Trade And Investment Opportunities
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Trade And Investment Opportunities

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    Trade And Investment Opportunities Trade And Investment Opportunities Presentation Transcript

    • Trade and Investment Opportunities in PAKISTAN
    • Macro Policy Framework
      • Legislation - Legal Framework (1976 Foreign Private Investment Act and 1992 Protection of Economic Reforms Act).
      • Privatization - SoEs, banking and telecomm.
      • Liberalization - ‘withering away of the state.’
      • Financial Regulatory Bodies - SBP, SECP and MCA.
    • Snapshot of the Economy
      • Growth (7%), inflation (9%) and unemployment (6.5%).
      • GDP (PPP) $427.3 billion (ExRt) $124 billion.
      • GDP Per Capita (PPP) $2600/-
      • GDP composition (services 52%, agri. 22% & manuf. 26%) and sectoral labor distribution (services 38%, agri. 44%, and manuf. 18%).
      • Growth sectors – agriculture (livestock, wheat, rice & cotton), manufacturing (textile/apparel, steel, chemical, fertilizer & cement), services (banking/finance, telecomm/IT, hospitality, warehousing/distribution, transport, medical & education).
    • Investment Sectors
      • Telecomm.
      • Financial Services (Banking and Insurance).
      • Services (IT/BPO, Accounting, Legal, Medical, Education/VTT and Tourism).
      • Energy (IPPs, Hydel, Wind and Solar).
      • Construction/Housing/Engineering (DHAs).
      • Commercial Real Estate Development (UAE and Malaysia).
      • Infrastructure/logistics (RR, Roads, P&S, Airports and Storage/Warehousing).
      • Agro-tech/Corporate Agricultural Farming (Dairies/Livestock, Fisheries, Farming and Food/Fruit processing and Horticulture).
      • Manufacturing (Textiles and Apparel, Light Engineering, Pharmaceuticals, Medical, Sports and Leather garments).
      • Mining (Marble/Granite/Onyx).
    • Pakistan’s Export & International Level Specialization in 11 out of 20 Globally Ranked ‘Most Market Dynamic Products’
      • Silk.
      • Knitted Garments.
      • Plastic Articles.
      • Leather Manufactures.
      • Non-alcoholic Beverages.
      • Medical Instruments.
      • Electrical Distribution Equipment.
      • Textile Undergarments.
      • Cereal Preparations.
      • Knitted Fabrics.
      • Pharmaceutical Products.
    • Trade and Business Opportunities in Different Areas of Business
      • SMEDA (Pre-feasibility Studies).
      • BoI (Matrix and Sectors).
      • OPD (OPIC March 5-6, 2007).
      • Privatization Commission/Ministry.
    • Trade Regulations
      • WTO commitments – Tariffs, Services and IPRs.
      • Tariff rationalization – 4 tariff slabs (5-10-15/20-25) based on value addition.
      • Trade Policy 2006 – inclusion of defense exports and services trade, FTAs (SAFTA), Domestic Commerce, TDAP, skill development, Carpet Cities, Dazzle Park & import of used machinery.
      • Import/Export Orders.
      • MoC (TP) www.commerce.gov.pk
      • IPOP (IPRs) www.ipo.gov.pk
      • CBR (Tax/Tariffs - SROs) www.cbr.gov.pk
    • Legal Issues
      • BoI (Investment Policy) www.boi.gov.pk
      • SECP (Companies Ordinance and Stock/Capita Market) www.secp.gov.pk
      • SBP (Prudential Regulations and Policy Guidelines) www.sbp.gov.pk
      • Ministry of Finance (Macro economic policy and Budget) www.finance.gov.pk
    • Investment Incentives
      • FDI protection.
      • Forex security.
      • Export/Import schemes.
      • SBP/SMEDA Financing.
      • Tariff reduction.
      • 100% repatriation.
      • 100% equity.
      • No performance (local content) requirements.
      • IT Parks.
      • Industrial Parks.
      • EPZs.
      • Tax (duty drawback and GST refund) and subsidy relief.
    • International Confidence Indicators
      • FDI $3.02 billion (FY2005-06).
      • Portfolio Investment $12 billion.
      • Stock market capitalization $57 billion.
      • Islamic Sukuk $600 million and Eurobonds $1.4 billion.
      • Country rating (S&P): Positive – 'B+' foreign currency, 'BB' local currency long-term & 'B' short-term sovereign ratings .
    • American Companies in Pakistan
    • Cost of Doing Business - I
      • TI ratings/Corruption Perception Index (CPI score 142/163 in 2006; 144/158 in 2005; 129/145 in 2004).
      • HDI - 136/178.
      • IFC Doing Business Index – 74/175 (Starting a business of 50 employees involves 11 procedures and 25 days).
      • Competitiveness Index - 90/192.
      • Risk Rating - 66/100 (D).
      • Business Environment Ranking - 72/82.
      • WTO (TP Report) 2 TP reviews (1995 and 2002) passing marks and liberal policies.
    • Cost of Doing Business - II
      • Direct labor cost $0.75/hour wage rate.
      • Electricity cost 1/5 of total costs ($0.09/Kw/hr).
      • Transportation/freight cost to USA: 24.8% air & 6.4% by sea (regional average is 12.5% & 3-4%).
      • Container Shipping Time: 25-35 days.
      • Inland Rail/Road Transport - $0.01-$0.02/km/ton.
      • Average landed tariff - 18.5% plus GST.
      • GST – zero rating vs. 15%.
      • Port Dwell Time – Exports 2 days/Imports 10 days.
      • Customs Clearance – PRAL and PACCS.
      • Red tape and speed money.
      • http://www.engineeringpakistan.com/CODB/CostofDoingBusiness.pdf
    • Three steps of Investing Step 1
      • Obtain a NICOP/POC.
      • Contact Pakistan’s Trade Officer in your area.
      • Contact the Board of Investment (BoI) – the primary focal & coordination point for Overseas Pakistanis and foreign investors.
      • http:// www.pakboi.gov.pk /
      • http://www.pakboi.gov.pk/About_us/directory_of_boi_officials.html
      • Attaturk Avenue, G-5/1Islamabad, Pakistan,
      • Tel: 92-51-9219957, 9224101Fax: 92-51-9215554, 9206160
      • Hours: Monday to Thursday & Saturday - 0800 hrs to 1500 hrs Friday – 0800 hrs to 1200 hrs
      • Utilize the BoI’s Facilitation Center and Business Guide.
    • Three steps of Investing Step 2
      • Contact SECP (Securities & Exchange Commission of Pakistan) – the main regulator of the capital markets and implementer of the Companies Ordinance (the grund norm governing businesses in the country).
      • http://www.secp.gov.pk/
      • SECP registers foreign and domestic companies in Pakistan.
      • http://www.secp.gov.pk/divisions/Portal_CLD/index_CSS.htm
      • http://www.secp.gov.pk/Guides/PromotersGuide.pdf
    • Three steps of Investing Step 3
      • Visit the CBR, SBP, SMEDA and MoC websites to learn about the taxes/tariffs structure, credit policies, SME policy and latest Import and Export Orders governing trade.
      • Contact the US-Pakistan Business Council in Washington DC (http://www.uspakistan.org/) and the American Business Council of Pakistan in Karachi ( [email_address] ). The ABC is the largest group of single country investors in Pakistan.  It acts as a catalyst to promote US investment in the country.
      • Undertake a ‘look see’ visit to Pakistan to obtain a first hand view of the lay of the land.
      • Visit the Engineering Development Board and scrutinize their various studies.
      • Follow the proposed ‘investors checklist’.
    • Investor's Checklist
      • Learning from others – contact US based expats already doing business in Pakistan.
      • ‘ Look see’ preparatory visit.
      • Feasibility study ( http:// www.pakboi.gov.pk/Misc/project_brief.html ; http://www.smeda.org.pk/pre-feasibility.php ).
      • Check the Engineering Development Board’s website for studies and useful information on many sectors of the economy ( http://www.engineeringpakistan.com/EngPak1/index.php ).
      • ABCP (American Business Council of Pakistan).
      • BoI/SMEDA/SECP interface.
      • RoI projection.
      • Due Diligence.
      • Local partner/risk sharing.
      • Local content/sourcing.
      • Hiring a legal consultant.
      • Checking land title transfer record.
      • Legal instrument drafting/risk transfer & mitigation issues.
      • Scrutinizing financing options- loan and equity issues.
      • Assessing Land-Capital-Management-Labor costs -- the ‘TFP equation’.
      • Perseverance and patience.
      • Consistency and constant follow up.
    • GoP Paradigm
      • Education and skills development – HEC and NAVTEC.
      • Managerial development – bridging the ‘knowing-doing’ gap.
      • Free markets – trade liberalization and WTO commitments/FTAs.
      • Consumer protection – regulatory bodies.
      • Economic liberalization.
      • Transparent Privatization.
      • Regulatory oversight (SBP, SECP, PTA, NEPRA, OGRA, MCA, PEMRA, PPRA, HEC, PMDC, PEC & FAB).
      • Availability of credit – SBP, Banks and SMEDA.
      • Banking & insurance reform – SBP and SECP.
      • Stock market – foreign portfolio investment ($12 billion).
      • FDI – forex liberalization.
      • CBR overhaul – Customs and IT.
      • Trade Facilitation – reducing cost of doing business and National Trade/Transportation Corridor – Gateway to Central Asia.
      • Infrastructure development – roads, ports, railway and air transport.
    • Useful Websites www.engineeringpakistan.com/EngPak1/index.php (Engineering Dev Board) www.pakistan.gov.pk (GoP Gateway) www.commerce.gov.pk (Trade/Commerce) www.pakboi.gov.pk (Investment) www.privatisation.gov.pk (Privatization) www.tdap.gov.pk (Trade-Export) www.sbp.org.pk (Finance and Regulation) www.smeda.org (SMEs) www.cbr.gov.pk (Tax/Tariffs) www.secp.gov.pk (Capital/Stock Market) [email_address] (American Business Council of Pakistan)
    • United States Exports to Pakistan 2006
    • Midwest Exports to Pakistan 2006
    • Illinois Exports to Pakistan 2006
    • United States Imports From Pakistan 2005
    • All Import Commodities to Midwest from Pakistan 2005
    • Top Ten U.S. States Exporting to Pakistan 2005