Overview of Business & Trade in Pakistan - Edit 10th Nov 2012

Overview of Business & Trade in Pakistan Pakistan History about the business.
The Unsustainable Power Prism Pakistan as an economy and political entity is in a mess. However, a handful of financially Stable Corporation do give some hope. But are they really up to it or is this jus another political-business nexus? It is sometimes rather baffling to think how the belief of a single man can transform the fate of millions, once and forever. Desite being and independent country for 64 years. Pakistan stands as one of those unique experiments in policy and geopolitics which well, still remains an experiment. If one wants to guage the difference between this nation torn apart by whimsical fancies and India, then it would be advisable to flick through the data compiled by Center for Research & Security Studies based out of Islamabad in 2009. The independent think tank reveals that The Two Ambani brothers can buy 100% of every company listed on the Karachi Stock Exchangeand would still be left with $30 billion Further, the entire Pakistani produce of a year can be purchase by the four richest Indians with $60 billion still left over to spare. However, While US drones continue to bombard the federally administered tribal areas of the beleaguered state. Mian Muhammed Mansha(Pakistanis Richest man with a net worth of $1 billion), Founder and Chairman of Nishat Group(one of the Pakistans top five business houses) sits in his plush office based out of Lahore planning the future strategic orientation of his $5 billion empire. Infact, Nishat Group is the face of a coin which the world never attempts to notice. What started as a single textile mill in 1951 has now grown in to a
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OVERVIEW OF BUSINESS& TRADE IN PAKISTAN
conglomerate with interests in banking, textile, Cement, aviation and energy. Today, The groups annual sales have surpassed Rs. 2.2 billion and the corporate giant now employees a work force of 30,000. A Robust machinery on the face of a failed state gives rise to what is both a question and hope are companies like Nishat Group Pakistan Incs last hope? After all, at the end of the day, it is business which runs your economy(given you have a sturdy political structure in place). Nevertheless, it would be a futile effort to address this predicament without the dwelling into the finer nuance of Pakistans unique genetic makeup. Since 1947, upheavals witnessed by Pakistans economy can be broadly broken into six definitive periods each lasting approximately a decade. The first one started with this country emerging on the world map and lasted till about 1958. This was a phase marred by issues which any newly formed state would face. Ayub khan (apart from being Pakistans first ruthless dictator was also a shrewed strategist). Aided by advisor from Harvard University, Pakistan was exposed to one of the most healthy cycles of economic development in the countrys short and chequered history. While agriculture grew at 4%, manufacturing took off at a phenomenal rate of 9% per annum. This had a direct impact on GDP which doubled to 6%from 3% in the 1950s.Astonishingly, by 1969,Pakistan was exporting more manufactured goods than Thailand, Malaysia and Indonesia put together. But by 1972, Khans Policies (on the political front) had backfired and thus came Zulfikar Ali Bhutto in power. The introduction of populist policies under his regime resulted in a kind of economic reversal. Sector wide nationalization dragged back the GDP to 1950 levels.And the rest as they say is
history.The Unification of military along with Islamic bodies resulted in what we today know as Islamic fundamentalism. Bloodbath arising out of terrorism shows no signs of slowing down. In fact, as of 2011, Pakistans GDP growth rate has slipped down to 2.2% per annum. Moreover, as the surge in imports further outstrips exports, the economy is poised for yet another tough phase. With public debt amounting to $60 billion S&P Rates this economy B:-. The fact is a couple of profit making power houses do not have the where withal to give a meaning direction to Pakistans economy let alone save it. Economic growth is witnessed by nations which have a well planned political structure along with a mechanism to deliver security. Pakistan lacks both of them. The issue lies in the fact that no one really knows who is controlling power in Pakistan. Agrees Dr.Suvrokamal Dutta , a New Delhi based foreign and economic policy experts, as he tell B&E. If someone thinks that a few corporate institutions with financial stability can safeguard the future of Pakistans economy, I would call it day dreaming. Moreover, these corporations are financially strong because of their political links and derive huge synergies from foreign aids received by the treasury. If these aids were to stop, I guarantee that Pakistan as a political entity would disintegrate within 10 days. The only way this situation can change for the better is by pursuing political and economic reforms collaterally. The West will have a play an instrumental role in reinforcing amendments. A Good Start would be to ramp up investment and generate employment, which in turn would boost consumption. In the absence of these imperative measures, Pakistan would continue to be failed state for generations to come supported by the US. Source : Business Magazine
1) Pakistans merchandise trade*
Imports have been continuosly outstripping exports. Source:- World Bank

2) Movement of Karachi Stock Exchange (KSE)100 index over the past four years.*
The index has relatively performed well compared to global stock exchanges because of limited participation of FIIs Figure/Image download from Internet Source :- Karachi Stock Exchange
3) GDP growth rate of Pakistan over the last three decades (Constant Prices)*
The growth rate fluctuated drastically every time the country shifted from democracy to dictatorship and vice versa. Figure/Image download from Internet Source:-International Monetary Fund :- 2010 World Economic Outlook.
4) Pakistan External debt stocks*
Elusive Indicator as Pakistan runs on aids rather than debts. Source :- World Bank
1. ISLAMIC REPUBLIC OF PAKISTAN

1.1. LOCATION
Home to one of the worlds cradles of civilization, Pakistan shares its eastern border with India and north-eastern with China, with Afghanistan running along the northwest and Iran in the southwest. Along the southern boundary of Pakistan runs the Arabian Sea with 1,064 kilometres of coastline. Roughly twice the size of California, Pakistan covers an area of approximately 803,940 square kilometres.
1.2. POPULATION DEMOGRAPHICS
The sixth most populous Country of the world, Pakistan has a current population of approximately 164 million, with a growth rate of 1.828% (2007 estimates). The majority of southern Pakistans population lives along the Indus River; in the north, most of the people are concentrated in the cities of Faisalabad, Lahore, Rawalpindi/ Islamabad, and Peshawar. Karachi, the capital of the Sindh province and the largest city in Pakistan, is, by virtue of being a sea-port, the financial and commercial centre. With a population of over eleven million, Karachi is also the fifth most populous city of the World. Ninety seven percent of the Countrys population is Muslim, making Pakistan the second largest Muslim country in the world and an important member of the Organization of the Islamic Conference (OIC). Hinduism and Christianity form the leading minority religions; other religious groups include Sikhs,
Parsees, and a small number of Buddhists. The constitution defines Pakistan as an Islamic nation and Islamic Shariah is the supreme law of Pakistan. However, the freedom of religion is guaranteed by the constitution.
1.3. INTERNATIONAL TIME
International time of Pakistan is GMT + 5.

1.4. CLIMATE
Pakistan has a continental type of climate, characterized by extreme variations of temperature. During the winter season, temperature falls to -5 in the northern areas of Pakistan. Temperatures on the Baluchistan plateau are somewhat higher; maximum temperature goes to 52C mainly in the Sibbi (located in the Baluchistan Province). Along the coastal strip the climate is tempered by sea breezes. In rest of the country temperatures rise steeply in the summer and hot winds blow across the plains during day. Daily variation in temperature may be as much as 11C to 17C. Winters are cold with minimum mean temperature of about 4C in January.
1.5. LANGUAGE
The national language of Pakistan is Urdu, but comparatively few people use it as their mother tongue. Punjabi is the most widely spoken language, followed by Sindhi, Pashto, Saraiki, and Baluchi respectively. English is extensively used by educated people and is the official language of Pakistan.
1.6.
CURRENCY
The currency of Pakistan is Rupee and the acronym used for the currency is PKR.
1.7. THE CONSTITUTION AND LEGAL SYSTEM
Pakistan is a federal republic with four provinces, capital territory (Islamabad) and territory consisting of tribal areas. Pakistan also administers Azad Kashmir and the Northern Areas, portions of the Jammu and Kashmir region. The constitution of the Islamic Republic of Pakistan of 1973 provides for Parliamentarian form of Government. The Prime Minister (elected by the National Assembly) is the head of Government and the President (collectively elected by the National Assembly, the Senate and the Provincial Assemblies) is the head of the federation. The National Assembly (also called lower house) and Senate (also called upper house) are the legislator institutions. The National Assembly has 342 members who are elected from all provinces, the capital territory and tribal areas on the basis of population. The Senate derives equal representation from all the four provinces and has a total membership of 100. Pakistans legal system is based on English common law, adapted to the needs of an Islamic state. High Court and Supreme Court of Pakistan are the highest forum of judiciary at provincial and national level, respectively. Additionally, the Shariah court is
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responsible for ensuring that the Countrys laws are as per Islamic injunctions.
1.8. HIGHLIGHTS OF THE ECONOMY
Pakistan used to be heavily dependent on the agriculture sector, but slowly and gradually, the industry and service sectors have increased their shares in recent years and they collectively account for around three-fourths of the GDP. In 2006-2007 Pakistan's real GDP at factor cost grew by 7 % and inflation remained around 7.9 %. During that period, there was a considerable increase in the level of FDI. Total exports amounted to US$17.011 billion 20062007, growing by about 3.4 % and crossing the $17 billion mark. Imports amounted to US$30.54 billion during the same period increasing by about 8.22%. Major exports are textiles (garments, cotton cloth, and yarn), rice, leather, sports goods, and carpets and rugs. United States of America, United Arab Emirates, England, Germany and Hong Kong are the main export partners, while major import commodities are petroleum, petroleum products, machinery, chemicals, transportation equipment, edible oils, pulses, iron and steel, tea. The major import partners are United Arab Emirates, Saudi Arabia, Kuwait, United States of America and China. Cotton, Wheat, Rice and Sugarcane are Pakistans main crops while main industries of the Country are textiles, telecommunications, cement, power,
commercial & investment banking, oil & gas, agrobased produce, sports goods, surgical goods, leather and leather goods, and cutlery. Karachi, Lahore, Islamabad, Rawalpindi, Faisalabad, Hyderabad, Gujranwala and Sialkot are the Countrys key business centres. Karachi and Gwadar have the sea ports while Lahore, Rawalpindi, Sialkot, Hyderabad, Multan, Faisalabad, Peshawar and Quetta have the dry ports. Islamabad, Karachi, Lahore, Peshawar and Quetta have the International Airports.
1.9. ECONOMIC ARRANGEMENTS
1.9.1.List of Countries / Organizations with which Pakistan has Bilateral Investment Agreements
S. No. 1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. 12.
Name of Country Germany Sweden Kuwait France South Korea Netherlands Uzbekistan China Singapore Tajikistan Spain
Signing Date 25.11.1959 12.03.1981 17.03.1983 01.06.1983 25.05.1988 04.10.1988 13.08.1992 12.02.1989 08.03.1995 13.05.2004 15.09.1994
S. No. 24. 25. 26. 27. 28. 29. 30. 31. 32. 33. 34. 35.
Name of Country Indonesia Tunisia Syria Belarus Mauritius Italy Oman Sri Lanka Australia Japan Belgium Qatar
Signing Date 08.03.1996 18.04.1996 25.04.1996 22.01.1997 03.04.1997 19.07.1997 09.11.1997 20.12.1997 07.02.1998 10.03.1998 23.04.1998 06.04.1999
Turkmenistan 26.10.1994
13. 14. 15. 16. 17. 18. 19. 20. 21. 22. 23.
United Kingdom Turkey Portugal Romania Malaysia Switzerland Kyrgyz Republic Azerbaijan Bangladesh U.A.E. Iran
30.11.1994 15.03.1995 17.04.1995 10.07.1995 07.07.1995 11.07.1995 23.08.1995 09.10.1995 24.10.1995 05.11.1995 08.11.1995
36. 37. 38. 39. 40. 41. 42. 43. 44. 45. 46.
Philippines Yemen Egypt OPEC Fund Lebanon Denmark Morocco Bosnia and Herzegovina Kazakhstan Loas Cambodia
11.05.1999 11.05.1999 16.04.2000 24.10.2000 09.01.2001 18.7.1996 16.04.2001 04.09.2001 08.12.2003 23.04.2004 27.04..2004
1.9.2.Pakistan and The Non-Aligned Movement (N.A.M.)
Pakistan is an active member of NAM. Since the Movement predominantly comprises developing countries, it has consistently paid considerable attention on economic issues. The Movement has maintained its long-standing position on the need for conscious steps to regulate the market measures as a means of ensuring that growth in the world economy and trade is both dynamic as well as equitable.
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1.9.3.Pakistan and The Organization (ECO)
Economic
Co-operation
ECO is an inter-governmental regional organization established in 1985 by Iran, Pakistan and Turkey for the purpose of sustainable socio-economic development of the Member States. ECO is the successor organization of Regional Cooperation for Development (RCD) which remained active from 1964 up to 1979. In 1992, the Organization was expanded to include seven new members, namely: Islamic State of Afghanistan, Republic of Azerbaijan, Republic of Kazakhstan, Kyrgyz Republic, Republic of Tajikistan, Turkmenistan and Republic of Uzbekistan.
1.9.4.Pakistan and The D-8
D-8, also known as developing-8 is an arrangement for development cooperation among the following member countries: Bangladesh, Egypt, Indonesia, Iran, Malaysia, Nigeria, Pakistan and Turkey. The objectives of D-8 are to improve developing countries' positions in the world economy, diversify and create new opportunities in trade relations, enhance participation in decision-making at the international level, and provide better standards of living.
1.9.5.Pakistan and The South Asian Association for Regional Cooperation (SAARC)
The South Asian Association for Regional Cooperation (SAARC) was established on December
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8, 1985 by Bangladesh, Bhutan, India, Maldives, Nepal, Pakistan and Sri Lanka. South Asia, home to nearly a fifth of humanity, is endowed with vast natural and human resources. It has the potential of becoming a vibrant region in the world, given its enormous resources in manpower, technology, agricultural and mineral assets, its history and civilization, arts and culture. Intra-regional exchanges in the SAARC framework and trade among its Member States can realise much of this potential. Appreciating the same, the association was formed with the primary objective "to promote the welfare of the peoples of South Asia and to improve their quality of life".
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2. INVESTMENT FACTORS 2.1 FIVE REASONS TO INVEST IN PAKISTAN (AMONG MANY OTHERS!!) a. Abundant land and natural resources
Extensive agricultural land Crop production (wheat, cotton, rice, fruits and vegetables) Mineral reserves (coal, crude oil, natural gas, copper, iron ore, gypsum, etc.) Fisheries and livestock production
b. Strong human resources
English speaking work force Cost-effective managers and technical workers
c. Large and growing domestic market
150 million consumers with growing incomes A growing middle-class moving sophisticated consumption habits to
d. Well-established infrastructure and legal system
Comprehensive road, rail and sea links
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Good quality telecommunications and IT services Modern company law Long-standing corporate culture
e. Strategic location as a regional hub

2.2
Principal gateway Republics
to
the
Central
Asia
Strong and long-standing links with the Middle East and South Asia Comprehensive investors duty-free facilities for
INVESTMENT OPPORTUNITIES
There are good investment opportunities in the following sectors of Pakistan economy. Oil & Gas Energy and Power IT Projects Telecommunication Agriculture & Agro-based Projects Housing and Construction
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2.3
Textile Infrastructure Health Projects Mining & Minerals Services Sector Tourism Projects
TAX BENEFITS
Tax benefits as available under the second schedule to the Income Tax Ordinance, 2001 are mentioned below:
a. Exemption from total income:
Some important sectors where exemptions are available are: Software exports Business Process Outsourcing (BPO) Income of Non Profit Organisation (NPO) Income of Computer Institutes
b. Reduction in tax rates
Tax rates have been reduced for some businesses, for example:
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2.4
Exploration of mineral deposits Commission of export indenting agents Income of Modaraba (also discussed in some detail under the section on Income Tax)
SOURCES OF FINANCE
Pakistan has a diversified and modern financial system, which is completely integrated with the international financial markets. The main sources of finance can be classified as following:
2.4.1 Banks
The banking sector of Pakistan is very modern and organized. Most of the leading international banks have branches in the Country and local banks are also competing with them with quality services. Both foreign and national banks have invested heavily in infrastructure and information technology and thus are able to provide state of the art facilities to the customers. State Bank of Pakistan is the regulatory body for the banks, which has established its autonomous status.
2.4.2 Non-Banking Finance Companies (NBFCs)
The NBFC sector of the Country is equally strong. The following classes of NBFCs are involved in extending credit facilities to both corporate and individual customers:
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Leasing Companies Investment Banks Modarabas Venture Capital Companies
Like foreign banks, many international NBFC also have branches in Pakistan. The Securities and Exchange Commission of Pakistan is the regulatory body for NBFCs. The NBFCs offer various debt facilities for medium to long-term including project financing, lease and sale, and lease-back of assets.
2.4.3 Public offers through stock exchanges
Financing can be arranged through a public offer of debt and equity instruments. The Securities and Exchange Commission of Pakistan approves the public offer and the equity and debt instruments can be listed on all or any of the three stock exchanges in Pakistan.
2.5 FOREIGN EXCHANGE REGULATIONS
The Foreign Exchange Regulations Act, 1947 (the Act) and Foreign Exchange Manual govern issues related to the receipt and remittance of foreign exchange in and from Pakistan. The regulatory authority in this regard is State Bank of Pakistan. The present Act is friendly to foreign investors and provides freedom to bring, hold and take out foreign
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exchange, maintenance of foreign-currency accounts, purchase and sale of shares and securities by nonresidents and foreign exchange borrowings for setting up of a new industry or balancing, modernization or replacement of an existing industry. The rules relating to the purchase of technology and requirements for import licences have also been substantially relaxed. Approval of the Board of Investment Government of Pakistan may also be required in certain cases for remittance of Foreign Exchange by a foreign investor. The policy of the Board of Investment is also foreign investor friendly.
2.6 EMPLOYEMENT REGULATIONS
2.6.1 Labour Policy
The labour policy issued by the Government of Pakistan lays down the parameters for the growth of trade unionism, the protection of workers rights, the settlement of industrial disputes, and the redress of workers grievances. The policy also provides for the compliance with international labour standards ratified by Pakistan. At present, the labour policy as approved in year 2002 is in force. With the efforts of Government and enlightened elements within labour and employers, a forum i.e. Workers Employers Bilateral Council of Pakistan (WEBCOP) has been established which facilitates the resolution of issues relating to bilateral rights.
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2.6.2 Child Labour
Awareness of the problem provided the basis for enactment of the Employment of Children Act, 1991 in Pakistan, which has been followed by a number of administrative and other initiatives to address the issue of child labour effectively. The Constitution of the Country also protects the rights of children and states: No child below the age of fourteen shall be engaged in any factory or mine or in any other hazardous employment. All forms of forced labour and traffic in human beings are prohibited.
2.6.3 Minimum wages
The Government has prescribed the Rs. 4,600 Per/ month the minimum wage to be paid.
2.6.4 Employees Social Security Ordinance, 1965
An Employees Social Security scheme was introduced in Pakistan under the provisions of the Provincial Employees Social Security Ordinance, 1965. The main objective is to provide comprehensive medical cover to the secured workers and their family members including parents and to provide financial assistance in case of sickness and employment injuries. The Social Security scheme is implemented on the basis of the contributory principle. The main source of income is the Social Security Contribution, which is collected under Section 70 of the Ordinance
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from the employers of the notified industrial and commercial establishment at a rate of 7% of the wages paid to their workers who are drawing wages up to Rs. 5,000/- p.m. or Rs. 200/- per day. The workers once covered under this scheme remain secured even if their wages exceed Rs. 5,000/- per month.
2.6.5 Workers Welfare Fund Ordinance, 1971
Through the Ordinance, the government has constituted a fund called Workers Welfare Fund for the welfare of workers. The Fund consists of:
a. An initial contribution of Rupees one hundred
million by the Federal Government,

b. Such moneys, as may from time to time, be paid
by industrial establishments under the Ordinance. An industrial establishment, the total income of which in any year is not less than one hundred thousand rupees shall pay to the Fund in respect of that year a sum equal to two percent of so much of its total income as is assessable under the Income Tax Ordinance, 2001. The Fund is applied to: The financing of projects concerned with the establishment of housing estates or construction of houses for workers; and
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The financing of other welfare measures including education training, re-skilling and apprenticeship for the welfare of workers.
2.6.6 Companies Profit (Workers Participation) Act, 1968
The Companies Profits (Workers Participation) Act, 1968 (the Act) provides for participation of workers in the profits of the companies. The Act applies to Companies engaged in as industrial undertaking that fulfils the prescribed criteria and such companies are required to:
a. Establish
a workers participation fund in accordance with the scheme as soon as the accounts for the year in which the scheme becomes applicable to it are finalized, but not later than nine months after close of the year; the Fund not later than nine months after the close of that year five percent of its profits during such year, which shall, where the accounts have been audited by an auditor appointed under section 23B of the Industrial Relations Ordinance, 1969 (XXIII of 1969), be assessed on the basis of such audit; and
b. Subject to adjustments, if any, pay every year to
c. Furnish to the Federal government and the Board,
not later than nine months after the close of every year of account, its audited accounts for that year, duly signed by its auditors.
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The fund is distributed among workers of prescribed categories.

2.6.7 Employees Old Age Benefits Act, 1976
The Employees Old Age Benefits Act, 1976 (the Act) is applicable to every industry or establishment where ten or more persons are employed directly or indirectly. This statute intends to provide security and benefit for old age to employees of industrial, commercial or other organizations covered by it. The Employee Old Age Benefits Institute (the Institute) formed under it collects and receives contributions, donations, bequests and all other payments. It deals with pensions, invalidity pension, widows pensions, old age grants and other benefits, out of contribution payable to the Institute by every employer of industry. Contribution shall be payable monthly by the employer to the Institute in respect of every person in his insurable employment, at the rate of five percent of his wages
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2.6.8 List of other important labour laws Name of law Applications
Factories Act, 1934
Regulates the working conditions in factories, employing 10 or more workers Determines the mode of payment of salaries and wages to the industrial workers Specifies the minimum wage to be paid to different categories of workers Provides the framework and guidelines for the service rules of industrial and commercial workforce Provides criteria for the establishment of fair price shops at industrial units where 100 or more workers are employed It envisages provision of a canteen facility, where 250 or more workers are
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Payment of Wages Act, 1936
Minimum Wages Ordinance, 1961
West Pakistan Industrial & Commercial Employment (S.O.) Ordinance, 1968 Punjab Fair Price Shops Ordinance, 1971
Canteen Rules, 1959
employed Industrial Relations Ordinance, 2002 It provides framework for the industrial relations between management and the workers. It regulates trade union activities Gives guidelines for protection of workers against certain hazardous occupations in the factories Regulates the employment of children Provides certain facilities to those female employees, who are expectant Regulates the employment and working conditions of workers in shops as well as commercial establishments (such as banks, offices etc.) Provides guidelines for welfare of transport workers
Hazardous Occupations Rules, 1978
Employment of Children Act, 1991 Maternity Benefit Ordinance, 1959
Shops & Commercial Establishments Ordinance, 1969
Road Transport Workers Ordinance, 1961
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2.7
BUSINESS VISA AND WORK PERMIT
2.7.1 Business Visa for Citizens of Countries in A list
To facilitate travel to and staying in Pakistan for foreign business persons and investors, business visa policies have been considerably relaxed. Missions abroad can issue up to five years multiple business visa (non-reporting) within 24 hours to businessmen of countries of list-A' on production of any of the following documents: Recommendation letter from CC&I of the respective country of the foreigner. Invitation letter from Business organization duly recommended by the concerned Trade Organization/ Association, in Pakistan. Recommendatory letter by Honorary Investment Counselors of BOI. Recommendatory letter from Pakistani Commercial officers posted in Pakistan High Commissions / Embassies / Consulates General abroad.
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Countries of A List
1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. 12. 13. 14. 15. 16. B 17. Australia Austria Argentina Bahrain Brazil Belgium Brunei Canada Chile China Czech Republic Denmark Finland France Germany Greece Hong Kong 18. 19. 20. 21. 22. Hungary Indonesia Iceland Iran Ireland 35. 36. 37. 38. 39. 40. 41. 42. 43. 44. 45. 46. 47. 48. 49. Qatar Russian Federation Saudi Arabia Singapore Slovakia South Africa South Korea Spain Sweden Switzerland Thailand Turkey U.A.E. United Kingdom USA
u Business Visa for Citizens of those Countries which are not in A List Missions are authorized to issued entry visa for one month to Genuine Businessmen of countries besides those in A' list (except those countries not recognized by Pakistan) from applicant's own country or place of legal residence by Ambassador/High Commissioner/Head of Mission only on the following criteria: The applicant belongs to International repute. And / or Company of
23. Italy 24. Japan 25. Kuwait 26. Luxembourg 27. Malaysia 28. Mexico 29. Netherlands 30. New Zealand 31. Norway 32. Oman 33. Poland 34. Portugal
Fulfills the criteria laid down for List A' country in respect of valid sponsorship from Pakistan.
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2.7.2 Visa on Arrival Businessmen
to
the
Foreign
Investors
and
Genuine businessmen from developed countries as mentioned below will be allowed Visa On Arrival (VOA) non-reporting for 30 days on production of any of the following documents: Recommendation letter from CC&I of the respective country of the foreigner. Invitation letter from Business organization duly recommended by the concerned Trade Organization/Association, in Pakistan. Recommendatory letter by Honorary Investment Counsellors of BOI. Recommendatory letter from Pakistani Commercial officers posted in Pakistan High Commissions / Embassies / Consulates General abroad.
List of Countries 1. 4. 7. 10. 13. 16. 19. 22. 25. United Kingdom Germany France China Japan Canada Luxembourg Greece Austria 2. United State of America 5. Australia 8. Switzerland 11. Singapore 14. Korea 17 Belgium 20. Denmark 23. Portugal 26. Finland 3. Italy 6. 9. 12. 15. 18. 21. 24. 27. Brazil Sweden Hong Kong Malaysia Netherlands Ireland Spain Turkey
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2.7.3 Work Visa Procedures
A uniform facility has been extended to exempt technical and managerial personnel from work permit for the newly opened sectors of the economy, including Agriculture, Service and Social Sectors, in addition to exemption already enjoyed by such personnel for working in the manufacturing/industrial and infrastructure sectors. They are now only required to obtain work visas. Work visas will be granted to foreign technical and managerial personnel for the purpose of transferring skills and know-how. These visas will be granted subject to a constructive plan to train Pakistani personnel to take over the technical and managerial responsibilities over a reasonable period of time. A Committee under the Chairmanship of the Secretary of BOI periodically considers and decides the cases of granting or extending work visas to foreign personnel. Companies requiring employment of foreign nationals or extension in their visa should submit the request on the prescribed application form to the Board of Investment (FTP Wing) Islamabad. Work visas will be authorised and issued by the Ministry of Interior on the basis of the decision of the Committee. The work visa may be issued for a period up to 2 years or for the life of the applicant's passport. The concerned Pakistani Mission abroad will grant work visas to the applicant whereas extension in work visa will be endorsed by the Regional Passport Office of
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the city where the expatriate is working upon authorization by the Ministry of Interior. In case of multiple entry visas, the number of entries will not be restricted.
2.7.5 Conversion of Business Visa to Work Visa
For the purpose of changing the category of visa of foreign national employees and investors from business visa to work visa, the condition to go out of Pakistan to any third country and get it converted from the Pakistani Mission in that country has been withdrawn. The Ministry of Interior will process such requests simply upon receiving verification from the BOI. Multiple entry resident visas for up to 3 years will be issued to businesspersons of all countries, except those not recognized by Pakistan, who bring in an amount of US$ 200,000.
2.7.6 Registration of Foreigners with the Police
It has been decided to exempt all foreigners who have been issued work visas from registration with the police, except for nationals of countries on the negative list. Even in the case of countries on the negative list (except for Indians and foreigners of Indian origin), foreign nationals in the managerial category who are issued work permits/visas will also be exempted from police registration.
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SETTING UP A BUSINESS IN PAKISTAN 3.1 LICENCE REQUIREMENTS 3.1.1 Specialised businesses
In Pakistan, certain businesses have been declared specialized and in addition to corporate and tax requirements, a specific licence is required to commence such businesses. Such businesses are Banking Companies, Non-Bank Finance Companies, Security Service Providing Companies, Corporate Brokerage Houses, Money Exchange Companies, a Company which invests in Arms and Ammunition, Security Printing, Currency and Mint., High Explosives and Radio Active Substances. Certain conditions e.g. as to minimum capital, qualification of directors, corporate structure and area of operations etc. are required to be complied with to obtain these licences. However, the conditions for grant of licence vary from business to business.
3.1.2 Generalised businesses
For other businesses some procedural approvals etc. may be required but no specific licence is necessary.
3.2 TYPES OF BUSINESSES ORGANISATIONS
Complying with the requirements of licence, a business can be established in any of the following forms:
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3.2.1
Sole proprietorship
An individual may set up the business as sole proprietorship without any registration except with tax authorities.
3.2.2 Partnership firm
A partnership firm can be established by executing a partnership deed on a stamp paper of Rs. 500/- and getting the same Notarized by the authorised Notary Public Magistrate. The Partnership Act, 1932 is the legal framework for partnership firms and a firm may or may not be registered with the Registrar of Firms.
3.2.3 Companies
The Companies Ordinance, 1984 (the Ordinance) and The Companies (General Provisions and Forms) Rules, 1985 provide the legal framework for operations of companies in Pakistan and the Securities and Exchange Commission of Pakistan (the Commission) is the regulatory authority in this regard. In Pakistan, a company may be formed with or without limited liability and the Ordinance provides for the following categories of the companies:
a. A company limited by shares; or b. A company limited by guarantee; or c. An unlimited company
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Companies formed in any of the above categories can further be classified in two types:
a. Private company b. Public company c. Single Member Company
Any three or more persons associated for any lawful purpose may, by subscribing their names to the Memorandum of Association (document that defines the objectives of the company) and complying with the registration requirements, form a public company. There is no limitation as to the maximum number of members of such a company and after complying with the prescribed requirements; it may offer its shares and other securities to the general public. The public company may get its shares and other securities listed on the stock exchange(s). A private company can be established by any one or more persons associated in such manner as specified in the case of a public company and means a company which by its articles of association (document that defines the standard operating procedures of the company),
a. Restricts the right to transfer its shares, if any; b. Limits the number of its members to fifty;
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c. Prohibits any invitation to the public to subscribe
for the shares, if any, or debentures of the company. The name of every public limited company should include the word Limited as the last word of the name. And the name of every private company and a company limited by guarantee should respectively include the parenthesis and word Private and Guarantee before the last word Limited. The Commission may grant licence to a non-profit association for the promotion of commerce, art, science, religion, sports, social services, charity or any other useful object to be registered as a company with limited liability without the addition of the words Limited, (Private) Limited or (Guarantee) Limited as the case may be, to its name. The schedule of fees for registration of a company is as following:
a. For registration of a company whose nominal
share capital does not exceed Rs. 100,000 the fee shall be Rs. 2,500.
b. For registration of a company whose nominal
share capital exceeds Rs. 100,000, a fee of Rs. 2,500 is payable along with an additional fee to determine according to the amount of nominal share capital as follows. i. For every 100,000 rupees of nominal share capital or part of 100,000 rupees, after the first
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100,000 rupees, up to 5,000,000 rupees, a fee of Rs. 500. ii. For every 100,000 rupees of nominal share capital or part of 100,000 rupees, after the first 5,000,000 rupees, a fee of Rs. 250. Provided that for registration of a company the total amount of fee to be paid shall not exceed ten million rupees A single person may form a single member company on fulfilment of certain legal conditions.
3.2.4
Modaraba
Pakistans commitment to promote an Interest (Riba) free economic system was carried forward with the promulgation of the Modaraba Companies and Modaraba (Floatation and Control) Ordinance, 1980. Its primary aim was to accelerate capital formation and economic development in accordance with the tenets of Islam. It is a distinct form of business and its general concept is that investment comes from the one partner while the management and work is an exclusive responsibility of the other, and the profits generated are shared in a predetermined ratio. The corporate formation is arranged in such a way that a Management Company is formed which is responsible for the management of Modaraba and business is executed by the Modaraba itself. For all legal and practical purposes both the Management Company
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and Modaraba are separate entities. A management company may operate more than one Modarabas. The Modaraba pays a fee to the Management Company. Like Shares of a company, Modaraba certificates are issued to the equity holders of the Modaraba. The certificates can also be offered to the general public. Modaraba has established itself as a well understood Shariah compliant form of business and has been practiced for the last 22 years. It also enjoys certain tax benefits which are discussed in the relevant section.
3.3 LISTING OF COMPANIES AND SECURITIES
There are three stock exchanges in the country, namely: Karachi stock exchange, Lahore stock exchange, and Islamabad stock exchange.
Karachi Stock Exchange (the Exchange) is the biggest and most liquid exchange and has been declared as the Best Performing Stock Market of The World For the year 2002. All exchanges have their own regulations which are largely similar. The Securities and Exchange Commission of Pakistan (Commission) grants the approval for the public offer and after such approval a company may obtain listing for its equity and/or debt
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securities according to the regulations of the Exchange. The stock exchange regulations provide for certain reporting and other requirements. Some important regulations are in respect of notice of board and shareholders meetings, approval for date of annual general meeting of the company, reporting of the results and announcements of the dividends, payment of dividend at least once in five years and code of corporate governance. The code is a comprehensive set of rules for ensuring transparency and good governance in the management of the company. For an application to the Commission seeking approval to issue, circulate and publish the prospectus for public offer, a non-refundable fee is payable in the following manner according to the size of total issue including all types of securities: Up to Rs. 250 million More than Rs. 250 million and upto Rs. 1,000 million More than Rs. 1,000 million Rs. 25,000/Rs. 50,000/Rs. 100,000/-
As per regulations of the Karachi stock exchange, the following fees are presently applicable: Initial listing fee for the share capital is equivalent to one tenth of one percent of the paid-up capital subject to a maximum of one million and five hundred thousand rupees.
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Listing fee for debt instruments and open-end mutual funds is equal to one twentieth of one percent of the amount of debt instrument/ seed capital of mutual fund subject to a maximum of five hundred thousand rupees. Whenever a listed company increases the paid-up capital of any class or classes of its shares, or securities it shall pay a fee equivalent to one tenth of one percent of such increase.
Annual listing fee is payable as following:

Companies having paid-up capital Fee per Annum (Rupees)
Upto Rs. 50.00 million Above Rs. 50.00 million and upto Rs. 200.00 million Above Rs. 200.00 million Size of Instrument Upto Rs. 50.00 million Above Rs. 50.00 million and upto Rs. 200.00 million Above Rs. 200.00 million
3.4 FOREIGN INVESTOR IN PAKISTAN
15,000 30,000 60,000 15,000 30,000 35,000
A foreign investor may establish an independent business with any of above mentioned corporate structures. He can establish a sole proprietorship, can enter into partnership with any local person or foreigner and even can establish a company with or
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without participation of local shareholder(s) and director(s). If a foreign enterprise wishes to establish a business in Pakistan as a part of its international operations, in addition to the said corporate structures it also has following choices:
a. It can obtain registration with Board of Investment
Government of Pakistan (the Board), for opening of a branch office, marketing office or liaison office. Regulations of the Board impose certain restriction on the operations of the enterprise.
b. It can appoint an agent in Pakistan. Relevant
provisions of the Contract Act, 1872 shall apply in such agency arrangements.
c. It can enter into joint venture with other business
entities. Relevant provisions of Contract Act, 1872 and Partnership Act 1932 are applicable to these ventures.
3.5 ACCOUNTING AND AUDITING
The financial year for all business enterprises (except as discussed in the section on Income Tax) is from 1 st July to 30th June of every year. All listed companies are required to issue their financial statements for the year ending on 30th June at the latest by the last day of the immediately following October, while other Companies may submit their financial statements to Securities and Exchange Commission of Pakistan (SECP), at the latest by the last day of immediately following December.
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All companies are required to get their financial statements audited by a Chartered Accountant who is a member of the Institute of Chartered Accountants of Pakistan (ICAP). However, a company that has share capital below three million rupees may get their financial statements audited by a Cost and Management Accountant who is a member of the Institute of Cost and Management Accountants of Pakistan (ICMAP). Financial statements of listed companies are presented according to the requirements of the fourth schedule to the Companies Ordinance, 1984 while financial statements of all other companies are presented according to the fifth schedule to the Companies Ordinance, 1984. ICAP considers and adopts the International Accounting Standards (IASs) and SECP notifies their application in preparation of financial statements of companies. At present, all IASs issued by International Accounting Standards Board except IAS 15 and IAS 29 have been adopted and notified.
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TAXATION
The Central Board of Revenue (the Board) is the regulatory authority which is responsible for the management of the Taxation System and is engaged in the collection of taxes under various structures. The taxes, duties and other levies can be classified in two categories i.e. direct taxes and indirect taxes.
4.1 DIRECT TAXES
Direct taxation consists of Income Tax and Capital Value Tax.

4.1.1 Income tax
The Income Tax Ordinance, 2001 and Income Tax Rules, 2002 provide the legal framework for the levy, collection and other matter related to income tax. The levy of income tax is an annual charge on the taxable income.
Classification of assessees
The nomenclature of corporate and non corporate structures for income tax purposes is as follows: Company Registered Firm Un-registered Firm Association of Persons (AOP)
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Individuals
The Income Tax Ordinance, 2001 provides a broader definition of the Company which includes: A company as defined in the Companies Ordinance, 1984 A body corporate formed by or under any law in force in Pakistan A body incorporated by or under the law of a country outside Pakistan relating to incorporation of companies A trust, a co-operative society or a finance society or any other society established or constituted by or under any law for the time being in force. A foreign association, whether incorporated or not, which the Central Board of Revenue has, by general or special order, declared to be a company for the purposes of this Ordinance A foreign association, whether incorporated or not, which the Central Board of Revenue has, by general or special order, declared to be a company for the purposes of this Ordinance
Sources of income
The Income Tax Ordinance, 2001 classifies income into the following categories (called heads of income)
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and prescribes the allowable deductions against each head: Salary Income from Property Income from Business Capital Gains Income from Other Sources
Taxable income under a specific head means the income as reduced by allowable deductions. The net income from each head is added to arrive at the total income for the year, however, income from certain sources is subject to separate taxation, or is subject to presumptive tax. Under the presumptive tax regime, the income is subject to deduction of tax at source which becomes the discharge of final tax liability in respect of that income. The taxation of income from a certain source under the normal or presumptive tax regime is notified by the Government and such classification once advised may also change. At present income from following sources is taxed under the presumptive tax regime: Dividend received from a listed company Prize on a prize bond or winnings from raffle, lottery, quiz or crossword puzzle, or prize offered by companies for promotion of sale.
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Travelling agents commission Contracts other than service contracts Royalty and fee for technical services of nonresidents
Scope of total income for tax purposes
The Residential status of an assessee is also an important concept as it determines the scope of total income for tax purposes. In the case of a resident assessee the total taxable income means income from all sources within and outside Pakistan subject to the provisions of double taxation treaties, while in the case of a non-resident individual it is restricted to Pakistan source income only. An individual is a resident individual if he is present in Pakistan for 182 days or more in a tax year or if he is an employee or official of the Federal or Provincial Government posted abroad. A Company is considered to be resident when either it is incorporated or formed by or under any law enforceable in Pakistan or, the control or management of which is situated wholly in Pakistan at any time during the tax year. A registered firm, un-registered firm and association of persons is considered resident when its management and control is situated (either wholly or partly) in Pakistan.
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Tax year and filling of return
The tax year shall be a period of twelve months ending on 30th June of every year 'hereinafter referred to as 'normal tax year''. All assessees except companies are required to file their return of income for the tax year at the latest by 30th September immediately following the close of that tax year. Companies are required to file their return of income for the tax year at the latest by 31 st December immediately following the close of that tax year. Central Board of Revenue has prescribed different period of twelve months to be the tax year for various businesses. These different periods are called Special Tax Year. Accordingly the last date for filling the return of income is also different as prescribed for the normal tax year. Presently prescribed, special tax years and last date of filing the return are as following:
Business
Tax Period Filling of Return (Year ending on) (Latest by)
Companies Manufacturing Sugar
30th September
31st March 30th June 28th or 29th February 28th or 29th February
All persons exporting Rice 31st December All persons carrying on the business of rice husking 31st August All persons carrying on the business of oil milling 31st August
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All persons carrying on the Business of manufacturing and dealings in shawls 31st March All Insurance Companies 31st December
30th September 30th June
A person may apply, in writing, to the Commissioner of Income Tax to allow him to use a twelve months' period, other than the normal tax year, as a special tax year and the Commissioner may by an order, allow him to use such special tax year. In case of a class of persons having a special tax year, the Central Board of Revenue may permit it, by a notification in the Official Gazette, to use the normal tax year as its tax year.
Tax rates
The rates of tax applicable to various assessees are provided as Annexure 1.

Special rules for taxation of certain businesses
The Income Tax Ordinance, 2001 provides for separate provisions for taxation of the following businesses: The fourth schedule to the Ordinance provides the rules for the taxation of profits and gains of Insurance Business. The fifth schedule to the Ordinance provides the rules for the taxation of profits and gains from the exploration and production of petroleum profits
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and gains from the exploration and extraction of mineral deposits (other than petroleum).
WITHHOLDING TAX
Section 148 to Section 169 of The Income Tax Ordinance, 2001 provides for deduction of tax on certain payments. The ordinance provides for a complete procedure for the withholding tax system. Nature of such payments and pertinent rate of tax deduction is provided as Annexure 2.
Exemptions, Rebates and other Benefits
The Second Schedule to the Income Tax Ordinance, 2001 deals with exemptions and rebates etc.
A. Exemption from total income
Part I of the Second Schedule provides exemption from total income.

B. Reduction in tax rates
Part II of the Second Schedule provides for reduction in tax Rates.

C. Reduction in tax liability
Part III of the Second Schedule provides for reduction in net tax Liability.
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D.
Exemption from specific provisions
Part IV of the Second Schedule provides for exemption from specific provisions of the Ordinance.
Exemptions for Modarabas
The Modaraba enjoys special tax benefits, which are as follows: Income (except income from trading activity) of a Modaraba is exempt from tax provided that not less than ninety percent of the profits in the year as reduced by the amount transferred to a mandatory reserve are distributed among the Modaraba certificate holders. It is taxed at a reduced rate of 25% as compared to 35 % applicable to companies. Further, minimum tax is also not leviable on the Modarabas.
Depreciation and Amortization
Third Schedule to the Income Tax Ordinance, 2001 prescribes the rates of depreciation for various assets. It also provides for the following depreciation and amortization allowances: Initial depreciation Allowance @ 50%
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Amortization of pre-commencement expenditure @ 20%
Treaties for avoidance of double taxation
Pakistan has entered into treaties for avoidance of Double Taxation with different countries. These agreements are executed to avoid the fiscal loss of both countries. A brief about these treaties is provided as Annexure 3.
4.1.2 Capital Value Tax
The Capital Value Tax was introduced through the Finance Act, 1989. Initially this tax was also applicable to urban immovable properties and locally assembled/imported vehicles, but currently it is applicable to the following :ctivity
Rate of Tax
Purchase of shares through stock exchange:0.02%
Purchase of Air Tickets (Diplomats are Exempt):3.00% Purchase of New Vehicles 3.75% to 7.50%
The tax is paid along with the payment and is final discharge of liability.
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4.2 INDIRECT TAXES
The detail of indirect tax statutes is provided below:

4.2.1 Sales Tax
The VAT-mode Sale Tax has become a salient feature of the countrys tax policy. Sales Act 1990 forms the legal frame work for the operation and collection of sales tax. The Collectorate of Sales Tax a division of the Central Board of Revenue (CBR) is the regulatory authority in this regard. Sales tax is payable on monthly basis at the rate of 15, 17.5 & 20 % of the value of supplies net of the amount of input tax i.e. paid on purchases. The following persons are required to obtain the Sales tax registration: 1. A manufacturer whose annual turnover from taxable supplies made in any period during last twelve months ending any tax period exceeds five million rupees. 2. A service provider whose annual turnover from taxable services made in any period during last twelve months ending any tax period exceeds five million rupees. 3. A retailer whose value of supplies made in any period during last twelve months ending any tax period exceeds five million rupees. 4. An importer.
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5. A wholesaler including dealer and distributor. The Government promotes the sales tax registration and it is a must for doing business with most of Government departments, Corporations and large Companies. To solicit such business a manufacturer, service provider or retailer may obtain voluntary registration at the time of commencing the business even if his turnover does not fall within the limits prescribed for compulsory registration.
4.2.2 Custom Duty
The Customs Act, 1969 (the Act) was promulgated on 8th March 1969. The Act consolidated and amended the laws relating to the levy and collection of customs duties and other allied matters. The Act along with Custom Rules, 2001 provides the legal framework for customs duties which presently are levied on the following goods:

Goods imported into Pakistan; Goods exported from Pakistan; Goods which are brought from any foreign country and are transhipped or transported, without payment of duties, from one custom station to another; and Goods brought in bond from one customs station to another.
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The rates of duty vary from item to item and are provided in section 18 of the Act. In view of the post WTO scenario, the Government is revisiting its tax policy and reduction and elimination of duty is expected.
4.2.3 Excise Duty
The Federal Excise Act 2005 and Federal Excise Rules, 2005 provide the legal framework to address the issues related to Federal excise duty. The Federal Excise Duty is a federal charge and it is levied and collected on excisable goods and services of the following categories: 1. Goods which are produced or manufactured in Pakistan. 2. Goods which are imported into Pakistan. 3. Goods which are produced or manufactured in the non-tariff areas and are brought to the tariff areas. 4. Excisable services provided or rendered in Pakistan. The rates and basis of levying the duty vary from item to item and are provided in the first schedule of the Act. However, the Government now intends to gradually withdraw Federal excise duty from a number of items and restricts it only to five or six non-essential items.
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Source: http://www.google.co.in/url?sa=t&rct=j&q=&esrc=s&source=we b&cd=2&cad=rja&ved=0CDcQFjAB&url=http%3A%2F%2Fw ww.ijaztabussum.com%2FDOING%2520BUSINESS%2520IN% 2520PAKISTAN.doc&ei=hRW3UPXUFMXOrQf5rYGQBw&us g=AFQjCNGbWBZJougFemlRoeWb8IrsxKrkg&sig2=MIzqP19i2YBIrwLqwkVcEg
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FLOW DIAGRAM of How the Formation of any company takes place in Pakistan?
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PUBLICLY TRADED COMPANIES
This is a list of Public companies that are traded on Pakistani stock exchanges.
Automobile assembler
Adam Motors - Defunctioned Al-Ghazi Tractors Atlas Honda Dewan Farooque Motors (including BMW Pakistan) Dongfeng Motor Corporation Ghani Automobile Industries Ghandhara Industries Ghandhara Nissan Hinopak Motors Hyundai Motors Indus Motors Company Master Motors Millat Tractors Pak Suzuki Shaukat Agriculture Industry Sigma Motors TCM Automobiles
BANKS
Allied Bank of Pakistan Askari Commercial Bank Atlas Bank

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Bank Al-Falah Bank AL-Habib BankIslami Pakistan Limited Bank of Credit and Commerce International (BCCI) Bank of Khyber Bank of Punjab Barclays Bank Burj Bank Citigroup Dubai Islamic Bank First Women Bank Habib Bank Habib Metropolitan Bank Jahangir Siddiqui Bank Meezan Bank MCB Bank National Bank of Pakistan NIB Bank PICIC Commercial Bank/NIB Bank Sindh Bank Soneri Bank Summit Bank Standard & Chartered Bank State Bank of Pakistan United Bank Limited
CHEMICAL Colgate-Palmolive Pakistan

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ICI Pakistan Ittehad Chemicals
ENGINEERING CONSULTANTS
List of Construction Companies of Pakistan National Engineering Services Pakistan Siemens Pakistan Mindstorm Studios Zishan Engineers DESCON Engineering Zishan Engineers
FASHION
ChenOne Amir Adnan Deepak Perwani Kamiar Rokni HSY Junaid Jamshed Crossroads
FERTILIZER
Engro Corporation Fauji Fertilizer Company Limited Fatima Fertilizer Dawood Hercules
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ICI Pakistan
FOOD AND PERSONAL CARE PRODUCTS
LU Peek Freans Procter & Gamble Reckitt Benckiser Pakistan Unilever Pakistan Shezan International Pepsi Co Pakistan National Foods
HOTELS
Pearl-Continental Hotels & Resorts Sheraton Hotels Marriot Hotels Avari Hotels Ambassador Hotel
INSURANCE
MetLife ALICO Beema-Pakistan Company Century Insurance Company State Life Insurance Corporation of Pakistan EFU Life
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Adamjee Insurance Co. Ltd PICIC Insurance Jubilee Insurance
INVESTMENT BANKS AND STOCKBROKERS
Dawood Capital Management First Dawood Investment Bank Jahangir Siddiqui & Company Jahangir Siddiqui Capital Markets Jahangir Siddiqui Investment Bank
NEWS AND MEDIA
Geo TV Hum TV SAMAA TV AAJ TV ARY Digital Style 360 Dawn News Express News
OIL AND GAS EXPLORATION
BHP Billiton MOL Oil and Gas Development Company OMV

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Pakistan Oilfields Pakistan Petroleum Petronas Schlumberger Weatherford British Petroleum
OIL AND GAS MARKETING
Attock Petroleum Pakistan State Oil Shell Pakistan Sui Southern Gas Company Sui Northern Gas Pipelines Total
OIL REFINERIES
Pakistan Refinery Limited Pak-Arab Refinery Attock Refinery National Refinery Indus Oil Refinery Ltd (not yet operational) Khalifa Coastal Refinery (not yet operational) Trans Asia Refinery (not yet operational)
PHARMACEUTICALS
Abbott Laboratories
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Brookes Ferozsons Laboratories Getz Pharma GlaxoSmithKline Pakistan Pfizer Sanofi Aventis
GENERATION AND POWER DISTRIBUTION
Faisalabad Electric Supply Company Gujranwala Electric Power Company Hub Power Company Hyderabad Electric Supply Company Islamabad Electric Supply Company Karachi Electric Supply Corporation Kot Addu Power Company Lahore Electric Supply Company Multan Electric Power Company Peshawar Electric Power Company Quetta Electric Supply Company Tribal Electric Supply Company Water and Power Development Authority
SUGAR AND ALLIED INDUSTRIES
Baba Farid Sugar Mills Fecto Sugar Mills Madina Sugar Mills Ramzan Sugar Mills
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TELECOMMUNICATION AND IT AND TECHNOLOGY
Techlogix (Not traded on Pakistani stock exchanges) CyberNet Mindstorm Studios Mobilink (Not traded on Pakistani stock exchanges) Netsol Technologies Ovex Technologies Pakistan Telecommunication Company Palmchip Corporation Southern Networks Telenor Pakistan (Not traded on Pakistani stock exchanges) Nextech (Not traded on Pakistani stock exchanges) Transworld Warid Ufone Zong Wateen Worldcall Wi-Tribe
TEXTILE COMPOSITE
Ahmed Hassan Gul Ahmed Textile Mills Limited Hussain Industries
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TEXTILE PROCESSING
Chenab Group
TEXTILE SPINNING
Nishat Textile Mills JK Fibre Mills & Spinning Mills
TEXTILE WEAVING
Gul Ahmed
TOBACCO
Lakson Tobacco Company Pakistan Tobacco Company
TRANSPORT
Aero Asia International Airblue Air Indus Askari Aviation Pakistan International Airlines Pakistan National Shipping Corporation Pearl Air Shaheen Air International Star Air Aviation
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MAJOR PAKISTANI BUSINESS GROUPS AND ALLIANCES
Al-Karam Group of Companies Atlas Group Attock Group of Companies Bahria Town Cowasjee Group Chenab Group Dewan Mushtaq Group Fecto Group of Industries First Dawood Group Gul Ahmed Group Habib Group Hashoo Group Izhar Group Jahangir Siddiqui Group Lakson Group Muller & Phipps Pakistan Nagina Group Nishat Group Saigol Group Sharif Group Sources:http://en.wikipedia.org/wiki/List_of_companies_of_Pakistan
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EXPORT OPPORTUNITIES WHAT ARE THE MAIN EXPORT OPPORTUNITIES IN PAKISTAN?
Despite some negative perceptions among the international, including European, public, Pakistan has shown remarkable political and economic developments since the late 1990s when the country was on the verge of bankruptcy. With a rapidly growing population of about 150 million, Pakistan is a major country, recognised by the international community, and is one of the most important actors in the Islamic world. Based on its geographical location Pakistan has close political and economic relations with the Middle East, Central and South Asia. It is the main gateway to Central Asia and supplier to the Emirates. Economic integration with South Asia has been less effective in the past due to the strained relations with India on the Kashmir issue. However, recently notable steps have been taken by the South Asian Association for Regional Co-operation (SAARC), of which Pakistan is a member, to establish a South Asian Free Trade Area (SAFTA), including India. Politically, despite some reservations from the European Union about the last presidential and legislative elections, Pakistan has been moving towards democracy. Based on the experience of the last thirty years, it is hoped that the present administration and its successors will continue to pursue the sound economic reform policies initiated by President Musharraf. By the end of 2003, an agreement between President Musharraf and the main opposition Islamic Parties helped to resolve a serious impediment to the functioning of Parliament. It is hoped that soon the European Union as well as the Commonwealth of Nations will recognize Pakistan as a full-fledged democracy. The main consequence of these macro economic successes has been an increased liquidity in the country and the subsequent
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lowering of interest rates to a single digit for prime borrowers, from rates as high as 17% to 18% a few years ago. This has enabled higher profits for most businesses, followed by an exceptional boom on the stock market. Also, banks have aggressively marketed consumer finance to the emerging middle class, allowing for a consumption boom (more than a 7-month waiting list for certain car models) as well as a construction bonanza. The Central bank has carefully managed the incoming "hot money" so that inflation remains under control at less than 3% per annum.
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OVERVIEW OF THE ECONOMY AND FOREIGN TRADE
Pakistan's economy is still very dependent on agriculture. The sector contributes 25% to GNP but employs nearly 50% of the labour force. Industry contributes approximately 18% to GNP and services about 50%, of which wholesale and retail trade account for 15%, and transport and communication for 10%. As a result of the importance of the agricultural sector, climatic conditions and water resources have a significant impact on the yearly economic performance. Over the period 2000 to 2003, GNP growth has increased from an average of 3% per annum to nearly 5% in fiscal year 2003. The industry is concentrated in the Karachi area, as well as in Punjab, around Lahore, Sialkot and Faisalabad. Other cities such as Quetta, Multan, Hyderabad or Peshawar also present some industrial activity but cannot compete with the former as far as the quality of the business environment is concerned The size of the domestic market has been increasing at a high rate based on a growing middle class, presently estimated at 7 million, with a Purchasing Power Parity of USD 7000. The volume of foreign trade has been increasing since 1999; in 2003, total import value was USD 12 billion, approximately 1 billion higher than total exports. Imports are dominated by petroleum and derivatives as well as machinery and equipment. The largest export sector of Pakistan is the textile and apparel sector with nearly 70% of the total exports, the balance is made up of cereals (mainly rice), miscellaneous manufactured goods (mainly toys and sports goods), chemicals, food and fish products and scientific instruments.
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The European Union is the single largest trading partner of Pakistan and during fiscal year 2003, the share of Pakistani exports to the EU markets was in excess of 30% of Pakistan's total exports. The exports to the EU market this year grew by more than 22% over the previous year. Pakistan enjoys a reasonable trade surplus with the EU. Growth in exports to the EU was primarily due to the enhancement of 15% in the textile quota and therefore, an increased market access for Pakistani exports from January 2002. Chances for a substantial growth of intra-regional trade are high. In January 2004, the South Asia Free Trade Agreement has been signed, with the Free Trade Area expected to become effective in 2006. In a similar vein, bilateral trade between Pakistan and India is expected to gain momentum after tariff cuts were agreed on at the end of 2003.
FOREIGN INVESTMENT IN PAKISTAN
A number of large international companies have been operating successfully in the country for the last twenty years or more. However, no significant new entrants have come recently. The main multinationals in the country are in oil and gas exploration and production, electrical engineering, and the pharmaceutical, food, and chemical industries. European and American companies have not shown much interest in privatization to date. Most export credit agencies in EU Member States (with the exception of Hermes in Germany) do not cover Pakistan risk (October 2003), except on a case by case basis. Despite this, inward foreign direct investment (FDI) has increased significantly in the fiscal year 2010 to USD $30.09 billion, a large part being linked to privatization. Major investors
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in the country come from the UK, the Middle East and the US, each contributing 25% of FDI. China has traditionally had a strong presence in the country, mostly through infrastructure development and supply of low cost goods and equipment. China accepts differed payment risks through large suppliers' credit, up to ten year duration. It is certainly a country which has a long term strategy regarding its investments, and European Investors may have to compete with Chinese investments in Pakistan. The recent improvements in the economy and the business environment have been recognized by international rating agencies such as Moody's and Standard and Poor's (country risk upgrade at the end of 2003). Provided the positive trend is maintained, Pakistan presents numerous and significant opportunities for investments aiming both at using Pakistan as an export base and at tapping an emerging market with a rapidly growing middle class.
RECOMMENDATIONS FOR POTENTIAL INVESTORS
To limit the risks inherent in all business activities, medium sized investors from Europe are advised to:
select a reliable partner, with an obvious long term interest in a partnership, to help understand the local environment; target a sector where Pakistan has a specific advantage, and to plan for a long term investment; bring into the project a distinct and permanent advantage, such as a new technology, process, know how, brand, design or marketing ability; ascertain that at least 75% of the output is exported, gaining therefore sufficient foreign currency income to
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service the foreign investment, while the local market, still small, shall only become significant over time. It is worth noting that finance is not at present an area where Pakistani businessmen are looking for help or support from overseas partners. As discussed above, further to an improved macro economic situation, the country is liquid and many business groups are flushed with funds, eagerly looking for business opportunities and know-how.
HIGH POTENTIAL SECTORS FOR FOREIGN DIRECT INVESTMENT TEXTILES AND GARMENTS
In the textile and garment sector Pakistan has a definite competitive advantage, further enhanced by the disappearance of the Multi- Fiber Agreement by the end of 2004. Despite its successes and its recent spate of investment in state of the art machinery, the industry still needs know-how and processes to improve the quality of its products, as well as design, fashion and marketing development. This sector has been divided into the different stages of production, such as spinning, weaving, knitting and finishing, dyeing, etc. while the major groups usually cover all stages of the product cycle. Most products are cotton based with emphasis on the first stages of production like yarn, cloth and fabrics. Only recently has the country entered into the more added value production of garments. The particular emphasis on bed linen and towels is worth noting, given that it is the subject of an anti dumping review by the European Union. Based on the competitive advantages of this sector in Pakistan, and the liberalizing of international trade after the end of the Multi-Fibre Agreement by the end of 2004, there should be
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opportunities for a mutually beneficial co-operation between Pakistani business groups and European investors.
FOOD PROCESSING AND PACKAGING
Opportunities in the food processing and packaging industry (especially dairy products, fruits and vegetables, fish and sea food), based on a very large agricultural sector and a large and expanding fishing fleet, are primarily related to upgrading of the underdeveloped collecting, processing, packaging and distribution system. Obvious export markets are the Middle East, South and Central Asia as well as Europe and the USA if the present phyto-sanitary constraints can be resolved. The local emerging middle class should also provide an outlet for well processed and packaged food in the medium term. The impression from the authors is that investment in this sector should definitely be long-term, in view of the necessity to organise the supply chain as well as the distribution network in a rather primitive environment, be it in the fruit, vegetable, dairy or fishing sectors. Also, a major part of the sector depends on the packaging industry, including carton boxes, tin can, or freezing processes, which are still underdeveloped.
LIGHT ENGINEERING AND AUTOMOTIVE PARTS
The light engineering and automotive parts industry should also provide opportunities, as far as they are backed up by export markets. Based on an infant automobile industry still protected by high tariffs and dominated by Japanese assemblers, the existing automotive supply industry is in dire need of technology improvements. Similarly, there is a great demand for machinery and equipment linked to the textile and garment sector, such as industrial dryers, cooling fans, spinning needles, etc.
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Last but not least, the electrical and engineering sector linked to power generation and transmission is expected to face a strong and growing demand in coming years. However, this sector has been targeted only as a third priority sector mostly based on the competition which is already present from technology sourced from other Asian countries, such as Japan, Korea, Taiwan and more importantly China, which appears to be a main trading partner for Pakistan as well as a potential investor in this sector.
OTHER SECTORS
Other sectors have been identified as worthy of consideration by foreign investors, but are more limited in size. The following niche sectors have been identified:
SURGICAL INSTRUMENTS
This sector exports 95% of its production, mostly to the USA and the EU. It represents a turnover of about USD 150 million per annum and consists mostly of metal instruments. This industry is concentrated in Sialkot, north of Lahore, making it one of the significant clusters for such production worldwide. The technique is mostly based on forging and metal finishing for which cooperation with European firm with the proper know how might be required.
MARBLE PRODUCTION
Marble is used extensively by the domestic construction industry, and part of the production is exported, mostly to the Middle East. Mining and production sites are spread more or less over the North and East of the country. The production represents about USD 25 million per annum. The main drawback of this industry is the absence of sophisticated techniques: mining through
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explosives which do not allow the production of large slabs of marble and implies important wastage. The industry is definitely interested in acquiring know-how, as well as the proper slicing equipment to improve the quality of its products. The main drawback for a foreign investor would be to find the right partner in an industry which is made up of a number of small enterprises.
GEMS AND JEWELLERY
This sector, based on vast resources of rough semi precious stones is still in the infant stages. The official export of rough stones represents about USD 5 million per annum, while no stones are cut locally yet. The government is trying to develop a stone cutting industry and has created three training institutes.
IT (CALL CENTRES, SERVICE CENTRES, SOFTWARE DEVELOPMENT, ETC.)
It may be surprising that this sector has so far not been developed in Pakistan, especially when compared to its large neighbour India. At present there is no such industry in Pakistan, despite the opening of a few call centres by financial institutions or some overseas Pakistanis from the USA. Also, some incubators have projects in the animated video games sector. However, the government has recently launched initiatives to promote the industry, through the development of IT education and training. Source: http://www.iptu.co.uk/content/pakistan_export_opps.asp#1
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LIST OF TRADING PARTNERS OF PAKISTAN. The following is a list of Pakistan's main trading partners as of 2010.
Sources:- http://en.wikipedia.org/wiki/Foreign_trade_of_Pakistan
Pakistan Trade flows Pakistans exports are highly concentrated: currently the majority of exports originate in the textiles and apparels sectors. Early evidence indicates that Pakistan has so far been able to expand exports in the wake of the abolition of OECD countries quotas on textiles and apparel in 2005. Imports are more dispersed, as is typical in most countries although inputs for the textile and apparel sectors (machinery, fibers, dyes and chemicals, etc.) and petroleum products make up sizeable shares of total imports. The bulk of Pakistans trade is with countries outside of South Asia. This reflects in part Pakistans specialization in products that are also exported by its neighbors. This low level of trade also stems from a half-century of protectionist policies and
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political-military tensions in the region. Recent analysis commissioned by the World Bank indicates the potential for greater trade with India, notably in light manufactured products (e.g., bicycle components and fans). Commodity Composition of Trade, 2004 Principal Export Products Textiles (fabrics and yarns) $6.5 billion Apparel and clothing $3.0 billion Rice $682 million Principal Import Products Petroleum products Industrial machinery Organic chemicals Cotton and fibers Total Imports
$3.7 billion $1.3 billion $1.2 billion $800 million $17.9 billion
Sports goods $315 million Total exports $13.4 billion Source: UN Comtrade Direction of Trade, 2004 Principal Export Markets United States $3.1 billion United Arab Emirates $1.1 billion United Kingdom $969 million Germany $665 million Total Exports $13.4 billion
Principal Suppliers of Imports Saudi Arabia $2.1 billion United Arab Emirates $1.8 billion United States $1.7 billion China $1.5 billion Total Imports $17.9 billion
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Source: UN Comtrade A recent field survey conducted by the Sustainable Development Policy Institute estimated total informal trade between Pakistan and India at around $500 million per year (primarily imports from India via Dubai). Cloth, machinery (for textiles and pharmaceuticals), cosmetics and jewelry, and tires made up most of the goods imported. Trade Strategy Pakistan has made substantial progress over the past decade in constructing a more open and transparent trade policy regime.
The government has reduced tariff rates across the board. The simple average ad valorem tariff rate in the 2005/06 trade policy is just under 15 percent, compared to over 50 percent in 1995. . Quantitative restrictions, exchange controls, and other direct state interventions into trade have been largely eliminated; ordinary customs duties are now the primary trade policy Instrument . Many special regulatory orders that provided discretionary exemptions to firms or industries have been eliminated, thus leveling the playing field and making the trade regime less complex. . The complete tariff schedule and regulatory orders affecting trade are easily accessible from government
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websites (see http://www.cbr.gov.pk).
Pakistan has steadily extended the positive list which restricts the types of goods that may be legally imported from India. The list expanded from 40 items in 1983 to 687 items in 2004/5, and to 768 in 2006. The signing of the South Asia Free Trade Agreement (SAFTA) in January 2004 is an important step towards higher intra-regional trade in South Asia. The first phase of SAFTA tariff reductions is expected to come into effect from July 2006.
Pakistan's peers around the world have reduced their trade barriers to even lower levels, however, and more work remains to be done to remove the bias against exports that is implicit in the tariff structure. While India granted Pakistan the Most Favored Nation status in 1995/96, Pakistan has not yet reciprocated this move. Perhaps more importantly, Pakistan faces the challenge of increasing the productivityand thereby the export competitivenessof its firms and producers. Value chain analyses conducted by the World Bank identify a number of "behind the border" constraints to trade, including problems trade logistics, availability and cost of electricity, labor market rigidities, the food safety standards regime, and slow dutydrawback payments. To ensure that trade can contribute to Pakistans economic growth and poverty reduction, a concerted effort must be made to address these impediments to competitiveness.
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World Bank Operations on International Trade In recent years the World Bank has supported the Ministry of Commerce and other agencies in the Government of Pakistan with analysis on trade issues, including most recently the Pakistan Growth and Export Competitiveness Report, as well as studies on agricultural trade, a series of studies on Pakistan-India trade, plus policy notes on SAFTA, textile quotas, and tariff rationalization. The Pakistan Tax Administration Reform Project supports improvements in customs administration. Sources:-http://go.worldbank.org/E4GRINENAO Pakistan Economic Development In last few years there has been a steady rate of Pakistan economic development that has manifested itself in its impressive gross domestic product statistics. In financial year 2007 there was a real increase of 52 percent in amount allotted in Pakistani budget for development of national economy. This has been an important step as far as development of Pakistan economy is concerned as this move has sought to address underdevelopment of national economy that has spread at all levels especially in social sector. Economic development of Pakistan has always been among its major assets as far as garnering recognition from global financial circles is concerned. In decade of 60s Pakistans economy had
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progressed at a decent rate and it was regarded as being exemplary. Economic policies adopted by national government have helped economic development in Pakistan to a significant extent. In 1990s 2 percent of gross domestic product of Pakistan had been earmarked for economic progress. This had been doubled to 4 percent of Pakistans gross domestic product by 2003. In 1999 PKR 80 billion had been set aside for economic development of Pakistan and by 2007 this amount had gone up to PKR 520 billion. In fiscal 2008 this amount was PKR 549.7 billion. Poverty in rural areas has been an important area of Pakistani economics. From 2005 to 2008 $16.7 trillion has been spent in order to address various issues related to poverty. This money has played a vital role in overall economic development at Pakistan. Poverty has been reduced to 24 percent by 2006 from 35 percent at 2000-01. As per Human Development Index of 2007 Pakistan has been accorded status of a Medium Development Country. Infrastructural upgradation is an important area of Pakistan economic development. However, it has not been paid much attention by Pakistan national government. Over years a number of international financial organizations have played a major part in development of Pakistans economy such as International Monetary Fund, Asian Development Bank and World Bank. From 2006 to 2009 Asian Development Bank would be providing almost $6 billion for Pakistan economic development. World Bank is supposed to provide a loan for infrastructural development worth $6.5 billion in same period. Pakistan would
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also receive a yearly financial help from Japan worth $500 million. Pakistan's failure to explore and exploit its own oil and gas resources to its full capacity has led to them relying on imports to meet the growing energy demands in the country. By 2011, experts forecasts that Pakistan's oil imports will rise to US$13.221 billion from the US$10.089 billion in 2010. List of Pakistan's FTAs Pak-Afghanistan Trade Agreement Agreement on South Asian Free Trade Area Pak-Malaysia Trade Agreements Pak-China Trade Agreements Pak-Sri Lanka Free Trade Agreement Pak-Iran Preferential Trade Agreement Pak-Mauritius Preferential Trade Agreement
Pakistan's Import and Export Indicators and Statistics at a Glance (2010) Total value of exports: US$20.29 billion Primary exports - commodities: textiles (garments, bed linen, cotton cloth, yarn), circe, leather goods, sports goods, chemicals, manufactures, carpets and rugs Primary export partners: US (15.87 percent of total valor of exports), UAE (12.35 percent), Afghanistan (8.48 percent), UK (4.7 percent), China (4.44 percent). Total value of imports: US$32.71 billion
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Primary imports - commodities: petroleum, petroleum products, machinery, plastics, transportation equipment, edible oils, paper and paperboard, iron and steel, tea Primary import partners: China (15.35 percent of total imports), Saudi Arabia (10.54 percent), UAE (9.8 percent), US (4.81 percent), Kuwait (4.73 percent), Malaysia (4.43 percent), India (4.02 percent).
Sourcres:-(http://www.economywatch.com/economicdevelopment/pakistan.html)
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Challenge to Pakistans economic overcome: ADB
stability has been
ISLAMABAD: The immediate challenge to Pakistans economic stability has been overcome with the help of an International Monetary Fund (IMF) - backed stabilization programme, said a Fact Sheet of Asian Development Bank (ADB) issued here on Thursday. Stabilizing macroeconomic fundamentals in view of the recent weakening of some indicators, implementing a second generation of reforms, addressing the infrastructure deficit, and improving implementation of development projects are the key challenges to the Government going forward, the ADB added. It said that Pakistan is an important partner of the Asian Development Bank (ADB) in its pursuit of fighting poverty in Asia. The ADB Facts sheet said that over the years, Pakistan has undertaken important economic and governance reforms that resulted in steady economic growth, allowing it to boost spending on poverty reduction programs. Recently, however, it said that the global economic recession that followed a rapid increase in prices of food and other commodities worldwide, coupled with an array of domestic challenges, have impacted Pakistans economic outlook negatively. The immediate challenge to Pakistans economic stability has been overcome with the help of an International Monetary Fund (IMF)-backed stabilization programme, the ADB added.
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It added that Pakistans poverty reduction strategy is encompassed in the Poverty Reduction Strategy Paper (PRSP) and the Medium-Term Development Framework for 2005-2010. Highlighting the relationship with ADB, the Bank said that Pakistan has received about $ 19.8 billion in loans since joining ADB in 1966, with about $14 billion disbursed as of the end of 2008. A total of 284 loans were provided through the highly concessional Asian Development Fund window and the Ordinary Capital Resources window with $ 188 million provided in grants for 325 technical assistance (TA) projects, the Bank Facts sheet said. It said that a record lending programme in 2008 included a $1.87 billion disbursement and $1.2 billion in newly approved assistance. As of December 2008, there were 62 ongoing sovereign loans amounting to $5.08 billion in net loan amount for infrastructure, social sectors, governance, and earthquake rehabilitation in the four provinces and at the national level. Under implementation were 31 ongoing TA projects worth $61.93 million, the Bank said. The ADB is working with the Government and the private sector to improve the countrys infrastructure, energy security, and basic public services. Aligned with national development objectives, ADBs partnership priorities aim to attract investment, create industries and jobs, and improve the quality of life of citizens.
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A new Country Partnership Strategy (CPS) for Pakistan, approved by ADBs Board of Directors in March 2009, aims to support Pakistans strategic objectives of prosperity and poverty reduction, it added. About Portfolio Performance, it said that in 2008, ADBs operations in Pakistan remained robust with record disbursements of $1.87 billion, and a majority of currently active loans are expected to meet their respective development objectives. Regarding the Impact of Assistance, it said that the ADBs support to Pakistan in recent years has helped the Government implement its reform agenda, while contributing to macroeconomic stability and revived economic growth, as well as reduced poverty levels. This support, it said was premised on the three cornerstones of ADBs strategy: sustainable economic growth, inclusive social delivery, and pro-poor governance policies. The Banks Fact Sheet said that to support sustainable growth, ADB is providing substantial levels of assistance to bridge the infrastructure gap in the country, particularly in the areas of transport and energy. In this regard, it added that a multitranche financing facility (MFF) to support the Governments flagship National Trade Corridor Highway Investment Programme is helping Pakistan improve key sections of the motorway and expressway and cope with the infrastructure deficit in this vital sector. Likewise, a facility to strengthen the power transmission network is helping to improve the efficiency of the system and will lead to
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reduced lines losses and improve availability of electricity, it added. To help support social development, ADB provided assistance to improve delivery of social services at the local government levels through a series of devolved social service programs. Support for governance reforms was centred at the provincial levels of government to improve fiscal and financial management and was instrumentalized through resource management programs. To help bring justice to the poor, the Access to Justice Program, closed in 2008 was designed to achieve greater civil society engagement for improved justice delivery, strengthened public oversight of the police, and the establishment of specialized and independent prosecution services. Responding to the earthquake of October,8 2005, ADB is implementing the Earthquake Emergency Assistance Project (EEAP). The project supports Governments efforts to rehabilitate earthquake-hit areas. The ADB has committed about $870 million in the form of loans and grants and arranged another $97 million in bilateral grant cofinancing for the ADB-funded Pakistan Earthquake Fund. Under EEAP, 71 % of the targeted destroyed houses have been reconstructed, ensuring peoples access to shelters. In addition, uninterrupted power supply stand to be restored in affected areas through rehabilitation of 9 hydropower stations and 10 grid stations.
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In addition, ADB placed strong emphasis on strengthening social safeguards in Pakistan by providing technical guidance and improved monitoring and resettlement actions, which together significantly improved safeguard compliance and accelerated physical progress of ADB-assisted projects in the country. Other major projects/programs approved in 2008, it said were included: Accelerating Economic Transformation Programme $500 million), Sindh Rural Growth and Revitalization Program ($100 million),Sindh Cities Improvement Program ($38 million; MFF: $300 million),Second ssBaiochistan Resource Management Program ($100 million), Punjab Millennium Development Goals Program ($100 million), Power Distribution Facility ($252 million; MFF: $810 million), Barani Integrated Water Resource Project ($75 million) and Technical assistance loan for the Lahore Rapid Mass Transit System ($6 million). About Future Directions, it said that ADBs CPS projects have planned assistance of $4.4 billion during 2009-2011 and an annual average lending of almost $1.5 billion. The focal areas delineated in the CPS 2009-2013 focuses on reforms and investment in energy and infrastructure. The CPS provides the framework for ADBs partnership priorities and the future direction of its assistance strategy in Pakistan, it added. Sources:- http://archives.dawn.com/archives/17094
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REVIEW ON PAKISTAN EXPORTS JULY-JUNE ( 2008-09 )

Pakistans exports during July-June 2008-09 were US$ 17.688 billion as compared to US$ 19.052 billion in 2007-08 and US$ 16.976 billion in 2006-07 reflecting a decrease of (7.16%), (12.2%) and (3.19%) respectively.
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SECTOR WISE EXPORTS ARE AS FOLLOWS: A) TEXTILE & GARMENTS CATEGORIES: Textile & Garments Sector contributed 54.16% in Pak-exports and declined at US$ 9.579 billion in 2008-09 from US$10.670 billion worth exports in 2007-08 registering a decrease of (10.22%). Major categories that increased over the previous year were Towels, Knitwear (Hosiery) and other Textile Material etc. A decrease was witnessed in Textile items such as Cotton fabrics, Textile made-ups, Cotton yarn, Garments, Ready made garments and Synthetic textile. PRODUCT WISE ANALYSIS: I Cotton Fabrics. Export of Cotton Fabrics declined at US$ 1.955 Billion from US$ 2.011 billion in the year 2008-09 as compared with 2007-08 showing a decrease of ( -2.75% ) and quantity showed also decrease to 1882 million SQM from 2035 million SQM. Major buyers of the product were Bangladesh, China, UAE, Russian federation, Egypt and Mexico. II Textile Made-ups including Towels. a) Bedware fetched US$ 480.138 million in 2008-09 as against exports of US$ 537.868 million in 2007-08, showing a decrease of ( -10.60% ). Major buyers of the product were UAE, Canada, Saudi Arabia, Chile, Malaysia and Sri Lanka.
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b) Towels exports increased at US$ 643 million in the year 2008-09 as compared with 2007-08 exports of US$ 613 million which recorded an increase by (4.86%). The quantity of the product increased to 165.638 million kg from 152.323 million kg. Major buyers of the product were USA, UAE, Saudi Arabia, South Africa, Netherlands and Belgium. III Cotton Yarn.
During 2008-09 exports decreased by (-14.31%) of US$ 112 million as against exports of US$ 131 million in 2007-08. Quantity decreased by (-5.59%) from 554.817 million kg to 523.790 million kg, however AUP came down (-9.96%). China remained number one among the major buyers of the product, while Bangladesh obtained number two position followed by Egypt, Philippines and Australia respectively. IV Garments. Export of garments decreased by (-23.26%) during the year 2008-09 and detail analysis of Knitwear and Readymade garments is given as follows:a) Knitwear ( Hosiery ) witnessed increasing trend touching US$ 1741 million in the review period 2008-09 as compared to US$ 1732 million last year. Upward trend was also seen in exports to United Kingdom, Belgium, UAE, Saudi Arabia and Sweden, while decreasing trend was seen in the market of USA, Germany, Netherlands, Spain and Canada.
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b) Ready made garments there was a decrease of US$ 362 million (-22.76%) over the previous year. During the period under review exports came down to US$ 408 million from US$ 1442 million. However, it showed increased trend in the exports to Belgium, Turkey, Saudi Arabia, Sweden and Denmark. Major decreases were witnessed in the markets of USA, Germany, UK, Spain and France. V Synthetic textiles. There was a decrease of US$ 139 million i.e. (-32.23%) over the previous year. During the period under review exports came down to US$ 278 million from US$ 410 million. Quantity is also decreased by (-18.77%) from 442.5 million SQM of the previous year to 359.4 million SQM. AUP was US$ 0.89 per SQM while it was US$ 0.93 per SQM in 2007-08, thus showed a decrease (4.14%). Moreover, Mexico, Malaysia, Indonesia, Srilanka and Kuwait were higher export markets. On the contrary, minor decline in UAE, USA, South Africa, Saudi Arabia and UK were observed. B) OTHER CORE CATEGORIES. This head Contributed (25.60%) in Pak-Exports and came down to US$ 4.528 billion from US$ 5.177 billion showing a decrease of (-12.20%) over the last year. The items witnessed increased trend in Rice, Leather & leather products, leather manufactures and leather footwear. However, decreased trend appeared in the products of Leather garments (excluding gloves), Leather gloves and Surgical Instruments and Sport goods. Therefore, it further shown high trend in the Molasses item.
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I Rice. This Commodity witnessed an increasing trend by US$ 1983 million from US$ 1836 million showing an increase of 8.02%. Quantity felt down by (-8.87%). In terms of Quantity total export of Rice which was 2809 thousand/MT in 2007-08 and in 2008-09 came down to 2560 thousand MT. However, AUP, which was US$ 653.60/MT in 2007-08, went up to US$ 776.06/MT in 200809.
a) Rice Basmati Contributed US$ 1070 .338 million in total export of Rice, export of basmati was US$ 1068.86 million in 2007-08. Quantity exported 868577 MT in 2008-09 as against 1138093 MT in 2007-08. AUP sowed increase by 26.86% per MT from US$ 939.17 per MT to US$ 1191.41 per MT. b) Rice Non-Basmatis share is US$ 912.89 million in 2008-09 from US$ 767.200 million of 2007-08. AUP increased by 22.58% and quantity went up to 169.535 MT from 167.055 MT showing an increase of 1.23%. The buyer of the Rice and Rice others was Iran obtained number one followed by Afghanistan, Saudi Arabia, Qatar, Kenya and Mozambique. II Leather and leather products. Showed decrease of (-22.65%) exports of leather and leather products which came down to US$ 943.788 million from US$ 1220.119 million. Leather tanned contributed 2.18%, Leather
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garments/manufactured 2.77% and leather footwear 0.65% in the group of leather & leather products. a) Leather showed a decrease of (-27.88%). The export of Leather fetched US$ 299 million as against US$ 415 million in previous year. Quantity also decreased by (-21.57%) from 24,258 thousand SQM to 19, 026 thousand SQM. Major buyers of the product were Bangladesh, Indonesia, Sri Lanka, Thailand and UAE. b) Leather garments ( Excluding gloves ) registered decrease of (-25.68%) to US$ 392.537 million from US$ 528.154 million. The major buyers of this product were Germany, USA, Spain, France, Turkey and Brazil. a. Leather gloves a downward trend of (-5.53%) from US$161.168 million to US$ 152.258 million. The major buyers of the product were Belgium, Saudi Arabia, UAE, Norway and Poland.The product market of USA, Germany and Sweden and France registered decrease during 2008-09. c) Leather Manufacture registered increase of 17.66% fromUS$ 10.177 million 2007-08 to US$ 11.974 million 2008-09. The major buyers of the product were USA, Germany, UK, Netherlands, France and South Africa. d) Leather footwear, obtained increase by 3.54% from US$ 124.135 million of the previous year to US$ 128.531 million.
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The major markets of the product were UAE, Germany, Italy, Afghanistan, Oman and South Africa. III Carpet. Exports during 2008-09 were US$ 145.77 million as Compared to US$ 216.620 million of the previous year, showing a decrease of (-32.71%). Major Buyers of the product were Afghanistan, Thailand, Mexico and China while USA, Germany, Italy, Turkey, France & UK remained on decreasing side during 200809. Pertinently, only ten Countries were buyers in the export arena of Carpet from Pakistan in the year 2008-09. IV Petroleum & its Products. Decreased (35.41%) in value and (4.57%) in term of AUP. Value from US$ 1259.33 million to US$ 813.458 million and AUP from US$ 804.85 MT to 768.05 MT. However, Quantity wise is also decrease from 592,758 MT to 583,827 MT. The major buyers of the products were also six Countries i.e. India, Korea, Netherlands, Singapore, Kenya and South Africa. V Surgical Instruments. The exports which were US$ 261.072 million in 2007-08 came down to US$ 253.554 million in 2008-09 showed a decrease of (-2.88%). Although exports to USA, Australia, India, Korea, China & Turkey increased. The top buyer of this product was USA. VI Sport Goods. Exports from US$ 302.723 million in 2007-08 declined to US$ 273.318 million in 2008-09, showed a decrease of (-9.71%) while export increase took place in USA, Belgium, Italy, UAE and
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Turkey. Offset by markets of Germany, UK, Spain, Netherlands and Denmark, where declining trend is appeared.
C)
DEVELOPMENTAL AND OTHER CATEGORIES.
This head Contributed 15.51%) in Pak-Exports and went-up to US$ 2.743 billion in 2008-09 from US$ 2.365 billion showing an increase of (16.01%) over the last year 2007-08. Major categories that increased over the previous year were fish & fish preparations, fruits & vegetables, engineering goods, jewellery, marble stones and onyx manufactures, cement and oil seeds. A decrease was witnessed in same developmental categories such as chemical and its products, cutlery, gems (Precious Stones) and furniture. I Fish & Fish Preparation. In terms of Quantity and value exports increased by (1.58%) and (10.41%) respectively and AUP is also increased from US$ 1.60/Kg to US$ 1.76/Kg. Exports of fish and fish preparation came-up to US$ 234 million 2008-09 from US$ 213 million 2007-08. Major buyers were Thailand, China, Malaysia, Saudi Arabia, Korea and Egypt. Decline was noticed in buyer Countries i.e. UAE, Kuwait, Japan, Sri Lanka and Hong Kong. II Fruits. Exports were US$ 157 million during the period under review, compared to US$ 146 million in the previous Corresponding period showing an increase of 7.84%. The major buyers of the fruits were India, Afghanistan, Russia, Germany and USA.
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III Vegetables ( Excl: Leguminous ). Exports were US$ 72.92 million during 2008-09 as against US$ 56.39 million of the year 2007-08 showed an increase by 29.31%. The major buyers of the Vegetables were Afghanistan, Malaysia, Saudi Arabia, Qatar and Canada. IV Chemical and its Products. The exports which were US$ 619 million in 2007-08 and decreased to US$ 604 million in 2008-09 showing a decrease of (2.40%). However, exports of Pharmaceutical Products rose to US$ 116.286 million from US$ 110.531 million. Italy, Afghanistan, Philippines, China, USA and Sri Lanka are the major buyers of the Product and among these major buyers decreases are recorded in the markets of Netherlands, UAE, Turkey, Korea and France. V Engineering goods (Machinery & Transport equipment ). There was an increase of (25.35%) and exports came-up to US$ 264.898 million from US$ 211.329 million. Imports in the markets like Afghanistan, Djibouti, Bangladesh, Sudan and Iran were higher over last year. However there was a major decline in UAE, Saudi Arabia, USA and UK. VI Cutlery. Export of this item is US$ 48.681 million during 2008-09 compared to the US$ 54.856 million in the previous year showing a decrease of (11.26%).
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The major buyers of cutlery were France, Italy, Saudi Arabia, China and Netherlands. VII Gems & Jewellery. a) Precious & Semi Precious Stones (Gems ) decreased by (-54.84%) during 2008-09 and export was US$ 3.386 million from US$ 7.497 million (2007-08). The major markets of Gems were Canada, Japan, Russian federation, Belgium and Iran while declined trend was witnessed in USA, Hong Kong, Germany, UAE and Thailand. b) Jewellery, increased by 33.90%. Export came up to US$ 285.684 million in 2008-09 from US$ 213.364
million 2007-08.
The exports of jewellery major buyers were UAE, UK, Afghanistan, Turkey France, Netherlands and India. VIII Marble & Stones / Onyx Manufactures. Exports increased by 46.35% from US$ 22.119 million 2007-08 to US$ 32.371 million (2008-09). However the major buyers of the products were China, Russian federation, Ukraine, UAE, Saudi Arabia, Malaysia and Germany. IX Cement. There was an increase of 39.21%. Export grew up from US$ 416.977 million during 2007-08 to US$ 580.479 million in 200809. Major buyers of the product were Afghanistan, Qatar, Oman, Iraq, Djibouti and Sri Lanka.
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X Oil Seeds. The Exports were US$ 39.379 million in 2007-08, came up to US$ 41.746 million in 2008-09, showing an increase of 6.01%. Increase took place in exports to Korea, Turkey, Iran, China, India, UAE, Singapore, Netherlands and Saudi Arabia. XI Furniture. The Exports were US$ 11.035 million in 2007-08 came down to US$ 8.455 million in 2008-09, showing a decrease of (-23.38%). The main buyers of the product were Afghanistan, Italy, Germany, Netherlands, Poland, Australia and Denmark.
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Geographical Analysis
JULY-JUNE ( 2008-09 )
Pakistans exports during July-June 2008-09 as compared to the
corresponding period of the last year decreased by (-7.16 %) to Middle East Region, (-9.60%), to Eastern European Region (14.78 %), to African Region, grew by (+5.55%), Asian Region, increased by 5.28% Oceania region and Western European Region decreased by (-9.47%) and (-14.49%) respectively. Decrease is recorded in exports to American region by (10.63%). 1) American Region. This region accounted for US$ 3,941.128 million showing a decrease of (-10.63%) over the last years exports. North America: Accounted for US$ 3,587.674 million, which is less by (-10.07 %) over last year. Decrease in exports took place in the countries of North America (-10.07%). Exports to Central America decreased by (-15.49%) US$ 109.160 million in 200809. South America: Shown decrease in exports by (-16.18 %) in this region over the previous year, the value, which was US$ 244.294 million during 2008-09 whereas the exports in 2007-08 were US$ 291.464 million. 2) Western Europe. The exports to this region were US$ 4299.722 million. 16 EU Countries accounted for (-14.53 %) at US$ 4234.844 million and showed a decrease of (-14-.49%) as well over previous years
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exports. In terms of value exports decreased to US$ 4234.844 million from US$ 4954.684 million. Major contributing countries are UK US$ 874 million, Germany US$ 738 million, Italy US$ 580 million, Netherlands US$ 465 million, Spain US$ 404 million, Belgium US$ 393 million and France US$ 313 million. EFTA decreased to US$ 63 million from US$ 72 million, showed a decrease of (-12.50%), whereas Norway and Switzerland were remained major buyers among the EFTA Countries. 3 ) Eastern Europe. Export in this region accounted for US$ 324.401 million which declined at (-14.78%) over the corresponding period of last year. Russian federation, Poland, Ukraine, Lithuania, Estonia, Hungary and CZECH Republic were major contributing markets to US$ 105.5 million, US$ 45.09 million, US$ 32.43 million, US$ 23.89 million, US$ 19.80 million, US$ 15.48 million and US$ 16.19 million respectively. 4 ) Middle East Region. In this region Exports accounted for US$ 3491.468 million. UAE exports was US$ 1469.990 million in 2008-09 and US$ 2070.953 million was in 2007-08 which decreased at (29.02%). Exports to Iraq came up to US$ 71.75 million from US$ 23.95 million which recorded increase up to 199.59% in 2008-09. Saudi Arabia, Turkey, Iran, Oman, Qatar and Kuwait were the major markets contributed US$ 455.634 million, US$ 403.198 million, US$ 399.619 million, US$ 187.545 million, US$ 172.112 million and US$ 104.220 million respectively.
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5 ) African Region. Exports in this region were US$ 1197.247 million in 2008-09 and gained 5.55% over the corresponding period of last year. In the African Region, South Africa contributed US$ 193.742 million from US$ 318.461 showing decrease of (39.16%) followed by Kenya US$ 119.939 million, Egypt US$ 101.685 million, Sudan US$ 60.596 million, Mozambique US$ 60.104 million, Benin US$ 58.328 million, Co, TE DIvoire US$ 55.837 and Somalia US$ 50.737 million respectively. 6 ) Asian Region. Exports in this region accounted for US$ 4272.615 million in 2008-09 which showed increase of 5.28% over the last year. Afghanistan contributed US$ 1397.518 million, China US$ 701.043 million, Bangladesh US$ 383.373 million, Hong Kong US$ 378.658 million, India US$ 319.619 million and Malaysia US$ 124.378 million respectively. 7 ) Oceania Region. In this region the exports were US$ 161.426 million in 2008-09 and shown decrease of (-9.47%) over the previous year. Austria and New Zealand are major buyers of the region which contributed US$ 128.926 million and US$ 29.640 million during 2008-09 respectively.
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Top 20 Countries who exports and their figures.

The top 20 countries / major buyers export accounted for US$ 13,645 million and grew by +8.44%. Exports to 6 of these countries increased in Afghanistan (+22.20%), China (+2.37%), Saudi Arabia (+19.88%), Iran (+86.91%), Bangladesh (+12.11%), India (+25.41%) and Korea Republic of (+22.77%) whereas decline trend was noticed in USA (-10.21%), UK (-15.09%) and UAE (-29.02%) respectively. Top 5 Countries Analysis. 1 U.S. America. Exports have decreased by US$ (-379.907 million) or (10.21%) in the year 2008-09. However, USA, contributed US$ 3339.453 million during 2008-09, whereas it was increased by +19.52% in 2007-08. Decline was recorded in Knitwear (US$ 1069 million), Bed ware (US$ 625 million), Readymade garments (US$ 404 million), Textile made up (US$ 302 million), Cotton cloth (US$ 97 million), Wool Carpet & Rugs (US$ 51 million ), Leather gloves (US$ 32 million), Cotton yarn (US$ 28 million), Rice Basmati (US$ 19 million), Art Silk & Synthetic textile (US$ 17 million), Foot balls complete (US$ 14 million), Cutlery (US$ 12 million), Guar and Guar products (US$ 7 million) and Jewellery (US$ 7 million). 2 -- United Arab Emirates. Exports have decreased by US$ 600.963 million or -29.02% in 2008-09 and fetched total exports US$ 1469.990 million compared US$ 2070.953 million of 2007-08. Main decline was recorded in Petroleum Products (US$ 234.488
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million), Rice Basmati (US$ 215.408 million), Ready made garments (US$ 39 million), Art Silk & Synthetic Textile (US$ 32 million), Fruits (US$ 16 million), Plastic material (US$ 9 million) and Vegetables (US$ 6 million). 4 Afghanistan.
During 2008-09, the total exports to Afghanistan were US$ 1397.518 million showed an increase by 22.20%. Exports increased in the items like Rice other varieties (US$ 142.686 million), Rice Basmati (US$ 82.25 million), Article of Plastic (US$ 46.78 million), Vegetables (US$39.76), Wheat (US$ 39.41 million), Fruits (US$ 27.64 million), other Chemicals (US$ 25.12 million), Pharmaceutical Products (US$ 18.44 million). However, significant decreases appeared in exports of Petroleum Products (US$ 363.7 million), Household equipments (US$ 8.43 million), Fruits & Vegetables (US$ 8.32 million), Electric fans (US$ 2.640 million) and Paper & Products (US$ 1.01 million). 5 United Kingdom.
During the year 2008-09 the exports to UK came down by (-15.09%) worth US$ 874.588 million compared to US$ 1030.028 million (+5.41%) over the previous year. Exports decreased in the items like Bedware (US$ 185.502 million), Ready made garments (US$ 136.027 million), Textile made ups (US$ 53.01 million), Cotton Cloth (US$ 46.064 million), Rice Basmati (US$ 35.868 million), Towels (US$ 32.88 million), Apparel and Clothing (US$ 32.73 million), Surgical goods (US$ 27.07 million), Art Silk & Synthetic Textile (US$ 12.088 million) and fruits (US$ 10.76 million).
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Germany.
Germany contributed US$ 737.988 million exports with decrease of (-9.63%) during 2008-09 compared with last year US$ 816.615 million (+4.29%). Declining trend in exports was recorded in Ready made garments (US$ 174.50 million), Bedware (US$ 114.103 million), Cotton Cloth (US$ 72.96 million), Knitwear (US$ 72.22 million), Surgical goods (US$ 36.60 million), Towels (US$ 23.74 million), Foot balls complete (US$ 18.21 million), Leather gloves (US$ 16.23 million), Textile made ups (US$ 15.60 million), Wool Carpets & Rugs (US$ 15.135 million), Leather (US$ 12.79 million) Leather footwear (US$ 11.05 million) and Rice Basmati (US$ 9.39 million). However, increase was seen in Apparel and Clothing (US$ 59.883 million), Gloves Sports (US$ 9.03 million), Fruits (US$ 7.56 million), Crude animal material (US$ 6.55 million), Other leather manufacture (US$ 2.535 million) and other machinery (US$ 2.015 million). Sources:- http://www.tdap.gov.pk/tdap-statistics.php
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GRAPHS AN`D CHARTS
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REFRENCES
Websites. http://www.tdap.gov.pk/tdap-statistics.php http://www.economywatch.com/economicdevelopment/pakistan.html http://www.cbr.gov.pk http://go.worldbank.org/E4GRINENAO www.wikipedia.org
Magazine:Business World.
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Overview of Business & Trade in Pakistan Pakistan History about the business.

OVERVIEW OF BUSINESS& TRADE IN PAKISTAN

1) Pakistans merchandise trade*

Imports have been continuosly outstripping exports. Source:- World Bank

OVERVIEW OF BUSINESS& TRADE IN PAKISTAN

1. ISLAMIC REPUBLIC OF PAKISTAN

International time of Pakistan is GMT + 5.

OVERVIEW OF BUSINESS& TRADE IN PAKISTAN

S. No. 1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. 12.

OVERVIEW OF BUSINESS& TRADE IN PAKISTAN

1.9.2.Pakistan and The Non-Aligned Movement (N.A.M.)

OVERVIEW OF BUSINESS& TRADE IN PAKISTAN

1.9.3.Pakistan and The Organization (ECO)

OVERVIEW OF BUSINESS& TRADE IN PAKISTAN

b. Strong human resources

English speaking work force Cost-effective managers and technical workers

c. Large and growing domestic market

d. Well-established infrastructure and legal system

Comprehensive road, rail and sea links

OVERVIEW OF BUSINESS& TRADE IN PAKISTAN

e. Strategic location as a regional hub

Principal gateway Republics

b. Reduction in tax rates

OVERVIEW OF BUSINESS& TRADE IN PAKISTAN

Leasing Companies Investment Banks Modarabas Venture Capital Companies

2.6.1 Labour Policy

OVERVIEW OF BUSINESS& TRADE IN PAKISTAN

2.6.2 Child Labour

million by the Federal Government,

OVERVIEW OF BUSINESS& TRADE IN PAKISTAN

2.6.6 Companies Profit (Workers Participation) Act, 1968

b. Subject to adjustments, if any, pay every year to

c. Furnish to the Federal government and the Board,

OVERVIEW OF BUSINESS& TRADE IN PAKISTAN

The fund is distributed among workers of prescribed categories.

OVERVIEW OF BUSINESS& TRADE IN PAKISTAN

2.6.8 List of other important labour laws Name of law Applications

Factories Act, 1934

Payment of Wages Act, 1936

Minimum Wages Ordinance, 1961

Canteen Rules, 1959

OVERVIEW OF BUSINESS& TRADE IN PAKISTAN

Hazardous Occupations Rules, 1978

Employment of Children Act, 1991 Maternity Benefit Ordinance, 1959

Shops & Commercial Establishments Ordinance, 1969

Road Transport Workers Ordinance, 1961

OVERVIEW OF BUSINESS& TRADE IN PAKISTAN

BUSINESS VISA AND WORK PERMIT

2.7.1 Business Visa for Citizens of Countries in A list

OVERVIEW OF BUSINESS& TRADE IN PAKISTAN

OVERVIEW OF BUSINESS& TRADE IN PAKISTAN

2.7.2 Visa on Arrival Businessmen

OVERVIEW OF BUSINESS& TRADE IN PAKISTAN

2.7.3 Work Visa Procedures

SETTING UP A BUSINESS IN PAKISTAN 3.1 LICENCE REQUIREMENTS 3.1.1 Specialised businesses

OVERVIEW OF BUSINESS& TRADE IN PAKISTAN

OVERVIEW OF BUSINESS& TRADE IN PAKISTAN

OVERVIEW OF BUSINESS& TRADE IN PAKISTAN

c. Prohibits any invitation to the public to subscribe

Annual listing fee is payable as following:

15,000 30,000 60,000 15,000 30,000 35,000

OVERVIEW OF BUSINESS& TRADE IN PAKISTAN