1	Board of Investment Government of Pakistan Investment Climate in Pakistan A Presentation by Chairman, BOI
2	Presentation Structure 1. Economy – Key features 2. Pakistan’s Strengths 3. Regional & Pakistan Investment Scoreboard 4. Protection to Investment 5. Pakistan’s Investment Policy 6. Pakistan’s Investment Policy – regional perspective 7. Sectoral Investment opportunities 8. OICCI 9. Status of Impediments to Investment Promotion 10. Macro-economic developments (1999-00) 11. Structural Reform Measures (1999-00) 12. Steps taken by BOI for improving investment climate 13. BOI: Direction, Vision and Missions
3	Economy - Key Features
4	Pakistan’s Strengths: Large Market Size and attractive location for exports to Central Asia, Middle East and South Asia A large emerging middle class with growing demand for consumer durables, autos, services Per Capita Income of PPP $ 2000 and 40 years' record of 6 percent GDP growth annually Abundance of Water Resources, Natural Gas and other natural resources Easy Sea Port, Airport Connections with Europe, Asia and Middle East. Road links to CARs/ECO countries English speaking educated and trainable manpower with aptitude for fast learning Self-sufficiency in food production and strong agriculture sector
5	Pakistan’s Strengths: Liberal foreign exchange regime Repatriation of capital, profits, dividends allowed Quantitative restrictions on imports have largely been removed Import tariff rates being brought down to maximum rate of 30% with average incidence of I4‑15% Dynamic financial Sector open to foreign investors is diversified and has potential for future growth Capital markets offer a range of instruments for raising domestic finance A fibre optic backbone infrastructure up and running for IT services
6	Pakistan’s Strengths: Consistent Investment Policy Trends Liberalization De-regulation Privatization Consistent policy direction, but problem has been and is, of inconsistent implementation
7	Weaknesses Poor governance in the nineties – with serious adverse consequences for efficiency and equitable distribution of growth. Failed democratic regimes with frequent changes in government in the last decade. Lingering dispute with Hubco and freezing of foreign currency accounts in May 1998 have shaken investor confidence (Both the issues now resolved). Key economic institutions have been in a state of financial and management disarray creating strains on public finances as well as banking system. Bureaucratic procedures and enforcement of contracts are slow, time consuming and cumbersome, encouraging lobbying and rent-seeking opportunities. Public service delivery of essential services is of low quality and inefficient Non-government organizations (NGOs) have not played a major role in social development and Micro Credit allocation to the poor.
8	Global/Regional Investment Scoreboard Foreign Investment Inflows - 1999
9	Pakistan Investment Scoreboard (1990 – 2000)
10	Pakistan Investment Scoreboard Main Foreign Investors (1990 – 2000)
11	Foreign Investment Shares by Sector
12	Protection & Repatriation of Investment
13	Pakistan’s Investment Policy
14	Pakistan’s Investment Policy - Regional Perspective
15	Sectoral Investment Opportunities
16	Pharmaceuticals Multinational Pharma Members of OICCI US 11 British 6 German 5 Swiss/Dutch & French 4 Total: 26 More than 50 local Pharma manufacturers Multinational’s share in local market is 60%
17	PRIVATIZATION Upcoming Transactions Prior to June 2003
18	Banking and Finance
19	Oil and Gas
20	Commercial and Industry
21	Power
22	MAJOR INVESTMENTS IN IT SECTOR Align Tech established the first call center (100 + agents) at Lahore Cisco to put up a full fledged office in PK Lockheed Martin actively working with partners in the private sector Microsoft negotiating a multi million $ investment package with GOP Oracle to invest $ 20 million in training in Sindh $ 30 million Telehousing Project with Akhtar Group, UK being signed IBM to invest $ 3.5 million in IT education
23	MAJOR INVESTMENTS IN IT SECTOR Commitments from CERN, Geneva and World Bank Huawei Technologies to invest $ 2.5 m in IT Center in Pakistan Motorola to invest $ 150 m in expanding its cellular network ZTE to establish a software development center Around $ 300 million investment has been indicated so far INVESTMENTS IN TEXTILE SECTOR More than $ 500 million for BMR/expansion of textile sector.
24	INVESTMENT COMMITMENTS IN OIL & GAS AS SECTOR
25	INVESTMENT COMMITMENTS IN OIL & GAS AS SECTOR
26	Status of Impediments to Investment Promotion Impediments Freezing of foreign currency accounts Outstanding IPP/Hubco litigation Over-regulation: too many regulatory agencies too many SROs and too much bureaucracy Inconsistency in policy implementation Negative international image of Pakistan perception of Pakistan as high-risk low credit ratings Current Status Resolved Resolved Improvements in progress Being removed Pakistan & India have declared ceasefire and indicated for holding talks IMF has approved a standby credit Hubco issue resolved Credit ratings improved to B+
27	Status of Impediments to Investment Promotion Impediments Domestic fixed capital formation stagnant except Textiles, IT and Oil & Gas Low confidence among domestic investors Pakistani investors moving overseas Investor shyness among overseas Pakistanis Current Status Activity in other sectors generated Improved – specially in past 2 months Recent developments on domestic political front and IMF Package have changed the environment Workers home remittances increasing; OPs are now showing interest. July – Nov ‘00 remittances increased by 24% as compared to same period of 1999
28	MACRO ECONOMIC DEVELOPMENTS DURING 1999-00 Agriculture Sector boosted real GDP growth to 4.8% Agriculture out-put expanded by 7% Industrial activity contracted by 0.8% - collapse in sugar production Inflation 3.6% External account deficit narrowed from 3.8% of GDP in 1998-99 to 1.6% Exports increased by 8.5% in $ terms Import Bill increased due to international petroleum prices Exchange rate stable
29	STRUCTURAL REFORM MEASURES IN 1999-00 Fiscal GST extended to petroleum, gas and electricity Tax whitener schemes withdrawn Tax amnesty scheme remained in place Major Tax Survey and registration campaign launched to widen the tax base Price adjustment mechanism introduced for petroleum products.
30	STRUCTURAL REFORM MEASURES IN 1999-00 Import liberalization in international trade, agriculture and petroleum products. Restructuring reforms for key public enterprises Corporate management structure for petroleum, gas and power sectors Deregulation of petroleum products:- - Furnace oil in July, 2000 - HSD under process Provincial taxation structure streamlined with reduction in number of provincial taxes
31	STRUCTURAL REFORM MEASURES IN 1999-00 Financial Loan recovery drive Improvement in Bank’s financial position Integration of financial markets National Saving Scheme Reforms:- - Reducing financial market segmentation - Encouraging the capital market - Reducing cost of government borrowing Requirement of placing foreign currency deposits by Banks with SBP liberalized
32	Governance & Transparency Anti corruption move Right sizing of Government machinery Monitoring of public sector organizations Professional management being introduced in public sector National devolution plan Enhancing quality of public sector spendings Civil service, Police and Judiciary reforms with increased accountability of public officials Improving the transparency of economic and financial policies Political Bold steps taken for regional and domestic political stability Further developments in progress
33	Key Features of BOI’s Capacity-Building Project Road Map: study of laws, rules, procedures that investors have to comply Database and interactive website: for investors, government departments, embassies, with hot links into other investor-relevant web sites Effective Partnerships: with provinces, ministries, private sector and trade bodies Investor Targeting Strategy: investment promotion and image building activities Develop a Service-oriented organization culture
34	Improving Investment Climate Improving existing investment policies Revamping the BOI: introduction of corporate culture building institutional capacity (ADB) Addressing the following major constraints to investment: ineffective policy implementation local and international political issues Improvement in quality of life
35	Major Steps to Restore Confidence New sectoral and export promotion policies Promoting investments in SMEs Ambitious privatization program Restructuring the Central Board of Revenue Reforming the tariff and tax systems Dismantling the SRO culture
36	Steps taken by BOI for improving investment climate A presentation made to Chief Executive of Pakistan on 16^th October, 2000. C.E approved the strategy for boosting domestic and foreign investment Institutional strengthening of BOI:- BOI Ordinance under submission to Cabinet BOI’s restructuring underway Induction of private sector members in BOI’s Board OPs are being appointed as Investment Counsellors Young professionals being inducted in BOI ADB Project on BOI’s Capacity building
37	Steps taken by BOI for improving investment climate Greater participation of Provinces in investment mobilization. PCOIs have been revived by the Balochistan, Punjab and Sindh Governments Two Industrial Estates in each Province are being identified for development as Model Estates having infrastructure/utilities and other support facilities Investment Promotion Campaign:- Overseas Investment Conferences in investment potential countries during this year. Pakistan missions are being consulted for suitable dates, modalities, etc. Domestic Investment Conferences. First one: Agribusiness Conference April, 2001
38	Steps taken by BOI for improving investment climate One Window Service at BOI having full support at Federal, Provincial, local level Full support to Pakistan Chapter of YPO for their Seminar at Lahore in February this year Supply of natural gas to Industrial Estates of Nawabshah, Nooriabad and Risalpur. Ministry of Petroleum has agreed to do the needful at the earliest
39	Steps taken by BOI for improving investment climate Promotional documentary as well as printed material on Investment Policy, Incentives and Opportunities Investor tracking exercise in progress Consultation process and dialogue initiated with FPCCI, Local Chambers, Overseas Chambers, Foreign Missions, CBR and other government agencies/Ministries BOI’s Website is being up-graded and converted into dynamic site
40	Improvements made in existing Investment Policy
41	Improvements made in existing Investment Policy
42	"BOI’s direction – Striving for..." BOI’s direction – Striving for Investor Friendly Pakistan in 21^st Century BOI’s Vision – Promoting domestic and foreign investment to enhance Pakistan’s international competitiveness and contribute to economic and social development BOI’s Missions : To implement Policy Simplify procedures to attract investment To promote investment for profits Promotion (proactive, cost effective and responsive) Facilitation (account executives to provide customized assistance to investors) To coordinate for success Build linkages amongst provinces, private & public investors and overseas missions
43	"Improvements in Visa Policy" Improvements in Visa Policy Business Visa: Pakistan missions can issue multiple entry visa upto 3 years to businessmen and investors Where there is no Pakistani Embassy, 30 days’ Landing Permit on arrival at airport Multiple entry resident visa upto 3 years to businessmen of all countries who bring in an amount of $ 200,000 Work Visa: Grant of Work Visa cases are cleared by the Committee set-up in Board of Investment. Maximum time 1 month
44	"Registration of Foreigners with Police" Registration of Foreigners with Police: All foreigners are now exempted from registration with police, except the nationals of countries on negative list In case of countries on the negative list (except Indians and foreigners of Indian origin), their nationals in the managerial category, who are issued Work Visa are also exempted from police registration
45	Overseas Investors Chamber of Commerce & Industry (OICCI) Total Members: 190 (54 companies quoted on stock exchange) European Union: 105 American: 45 Japanese: 16 Middle East: 09 Others: 15
46	OICCI Sectoral Position Industrial Undertakings: 106 Banking & Financial Services: 37 Trading: 33 Insurance, Shipping & Airline: 14