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OVERVIEW OF BUSINESS& TRADE IN PAKISTAN 1
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(Pakistani’s Richest man with a
net worth of $1 billion)‖, Founder and Chairman of Nishat
Group(one of the Pakistan‘s 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
OVERVIEW OF BUSINESS& TRADE IN PAKISTAN 2
conglomerate with interests in banking, textile, Cement, aviation
and energy.
Today, The group‘s 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 Inc‘s 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
Pakistan‘s unique genetic makeup.
Since 1947, upheavals witnessed by Pakistan‘s 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 Pakistan‘s 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 country‘s 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 1950‘s.Astonishingly,
by 1969,Pakistan was exporting more manufactured goods than
Thailand, Malaysia and Indonesia put together.
But by 1972, Khan‘s 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
OVERVIEW OF BUSINESS& TRADE IN PAKISTAN 3
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, Pakistan‘s 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 Pakistan‘s
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 Pakistan‘s 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
OVERVIEW OF BUSINESS& TRADE IN PAKISTAN 4
1) Pakistan’s 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
OVERVIEW OF BUSINESS& TRADE IN PAKISTAN 5
1. ISLAMIC REPUBLIC OF PAKISTAN
1.1. LOCATION
Home to one of the world‘s 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 Pakistan‘s
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 Country‘s 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,
OVERVIEW OF BUSINESS& TRADE IN PAKISTAN 6
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.
OVERVIEW OF BUSINESS& TRADE IN PAKISTAN 7
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.
Pakistan‘s 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
OVERVIEW OF BUSINESS& TRADE IN PAKISTAN 8
responsible for ensuring that the Country‘s 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 2006-
2007, 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 Pakistan‘s
main crops while main industries of the Country are
textiles, telecommunications, cement, power,
OVERVIEW OF BUSINESS& TRADE IN PAKISTAN 9
commercial & investment banking, oil & gas, agro-
based produce, sports goods, surgical goods, leather
and leather goods, and cutlery.
Karachi, Lahore, Islamabad, Rawalpindi, Faisalabad,
Hyderabad, Gujranwala and Sialkot are the Country‘s
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.
Name of Country
Signing Date
S. No.
Name of Country
Signing Date
1. Germany 25.11.1959 24. Indonesia 08.03.1996
2. Sweden 12.03.1981 25. Tunisia 18.04.1996
3. Kuwait 17.03.1983 26. Syria 25.04.1996
4. France 01.06.1983 27. Belarus 22.01.1997
5. South Korea 25.05.1988 28. Mauritius 03.04.1997
6. Netherlands 04.10.1988 29. Italy 19.07.1997
7. Uzbekistan 13.08.1992 30. Oman 09.11.1997
8. China 12.02.1989 31. Sri Lanka 20.12.1997
9. Singapore 08.03.1995 32. Australia 07.02.1998
10. Tajikistan 13.05.2004 33. Japan 10.03.1998
11. Spain 15.09.1994 34. Belgium 23.04.1998
12. Turkmenistan 26.10.1994 35. Qatar 06.04.1999
OVERVIEW OF BUSINESS& TRADE IN PAKISTAN 10
13. United Kingdom
30.11.1994 36. Philippines 11.05.1999
14. Turkey 15.03.1995 37. Yemen 11.05.1999
15. Portugal 17.04.1995 38. Egypt 16.04.2000
16. Romania 10.07.1995 39. OPEC Fund 24.10.2000
17. Malaysia 07.07.1995 40. Lebanon 09.01.2001
18. Switzerland 11.07.1995 41. Denmark 18.7.1996
19. Kyrgyz Republic
23.08.1995 42. Morocco 16.04.2001
20. Azerbaijan 09.10.1995 43. Bosnia and Herzegovina
04.09.2001
21. Bangladesh 24.10.1995 44. Kazakhstan 08.12.2003
22. U.A.E. 05.11.1995 45. Loas 23.04.2004
23. Iran 08.11.1995 46. Cambodia 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.
OVERVIEW OF BUSINESS& TRADE IN PAKISTAN 11
1.9.3. Pakistan and The Economic Co-operation
Organization (ECO)
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
OVERVIEW OF BUSINESS& TRADE IN PAKISTAN 12
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".
OVERVIEW OF BUSINESS& TRADE IN PAKISTAN 13
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 to
sophisticated consumption habits
d. Well-established infrastructure and legal system
Comprehensive road, rail and sea links
OVERVIEW OF BUSINESS& TRADE IN PAKISTAN 14
Good quality telecommunications and IT
services
Modern company law
Long-standing corporate culture
e. Strategic location as a regional hub
Principal gateway to the Central Asia
Republics
Strong and long-standing links with the
Middle East and South Asia
Comprehensive duty-free facilities for
investors
2.2 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
OVERVIEW OF BUSINESS& TRADE IN PAKISTAN 15
Textile
Infrastructure
Health Projects
Mining & Minerals
Services Sector
Tourism Projects
2.3 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:
OVERVIEW OF BUSINESS& TRADE IN PAKISTAN 16
Exploration of mineral deposits
Commission of export indenting agents
Income of Modaraba (also discussed in some
detail under the section on Income Tax)
2.4 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:
OVERVIEW OF BUSINESS& TRADE IN PAKISTAN 17
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
OVERVIEW OF BUSINESS& TRADE IN PAKISTAN 18
exchange, maintenance of foreign-currency accounts,
purchase and sale of shares and securities by non-
residents 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.
OVERVIEW OF BUSINESS& TRADE IN PAKISTAN 19
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
OVERVIEW OF BUSINESS& TRADE IN PAKISTAN 20
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
OVERVIEW OF BUSINESS& TRADE IN PAKISTAN 21
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;
b. Subject to adjustments, if any, pay every year to
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 23-
B of the Industrial Relations Ordinance, 1969
(XXIII of 1969), be assessed on the basis of such
audit; and
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.
OVERVIEW OF BUSINESS& TRADE IN PAKISTAN 22
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, widow‘s 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
OVERVIEW OF BUSINESS& TRADE IN PAKISTAN 23
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
Payment of Wages Act,
1936
Determines the mode of
payment of salaries and
wages to the industrial
workers
Minimum Wages
Ordinance, 1961
Specifies the minimum
wage to be paid to
different categories of
workers
West Pakistan
Industrial &
Commercial
Employment (S.O.)
Ordinance, 1968
Provides the framework
and guidelines for the
service rules of industrial
and commercial workforce
Punjab Fair Price Shops
Ordinance, 1971
Provides criteria for the
establishment of fair price
shops at industrial units
where 100 or more
workers are employed
Canteen Rules, 1959 It envisages provision of a
canteen facility, where
250 or more workers are
OVERVIEW OF BUSINESS& TRADE IN PAKISTAN 24
employed
Industrial Relations
Ordinance, 2002
It provides framework for
the industrial relations
between management and
the workers. It regulates
trade union activities
Hazardous Occupations
Rules, 1978
Gives guidelines for
protection of workers
against certain hazardous
occupations in the factories
Employment of
Children Act, 1991
Regulates the employment
of children
Maternity Benefit
Ordinance, 1959
Provides certain facilities
to those female
employees, who are expectant
Shops & Commercial
Establishments
Ordinance, 1969
Regulates the employment
and working conditions of
workers in shops as well
as commercial
establishments (such as banks, offices etc.)
Road Transport
Workers Ordinance,
1961
Provides guidelines for
welfare of transport
workers
OVERVIEW OF BUSINESS& TRADE IN PAKISTAN 25
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.
OVERVIEW OF BUSINESS& TRADE IN PAKISTAN 26
Countries of “A” List
B
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 Company of
International repute. And / or
Fulfills the criteria laid down for List ‘A' country in
respect of valid sponsorship from Pakistan.
1. Australia 18. Hungary 35. Qatar
2. Austria 19. Indonesia 36. Russian Federation
3. Argentina 20. Iceland 37. Saudi Arabia
4. Bahrain 21. Iran 38. Singapore
5. Brazil 22. Ireland 39. Slovakia
6. Belgium 23. Italy 40. South Africa
7. Brunei 24. Japan 41. South Korea
8. Canada 25. Kuwait 42. Spain
9. Chile 26. Luxembourg 43. Sweden
10. China 27. Malaysia 44. Switzerland
11. Czech Republic 28. Mexico 45. Thailand
12. Denmark 29. Netherlands 46. Turkey
13. Finland 30. New Zealand 47. U.A.E.
14. France 31. Norway 48. United Kingdom
15. Germany 32. Oman 49. USA
16. Greece 33. Poland
17. Hong Kong 34. Portugal
OVERVIEW OF BUSINESS& TRADE IN PAKISTAN 27
2.7.2 Visa on Arrival to the Foreign Investors and
Businessmen
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. United Kingdom
2. United State of America
3. Italy
4. Germany 5. Australia 6. Brazil
7. France 8. Switzerland 9. Sweden
10. China 11. Singapore 12. Hong Kong
13. Japan 14. Korea 15. Malaysia
16. Canada 17 Belgium 18. Netherlands
19. Luxembourg 20. Denmark 21. Ireland
22. Greece 23. Portugal 24. Spain
25. Austria 26. Finland 27. Turkey
OVERVIEW OF BUSINESS& TRADE IN PAKISTAN 28
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
OVERVIEW OF BUSINESS& TRADE IN PAKISTAN 29
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.
OVERVIEW OF BUSINESS& TRADE IN PAKISTAN 30
3 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:
OVERVIEW OF BUSINESS& TRADE IN PAKISTAN 31
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
OVERVIEW OF BUSINESS& TRADE IN PAKISTAN 32
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;
OVERVIEW OF BUSINESS& TRADE IN PAKISTAN 33
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
OVERVIEW OF BUSINESS& TRADE IN PAKISTAN 34
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
Pakistan‘s 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
OVERVIEW OF BUSINESS& TRADE IN PAKISTAN 35
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
OVERVIEW OF BUSINESS& TRADE IN PAKISTAN 36
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 Rs. 25,000/-
More than Rs. 250 million and
upto Rs. 1,000 million Rs. 50,000/-
More than Rs. 1,000 million 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.
OVERVIEW OF BUSINESS& TRADE IN PAKISTAN 37
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 15,000
Above Rs. 50.00 million and
upto Rs. 200.00 million 30,000
Above Rs. 200.00 million 60,000
Size of Instrument
Upto Rs. 50.00 million 15,000
Above Rs. 50.00 million and
upto Rs. 200.00 million 30,000
Above Rs. 200.00 million 35,000
3.4 FOREIGN INVESTOR IN PAKISTAN
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
OVERVIEW OF BUSINESS& TRADE IN PAKISTAN 38
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 1st
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.
OVERVIEW OF BUSINESS& TRADE IN PAKISTAN 39
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.
OVERVIEW OF BUSINESS& TRADE IN PAKISTAN 40
4 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)
OVERVIEW OF BUSINESS& TRADE IN PAKISTAN 41
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)
OVERVIEW OF BUSINESS& TRADE IN PAKISTAN 42
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.
OVERVIEW OF BUSINESS& TRADE IN PAKISTAN 43
Travelling agent‘s commission
Contracts other than service contracts
Royalty and fee for technical services of non-
residents
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.
OVERVIEW OF BUSINESS& TRADE IN PAKISTAN 44
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 31st 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 31
st March
All persons exporting Rice 31st December 30th June
All persons carrying on the
business of rice husking 31st August 28th or 29th February
All persons carrying on
the business of oil milling 31st August 28th or 29th February
OVERVIEW OF BUSINESS& TRADE IN PAKISTAN 45
All persons carrying on the
Business of manufacturing
and dealings in shawls 31st March 30th September
All Insurance Companies 31st December 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
OVERVIEW OF BUSINESS& TRADE IN PAKISTAN 46
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.
OVERVIEW OF BUSINESS& TRADE IN PAKISTAN 47
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%
OVERVIEW OF BUSINESS& TRADE IN PAKISTAN 48
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.
OVERVIEW OF BUSINESS& TRADE IN PAKISTAN 49
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 country‘s 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.
OVERVIEW OF BUSINESS& TRADE IN PAKISTAN 50
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.
OVERVIEW OF BUSINESS& TRADE IN PAKISTAN 51
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.
OVERVIEW OF BUSINESS& TRADE IN PAKISTAN 52
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=AFQjCNGbWBZJougFemlRoeWb8IrsxKr-
kg&sig2=MIzqP19i2YBIrwLqwkVcEg
OVERVIEW OF BUSINESS& TRADE IN PAKISTAN 53
FLOW DIAGRAM of How the Formation of any company
takes place in Pakistan?
OVERVIEW OF BUSINESS& TRADE IN PAKISTAN 54
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
OVERVIEW OF BUSINESS& TRADE IN PAKISTAN 55
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
OVERVIEW OF BUSINESS& TRADE IN PAKISTAN 56
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
OVERVIEW OF BUSINESS& TRADE IN PAKISTAN 57
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
OVERVIEW OF BUSINESS& TRADE IN PAKISTAN 58
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
OVERVIEW OF BUSINESS& TRADE IN PAKISTAN 59
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
OVERVIEW OF BUSINESS& TRADE IN PAKISTAN 60
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
OVERVIEW OF BUSINESS& TRADE IN PAKISTAN 61
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
OVERVIEW OF BUSINESS& TRADE IN PAKISTAN 62
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
OVERVIEW OF BUSINESS& TRADE IN PAKISTAN 63
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
OVERVIEW OF BUSINESS& TRADE IN PAKISTAN 64
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
OVERVIEW OF BUSINESS& TRADE IN PAKISTAN 65
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.
OVERVIEW OF BUSINESS& TRADE IN PAKISTAN 66
OVERVIEW OF BUSINESS& TRADE IN PAKISTAN 67
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.
OVERVIEW OF BUSINESS& TRADE IN PAKISTAN 68
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
OVERVIEW OF BUSINESS& TRADE IN PAKISTAN 69
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
OVERVIEW OF BUSINESS& TRADE IN PAKISTAN 70
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
OVERVIEW OF BUSINESS& TRADE IN PAKISTAN 71
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.
OVERVIEW OF BUSINESS& TRADE IN PAKISTAN 72
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
OVERVIEW OF BUSINESS& TRADE IN PAKISTAN 73
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
OVERVIEW OF BUSINESS& TRADE IN PAKISTAN 74
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
Pakistan‘s 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 Pakistan‘s trade is with countries outside of South
Asia. This reflects in part Pakistan‘s 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
OVERVIEW OF BUSINESS& TRADE IN PAKISTAN 75
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 Principal Import Products
Textiles
(fabrics and
yarns) $6.5 billion
Petroleum
products $3.7 billion
Apparel and
clothing $3.0 billion
Industrial
machinery $1.3 billion
Rice $682 million
Organic
chemicals $1.2 billion
Sports goods $315 million
Cotton and
fibers $800 million
Total exports $13.4 billion Total Imports $17.9 billion
Source: UN Comtrade
Direction of Trade, 2004
Principal Export Markets Principal Suppliers of Imports
United States $3.1 billion Saudi Arabia $2.1 billion
United Arab
Emirates $1.1 billion
United Arab
Emirates $1.8 billion
United
Kingdom $969 million United States $1.7 billion
Germany $665 million China $1.5 billion
Total Exports $13.4 billion Total Imports $17.9 billion
OVERVIEW OF BUSINESS& TRADE IN PAKISTAN 76
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
OVERVIEW OF BUSINESS& TRADE IN PAKISTAN 77
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 productivity—and thereby the export
competitiveness—of 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 duty-
drawback payments. To ensure that trade can contribute to
Pakistan‘s economic growth and poverty reduction, a concerted
effort must be made to address these impediments to
competitiveness.
OVERVIEW OF BUSINESS& TRADE IN PAKISTAN 78
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 Pakistan‘s economy had
OVERVIEW OF BUSINESS& TRADE IN PAKISTAN 79
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 Pakistan‘s 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 Pakistan‘s 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
OVERVIEW OF BUSINESS& TRADE IN PAKISTAN 80
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
OVERVIEW OF BUSINESS& TRADE IN PAKISTAN 81
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/economic-
development/pakistan.html)
OVERVIEW OF BUSINESS& TRADE IN PAKISTAN 82
Challenge to Pakistan’s economic stability has been
overcome: ADB
ISLAMABAD: The immediate challenge to Pakistan‘s 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 Pakistan‘s economic outlook negatively.
―The immediate challenge to Pakistan‘s economic stability has
been overcome with the help of an International Monetary Fund
(IMF)-backed stabilization programme‖, the ADB added.
OVERVIEW OF BUSINESS& TRADE IN PAKISTAN 83
It added that Pakistan‘s 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 country‘s infrastructure, energy security, and basic
public services.
Aligned with national development objectives, ADB‘s
partnership priorities aim to attract investment, create industries
and jobs, and improve the quality of life of citizens.
OVERVIEW OF BUSINESS& TRADE IN PAKISTAN 84
A new Country Partnership Strategy (CPS) for Pakistan,
approved by ADB‘s Board of Directors in March 2009, aims to
support Pakistan‘s strategic objectives of prosperity and poverty
reduction, it added.
About Portfolio Performance, it said that in 2008, ADB‘s
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 ADB‘s
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
ADB‘s strategy: sustainable economic growth, inclusive social
delivery, and pro-poor governance policies.
The Bank‘s 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 Government‘s 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
OVERVIEW OF BUSINESS& TRADE IN PAKISTAN 85
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 Government‘s 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.
OVERVIEW OF BUSINESS& TRADE IN PAKISTAN 86
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 ADB‘s CPS projects have
planned assistance of $4.4 billion during 2009-2011 and an
annual average lending of almost $1.5 billion.
The focal areas delineated in the CPS 2009-2013 focuses on
reforms and investment in energy and infrastructure. The CPS
provides the framework for ADB‘s partnership priorities and the
future direction of its assistance strategy in Pakistan, it added.
Sources:- http://archives.dawn.com/archives/17094
OVERVIEW OF BUSINESS& TRADE IN PAKISTAN 87
REVIEW ON PAKISTAN EXPORTS
JULY-JUNE ( 2008-09 )
Pakistan‘s exports during July-June 2008-09 were US$ 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.
OVERVIEW OF BUSINESS& TRADE IN PAKISTAN 88
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.
OVERVIEW OF BUSINESS& TRADE IN PAKISTAN 89
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.
OVERVIEW OF BUSINESS& TRADE IN PAKISTAN 90
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.
OVERVIEW OF BUSINESS& TRADE IN PAKISTAN 91
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 2008-
09.
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-Basmati’s 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
OVERVIEW OF BUSINESS& TRADE IN PAKISTAN 92
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.
OVERVIEW OF BUSINESS& TRADE IN PAKISTAN 93
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 2008-
09. 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
OVERVIEW OF BUSINESS& TRADE IN PAKISTAN 94
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.
OVERVIEW OF BUSINESS& TRADE IN PAKISTAN 95
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%).
OVERVIEW OF BUSINESS& TRADE IN PAKISTAN 96
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 2008-
09.
Major buyers of the product were Afghanistan, Qatar, Oman,
Iraq, Djibouti and Sri Lanka.
OVERVIEW OF BUSINESS& TRADE IN PAKISTAN 97
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.
OVERVIEW OF BUSINESS& TRADE IN PAKISTAN 98
OVERVIEW OF BUSINESS& TRADE IN PAKISTAN 99
Geographical Analysis JULY-JUNE ( 2008-09 )
Pakistan‘s 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 year‘s 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 2008-
09.
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 year‘s
OVERVIEW OF BUSINESS& TRADE IN PAKISTAN 100
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.
OVERVIEW OF BUSINESS& TRADE IN PAKISTAN 101
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 D‘Ivoire 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.
OVERVIEW OF BUSINESS& TRADE IN PAKISTAN 102
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
OVERVIEW OF BUSINESS& TRADE IN PAKISTAN 103
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).
OVERVIEW OF BUSINESS& TRADE IN PAKISTAN 104
6 – 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
OVERVIEW OF BUSINESS& TRADE IN PAKISTAN 105
GRAPHS AN`D CHARTS
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REFRENCES
Websites.
http://www.tdap.gov.pk/tdap-statistics.php
http://www.economywatch.com/economic-
development/pakistan.html
http://www.cbr.gov.pk
http://go.worldbank.org/E4GRINENAO
www.wikipedia.org
Magazine:-
Business World.