Pakistan
Pakistan – The Preferred Investment Destination
The Preferred Investment
Destination
Czech Asia Forum, 2010
Nadia Rehman
Commercial Counsellor, Pakistan
Executive Summary


Overview of the Investment Policy
Infrastructure




Transport
IT & Communication
Energy
Bilateral Trade
Pakistan- Key Facts
Area
796,096 square km
Population
~ 170 million
Land Boundaries
Coastline
Total 7,266 km Afghanistan 2,430 km, China 580 km, India 2,240
km, Iran 909 km.
1,046 km
Arid Desert, Sub-Tropical and Temperate Mountain Lands
Climatic Zones
Terrain
Flat Indus plain in east, mountains in north and northwest,
Balochistan plateau in west and desert in south.
Lowest point: Arabian Sea 0 m
Elevation Extremes
Length
Highest point: K2 (8,611 meters ), 1000 peaks above 5,000 meters
Karachi – Khyber (1,057 kilometers), which can be traveled by
Motorway and Railway.
Pakistan Topography
At The Center of Asian Growth

Pakistan is well located to
become one of Asia’s
premier trade, energy and
transport corridors

Urumqi
Kazakhstan
Toshkent
Uzbekistan
Kyrgyzstan
#
Samarkand
Proximity to Middle-East,
Africa, China and Europe
Dushanfe
#
Ashkhabad
#
Tajikistan
#
Recent developments to
realize this vision include:
Herat
Land locked
energy rich
Central
KabulAsia
#
#
Jum mu &
Kashmir
(Disputed Territory)
Islamabad
##
Afghanistan
Gawadar port- Linking
Afghanistan, Iran and
China and onwards to
Central Asia, Middle East
& Europe
Yazd
Rawalpindi
Qandahar
#
Faisalabad Lahore
#
Iran
Booming
China
High Energy
China Demand
Kashi
#
Turkmenistan
#

#
#
Mashhad

Almaty
Frunze
#
# #
Amritsar
Pakistan
Zahedan
#
Nepal
New Delhi Delhi
#
Kathmandu
Jaipur

Geographical location suits
transit trade
Capital &
Energy surplus
Abu Zaby
Middle
Masqat East
India
Hyderabad
#
#
#
#
Patna
Benares
Booming
South Asia
High Energy
Demand
#
Karachi
#
United Arab Emirates
Oman
Kanpur
#
#
#
#
Lucknow
Ahmadabad
#
Nagpur
Calcutta
Doing Business 2010
Home to over 700 Companies
Haier
Deutsche Bank
Investment Policy Package
Non-Manufacturing Sectors
POLICY
PARAMETERS
Govt. Permission
Manufacturing Sector
None (Exceptions - Arms and ammunitions,
High Explosives, Radioactive substances,
Security Printing, Currency and Mint
Agriculture
Infrastructur
e & Social
Services
including IT
& Telecom
Services
Not required except specific licenses from
concerned agencies.
Remittance of capital,
profits, dividends, etc.
Allowed
Upper Limit of foreign
equity allowed
100%
100%
100%
100%
Minimum Investment
Amount (M $)
No
0.30
0.30
0.15
Customs duty on
import of PME
5%
0%
5%
0-5%
Tax relief (IDA, % of
PME cost)
50%
Royalty & Technical
Fee
No restriction for payment of royalty &
technical fee.
Allowed
50%
Allowed as per guidelines - Initial lump-sum
up to $100,000
- Max Rate 5% of net sales - Initial period 5
years
Sector-wise FDI in Pakistan
Sector
2003-04
2004-05
2005-06
2006-07
2007-08
2008-09
Oil & Gas
202.4
193.8
312.7
545.1
634.8
775.1
Financial Business
242.1
269.4
329.2
930.3
1,607.6
707.4
Textiles
35.4
39.3
47.0
59.4
30.1
36.6
Trade
35.6
52.1
118.0
172.1
175.5
165.7
Construction
32.0
42.7
89.5
157.1
88.5
92.5
Power
14.2
73.4
320.6
193.4
70.3
119.8
Chemical
15.3
51.0
62.9
46.1
78.0
74.3
Transport
8.8
10.6
18.4
30.2
73.0
93.1
Communications
(IT & Telecom)
221.9
517.6
1,937.7
1,898.7
1,625.3
879.1
Agriculture
3.93
19.3
60.43
134.24
50.44
93.6
Others
170.1
274.0
285.0
1,107.2
769.7
778.2
Total
949.4
1,523.9
3,521.0
5,139.6
5,152.8
3,721.8
Source: State Bank of Pakistan
US$ Millions
Investment Opportunities
• Offshore & Onshore
Exploration
• Refining
• Pipelines
• Storages
Mining
Oil & Gas
Priority Sectors
IT & Telecom
• Call centers
• Cell phone
• E-Commerce
• Software
• IT Parks
Power
• Coal
• Granite
• Marble
• Copper
• Semi-Precious
Stones
• Hydel
• Thermal
• Coal
• Solar
• Wind
• Biogas
Investment Opportunities
• Ports & Roads
• Urban Mass Transport
• Water supply &
• Sanitation
• Housing
• Desalination
Priority Sectors
Agriculture
- Agri-Business
- Livestock & Dairy
- Corporate Farming
- Fisheries
- Fruits & Vegetables
- Seed Production
SMEs
• Hotels
• Resorts
• Theme Parks
• Cultural tourism
• Entertainment Centers
Tourism
Infrastructure
• Textiles
• Leather
• Electronics
• Furniture
• Gemstones
• Food Processing
• Sports & Surgical
goods
• Value added textiles
Investment Opportunities
• Oil & Gas
• Infrastructure
• Power
• Industry/ Real Estate
• Banking
Housing
Priority Sectors
Engineering
• Light & Heavy Engineering
• Automobiles
• Auto parts
• Agriculture Machinery
• Steel Production
• Textile Machinery
Chemicals
• Golf City
• Water City
• Sports City
• Media City
• Residential Complexes
• Office apartments
Privatization
• Pesticides
• Dyes
• Agro Based
• Mineral Based
• Synthetic Fiber
• Pharmaceuticals
• Petrochemical
• Complex/ Naphtha
• Cracker
Infrastructure
Transport & Communication
Railways Sector Overview
Total Track (Km)
Locomotives
11,246
540
Freight Wagons
Passengers Carried
20,724
~80M/yr
Freight (000’s tonnes)
7,234/yr
Source: Pakistan Statistical Year Book 2009
Railways Investment Proposals
Project
Track Length
Doubling of tracks
300 km
Replacement of tracks
700 km
Rehabilitation of tracks
500 km
New tracks
800 km
High-speed train
1650 km
(Karachi-Peshawar)
Regional linkages
~10,000 km
Railways Investment Proposals










Procurement / manufacturing of HD wagons (3,500)
Procurement / manufacturing of DE locomotives (150)
Overhauling of locomotives (27)
Replacement of obsolete signaling system
Procurement of DE multi-train sets
Procurement of mechanized track maintenance machinery
Privatisation of train operations
Cargo handling & development
Privatisation of PR manufacturing facilities
Outsourcing of repair / maintenance of tracks, rolling stock and
services
National Highway Network
Khunjerab Pass
NHA NETWORK
Gilgit
• Only 4 % of total network
• Carries 80% of commercial
traffic
• N-5 carries 65% of this load
S-2
CHAMAN
N-55
N-80
LAHORE
QUETTA
TAFTAN
N-40
Description
Km
GABD
N-10
GWADAR
KARACHI Hu
b
Total Network
NHA Network
Provincial Roads
260,000
11,485
101,000
District Roads
94,150
Urban Roads
54,000
NHA - PPP Program &
Modalities

Public Private Partnership for

improved technology / skills and management practices

operational efficiencies

Motorways, highways, tunnels and road structures

Modes of PPP participation include

Build, Operate & Transfer (BOT)

Finance, Manage, Operate & Transfer (FMOT)

Operating Concessions (OC)
Airport Infrastructure

Major airports:


Secondary airports:


Karachi, Lahore & Islamabad
Peshawar, Quetta, Multan,
Faisalabad, Sialkot & Sukkur
Investment Opportunities:
 New airports / upgrading of
existing airports
 Cargo terminals / villages
 Outsourced operations,
facilities and services
Air craft
movements at
airports
197,486,000
Passengers
handled
141.2 M
Cargo
31.6 M tonnes
Mail
5.3 M tonnes
Ports & Shipping





Main ports: Karachi, Qasim and Gawadar
Port entries: 3372 vessels with registered tonnage of 50 million
tonnes
Cargo handled 64.8 million tonnes
Cargo in containers 5.9 million tonnes
Investment opportunities
 Cargo villages & industrial parks
 Container terminals
 Outsourced operations, facilities and services
 KPT enclave
 Miscellaneous supporting infrastructure
Information Technology and
Telecommunication Sector
Overview

Overall Tele-density growth of over 60% in Pakistan
telecom sector

Investment of more than US$ 8 billion in the last
four years

Largest pool of educated and talented workforce in
the country

Transparent and streamlined government regulatory
policies.
Cellular Subscribers
Growth of Cellular Subscribers
100
Millions
80
88
91.4
2007-08
2008-09
62.3
60
34.5
40
20
12.7
0
2004-05
2005-06
2006-07
Period
Broadband Subscribers
Broadband Subscribers
Number of Subscribers
300,000
267,180
250,000
592%
200,000
168,082
150,000
90,700
100,000
50,000
45,153
57,200
Jun-2007
Sep-2007
Dec-2007
Period
Jun-2008
Dec-2008
Foreign Direct Investment
Attracted by Telecom Sector
US$ Millions
Foreign Direct Investment
1600
1400
1200
1000
800
600
400
200
0
1198
1348
1331
716
77
2004-05
2005-06
2006-07
Period
2007-08
Jul-Dec 08
Opportunities Available

Development of IT Parks

Electronic Media and Content Development

Hardware Manufacturing

Software Designing

E-Business

Call Centers
Incentives Offered

100% foreign equity allowed in software houses

Tax holiday on software exports

Duty free imports of hardware and software

90% first year allowance of equipment cost

Tax holiday of 7 years for ‘Venture Capitalist’ funds

30% depreciation allowed on all computer related equipment
Power Sector
Overview





65-70 % of the population has access to
electricity
Increasing electricity demand
Government of Pakistan’s policy commitment
to increase private sector participation.
Discovery of Thar Coal fields
Renewable Energy
Main Key Players

Ministry of Water and Power

Water and Power Development Authority (WAPDA)

Karachi Electric Supply Corp (KESC)

Pakistan Electric Power Company (PEPCO)

Private Power and Infrastructure Board (PPIB)

National Electric Power Regulatory Authority (NEPRA)

Alternative Energy Development Board (AEDB)
Pakistan Power Sector
Public Sector
Public Sector
Thermal
4885 MW
(25.18%)
Private Sector
Thermal
7564 MW
(38.99%)
WAPDAPEPCO
NUCLEAR
Sub Total
MW
%
11,374
5
9
462
2
11,836
6
1
Private Sector
Nuclear
462 MW
(2.38%)
Public Sector Hydel
6489 MW (33.45%)
MW
%
IPPs
5,808
30
KESC
1,756
9
Sub Total
7,564
39
19,400
100
Grand Total
Peak Demand Projection
(2007-2030)
120000
Annual Growth Percentage = 8.1%
113695
100000
MW
80000
80566
60000
54359
40000
20000
36217
18883
24474
0
2007
2010
2015
Years
2020
2025
2030
Incentives Offered

Fiscal Incentives:





Customs duty at the rate of 5% on import of plant
and machinery not manufactured locally.
No sales tax on plant, machinery and equipment.
Exemption from Income Tax.
Initial depreciation allowance at the rate of 50%.
Amortization of pre-commencement expenses
allowed at the rate of 20% annually.
Incentives Offered…

Financial Incentives:






Permission to issue corporate registered bonds.
Permission to issue shares at discounted rate.
Raising of local/foreign finance allowed.
Abolition of the 5% limit on investment of equity.
Full repatriation of capital, capital gains, dividends
and profits are allowed.
Double taxation treaties
Incentives Offered…

Long-term agreements available on:


Build, Own, Operate and Transfer (BOOT)
Build, Own and Operate (BOO)

Protection against changes in taxes and duties.

Indexation of foreign operating and maintenance
cost (variable and fixed) with US CPI.
New Amendments to Power Policy
2002

Hedging against currency exchange risk.

Broadening access to debt financing.

Acceptance of Performance Guarantees and
Letters of Credit in Euro, Pound Sterling, US
Dollar and Yen

ROE allowed in single currency
HYDROPOWER SECTOR
Hydropower Potential
8,100 MW
6,500 MW
1,400 MW
Already Developed
Pre-Feasibilities /
Feasibilities Completed
Under Construction
Yet to be Studied
38,000 MW
Hydropower Potential in Pakistan
Investment Opportunities

Projects with feasibility studies available


Sammar Gah Hydropower Project
 Location – District Kohistan
 Capacity – 28 MW
 Construction Cost – US $ 42 million
Batal Khwar Hydropower Project
 Location – Utror
 Capacity – 8.1 MW
 Construction Cost – US $ 14 million
Investment Opportunities

Medium Size Hydropower Projects (Raw Sites)

Arkari Gol Hydro Power Project




Location – Momi Village, District Chitral
Design Capacity – 26.4 MW
Estimated Cost – US $ 28.58 million
Bhimbal Hydropower Project



Location – Naran, District Mansehra
Design Capacity – 8.1 MW
Estimated Cost – US $ 12 million
Investment Opportunities

Medium Size Hydropower Projects (Raw Sites)

Mastuj River Hydropower Project




Location – Miragram, District Chitral
Design Capacity – 8.9 MW
Estimated Cost – US $ 14.5 million
Lutkho River Hydropower Project



Location – Shoghore, District Chitral
Design Capacity – 6.4 MW
Estimated Cost – US $ 9.93 million
Investment Opportunities

Large Hydropower Projects

Dassu Hydropower Project
 Capacity – 4320 MW
 Estimated Project Cost – US $ 7.8 billion

Thakot Hydropower Project
 Capacity – 2800 MW
 Estimated Project Cost – US $ 6.0 billion

Patan Hydropower Project
 Capacity – 2800 MW
 Estimated Project Cost – US $ 6.0 billion
Investment Opportunities

Feasibility studies of projects in process:

Lower Spat Gah Hydropower Project
 Capacity – 567 MW
 Tentative Project Cost – US $ 614 million

Lower Palas Valley Hydropower Project
 Capacity – 621 MW
 Tentative Project Cost – US $ 667 million
Who Can Help?




Embassy of Pakistan
Board of Investment (BOI)
Private Power and Infrastructure Board
(PPIB)
Sarhad Hydel Development Organization
(SHYDO)

National Electric Power Regulatory
Authority
(NEPRA)



Ministry of Petroleum & Natural Resources
Ministry of Water and Power
Provincial Agencies
Bilateral Trade





Total Bilateral Trade: 217,924,000 USD
Exports to Czech Republic have grown at a
rate of 43% since 2006
Trade balance is in the favour of Czech
Republic
Pak-Czech Forum 12th May,2010
BIT and Avoidance of Double Taxation Treaty
Contact Information

Nadia Rehman



Commercial Counsellor
Office: +420-233-312-868
Website:
Thank you