Financing to SupportMAKE IN PAKISTAN
THE PBC’S MEMBER COMPANIES
F I N A N C I N G T O S U P P O R T M A K E I N P A K I S T A N 02
THE PBC’S MEMBER COMPANIES
F I N A N C I N G T O S U P P O R T M A K E I N P A K I S T A N 03
F I N A N C I N G T O S U P P O R T M A K E I N P A K I S T A N 04
“MAKE IN PAKISTAN”
HIGHER TAXES FROM ABROADER BASE
JOBS IN MANUFACTURING& SERVICES
VALUE-ADDED EXPORTSAND IMPORT SUBSTITUTION
Pakistan’s three acute needs, one solution:
Strong domestic industry with a consumer base of 207 mn
F I N A N C I N G T O S U P P O R T M A K E I N P A K I S T A N 05
Since ’88, Pakistan has been to IMF 12 times.
9
8
7
6
5
4
3
2
1
01993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
1.7
3.2
1.9
0.91.36 1.36
1.91.7
3.6
7
8.1
5.2
4.1 3.9 4.4
2
4.14.7
1.7
3.13.2
4.5 4.5
33.1
Imp
or
t C
ov
er
in M
on
ths
RECURRENT EXTERNAL ACCOUNT CRISES
F I N A N C I N G T O S U P P O R T M A K E I N P A K I S T A N 06
1.4
1.2
1
0.8
0.6
0.4
0.2
0
%
Pakistan Bangladesh Vietnam
2003
0.12
0.75
Growth Multiple
Growth Multiple
>x2
Growth Multiple
>x7
0.160.09
0.170.2
1.21
Pakistan's Share in World Exports
2017
Pakistan’s Share of World Exports Down, Bangladesh’s More than Doubledsince 2003 & Vietnam’s grew 7 - fold
PAKISTAN LOSING SHARE OF WORLD EXPORTS
F I N A N C I N G T O S U P P O R T M A K E I N P A K I S T A N 07
Manufacturing (% of GDP)
20
18
16
14
12
10
8
6
%
2005 2007 2009 2011 2013 2015 2017
17.5
13.312.7
13.8 13.6
12.812 12.1
2018
Manufactured Goods as % of Exports
120
100
80
60
40
20
0
%
Pakistan Bangladesh
96
77
PAKISTAN IS DE-INDUSTRIALISING PREMATURELY AND MANUFACTURED GOODS ARE LOW IN EXPORTS
F I N A N C I N G T O S U P P O R T M A K E I N P A K I S T A N 08
MANUFACTURING GROWTH LAGS NEIGHBOURS
Growth of Manufacturing
14
12
10
8
6
4
2
0
%
3.9
98
3.7
10.5
5.25.8
11.7
7.46.2
1111.8
2015 2016 2017 2018
Pakistan Bangladesh India
F I N A N C I N G T O S U P P O R T M A K E I N P A K I S T A N 09
Disproportionate Tax on Manufacturing
Manufacturing
Agriculture
Retail & Wholesale
Rest
13.5
19.5
18.5
48.5
58
<1
1
40
Sector % of Tax Burden% of GDP
MANUFACTURING IS OVERTAXED
F I N A N C I N G T O S U P P O R T M A K E I N P A K I S T A N 10
Poorly Negotiated FTA's
$94 Mn
($3.2) Bn
($1.5) Bn
($1.1) Bn
$38.7 Mn
Country Trade Balance (in year signed)
Year Signed
Sri Lanka
China
Malaysia
Indonesia
Mauritius
Trade Balance (in 2017)
2005
2006
2008
2013
2007
$268 Mn
($16.4) Bn
($1.0) Bn
($2.2) Bn
$2.2 Mn
FTA'S HAVE NOT HELPED TO BALANCE TRADE
F I N A N C I N G T O S U P P O R T M A K E I N P A K I S T A N 11
112
170
74
169
49
42
Items Import Value 2017 (US$ Mn)
Import Value 2007 (US$ Mn)
Footwear
Pumps
Glassware
Tiles
Blankets
Fans
Growth Multiple
34
47
13
50
17
13
3.3x
3.6x
5.7x
3.4x
2.9x
3.2x
% Import from China
89
64
85
65
97
87
GROWTH IN IMPORT RELIANCE - MAINLY FROM CHINA
F I N A N C I N G T O S U P P O R T M A K E I N P A K I S T A N 12
*World Bank Ease of Doing Business 2019 Ranking
47
13
3
Number of TaxesWB EDB* Paying Taxes Rank (out of 190)
Pakistan
India
Hong Kong(Best in World)
173
121
1
COMPLEX FISCAL REGIME
F I N A N C I N G T O S U P P O R T M A K E I N P A K I S T A N 13
* Includes WWF/WPFF/Super Tax
17%
7%
12%
15%
10%
Country VAT/GST%Corp Tax %
Pakistan
India
Bangladesh
Srilanka
Vietnam
38%*
25%
15%
25%
22%
HIGH TAX RATES
F I N A N C I N G T O S U P P O R T M A K E I N P A K I S T A N 14
Private Consumption % of GDP
100
80
60
40
20
01991 2001 2011 2016
64.4 68.2
76.2
81.2 80.1
59.4
55.9
61.8
Pakistan India
CONSUMPTION DRIVES THE ECONOMY …….. AND FDI
F I N A N C I N G T O S U P P O R T M A K E I N P A K I S T A N 15
Investment to GDP Ratio
16.4
31 31
37
Pakistan Bangladesh India Sri Lanka
40
35
30
25
20
15
10
5
0
%
INVESTMENT IS HALF THAT OF OUR PEERS
F I N A N C I N G T O S U P P O R T M A K E I N P A K I S T A N 16
9.6
6.6 6.0
3.6 3.3
9.48.2
5.7
3.85.0
3.13.9
5.4
7.7
10.4
13.612.5
20
18
16
14
12
10
8
6
4
2
0
%
FY98 FY99 FY00 FY01 FY02 FY03 FY04 FY05 FY06 FY07 FY08 FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16
16.3
19.4
Source: State bank of Pakistan and Pakistan Bureau of Statistics
GOVERNMENT CROWDING OUT THE PRIVATE SECTOR FROM BORROWING
F I N A N C I N G T O S U P P O R T M A K E I N P A K I S T A N 17
17.6917.01
16.18
11.7510.28
9.348.11
6.59 6.30 6.07 5.976.73
20
16
12
8
4
0Dec-05 Dec-06 Dec-07 Dec-08 Dec-09 Dec-10 Dec-11 Dec-12 Dec-13 Dec-14 Dec-15 Dec-16
%
LOW SHARE OF SME FINANCING IN TOTAL
F I N A N C I N G T O S U P P O R T M A K E I N P A K I S T A N 18
137
118
110
101
76
68
64
63
59
52
49
48
46
43
42
40
36
36
31
28
22
16
China
Malaysia
Thailand
Vietnam Chile
S.Africa
Brazil
Turkey
Nepal
India
Russia
Oman
Cambodia
Bangladesh
S.Arabia
Colombia
Philippines
Sri Lanka
Indonesia
Egypt
Mexico
0 50 100 150
Pakistan's Relative Standing in Credit - to - GDP Ratio (2010 - 17 Average)
PRIVATE SECTOR LENDING AS % OF GDP LOWEST
Pakistan
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