1	OIC and Pakistan Business Environment & Opportunities OIC/IDB Workshop Istanbul
2	OIC-Muslim World
3	Organization of the Islamic Conference (OIC) Established: September 1969 Members: 57 states Islamic Solidarity among Member States. Cooperation in Political, economic, social, cultural and scientific fields Safeguard dignity, independence and national rights Eliminate racial discrimination and all forms of colonialism Promotion of better understanding among Member States
4	Muslim World – Facts & Figures (2000)
5	Muslim World - Strengths Common historical, cultural, commercial & religious ties 25% of World population Unique strategic location South-East, West, South & Central Asia; Africa; Europe; 20% of World land Area Surrounded by open seas and have rivers & lakes International trade-routes Rich civilizations & traditions Technology: Turkey, Malaysia, Indonesia, Pakistan, Iran Capital: Middle East, Malaysia, Brunei Human Resources: Turkey, Malaysia, Indonesia, Pakistan, Egypt, CARs, European & American Muslims Natural Resources: Oil & Gas, Minerals, Agri-produce, Livestock & Dairy, Fisheries (20 – 40% of Global) Population: 1.2 Billion +
6	Muslim World – Weaknesses Only 5% of global GDP Only 7% of global trade Uneven economic & development terrain Insufficient physical & social infrastructure Relatively obsolete technology Less developed human resource Lack of Harmony & Understanding Weak political will Negative image Weak Defence Dependence on West Lack of modern education
7	OIC – Private Sector Development Challenges: Slow GDP Growth Un-sustainable economic growth Unfriendly investment climates Inconsistent policies Governance Heavy reliance on foreign financial assistance Less utilization of domestic resource base Political and Regional instabilities
8	OIC – Private Sector Development Challenges: (Cont’d…..) Failure to share in global production Excessive regulatory burden Weak financial policies and institutions: Discouraging availability of financing for private sector High levels of poverty Informal private sector Lack of private sector investment in infrastructure SME – Sector not nurtured
9	Private Sector Development – The Role of OIC Like E.U, ASEAN: Strong & Effective OIC by enhancing mutual: Business/Trade – Remove obstacles Investment – Policy dialogue & creating OIC states investment friendly regimes Technology Transfer Information & HR sharing Political Cooperation & support Education & Health To help members compete globally Monitoring World economic & investment developments and implications on Muslim World Develop counter measures/strategy
10	The Role of OIC (Cont’d) Encourage dynamic private sector – led growth Increase support from multi – lateral institutions: * World Bank * IFC * ADB * EC * IDB (Focus: IDB) Enhance share in global production Vis-à-vis Increase imports from member states Work for political stability at regional and national levels
11	The Role of OIC – Member Governments Active involvement of private sector in physical & social infrastructure development Maximize utilization of local resource base Minimize regulatory burdens Poverty reduction Active involvement of Private Sector in Policy formulation, implementation & decision making Capital surplus member countries should invest their funds in other member countries
12	The Role of IDB IDB should provide support through following instruments:- Improve intra-OIC investment & trade regimes Active inter-action with IPAs of member states Capacity building Identify key growth sectors and projects in member states Knowledge base on constraints to private sector development Further development of financial sector in member states Equity & loan investments and guarantees to mobilize private investment as well as exploitation of OIC natural resources Special Development Focus by financing: SMEs Social & Physical Infrastructure projects Purchase of Public Sector projects – privatization Intra-OIC-Trade
13	Case Study - Pakistan Like many other OIC – Members, Pakistan is a typical example Pakistan faces similar challenges to its private sector development Pakistan has identified the bottlenecks and undertaken several reforms Improving results Continuity of policies & reforms required
14	The Challenges Improve Macroeconomic Balance Revive Economic Growth Improve Investor’s Confidence Improve Governance Arrest Rising Trend in Poverty
15	Policies pursued Stabilization Policies Reduced Fiscal Deficit Reduced Current Account Deficit Market-based Exchange Rate Structural Reforms Tax Reforms Trade & Tariff Reforms Deregulation & Privatization Financial Sector and Capital Market Reforms Transparency in Fiscal Operation Improving Governance Poverty Reduction Programme
16	Economic Achievements during 3 years Exports $ 9 billion Forex reserve $ 7.6 billion ($ 1.6 B in 1999) Foreign remittances increased: $ 1 billion à $ 2.4 billion External Balance of Payment strengthen Stable exchange rate Industrial production averaged 6.5% Inflation averaged 3.5% Tax revenue: Rs.404 billion (13% growth) Fiscal deficit reduced to 4.9% of GDP External debt reduced by $ 2 billion Debt servicing as % of total revenue reduced: 63.5% à 40.7% Govt. is spending Rs.161 billion on poverty reduction Wide range of structural reforms introduced FDI increased Accelerated privatization & deregulation
17	Deregulation Government controls are being removed for better economic development Investment in all economic sectors deregulated Investors free to choose projects / sectors Foreign investment allowed in all sectors No limit on project size Remittance of royalty, technical, franchise fees allowed Number of specified industries reduced from 23 to 4
18	Deregulation (Cont’d) Established independent regulators:- Securities Exchange Commission of Pakistan (SECP) Pakistan Telecommunication Authority (PTA) National Energy and Power Regulatory Authority (NEPRA) Oil & Gas Regulatory Authority (OGRA) Pakistan Electronic Media Regulatory Authority (PEMRA) Pakistan Procurement Regulatory Authority (PPRA) Imports of Furnace Oil and High Speed Diesel deregulated Prices & allocation of LPG deregulated
19	Privatization Privatization Commission established in 1991 to: Privatize federal entities Follow open and transparent sale process A revitalized Privatization Program launched: Privatization Law 2000, to protect investors Prioritization of assets sales and diversified divestment strategies
20	Privatization (Contd….) Improving Enabling Framework: Restored investor confidence - resolving investor disputes Measures to ensure transparency Appointment of world renowned Consultants: ü JP Morgan ü Goldman Sacks ü Price Water House ü Merrill Lynch Established independent regulatory bodies to clarify rules of the game and ensure a level playing field:- ü Power üOil and Gas ü Telecom Issued new rules and regulations, and established Ministry of Privatization Improved public understanding of privatization:- ü Seminars ü Interviews ü Publications ü Website
21	Liberal Investment Policy All economic sectors open for FDI 100% foreign equity allowed No Government sanction required Attractive incentives package Remittance of Royalty, Technical & Franchise Fee; Capital, Profits, Dividends allowed Foreign investment fully protected: Foreign Private Investment (Promotion & Protection) Act, 1976 Protection of Economic Reforms Act, 1992 Foreign Currency Accounts (Protection) Ordinance, 2001 Bilateral Agreements: Countries OIC Investment Protection: 43 20 Avoidance of Double Taxation: 51 19
22	Pakistan: Sources of FDI (89/90 – 01/02)
23	Pakistan’s Trade with OIC
24	PRIORITY SECTORS Oil, gas & mining Information Technology & Telecom Energy (Hydel & coal) Agriculture Corporate Agriculture Farming (CAF) Livestock & dairy Fisheries Horticulture Cool chains & grain storage SMEs Textiles (apparels & children clothing) Leather (footwear, garments, etc.) Engineering & Electronics Sports & surgical goods Gemstones & jewelry Tourism
25	PRIORITY SECTORS (Contd..) Infrastructure and related services Hydro-electric power generation Roads (highways, motorways) Railways Airports Ports & Port Handling activities Gas & Oil pipelines Urban Mass transit Storage facilities for agricultural produce Cool chains (for agro-business)
26	Oil & Gas Sector
27	I.T & Telecom
28	Power
29	Why Pakistan Strategic Location Emerging Regional Hub & Transit Access to Afghanistan/CARs/Gulf/SAARC Abundant Land & Natural Resources Low Production Costs Trained and Low Cost Manpower Export Processing Zones and Industrial Estates One Window Facilitation Friendly environment
30	Pakistan is open for business…..
31	THANK YOU