economic diplomacy in a challenged economy...china footwear 34 103 3x 90% pumps 47 171 3.6x 61%...
TRANSCRIPT
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1
ECONOMIC DIPLOMACY IN A CHALLENGED ECONOMYFEBRUARY 2020
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2
“Financial solvency is the foundation of a country’s global standing and autonomy.
Economic diplomacy is even morecrucial in challenged times.”
em1
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Slide 2
em1 ehsan malik, 1/29/2020
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3
Research-based business advocacy body
Leading private sector Mfg & services
businesses from 15 sectors. No traders
Includes Pakistani groups
& MNCs
Critique and support the government
Not a trade body or a chamber. Pan-sectoral advocacy for the good of
Pakistan
Takes medium/ long
term view
THE PAKISTAN BUSINESS COUNCIL
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4
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5THE PAK ISTA N BUSINESS C O U N C I L - PROF I LE 25
PBC Members: The most prominent businesses from 15 sectors
11% of GDP
40% of Exports
25% of Taxes
2 MnJobs
1/3rd MNCs from 12
countries2/3rd Local companies
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6
PBC’S CENTRE OF EXCELLENCE IN RESPONSIBLE BUSINESS
• Gender Equality • Creating Livelihoods • Environmental Stewardship • Transforming Business Culture• Inclusive and Sustainable Systems• Ethical Practices and Governance
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7
….AND NOW OPEN TO THE KNOWLEDGE SECTOR, SUCH AS….
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8
ECONOMIC CHALLENGES AND PROGRESS ON STABILIZATION
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9
SEVERAL POSITIVES!
Incidents Fatalaties
-34% -37%
Generation Capacity
+46% since 2014
Third Democratic TransitionWith Fresh Hope of Change
Flight of Capital Abroad and into Hoarding of Real Estate Checked
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10
….WE NEITHER MAKE, NOR EXPORT ENOUGH… WE IMPORT AND CONSUME..…..
77.10%
94.20%
31.23%
16.70%
-8.30%
-11.00%
-20.00% 0.00% 20.00% 40.00% 60.00% 80.00% 100.00%
Bangladesh
Pakistan
Net Trade Investment Consumption
2018 GDP Components as % of GDP
World Bank
17pp higher Consumption
Half the investment
Higher Trade Deficit
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11Exceptforbriefepisodes (e.g. 2000‐2006), Pakistan’sgrowth hasbeen driven by domestic consumption
-6.0
-4.0
-2.0
0.0
2.0
4.0
6.0
8.0
10.0
12.0
14.0
-6.0
-4.0
-2.0
0.0
2.0
4.0
6.0
8.0
10.0
12.0
14.0FY
92FY
93FY
94FY
95FY
96FY
97FY
98FY
99FY
00FY
01FY
02FY
03FY
04FY
05FY
06FY
07FY
08FY
09FY
10FY
11FY
12FY
13FY
14FY
15FY
16FY
17FY
18FY
19
Consumption
Pakistan: GDP Growth and its driversGrowth in %, contribution in ppt.
Investment Exports (G&S) Imports (G&S) GDP
3Source: PBS
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12
…..HENCE RECURRING TRADE IMBALANCES:22 IMF PROGRAMMES SINCE 1958. 13TH IN THE LAST 30 YEARS
1.7
3.2
1.9
0.91.36
1.361.9 1.7
3.6
7
8.1
5.2
4.1 3.94.4
2
4.14.7
3.1
1.7
3.1 3.2
4.5 4.5
3
1.8
2
0
1
2
3
4
5
6
7
8
9
93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18 19
Impo
rt C
over
in M
onth
s
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13
PAKISTAN IS SUFFERING FROM PREMATURE DEINDUSTRIALIZATION
13.8 13.612.8
12
16 16.4 16.8 17.3
12
13
14
15
16
17
18
2011 2013 2015 2017
Manufacturing as % of GDP
Pakistan Bangaldesh
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14
GDP GROWTH IS CLOSELY CORRELATED WITH MANUFACTURING
6.1
-4.18
1.37 2.5 2.08
4.9 5.73.9
3.7
5.84.99
0.36
2.58 2.7 3.5
3… 4.1 3.9
4.5
5.3
-6
-4
-2
0
2
4
6
8
08 09 10 11 12 13 14 15 16 17
MFG % GDP %
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15
…..SLOWEST GROWTH OF MANUFACTURING. RESULT: DECLINING SHARE OF EXPORTS….
3.7
7.9
11.7
5.8 5.9
11
6.2
8.1
13.4
3
5
7
9
11
13
Pakistan India Bangladesh
% Growth of Manufacturing
2016 2017 2018
0.16 0.09 0.170.120.23
1.25
0
0.2
0.4
0.6
0.8
1
1.2
1.4Pakistan Bangladesh Vietnam
% Share of World Exports
2003 2018
>7x+2.6x
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16
-
19,742
23,826 28,020
33,668
60,451
-
10,000
20,000
30,000
40,000
50,000
60,000
70,000
1st 2nd 3rd 4th 5th
Aver
age
Mon
thly
Wag
e (P
KR)
Quintiles
Pakistan Household Wages (HIES 2016)
US$
Mill
ion
Note: 42MN people in each Quintile
Pakistan needs to replace $2.5 Bn of LSG (Low-Sophistication Goods) imports through local manufacturing to address the needs of just the three middle quintiles aggregating to 125 Mn of a total population of 210 Mn people.
125 MN
*PRODY Index
Source: PBS HIES 2016
….SCOPE TO SERVE A LARGE DOMESTIC MARKET, YET WE IMPORT BASIC GOODS….
ItemsImports 2007* US$MN
Imports 2016* US$MN
Growth Multiple
Est % from China
Footwear 34 103 3X 90%Pumps 47 171 3.6X 61%Glassware 13 74 5.6X 90%
Tiles 50 170 3.4X 75%
Blankets 17 46 2.7X 98%
Fans 25 69 2.7X 80%
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17
HENCE PBC'S THRUST IS “MAKE-IN-PAKISTAN”
MAKE-IN-PAKISTAN
JOBS VALUE-ADDED EXPORTS IMPORT SUBSTITUTION
DOCUMENTION OF THE INFORMAL SECTOR
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18
SNAPSHOT OF PROGRESS ON PBC’S KEY “MAKE-IN-PAKISTAN” RECOMMENDATIONS
Progress Key Recommendations
Competitive exchange rate
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19Themove to a market‐based exchange rate system hasmadetherupee competitive andwill support exports
Real exchange rate (REER)2013=100
U70
80
90
100
110
120
130
Jan-
13
May
-13
Sep-
13
Jan-
14
May
-14
Sep-
14
Jan-
15
May
-15
Sep-
15
Jan-
16
May
-16
Sep-
16
Jan-
17
May
-17
Sep-
17
Jan-
18
May
-18
Sep-
18
Jan-
19
May
-19
Sep-
19
REER range of major competitorsPakistan
Note: Competitors’ include India, China, Malaysia, Thailand, Sri Lanka, Philippines, Indonesia, Mexico
Index, inverted scale
↑in REER= depreciation
9Source: SBP
PKR Over-Valued by up to 20%
PKR REER 95%
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20
SNAPSHOT OF PROGRESS ON PBC’S KEY “MAKE-IN-PAKISTAN” RECOMMENDATIONS
Progress Key Recommendations
Competitive exchange rateRenegotiate FTA with China
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21
CPFTA 2: DUTY FREE ACCESS TO CHINA DOUBLED IN WHAT WE EXPORT
$5.69 bn
$11.34 bn $11.38 bn $11.5 bn
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
CPFTA1 CPFTA2 1 yr CPFTA2 5 yr CPFTA2 10 yr
Per c
ent o
f Pak
wor
ld e
xpor
t bas
ket i
n 20
18
(HS
6-di
git)
x=0 0<x<5 x=5 5<x<10 x=10 10<x<15 15<x<20 x=20 20<x<30 30<x<40 x>40
HOWEVER …..
- Pakistan lacks capacity to supply
- Further sophistication will require Investment
- Pakistan needs to address the trend towards man-made fibres
- Non-tariff barriers need to be overcome
Source: Author’s calculations using Ministry of Commerce data for CPFTA tariffs and ITC Trademap for trade data. All trade data is for 2018
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22
SNAPSHOT OF PROGRESS ON PBC’S KEY “MAKE-IN-PAKISTAN” RECOMMENDATIONS
Progress Key Recommendations
Competitive exchange rateRenegotiate FTA with ChinaCascading tariffs to encourage local value-addition
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23
CASCADING TARIFFS
Switch from revenue seeking to promoting industry
National Tariff Board to be composed of all relevant ministries, not just Finance and the FBR
Raw Materials to be levied lowest duty and Finished Goods the highest
Average tariff to be reduced to promote GVC integration
BUT POLICY U-TURN ON CELL PHONE MANUFACTURING.
PRIME MOTIVE: PLUG LOSS OF REVENUE FROM IMPORTS
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24
SNAPSHOT OF PROGRESS ON PBC’S KEY “MAKE-IN-PAKISTAN” RECOMMENDATIONS
Progress Key Recommendations
Competitive exchange rateRenegotiate FTA with ChinaCascading tariffs to encourage local value-additionWithdraw presumptive taxes on imports and stem under-invoicing and smuggling
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25
SNAPSHOT OF PROGRESS ON PBC’S KEY “MAKE-IN-PAKISTAN” RECOMMENDATIONS
Progress Key Recommendations
Competitive exchange rateRenegotiate FTA with ChinaCascading tariffs to encourage local value-additionWithdraw presumptive taxes on imports and stem under-invoicing and smugglingMake energy available at a competitive cost to industry
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26
POLICY U-TURN RENDERS EXPORTS UNCOMPETITIVE
7.5
109 9
8
13
6789
1011121314
Pakistan Bangladesh India China Vietnam
Cost of Power for the Five Export SectorsCents/KWh
1st-Jan-19 13th-Jan-20
70% backdated increase!
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27
SNAPSHOT OF PROGRESS ON PBC’S KEY “MAKE-IN-PAKISTAN” RECOMMENDATIONS
Progress Key Recommendations
Competitive exchange rateRenegotiate FTA with ChinaCascading tariffs to encourage local value-additionWithdraw presumptive taxes on imports and stem under-invoicing and smugglingMake energy available at a competitive cost to industrySeparate fiscal policy and tax audit from the collection of taxes. Simplify and document
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28
SNAPSHOT OF PROGRESS ON PBC’S KEY “MAKE-IN-PAKISTAN” RECOMMENDATIONS
Progress Key Recommendations
Competitive exchange rateRenegotiate FTA with ChinaCascading tariffs to encourage local value-additionWithdraw presumptive taxes on imports and stem under-invoicing and smugglingMake energy available at a competitive cost to industrySeparate fiscal policy and tax audit from the collection of taxes. Simplify and documentEncourage capital formation and scale through consolidation
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29
SNAPSHOT OF PROGRESS ON PBC’S KEY “MAKE-IN-PAKISTAN” RECOMMENDATIONS
Progress Key Recommendations
Competitive exchange rateRenegotiate FTA with ChinaCascading tariffs to encourage local value-additionWithdraw presumptive taxes on imports and stem under-invoicing and smugglingMake energy available at a competitive cost to industrySeparate fiscal policy and tax audit from the collection of taxes. Simplify and documentEncourage capital formation and scale through consolidation Promote investment and capacity addition
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30
A U-TURN: INVESTMENT TAX CREDIT WITHDRAWN
17
31 31 29
55
27 24
0
10
20
30
40
50
60
Pakistan Lags Neighbours in Investment……
Pakistan India Bangaldesh Sri Lanka
Nepal Vietnam World Avg
10%
5%
0%
2%
4%
6%
8%
10%
12%
Before FA '19 After FA '19 forInv to June 2020
After FA '19 forInv after June
2020
Yet Tax Credit Previously Valid to June 2021 Withdrawn!
0%
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31
SCORECARD ON PBC’S KEY “MAKE-IN-PAKISTAN” RECOMMENDATIONS – 4 OF 8 POSITIVE + 2 SOME PROGRESS
Progress Key Recommendations
Competitive exchange rateRenegotiate FTA with ChinaCascading tariffs to encourage local value-additionWithdraw presumptive taxes on imports and stem under-invoicing and smugglingMake energy available at a competitive cost to industrySeparate fiscal policy and tax audit from the collection of taxes. Simplify and documentEncourage capital formation and scale through consolidation Promote investment and capacity addition
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ECONOMIC HIGHLIGHTS
--+30% to 65%-- -30% 6.5 13.25
6.8%11.6%
Electricity Gas Exch. Rate Policy Rate Inflation FED on Autos
2.5-7.5%
--------------COST PUSH FACTORS-------------- leading to: ------------DEMAND COMPRESSION---------
Trade Deficit Tax Base Fiscal Deficit Borrowing Cost LSM Employment Agri Priv SectorBorrowing
Fed: 1st Qtr:13%of FY Target
Prov: 1st Qtr:6%of FY Target
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33
SOME SIGNS OF STABILITY IN THE MACRO ECONOMY
5.50% 3.30
% 2.40%
3%
FY18 FY19 FY20 F FY21 F
7%13% 11%
FY19 FY20 F FY21 F
GDP Growth % Inflation %
19.913.5
6.0
FY18 FY19 FY20 F
Cur A/C Def US $Bn
6.4%8.8% 9.0%
FY18 FY19 FY20 F
Fiscal Deficit % GDP
2.6%3.1% 3.2%
FY19 FY20 F FY21 F
World Trade Growth
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34
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35
PBC’S IMMEDIATE STEPS FOR ECONOMIC REVIVAL
Objective MeansCash Flow Release tax refunds and rebates, especially to exporters
Remove LC margin on import of industrial inputsCost of Doing Business Reduce the cost of borrowing
Revert to 7c/KWh electricity tariff for the export sectorReform import tariffs to facilitate value-addition
Ease of Doing Business Rationalize food and environment standardsInvestment Restore tax credit for investment in plant
Remove Min. Tax on Turnover, at least for first 5 years and in tax holidaysDevelopment Revive the PSDP spend
……… The “9 R’s”
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36
THE IMPORTANCE OF EXPORTS
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37
PROJECTED TRADE DEFICIT TO REVERT TO THE 2019 LEVEL
-55 -52 -56 -58-60
23 25 27 2829
-32 -27 -29 -30-31
-65
-45
-25
-5
15
FY'19 FY '20 FY '21 FY '22 FY '23
Imports Exports Trade Deficit
If Imports Grow @ GDP Growth Rate
If Exports Grow @ World Growth Rate
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38
EXPORTS ARE NARROWLY BASED
50%
50% Reliant on EU/UK/USA
56%
56% of Exports are Textiles
68%
68% of Textiles go to the EU/UK/USA
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39Growing at the same rate as the top 25% of emergingmarkets will require much higher export growth
Contribution ofExports and other factors in GDP growthAverages over 2001‐2018, real growth in %, contribution in ppt.
Pakistan Top quartile countriesNotes:1. Top quartile of countries selected w.r.t. GDP growth form 98 countries over the period of 2001-2018.2. Beside others, these countries include Pakistan’s textile competitors like India, Bangladesh, Vietnam, and Cambodia.
0.0
1.0
2.0
3.0
4.0
5.0
6.0
7.0
8.0
0.0
1.0
2.0
3.0
4.0
5.0
6.0
7.0
8.0Export contribution to growthContribution from other demand-side factors to growthGDP growth
3. Other demand-side factors include public and private consumption/investment and imports (G&S). Source: World Bank 5
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40Pakistan: Export diversification has been limited
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41
Long term export policy overseen by the PM Attitude shift from “control” to “empowerment” Tailor for branding Allow prospective instead of retrospective investment Enable B2C through portals such as Amazon Wash exports clean of all taxes – standardize refunds Export Credit Guarantee Bank especially to fund SMEs Competitive energy costs Why no rebates for export of services?
PBC’S NATIONAL CHARTER FOR EXPORTS: THE POLICY FRAMEWORK
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42
PBC’S NATIONAL CHARTER FOR EXPORTS: PRIVATE SECTOR’S ROLE
Invest in capacity, broaden, sophisticate and diversify offerings Invest in overseas brands, warehousing, sales and online networks Inward FDI to promote exports (and import substitution) SME training for global outreach
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43
PAKISTAN AND VIETNAM: CONTRASTING STRATEGIES (AND RESULTS)
60
237
24
243
0
50
100
150
200
250
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018Pak Imports Viet Imports Pak Exports Viet Exports
2018 TradeSurplus $6Bn
2018 TradeDeficit $36Bn
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44Diversification has driven Vietnam’s Exports to >$260 Bn
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45
KEY COMPONENTS OF ECONOMIC DIPLOMACY
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46
KEY COMPONENTS OF ECONOMIC DIPLOMACY
FATF Export diversification Parity market access GSP Plus Travel Advisories Investment priorities Diplomatic trade-off: Malaysia vs Indonesia
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47
KEY COMPONENTS OF ECONOMIC DIPLOMACY
FATF Export diversification Parity market access GSP Plus Travel Advisories Investment priorities Diplomatic trade-off: Malaysia vs Indonesia
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48
FATF: WHITE IS RIGHT!
Formalize, document and broaden the tax baseBoost bank deposits by discouraging cash transactionsStem flight of capital abroad and into non-productive hoarding of landPromote investor confidence Improve security conditions, hence ease travel advisories…..Tremendous amount of work done to move out of the grey list…..PBC played a modest role e.g. in Track 2 talks with the USA
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49
KEY COMPONENTS OF ECONOMIC DIPLOMACY
FATF Export diversification Parity market access GSP Plus Travel Advisories Investment priorities Diplomatic trade-off: Malaysia vs Indonesia
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50
Two Under-Addressed Geographies
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51
• 54 countries• 1.3 Bn people• Growing at 3% pa – projected to reach
1.6 Bn by 2030• Combined GDP $ 2.2 Tr ($ 6.4 Tr PPP)• Young Population – half under 20• Annual Imports $ 577 Bn• Annual Exports $461 Bn
Africa – now and the potential
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52
PAKISTAN’S EXPORTS TO AFRICA DWARFED BY INDIA AND CHINA
92
22.6
1.3
95
24.4
1.5
105
26.9
1.5
-10
10
30
50
70
90
110
China India Pakistan
US$ BN
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53
PAKISTAN SIGNIFICANTLY UNDER-REPRESENTED IN AFRICA
Africa’s Total Imports 2018 US $ 577 Bn. 10 Largest importers $367 Bn; 10 Largest Import Items $362 Bn
Pakistan India India Multiple Pakistan
Exports to Africa US$ Bn 2018 1.5 26.9 x18
Share of Africa’s Total Imports 0.25% 4.7% x18
Share of Imports into 10 largest Import Markets 0.2% 3.8% x19
Share of 10 Largest Import Items0.2%
(almost all Rice)
4% x20
Number of Trade Agreements 1(Mauritius) 13 x13
Number of in-country Trade & Investment Officers 4 18 x5
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54
UNFAVOURABLE TARIFFS ON PAKISTAN’S EXPORTS TO AFRICA
Cement from Pakistan subjected to Anti-dumping Duty in South Africa
$0.7 Bn of Rice from Pakistan @ 48% duty into Kenya
$0.6 Bn of Tea from East Africa @ 10% duty into Pakistan
$1 Bn of Coal from Africa @ 3% duty into Pakistan
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55
CENTRAL ASIAN REPUBLICS
• 73 Mn population• $270 Bn GDP• $61 Bn Imports
• Russia 30%• China 19%• India 1% ($ 422 Mn)• Pakistan 0.2% ($116 Mn)
• Largest Imports• Pharma $2.3 Bn (India $150 Mn)• Fruit $0.8 Bn• Sugar $0.8 Bn• Meat $0.35 Bn• Sports Goods $0.25 Bn
Quadrilateral Traffic in Transit Agreement (QTTA) needs to be finalized. Need to agree a fast track for transit via China
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56
PHARMACEUTICALS: A MAJOR OPPORTUNITY
$3 Bn of Exports20% of Africa’s TotalFor Pharmaceuticals
$150 Mn ExportsTo Central Asia
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57
KEY COMPONENTS OF ECONOMIC DIPLOMACY
FATF Export diversification Parity market access GSP Plus Travel Advisories Investment priorities Diplomatic trade-off: Malaysia vs Indonesia
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58
$3.2 BN OF EXPORT POTENTIAL FROM PARITY TARIFF ACCESS TO CANADA, JAPAN AND AUSTRALIA
Export Potential of $26 MnAt parity tariffs with
Bangladesh
Bangladesh Exports at 0% tariff$1.2 Bn
Pakistan Exports at upto16% tariff$0.196 Bn
Substantial potential at paritytariff
Export Potential of $2.2 Bnat parity tariffs with China,
ASEAN and Bangaldesh
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59
KEY COMPONENTS OF ECONOMIC DIPLOMACY
FATF Export diversification Parity market access GSP Plus Travel Advisories Investment priorities Diplomatic trade-off: Malaysia vs Indonesia
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60
IMPORTANCE OF TEXTILES & EU’S GSP + TO PAKISTAN
Textiles represents 60% of Pakistan’s total exports
Employs 40% of industrial labour, many are women
40% of Pakistan’s textile exports are reliant on GSP+
Mostly value-added, hence more jobs and foreign exchange earnings
Despite GSP+ Pakistan has just 4% share of EU’s imports of textiles.
Cotton availability, energy cost and exchange rate competitiveness have been factors limiting exports
Export of leather and agricultural commodities. Impacted by testing facilities
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61
IMPORTANCE OF GSP+ ACCESS INTO THE EU & POST BREXIT INTO THE UK
EU 28 Exports under the GSP+2018 $Bn % Growth
since 2013% of Pak
Exports ofthese items
Apparel 2.7 95% 51%Home 1 71% 25%Leather 0.4 -3% 42%Cotton Yarn
0.6 16% 18%
Footwear .08 45% 80%Total GSP+ 5.51 63% 40%
…of which exports to the UK2018 $Bn Of Pak
Exports to EU, % to UK
Apparel 0.74 27%Home 0.6 60%Leather 0.05 12.5%Cotton Yarn 0.05 8.3%Footwear .08 100%Total GSP+ 1.52 28%
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62
EXPORT PRIORITIESMain Markets Market Access New Export
MarketsTrade Advisories Business and
Tourist VisasMaintain Current Negotiate NewUSA Beyond GSP esp.
for Textiles Differentiated and more
positive view on travel to the
main commercial
cities of Pakistan
Implement the online visa
policy in its full spirit. Challenge
is visas for Indian and Bangladesh
nationals who now occupy key buying positions
EU GSP+UK GSP+ post BrexitJapan
Parity with BangladeshCanada
AustraliaAfrica New MarketsLatin America New MarketsCentral Asia New Markets
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63
KEY COMPONENTS OF ECONOMIC DIPLOMACY
FATF Export diversification Parity market access GSP Plus Travel Advisories Investment priorities Diplomatic trade-off: Malaysia vs Indonesia
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64
TRAVEL ADVISORIES AND EASE OF TRAVEL
UK’s travel relaxation, a major positive development
Some countries yet to recognize the improvement in Karachi’s security
Others make sweeping assumptions of conditions in Lahore, Sialkot, Faisalabad
“Avoid all travel;” “Extreme Caution;” “High Risk;” are terms still in vogue
Despite the online facility, difficult to obtain visas to visit Pakistan
Pakistani exporters face difficulty in obtaining visas for travel abroad
Buyers’ access is essential for textile exporters
A challenge is visas for Indians and Bangladeshis who now represent buying houses in South Asia
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65
BESIDES EXPORT OF GOODS, SOME BPO AND IT COMPANIES THAT WILL BENEFIT FROM IMPROVED SECURITY CONDITIONS
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66
Pakistan Bangladesh Sri Lanka India
USALevel 3: Reconsider travel
Do not travel to: Balochistan, KPK, Azad Kashmir, India‐Pakistan border
Level 2: Exercise Increased Caution
Level 2: Exercise Increased Caution
Level 2: Exercise Increased Caution
Canada
Avoid non‐essential travelAvoid all travel to: Balochistan, KPK, Kashmir, India‐
Pakistan borderAvoid non‐essential travel to: Rest of Pakistan except
IslamabadExercise high degree of caution: Islamabad
Exercise a high degree of caution
Exercise a high degree of caution
Exercise a high degree of caution
UK
Advise against travel to Baluchistan, former FATA, certain other areas of KPK, a section of the Karakoram Highway and the line of control in Kashmir; care when
travelling elsewhere in Pakistan.
Advise against all but essential travel to the Chittagong Hill Tracts
‐‐
Advise against all travel to: border with
Pakistan, other than at Wagah
Jammu and Kashmir
SpainExtreme caution during the trip. Certain areas must be
avoided except for reasons of extreme needThe trip is advised for
reasons of extreme need
Recommended to travel with extreme
caution during the trip
Recommended to travel with caution and refrain from doing so for certain areas
Travel Advisories are much more limiting for Pakistan
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Germany Strongly discouraged to travel to: KPK, Balochistan, LoC. Take special careTravel with increased
cautionTravel with increased
caution
Belgium
Non‐essential journeys are discouragedAdvise against all travel to: KPK, tribal areas on the border with Afghanistan, Baluchistan, Azad Jammu and Kashmir and around the disputed border with India, rural areas of Punjab,
and rural areas of Sindh.Travel to these areas only if necessary: Islamabad and its surroundings, the big cities in Punjab (Rawalpindi, Lahore,
Faisalabad), and Karachi.
Exercise utmost vigilanceNormal caution recommended
Usual vigilance is required
Denmark
Advise against all unnecessary tripsAdvise against all travel to: Baluchistan, KPK, Kashmir and the
tribal areas against the border with Afghanistan.Advise against all unnecessary trips to: The rest of the country including Islamabad and the provinces of Punjab, Sindh and
Gilgit‐Baltistan.
Take special care Take special care Take special care
France
High RiskTravel discouraged to: Baluchistan, Tribal areas (ex‐FATA), KPK,
Azad Jammu and Kashmir, The border with India. Punjab province, with the exception of the area between Faisalabad, Lahore and Islamabad, not recommended unless imperative.Travel not recommended unless imperative to: Sind, Gilgit‐
Baltistan, area between Faisalabad, Lahore and Islamabad, the cities of Sialkot, Faisalabad and Multan in Punjab province.
Vigilance required in: Islamabad and Lahore
Medium RIsk High Risk Medium Risk
Pakistan Bangladesh Sri Lanka India
Some Travel Advisories: an unlevel playing field vs key countries
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Italy High Risk‐ Advisable to limit tripsMedium Risk – Exercise caution in certain areas
High Risk – Exercise utmost caution
High Risk‐ Maximum vigilance
recommended
SwedenExercise utmost caution
Advise against all trips to KPK and BalochistanExercise caution Exercise caution
Exercise utmost caution in border areas
with Pakistan
Switzerl‐and
Vigilance recommendedHigh risk areas: GB, KPK, Border with India, Lahore, Balochistan, Northern Sindh, South Punjab, Karachi
Vigilance recommendedVigilance
recommendedVigilance
recommended
New Zealand
Avoid non‐essential travelDo not travel to the FATA, Balochistan, Khyber‐
Pakhtunkhwa, and border areas with Afghanistan and India (excluding the Wagah).
Avoid non‐essential travel elsewhere in Pakistan.
Exercise increased caution
Exercise increased caution
Avoid non‐essential travel
Australia
Reconsider your need to travelDo not travel to Balochistan, Khyber‐Pakhtunkhwa (excluding Chitral district) and border areas with
Afghanistan and India (excluding Lahore, Wagah, Kasur, Narowal and Sialkot).
Exercise a high degree of caution
Exercise a high degree of caution
Exercise a high degree of caution
Japan
Evacuation is recommended (Level 4 threat) at border with Afghanistan, Quetta, LoC.
Stop traveling (Level 3 threat) to certain counties in Balochistan.
Stop unnecessary travel (Level 2 threat) to cities such as Islamabad, Lahore, Karachi.
Stop unnecessary travel in Chittagong. Normal caution in other areas
Normal caution in all areas.
Evacuate from LoC, Srinagar, Ladakh. Normal caution in
other areas
Pakistan Bangladesh Sri Lanka India
Some Travel Advisories: an unlevel playing field vs key countries
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KEY COMPONENTS OF ECONOMIC DIPLOMACY
FATF Export diversification Parity market access GSP Plus Travel Advisories Investment priorities Diplomatic trade-off: Malaysia vs Indonesia
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VIETNAM: GLOBAL VALUE CHAIN INTEGRATION STRATEGY
Vietnam’s Trade Agreements China ASEAN US Japan CP Trans Pacific
Partnership EU (ratification pending)
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FDI: VIETNAM IS EXPORT FOCUSED; PAKISTAN'S IS CONSUMPTION DRIVEN
Samsung alone 25%
of Vietnam’s Exports
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MNCS DOMINATE MANY CATEGORIES: NONE EXPORT FOCUSED
Sector>>> Packed Dairy Home & Personal Care
Ice Cream Bottled Water MobileTelephony
MNC Share % 80% 75% 80% 70% 100%
MNC Operators
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MAJOR INVESTMENT SECTORS FOR FDI
Exports/Forex Earnings
Import Substitution Jobs Technology/Know how
AgricultureHorticultureLivestockTourismIT/IT-Enabled ServicesMiningOil & gas ExplorationHealth ServicesFisheries
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SOME RECENT EXAMPLES OF DESIRABLE FDI
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EXAMPLES OF OTHER DESIRABLE FDI WORTH PURSUING
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RELOCATION OF CHINESE FACTORIES
• Apparel
• Luggage
• Light Engineering
• Domestic Appliances
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KEY COMPONENTS OF ECONOMIC DIPLOMACY
FATF Export diversification Parity market access GSP Plus Travel Advisories Investment priorities Diplomatic trade-off: Malaysia vs Indonesia
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TARIFF PREFERENCE FOR MALAYSIAN OVER INDONESIAN PALM OIL NOT ECONOMICALLY JUSTIFIED
Malaysia IndonesiaPakistan’s Exports 2018 $157 Mn $ 302 MnExport Potential $662 Mn $1036 MnDuty on Pakistan Rice 40% 0% since July 2019Duty on Indian Rice 20%Total Rice Imports from anywhere $403 Mn $868 MnRice Imports from Pakistan $23 Mn $98 MnPalm Oil imports $0.48 Bn $1.45 BnC&F cost differential per ton $7-$10 more expensive than
IndonesiaRevenue loss if duty relief granted to Malaysia to equalize landed cost
Rs. 1.25 Bn
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REGIONAL TRADE – CHALLENGES AND OPPORTUNITIES FOR EXPORTS. $3.4 BN REGIONAL EXPORT POTENTIAL FOR PAKISTAN
IRAN - Sanctions
AFGHANISTAN - War
INDIA – Tense Relations& Non-Tariff Barriers
+$350 Mn
+$1.3 Bn
+$1.75 Bn
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