Trade And Investment Opportunities


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Trade And Investment Opportunities

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