pakistan – the preferred investment destination
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Pakistan The Preferred Investment Destination. Pakistan – 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 - PowerPoint PPT PresentationTRANSCRIPT
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Pakistan The Preferred Investment DestinationPakistanThe Preferred Investment Destination
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Czech Asia Forum, 2010Nadia RehmanCommercial Counsellor, Pakistan
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Executive SummaryOverview of the Investment PolicyInfrastructureTransport IT & CommunicationEnergyBilateral Trade
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Pakistan- Key Facts
Area 796,096 square kmPopulation ~ 170 millionLand BoundariesTotal 7,266 km Afghanistan 2,430 km, China 580 km, India 2,240 km, Iran 909 km.Coastline 1,046 km Climatic ZonesArid Desert, Sub-Tropical and Temperate Mountain LandsTerrain Flat Indus plain in east, mountains in north and northwest, Balochistan plateau in west and desert in south. Elevation Extremes Lowest point: Arabian Sea 0 mHighest point: K2 (8,611 meters ), 1000 peaks above 5,000 metersLengthKarachi Khyber (1,057 kilometers), which can be traveled by Motorway and Railway.
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Pakistan Topography
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Pakistan is well located to become one of Asias premier trade, energy and transport corridorsProximity to Middle-East, Africa, China and Europe
Recent developments to realize this vision include:Gawadar port- Linking Afghanistan, Iran and China and onwards to Central Asia, Middle East & Europe
Geographical location suits transit trade At The Center of Asian GrowthLand locked energy rich Central Asia Booming ChinaHigh Energy DemandBooming South AsiaHigh Energy DemandCapital & Energy surplus Middle East
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Demographic DividendPopulation growing at 1.9% - representing 2.5% of worlds populationPer capita incomes rising despite significant population sizeDemographic dividend with (54% of population below 19 years of age) will be in play for some time to come
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Doing Business 2010
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Home to over 700 Companies
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Poverty Reduction Strategy 2009-10 has defined a 9-point agenda to increase productivity, efficiency & growth rates
Macroeconomic StabilizationSocial Development and ProtectionAgriculture Industrial CompetitivenessHuman Capital DevelopmentEnergyCapital MarketsPublic-Private Partnerships for InfrastructureInstitutional /Governance ReformReform Process 9 Point Plan
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Liberal Investment PolicyNational treatment to foreign investorsAll economic sectors open to foreign investorsBilateral AgreementsInvestment Protection47 CountriesAvoidance of Double Taxation52 CountriesProtection of foreign investorsForeign Private Investment (Promotion & Protection) Act 1976Protection of Economic Reforms Act 1992
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Investment Policy Package
POLICY PARAMETERS
Manufacturing SectorNon-Manufacturing SectorsAgricultureInfrastructure & SocialServices including IT & Telecom ServicesGovt. PermissionNone (Exceptions - Arms and ammunitions, High Explosives, Radioactive substances, Security Printing, Currency and MintNot required except specific licenses from concerned agencies.Remittance of capital, profits, dividends, etc.AllowedAllowedUpper Limit of foreign equity allowed100%100%100%100%Minimum Investment Amount (M $)No 0.300.300.15Customs duty on import of PME5%0%5%0-5%Tax relief (IDA, % of PME cost)50%50%Royalty & Technical FeeNo restriction for payment of royalty & technical fee.Allowed as per guidelines - Initial lump-sum up to $100,000- Max Rate 5% of net sales - Initial period 5 years
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Sector-wise FDI in PakistanUS$ MillionsSource: State Bank of Pakistan
Sector2003-042004-052005-062006-072007-082008-09Oil & Gas 202.4193.8312.7545.1634.8775.1Financial Business242.1269.4329.2930.31,607.6707.4Textiles35.439.347.059.430.136.6Trade35.652.1118.0172.1175.5165.7Construction32.042.789.5157.188.592.5Power14.273.4320.6193.470.3119.8Chemical15.351.062.946.178.074.3Transport8.810.618.430.273.093.1Communications(IT & Telecom)221.9517.61,937.71,898.71,625.3879.1Agriculture3.9319.360.43134.2450.4493.6Others170.1274.0285.01,107.2769.7778.2Total949.41,523.93,521.05,139.65,152.83,721.8
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Investment Opportunities
Oil & GasMiningPowerIT & Telecom
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Investment Opportunities
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Investment Opportunities
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InfrastructureTransport & Communication
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Railways Sector OverviewSource: Pakistan Statistical Year Book 2009
Total Track (Km)11,246Locomotives540Freight Wagons20,724
Passengers Carried~80M/yrFreight (000s tonnes)7,234/yr
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Railways Investment Proposals
ProjectTrack LengthDoubling of tracks300 kmReplacement of tracks700 kmRehabilitation of tracks500 kmNew tracks800 kmHigh-speed train(Karachi-Peshawar)1650 km Regional linkages~10,000 km
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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 setsProcurement of mechanized track maintenance machineryPrivatisation of train operationsCargo handling & developmentPrivatisation of PR manufacturing facilitiesOutsourcing of repair / maintenance of tracks, rolling stock and services
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National Highway Corridor
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Khunjerab PassN-35N-70N-50N-40N-25KARACHICHAMANTAFTANN-65N-5GWADARQUETTAPESHAWARN-5N-55Indus RiverJhelum RiverRavi RiverM-3HubM-5M-6M-9N-15GilgitS-1N-75M-1M-2GABDN-45N-80S-2N-10M-8M-7LAHOREM-4N-85NHA NETWORK Only 4 % of total networkCarries 80% of commercial trafficN-5 carries 65% of this loadNational Highway Network
DescriptionKm Total Network260,000NHA Network11,485Provincial Roads101,000District Roads94,150Urban Roads54,000
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NHA - PPP Program & ModalitiesPublic Private Partnership forimproved technology / skills and management practicesoperational efficiencies Motorways, highways, tunnels and road structures Modes of PPP participation include Build, Operate & Transfer (BOT)Finance, Manage, Operate & Transfer (FMOT)Operating Concessions (OC)
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Airport InfrastructureMajor airports: Karachi, Lahore & Islamabad
Secondary airports: Peshawar, Quetta, Multan, Faisalabad, Sialkot & Sukkur
Investment Opportunities:New airports / upgrading of existing airportsCargo terminals / villagesOutsourced operations, facilities and services
Air craft movements at airports197,486,000Passengers handled141.2 M
Cargo31.6 M tonnes
Mail5.3 M tonnes
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Ports & ShippingMain ports: Karachi, Qasim and GawadarPort entries: 3372 vessels with registered tonnage of 50 million tonnesCargo handled 64.8 million tonnesCargo in containers 5.9 million tonnesInvestment opportunitiesCargo villages & industrial parksContainer terminalsOutsourced operations, facilities and servicesKPT enclaveMiscellaneous supporting infrastructure
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Information Technology and Telecommunication Sector
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OverviewOverall 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.
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Teledensity Growth in Pakistan
Chart2
3.438.30.17
3.3722.20.66
3.0440.91.08
2.754.71.4
2.356.81.5
Fixed
Cellular
WLL
Total Teledensity
Sheet1
2004-052005-062006-072007-082008-Mar 09
Fixed3.433.373.042.72.3
Cellular8.322.240.954.756.8
WLL0.170.661.081.41.5
Total11.926.2345.0258.860.6
Sheet1
Fixed
Cellular
WLL
Total Teledensity
Sheet2
Sheet3
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Cellular Subscribers
Chart8
12.7
34.5
62.3
88
91.4
Period
Millions
Growth of Cellular Subscribers
Sheet1
2004-052005-062006-072007-082008-Mar 09
Fixed3.433.373.042.72.3
Cellular8.322.240.954.756.8
WLL0.170.661.081.41.5
Total11.926.2345.0258.860.6
2004-0512.7
2005-0634.5
2006-0762.3
2007-0888
2008-0991.4
Jun-200745,153
Sep-200757,200
Dec-200790,700
Jun-2008168,082
Dec-2008267,180
2004-0577
2005-061198
2006-071348
2007-081331
Jul-Dec 08716
Mobilink30.90%
Telenor21.90%
Ufone21.40%
Warid19.00%
Zong6.80%
Sheet1
Fixed
Cellular
WLL
Total Teledensity
Sheet2
Period
Millions
Growth of Cellular Subscribers
Sheet3
Period
Number of Subscribers
Broadband Subscribers
Period
US$ Millions
Foreign Direct Investment
Market Share of Cellular Operators
Ufone21%
Warid19%
Mobilink31%
Telenor22%
Zong7%
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Cellular Operators in Pakistan
Chart7
0.309
0.219
0.214
0.19
0.068
Market Share of Cellular Operators
Zong7%
Telenor22%
Mobilink31%
Warid19%
Ufone21%
Sheet1
2004-052005-062006-072007-082008-Mar 09
Fixed3.433.373.042.72.3
Cellular8.322.240.954.756.8
WLL0.170.661.081.41.5
Total11.926.2345.0258.860.6
2004-0512.7
2005-0634.5
2006-0762.3
2007-0888
2008-0991.4
Jun-200745,153
Sep-200757,200
Dec-200790,700
Jun-2008168,082
Dec-2008267,180
2004-0577
2005-061198
2006-071348
2007-081331
Jul-Dec 08716
Mobilink30.90%
Telenor21.90%
Ufone21.40%
Warid19.00%
Zong6.80%
Sheet1
Fixed
Cellular
WLL
Total Teledensity
Sheet2
Period
Millions
Growth of Cellular Subscribers
Sheet3
Period
Number of Subscribers
Broadband Subscribers
Period
US$ Millions
Foreign Direct Investment
Market Share of Cellular Operators
Ufone21%
Warid19%
Mobilink31%
Telenor22%
Zong7%
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Broadband Subscribers592%
Chart3
45153
57200
90700
168082
267180
Period
Number of Subscribers
Broadband Subscribers
Sheet1
2004-052005-062006-072007-082008-Mar 09
Fixed3.433.373.042.72.3
Cellular8.322.240.954.756.8
WLL0.170.661.081.41.5
Total11.926.2345.0258.860.6
2004-0512.7
2005-0634.5
2006-0762.3
2007-0888
2008-0991.4
Jun-200745,153
Sep-200757,200
Dec-200790,700
Jun-2008168,082
Dec-2008267,180
Sheet1
Fixed
Cellular
WLL
Total Teledensity
Sheet2
Period
Millions
Growth of Cellular Subscribers
Sheet3
Period
Number of Subscribers
Broadband Subscribers
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Foreign Direct Investment Attracted by Telecom Sector
Chart5
77.42
1197.55
1347.69
1330.9
716
Period
US$ Millions
Foreign Direct Investment
716
1331
1348
77
1198
Sheet1
2004-052005-062006-072007-082008-Mar 09
Fixed3.433.373.042.72.3
Cellular8.322.240.954.756.8
WLL0.170.661.081.41.5
Total11.926.2345.0258.860.6
2004-0512.7
2005-0634.5
2006-0762.3
2007-0888
2008-0991.4
Jun-200745,153
Sep-200757,200
Dec-200790,700
Jun-2008168,082
Dec-2008267,180
2004-0577
2005-061198
2006-071348
2007-081331
Jul-Dec 08716
Sheet1
000
000
000
000
000
Fixed
Cellular
WLL
Total Teledensity
Sheet2
0
0
0
0
0
Period
Millions
Growth of Cellular Subscribers
Sheet3
Period
Number of Subscribers
Broadband Subscribers
Period
US$ Millions
Foreign Direct Investment
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Opportunities AvailableDevelopment of IT Parks
Electronic Media and Content Development
Hardware Manufacturing
Software Designing
E-Business
Call Centers
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Incentives Offered100% 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
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Power Sector
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Overview65-70 % of the population has access to electricityIncreasing electricity demand Government of Pakistans policy commitment to increase private sector participation.Discovery of Thar Coal fieldsRenewable Energy
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Main Key PlayersMinistry 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)
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Pakistan Power SectorMW %Private Sector MW %Public Sector
IPPs5,80830KESC1,7569Sub Total7,56439Grand Total19,400100
WAPDA-PEPCO11,37459NUCLEAR4622Sub Total11,83661
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Historical Peak Load Demand Growth
Chart1
0.036
0.064
0.085
0.097
Growth Rates
Sheet1
2002200420062008
Growth Rates3.60%6.40%8.50%9.70%
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Sales by Customer Category (2008)
Chart1
0.460.0650.2620.1270.0610.057
0.08CommercialCommercialCommercialCommercialCommercial
0.28IndustryIndustryIndustryIndustryIndustry
0.12TubewellsTubewellsTubewellsTubewellsTubewells
0.06othersothersothersothersothers
0
Domestic
Commercial
Industry
Tubewells
KESC
Others
12%
Sheet1
DomesticCommercialIndustryTubewellsothers
Domestic46.00%8.00%28.00%12%6.00%
Commercial6.50%
Industry26.20%
Tubewells13%
KESC6.10%
Others5.70%
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Peak Demand Projection (2007-2030)
Chart1
18883
24474
36217
54359
80566
113695
Annual Growth Percentage = 8.1%
MW
Years
MW
Sheet1
YearsMW
1200718883
2201024474
3201536217
4202054359
5202580566
62030113695
Sheet1
0
0
0
0
0
0
5591 MW
11743 MW
18142 MW
33129 MW
26207 MW
Annual Growth Percentage = 8.1%
MW
Years
MW
Sheet2
Sheet3
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Incentives OfferedFiscal 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.
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Incentives OfferedFinancial 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
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Incentives OfferedLong-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.
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New Amendments to Power Policy 2002Hedging 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
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HYDROPOWER SECTOR
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Hydropower Potential
Chart2
6500
38000
1400
8100
Hydropower Potential in Pakistan
1,400 MW
8,100 MW
6,500 MW
38,000 MW
Sheet1
Already Developed6,500
Pre-Feasibilities / Feasibilities Completed38,000
Under Construction1,400
Yet to be Studied8,100
Sheet1
Hydropower Potential in Pakistan
38,000 MW
6,500 MW
8,100 MW
1,400 MW
Sheet2
Sheet3
MBD00099119.xls
Chart1
6500
38000
1400
8100
Sheet1
Overview of Hydropower Sector
Already Developed6500
Pre-Feasibilities/Feasibilities Completed38000
Under Construction1400
Yet to be Studied8100
Sheet1
0
0
0
0
0
Overview of Hydropower Sector (In MW)
Sheet2
Sheet3
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Operational Hydropower Stations
ProjectInstalled Capacity (MW)Energy Generation (GWh)1Tarbela3478158012Mangla100054433Warsak24310094Ghazi Barotha145070375Chashma Low Head1849596Rasul22637Dargai201628Jabban*201559Nandipur143210Chichoki Mallian13.22311Shadiwal13.53812Others629TOTAL646430751
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Investment OpportunitiesProjects with feasibility studies availableSammar Gah Hydropower ProjectLocation District KohistanCapacity 28 MWConstruction Cost US $ 42 millionBatal Khwar Hydropower ProjectLocation UtrorCapacity 8.1 MWConstruction Cost US $ 14 million
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Investment OpportunitiesMedium Size Hydropower Projects (Raw Sites)Arkari Gol Hydro Power ProjectLocation Momi Village, District ChitralDesign Capacity 26.4 MWEstimated Cost US $ 28.58 million
Bhimbal Hydropower ProjectLocation Naran, District MansehraDesign Capacity 8.1 MWEstimated Cost US $ 12 million
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Investment OpportunitiesMedium Size Hydropower Projects (Raw Sites)Mastuj River Hydropower ProjectLocation Miragram, District ChitralDesign Capacity 8.9 MWEstimated Cost US $ 14.5 million
Lutkho River Hydropower ProjectLocation Shoghore, District ChitralDesign Capacity 6.4 MWEstimated Cost US $ 9.93 million
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Investment OpportunitiesLarge Hydropower ProjectsDassu Hydropower Project Capacity 4320 MWEstimated Project Cost US $ 7.8 billion
Thakot Hydropower ProjectCapacity 2800 MWEstimated Project Cost US $ 6.0 billion
Patan Hydropower ProjectCapacity 2800 MWEstimated Project Cost US $ 6.0 billion
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Investment OpportunitiesFeasibility studies of projects in process:Lower Spat Gah Hydropower ProjectCapacity 567 MWTentative Project Cost US $ 614 million
Lower Palas Valley Hydropower ProjectCapacity 621 MWTentative Project Cost US $ 667 million
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Who Can Help?Embassy of PakistanBoard of Investment (BOI)Private Power and Infrastructure Board (PPIB)Sarhad Hydel Development Organization (SHYDO)National Electric Power Regulatory Authority (NEPRA)Ministry of Petroleum & Natural ResourcesMinistry of Water and PowerProvincial Agencies
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Bilateral TradeTotal Bilateral Trade: 217,924,000 USDExports to Czech Republic have grown at a rate of 43% since 2006Trade balance is in the favour of Czech RepublicPak-Czech Forum 12th May,2010BIT and Avoidance of Double Taxation Treaty
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Contact InformationNadia RehmanCommercial CounsellorOffice: +420-233-312-868Website:
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Thank you
****(more than twice the area of Germany) (6th largest globally) Lush agrarian plains in the east, Hindukusk & Himalayan mountain ranges in the north**Pakistan becoming Asias trade, energy and transport corridor****Government strongly committed to restoring macroeconomic stability as well as the confidence of markets and investors
These nine points form the pillars of governments poverty reduction strategy***
Pakistan has a favourable investment policy the highlights are, National treatment to foreign investorsAll economic sectors open to foreign investorsForeign equity up to 100% allowedRemittance of capital, profits, royalty, technical & franchise fee allowedImport of raw material for export manufacturing zero-ratedBilateral AgreementsInvestment Protection47 CountriesAvoidance of Double Taxation52 CountriesProtection of foreign investorsForeign Private Investment (Promotion & Protection) Act 1976Protection of Economic Reforms Act 1992
I want to reiterate that the government of Pakistan is committed to facilitating foreign investors. We believe that given our geographic location Pakistan is positioned to be a key trade corridor in Asia******Total Track coverage is over 11,000Our trains carry 80 million passengers and more that 7 million tonnes of freight a year*the government has an ambitious goal of upgradation and expansion of the railway sector projects proposal vary from maintenance of the existing infrastructure to investment in new technologies such high speed trains between 2 key trade ports of Karachi and Peshawar. ***Pakistan National ************The government also offers favourable tax and fee incentives**RDF technology 10 (investment of 10-15 million dollars) projects are planned (25%-30%)Thermal power plants based on coal and natural gas energy mix 5-19%
Due to high cost of imported energy, government has decided to enhance the share of coal inthe over all energy mix from 5 percent to 19 percent by 2030. Energy Security Action Plan
*****In anticipation of the increasing demand, the government has drafted an Energy Security Action Plan*******I would like to conclude today with a very high priority and potential area of investment in Pakistan. This is in the hydro power sector. With the growing energy demand the government has developed Energy Security Action plan to grow hydropower supply threefold.
The purple area in the above pie chart represents hydropower projects whose feasibility studies have either started or are complete**********