Service Sector of PakistanPresentation by :Open Academy
The Service Sector in Perspective• The Service sector accounts for 60% of global GDP and 30% of global employment (World Development Indicators).• Service sector accounted for 53.3% of GDP in FY 2010-11 (Economic Survey of Pakistan). Source: Pakistan Economic Survey 2008- 09
Measuring International Trade in Services• For the purpose of GATS negotiations Service trade is divided according to 4 modes of supply using CPC nomenclature for Service sectors and subsectors• International service trade transactions are measured by countries’ respective Central banks using the standard Balance of Payment Methodology 5 (BPM 5) developed by the IMF.• Service trade is NOT measured according to the 4 modes of supply but we can use indicators: – Mode 1:Cross Border Supply – BPM 5 – Mode 2: Consumption abroad – BPM 5 – Mode 3: Commercial presence – FDI Statistics – Mode 4: Movement of natural person– Remittance Statistics
Cont…• Many gaps exist regarding the availability of Service trade data. Unlike HS codes for trade in goods there is no harmonized system internationally for the identification of Service sectors with countries applying different definitions for Service sectors.• UN is developing a manual which standardizes the record of Service trade.• UN has also developed a Service Statistics Database based on data gathered from country Central Banks.(This data is also available on Trade Map)• Even then there are serious gaps in the data: It only covers Mode1 and Mode 2 (tourism, foreign students, foreign patients).
Pakistan’s Trade in Services--SnapshotSummaryPakistan Services exports (FY 11) $5.47 billionMajor Service export categories (FY 11)• Transportation $1.4 billion•Travel $350 million•Communication $225 millionShare of Pakistan in world Service exports 0.08%(WTO,2009)Pakistan Service Imports (FY 11) $7.6 billionMajor Services imports (FY 11)•Transportation $4.03 billion•Travel $971 million•Communication $17.6 millionShare of Pakistan in world Service imports 0.18%(WTO, 2009)Source: State Bank of Pakistan & WTO Statistics database
Pakistan Service Trade– Major Partners• Major Service Export Destinations: USA (29.69%), UK (8.82%), UAE (7.23%), Saudi Arabia (5.56%)• Major Service Import destinations: USA (11.56%), UAE (10.40%), China (10.15%), UK (7.57%).• Source: Calculations based on UN Service Trade Database
Pakistan Services Exports—Mode1-2 • Since 2002 the major ServicePakistan Service Exports (US $ million) export category for Pakistan is July-May FY 11 July-May FY 10 Government ServicesTotal Service Exports 5016 4828 accounting for 42% of total Service Exports.Transportation 1297 1175 • In this category the majorityTravel 318 263 share is for Military Units &Communication Services 207 219 agencies which can beConstruction Services 16 15 ascribed to disbursements related to the War on Terror.Insurance Services 48 38 • Transportation Accounts forFinancial Services 67 87 28.7% of Total Service Exports.Computer and InformationServices 197 172 • Other Business ServicesRoyalties and licensing fees 2 6 Account for 12% of total Service Exports.Other business Services 646 482Personal & cultural 3 5&recreational Services Source: State Bank of PakistanGovernment Services 2215 2366
Pakistan Service Imports– Mode1-2Pakistan Service Imports (US $ million) • Transportation accounts July-May FY 11 July-May FY 10 for 42.3% of Pakistan’sTotal Imports of Services 6744 6259 Service Imports. SeaTransportation 3577 3210 freight imports account for 51% of all TransportTravel 875 818 Imports. • This comprises of theCommunication Services 160 139Construction Services 25 28 payment to internationalInsurance Services 137 135 shipping lines • Other Business ServicesFinancial Services 100 86Computer & InformationServices 151 148 account for 29% of allRoyalties & License Fee 106 103 Service ImportsOther Business Services 1047 1001 • Travel accounts for 15.9%Personal, Cultural &Recreational Services 10 19 of Total Service Exports.Government Services 555 573 Source: State Bank of Pakistan
Mode 3- FDI US$ MillionFY07 5139FY08 5410FY09 3719FY10 2150FY11 1573Source: State Bank of Pakistan
FDI—Mode 3: Sector wise leading companies investing in PakistanIndustry Number of foreign Affiliates Sales (US$ Million)Employees Leading parent company Leading home countryAll Sector 206 25475.6 92118 ROYAL DUTCH SHELL PLC , GBR United StatesWholesale and retail trade 53 10253.1 31827 MITSUI & CO., LTD. , JPN United StatesTransport, storage and communications 26 840 6138 Deutsche Post AG , DEU GermanyBusiness activities 26 33926 BP P.L.C. , GBR United StatesChemicals and chemical products 26 746.9 18606 Akzo Nobel N.V. , NLD United StatesFinance 23 7319.6 42767 STANDARD CHARTERED PLC , GBR United StatesOther services 15 27220 Weatherford International Ltd. , CHE United StatesFood,beverages and tobacco 9 6122 BRITISH AMERICAN TOBACCO P.L.C. , GBR United KingdomNon-metallic mineral products 7 666.1 2005 Beltexco Limited , HKG RomaniaElectricity, gas and water 7 115 RANHILL BERHAD , MYS United KingdomMachinery and equipment 6 2814.1 712 Cedar I Holding Company, Inc. , USA SwedenOther manufacturing 5 666.1 612 Cedar I Holding Company, Inc. , USA SwitzerlandMetal and metal products 5 413 General Motors Company , USA United StatesHotels and restaurants 5 1295 Marriott International, Inc. , USA United StatesConstruction 4 3501.8 General Motors Company , USA United StatesMotor vehicles and other transport equipment 4 2814.1 700 HONDA MOTOR CO., LTD. , JPN JapanTextiles, clothing and leather 4 224 YKK CORPORATION , JPN United StatesPetroleum 4 1300 Azzurra Holding Corporation , USA United StatesElectrical and electronic equipment 3 382 Imation Corp. , USA United StatesCommunity, social and personal service activities 3 27200 United Nations Population Fund , USA United StatesPrecision instruments 2 12 Cedar I Holding Company, Inc. , USA United StatesRubber and plastic products 2 12 Beltexco Limited , HKG United StatesPublishing, printing and reproduction of recorded media 2 14 Georg von Holtzbrinck GmbH & Co.KG , DEU States UnitedCoke, petroleum products and nuclear fuel 2 631 SAVOLA GROUP COMPANY , SAU Saudi ArabiaHealth and social services 1 United Nations Population Fund , USA United StatesMining and quarrying 1 Chevron Corporation , USA United StatesWood and wood products 1 TEHNO INDUSTRIAL S A , ROM RomaniaPublic administration and defence 1 Government of The United States , USA United StatesEducation 1 11 Oracle Corporation , USA United States Source: Investment Map
Mode 4-- Remittances• Workers remittances in FY08-09 were US$ 7.8 billion and rose to US$8.9 billion in FY09-10.• This rise in remittances can be attributed mainly to the efforts of the Government in reining in practices like hundi and hawala, which has resulted in these transactions carried out through banking channels.
MoC and promotion of Service exports• The Ministry of Commerce has set up a National Steering Committee to devise a long term Strategy for significantly improving Pakistan’s export of Services. Recently established Services Export Development Cell (SEDC) is working with all the stakeholders to address core issues and devise comprehensive strategies for each sector.• To help services sector grow and expand, a Services Export Development Fund is being established to provide assistance in the form of reimbursable grants to Pakistan services exporters for tendering or negotiating for international projects and for conducting pre-feasibility or feasibility studies for international projects. [STPF 2009-12]• The Service Export Development Cell (SEDC) of TDAP would be the lead department, having the primary responsibility, for promotion of trade in services.
Priority Service subsectors• SEDC has identified 5 priority sectors for Service exports: – Financial Services – Construction & Architectural Services – Professional Services – Health & Medical Services – Information Technology
Pakistan GATS Commitments• In the Uruguay Round, Pakistan made commitments in six sectors, namely business services, financial services, communication services, health and related services, construction and related engineering services, and tourism and travel related services. A total of 42 sub-sectors were scheduled with limitations.• New commitments have been proposed in business services, distribution services, educational services, and environmental services sectors.• In business services, commitments are proposed in the legal services and accounting, auditing and bookkeeping services, architectural services, veterinary services and services provided by midwives, nurses, physiotherapists and para medics sub-sectors.• Furthermore, computer related services, research and development services, rental and leasing services, printing and publishing, agriculture storage facilities and rangeland services have been proposed for commitments. In communications, commitments are proposed in courier services while in distribution services, retailing and wholesaling services are proposed for commitments.
Connect With Us ULTRASPECTRA OPEN AcademyFacebook.com/Ultraspectra Facebook.com/openacademy.isbTwitter.com/Ultraspectra Twitter.com/openacademyisbYouTube.com/user/ultraspectra YouTube.com/user/openacademyLinkedIn.com/in/Ultraspectra LinkedIn.com/in/openacademyForum.ultraspectra.com