awareness

 Transfer of assets to the poor without any

political strategy is counter productive
 Transfer to landless farmers (haris)
 A violent struggle over land tenure and
tenancy issues between Military and farmers

Property Rights: Reforms and Challenges in

Pakistan 10
Mystery of Legal Failure

 Western Union money transfer is an example

of a ‘social contract’ building upon efficiency
of hawala system and transparency of
banking system.
 USD 5 billion annual flow through informal
channels, i.e. 130% of official flow.
 Challenge is to identify an efficient and cost
effective method for transfer of money

Property Rights: Reforms and Challenges in

Pakistan 11
Recommendations: Fact Finding

 Impact of land transfer to landless farmers

 Potential wealth of small and informal
enterprises
 Study of an ‘illegitimate’ law and projected
effect of reforms
 Evaluation of Land Record Information
Systems
 Comparison of money transfer through legal
and illegal means

Property Rights: Reforms and Challenges in

Pakistan 12