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A
GLOBAL/COUNTRY STUDY AND REPORT
SUBJECT CODE: 2830003
ON
“PAKISTAN”
SUBMITTED TO: -
GUJARAT TECHNOLOGICAL UNIVERSITY
IN PARTIAL FULFILLMENT OF THE REQUIREMENT OF THE
AWARD FOR THE DEGREE OF MASTER OF BUSINESS
ASMINISTRATION
Batch: 2011-13
MBA SEMESTER III
SAMARTH INSTITUTE OF MANAGEMENT
MBA PROGRAM
AFFILIATED TO GUJARAT TECHNOLOGICAL UNIVERSITY
AHMEDABAD
APRIL – 2013
2
TABLE OF CONTENT Sr. No. Title Page No.
1 Introduction about the Country 5
1.1 Overview of Pakistan 5
1.2 Geography of Pakistan 7
1.3 Demographic profile of Pakistan 8
1.4 Largest / Major cities of Pakistan 9
2 Highlights of Pakistan’s Economy 10
3 Major Economic Sectors of Pakistan 13
3.1 Sectoral Analysis of growth 13
3.2 Contribution to Real GDP Growth 18
4 SWOT Analysis 19
4.1 Strengths 19
4.2 Weaknesses 19
4.3 Opportunities 20
4.4 Threats 21
5 PESTEL Analysis 22
5.1 Political Factors 22
5.2 Economical Factors 24
5.3 Socio-Cultural Factors 29
5.4 Technological Factors 31
5.5 Legal Framework 32
6 Trade Relation between India & Pakistan 33
7 Region Geo Economics & Prospects of Bilateral Trade 36
7.1 India’s Exports towards Pakistan 36
7.2 India’s Imports From Pakistan 39
8 How to start a new business in Pakistan 41
9 List of Trading partners of Pakistan 43
10 Import – Export Procedure 44
10.1 Import Procedure 44
3
10.2 Export Procedure 45
11 Top news of Pakistan – India Trade 46
11.1 Pakistan willing to buy India petroleum products at “right
prices”
46
11.2 Diamond players see Pakistan as a potential export
destination
47
11.3 India-Pakistan trade expected to receive another boost 48
11.4 Pakistanis allowed to buy Indian shares 49
11.5 Pak-India trade suffers for Inaction 50
12 Retail Industry/ Sector 51
12.1 Introduction 51
12.2 The Importance of Retailing in economy of Pakistan 52
12.3 Structure of Retailing 54
12.3.1. Store Retailing 54
12.3.2 Non Store Retailing 55
12.4 Investment regulation and barriers in Pakistan 57
12.4.1. Barriers to trade shaping the international activities of retailers
57
12.4.2. Institutional, Cultural and organizational Barriers 57
12.4.3. Regulatory Barriers 58
12.5 Overview of Pakistan’s Economy 59
12.6 Punjab’s Potential 61
12.7 Present position & trend of business in Pakistan 62
12.7.1. Food & Beverages 62
12.7.2. Apparel 62
12.7.3. Foot ware 63
12.7.4. Health & Beauty 63
12.7.5. Electronics 64
12.7.6. Home Furnishing 64
13 Telecommunication Industry/ Sector 65
13.1 Introduction of Telecommunication Industry 65
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13.2 Companies of Pakistan’s Telecommunication Industry 67
13.3 Introduction of Telephony companies in Pakistan 69
13.4 Introduction of WiMax 71
13.5 Revenue Contribution of Telecom Industry 74
13.5.1. Revenue share of Telecom services 75
13.6 FDI in telecom sector 77
13.7 Comparison with regional economies 78
13.8 Social Aspects of Telecommunication in Pakistan 80
13.9 Boom in the Telecommunication Sector 87
13.10 Boom period effects on existing Businesses 88
13.11 Telecommunication De-Regulation policy 91
13.12 Telecom imports in Pakistan over past five years 94
13.13 Telecom imports News in Pakistan 95
13.14 Indian telecommunication policies 98
13.15 Business opportunities in telecommunication industry in Pakistan
100
14 Agriculture Industry/ Sector 102
14.1 Background 102
14.2 Land use, Farming systems & Institutions 102
14.3 Significance of the Agricultural sector development 103
14.4 Overview of Agricultural sector development 104
14.5 Policies & Norms 112
14.6 Potential for Gujarat Market 117
15 Conclusion 118
16 Bibliography 122
5
1. Introduction about the Country 1.1 Overview of Pakistan:
Pakistan, officially the Islamic Republic of Pakistan is a sovereign country in South Asia. With a population exceeding 190 million people, it is the sixth most populous country in the world. Located at the crossroads of the strategically important regions of South Asia, Central Asia and Western Asia, Pakistan has a 1,046-kilometre (650 mi) coastline along the Arabian Sea and the Gulf of Oman in the south and is bordered by India to the east, Afghanistan to the west and north, Iran to the southwest and China in the far northeast. It is separated from Tajikistan by Afghanistan's narrow Wakhan Corridor in the north, and also shares a marine border with Oman.
Pakistan is a federal parliamentary republic consisting of four provinces and four federal territories. It is an ethnically and linguistically diverse country, with a similar variation in its geography and wildlife. A regional and middle power, Pakistan has the seventh largest standing armed forces in the world and is also a nuclear power as well as a declared nuclear weapons state, being the only nation in the Muslim world, and the second in South Asia, to have that status. It has a semi-industrialized economy which is the 27th largest in the world in terms of purchasing power and 47th largest in terms of nominal GDP.
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Emblem of Pakistan Flag of Pakistan
Pakistan was created in 1947 as an independent nation for Muslims from the regions in the east and west of India where there was a Muslim majority. Initially a dominion, Pakistan adopted a new constitution in 1956, becoming an Islamic republic. A civil war in 1971 resulted in the secession of East Pakistan as the new country of Bangladesh.
The country continues to face challenging problems, including terrorism, poverty, illiteracy and corruption. It is a founding member of the Organization of the Islamic Conference (now the Organization of Islamic Cooperation) and is a member of the United Nations, the Commonwealth of Nations, the Next Eleven Economies, SAARC, ECO, D8 and the G20 developing nations.
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1.2 Geography of Pakistan:
Location Southern Asia, bordering the Arabian Sea, between India on the east and Iran and Afghanistan on the west and China in the north.
Area Total: 877,365 sq km Country comparison to the world: 36 Land: 770,875 sq km Water: 25,220 sq km
Climate Mostly hot, Dry desert; temperate in northwest; arctic in north Natural Resources Land, extensive natural gas reserves, limited petroleum, poor
quality coal, iron ore, copper, salt, limestone. Total Renewable Water Resources
233.8 cu km (2003)
Natural Hazards Frequent earthquakes, occasionally severe especially in north and west; flooding along the Indus after heavy rains (July and August).
Environmental Issues Water pollution from raw sewage, industrial wastes, and agricultural runoff; limited natural fresh water resources; most of the population does not have access to potable water; deforestation; soil erosion; desertification.
(Source: https://www.cia.gov/library/publications/the-world-factbook/geos/pk.html)
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1.3 Demographic Profile of Pakistan
Total Population: 190,291,129 (2012), Sixth largest populous country in the world Age structure
0-14 years: 35.4% (male 34,093,853/female 32,278,462)
15-64 years: 60.4% (male 58,401,016/female 54,671,873)
65 years and over: 4.2% (male 3,739,647/female 4,157,870) (2012)
Median age
Total: 21.6 years
Male: 21.5 years
Female: 21.6 years (2012)
Population growth rate 1.551% (2012)
Urbanization
Urban population: 36% of total population (2012)
Rate of urbanization: 3.1% annual rate of change (2010-15 est.)
Sex ratio
At birth: 1.05 male(s)/female
Under 15 years: 1.06 male(s)/female
15-64 years: 1.07 male(s)/female
65 years and over: 0.89 male(s)/female
Total population: 1.06 male(s)/female (2011-12 )
Life expectancy at birth Total population: 66.35 years
Male: 64.52 years
Female: 68.28 years (2011- 12
Currency 1 Pakistani Rupee (PKR)
Ethnic Groups
Punjabi 44.68%, Pashtun (Pathan) 15.42%, Sindhi 14.1%, Sariaki 8.38%, Muhajirs 7.57%, Balochi 3.57%, other 6.28%
Religions Muslim 95% (Sunni 75%, Shia 20%), other (includes Christian and Hindu) 5%
Languages
Punjabi 48%, Sindhi 12%, Siraiki (a Punjabi variant) 10%, Pashtu 8%, Urdu (official) 8%, Balochi 3%, Hindko 2%, Brahui 1%, English (official; lingua franca of Pakistani elite and most government ministries), Burushaski, and other 8%
Literacy Rate
Definition: age 15 and over can read and write Total population: 49.9% Male: 63% Female: 36%
Major Infectious Degree of risk: high
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Diseases Food or waterborne diseases: bacterial diarrhea, hepatitis A and E, and typhoid fever Vector borne diseases: dengue fever and malaria Animal contact disease: rabies Note: highly pathogenic H5N1 avian influenza has been identified in this country; it poses a negligible risk with extremely rare cases possible among US citizens who have close contact with birds.
(Source: https://www.cia.gov/library/publications/the-world-factbook/geos/pk.html)
1.4 Largest / Major cities of Pakistan:
Largest cities of Pakistan – 2012
Rank City Prominence Population Rank City Prominence Population
1 Karachi Sindh 11,136,886 11 Sargodha Punjab 593,463
2 Lahore Punjab 6,658,393 12 Sialkot Punjab 545,646
3 Faisalabad Punjab 2,600,525 13 Bahawalpur Punjab 528,678
4 Rawalpindi Punjab 1,824,983 14 Sukkur Sindh 400,148
5 Multan Punjab 1,550,046 15 Jhang Punjab 379,770
6 Gujranwala Punjab 1,466,063 16 Sheikhupura Punjab 362,808
7 Hyderabad Sindh 1,391,534 17 Mardan Khyber
Pakhtunkhwa
326,132
8 Peshawar Khyber
Pakhtunkhwa
1,303,351 18 Gujrat Punjab 325,952
9 Islamabad Capital
Territory
1,082,262 19 Larkana Sindh 322,315
10 Quetta Balochistan 842,410 20 Kasur Punjab 317,575 (Source: http://en.wikipedia.org/wiki/Pakistan#Etymology)
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2. Highlights of the Pakistan’s Economy
Real GDP growth for 2011-12
has been estimated at 3.7 percent as compared to 3.0 percent in the previous fiscal year 2011.
Inflation & Unemployment
rates are 8.10 percent and 5.6 percent respectively. (Source:
http://en.wikipedia.org/wiki/Economy_of_Pakistan)
The commodity producing
sector has performed much better in outgoing fiscal year as compared to last year; its growth
rate is 3.28 percent against 1.47 percent last year.
Agriculture registered the
growth of 3.13 percent against 2.38 percent last year.
Major Crops registered an
accelerating growth of 3.18 percent compared to a negative growth of 0.23 percent last year.
The major crops including Cotton, Sugarcane and Rice witnessed growth in production of
18.6 percent, 4.9 percent and 27.7 percent respectively.
However, Wheat registered a
negative growth of 6.7 percent mainly due to 2.6 percent decline in area under cultivation,
sowing was also delayed because of late receding rain water in lower Sindh which resulted in
a decline in both the acreage as well as the yields.
Minor Crops growth declined
by 1.26 percent, due to rains affect in Sindh resulted in destruction of minor crops.
Livestock witnessed a
marginally higher growth of 4.04 percent against the growth of 3.97 percent last year.
Fisheries sector witnessed a
growth of 1.78 percent against the growth of 1.94 percent last year.
Forestry recorded growth at
0.95 percent as compared to the contraction of 0.40 percent last year.
Industrial sector contains 25.4
percent of GDP having sub sectors: manufacturing, construction, mining & quarrying and
electricity and gas distribution.
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Manufacturing Sector
registered growth at 3.56 percent compared to the growth of 3.06 percent last year.
Small scale manufacturing
maintained its growth of last year at 7.51 percent and slaughtering growth is estimated at
4.46 percent against 4.38 percent last year.
Large Scale Manufacturing has
also witnessed a slight improvement. It has shown a growth 1.05 percent in July-March
2011-12 as against 0.98 percent last year.
Construction Sector has shown
6.46 percent growth as compared to negative growth of 7.09 percent in last year.
Mining and Quarrying sector
recorded positive growth of 4.38 percent during the year 2011-12 against the negative growth
of 1.28 percent last year.
Electricity and gas distribution
witnessed a growth of -1.62 percent against the growth of -7.25 percent last year.
The Services sector has
registered a growth rate of 4.02 percent in 2011-12 against the growth of 4.45 percent in the
last year. This performance is dominated by Finance and Insurance at 6.53 percent, Social
and Community Services 6.77 percent and Wholesale and Retail Trade 3.58 percent. The
contribution of transport, storage and communication is estimated at 1.25 percent.
Private consumption
expenditure has increased to 75 percent of GDP; whereas public consumption expenditures is
13 percent of GDP. Total consumption has reached 88.35 percent of GDP in fiscal year
2011-12 as compared to 83 percent in the last fiscal year.
Real private consumption grew
at 11.6 percent in 2011-12 as compared to 3.7 percent last year. Whereas, real government
consumption grew at 8.2 percent in 2011-12 as compared to 5.2 percent last year.
Per capita real income grew at
2.33 percent in 2011-12 as compared to 1.33 percent growth in last year. In dollar term it
increased from $ 1258 to $ 1372 in 2011-12.
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Total investment has declined
from 13.1 percent of GDP to 12.5 percent of GDP in 2011-12 as compared to last year.
Fixed investment has declined
to 10.9 percent of GDP in 2011-12 from 11.5 percent of GDP as compared to last year.
Private investment witnessed a
contraction of 7.9 percent of GDP in 2011-12 as compared to 8.6 percent of GDP last year.
Public investment as a percent
of GDP increased to 3.0 percent in 2011-12 against the 2.9 percent last year.
National Savings are 10.7
percent of GDP in 2011-12 as compared to 13.2 percent in 2010-11.
Foreign Direct Investment in
Pakistan stood at $ 666.8 million during July-April 2011-12 as against $ 1292.9 million last
year.
Worker’s Remittances has
increased to $ 10,876.99 million in July-April of 2011-12, as against $ 9,046.61 million in
the comparable period of last year, posted a positive growth of 20.23 percent.
(Source: Pakistan Economic Survey 2011-12)
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3. Major
Economic Sectors of Pakistan
3.1 Sectoral Analysis of Growth:
The following table highlights the relative importance of various sectors and Sub-sectors of
Pakistan and interrelationship between them.
Growth Performance of Components of Gross National Product
Sectors/ Sub-sectors 2007-08
2008-09
2009-10
Commodity producing Sector 1.3 1.8 3.56 1. Agriculture 1.0 4.0 0.62
Major Crops -6.4 7.8 -2.28 Minor Crops 10.9 -1.2 -7.72 Livestock 4.2 3.1 4.28 Forestry 9.2 2.3 2.20 Fishing -13.0 -3.0 1.47
2. Mining & Quarrying
4.4 -0.5 2.23
3. Manufacturing 4.8 -3.6 5.46
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Large Scale 4.0 -8.1 4.79 Small Scale 7.5 7.5 7.51 Slaughtering - - 4.33
4. Construction -5.5 -11.2 16.34 5. Electricity & Gas
Distribution -23.6 59.0 6.16
Service Sector 6.0 1.7 2.63 6. Transport, Storage
and Communication 3.8 3.6 1.89
7. Wholesale & Retail Trade
5.3 -1.4 4.49
8. Finance & Insurance
11.1 -7.6 -12.16
9. Ownership of Dwellings
3.5 3.5 3.51
10. Public Administration & Defense
1.2 3.6 2.52
11. Social, Community & Public Services
9.8 8.9 7.83
12. GDP (Constant Factor Cost)
3.7 1.7 3.07
(Source: Pakistan Bureau of Pakistan)
Commodity Producing Sector: The commodity producing sector (CPS) comprises of
agriculture and industry. It is the most important sector of the economy, with relatively stronger
forward and backward linkages for economic development and prosperity of the country. It
accounted for 46.5 percent of GDP during the outgoing fiscal year. This is a decline from 49.1
percent of GDP in 2001-02, indicating that the share of the non-commodity producing sector has
increased. The commodity producing sector has performed much better in outgoing fiscal year
compared to last year; its growth rate this year was 3.28 percent against only 1.47 percent in last
year. The recovery in both agriculture and industrial sector, though moderate, has helped to
achieve this level. However, the growth of the commodity producing sector remained far below
its potential due to largely unforeseen climatic factors.
Agriculture Sector: Agriculture is a key sector of the economy. It provides food items
and raw materials for industrial units and accounts for 21 percent of GDP, 45 percent of
employment and 60 percent of exports. In the inevitable process of structural transformation its
share shrank to 21.1 percent in fiscal year 2011-12 compared to 24.1 percent ten years earlier in
2001-02. Despite its declining share, it is the single largest sector of Pakistan’s economy.
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Moreover, an overwhelming majority of the population depends directly or indirectly on income
generated by this sector. The agriculture sector has strong backward and forward linkages. As a
result its growth has a larger impact on the overall economic performance. The performance of
the agriculture sector remained weak due to recent catastrophic floods.
Major Crops: Major crops account for 31.87 of agricultural value added and registered an
accelerating growth of 3.18 percent compared to a negative growth of 0.23 percent last year and -
2.28percent in fiscal year 2009-10. The major crops including cotton, sugarcane and rice
witnessed growth in production of 18.6 percent, 4.9 percent and 27.7 percent respectively.
However, wheat a negative growth of -6.7 percent. The main reason for the negative growth of
wheat is the 2.6 percent decline in area under cultivation. In lower Sindh, in particular, sowing
was delayed mainly because of late receding rain water which resulted in a decline in both the
acreage as well as the yields. Moreover, in Punjab also the extended fog season delayed the
planting of seed beyond the optimal period. The other major crops bajra, jowar, maize, sesamim,
gram, barley, rapeseed and mustard and tobacco showed mixed trends but their share in the
overall sector is small.
Minor Crops: Minor crops contributed 10.11 percent to value addition in overall agriculture.
Production in this sub-sector declined by -1.26 percent. This negative growth is far below the
2.68 percent positive growth last year. The main reason for this negative growth of minor crops
is the heavy flood in Sindh and Balochistan provinces. The growth of pulses is estimated at -3.50
percent, vegetables -10.0 percent, chilies -78.4 percent, onion -15.4 percent and oil seeds -26.9
percent.
Livestock: Global integration, rising income and living standards as well as changing dietary
patterns across regions have brought a paradigm structural shift. This shift is visible in Pakistan
also. The share of livestock in agriculture has increased to 55 percent. Livestock includes cattle,
buffalos, sheep, goat, camel, horses, asses, mules and poultry and their products. The demand for
livestock has grown at a phenomenal pace. The increase in prices has provided incentive for
greater production and spurred growth. The importance of this sector may be recognized by the
fact that the majority of people living in rural areas depend directly or indirectly on the livestock
and dairy sector. This sub-sector is highly labor intensive. It has also emerged as a major source
16
of income for the small farmers as well as the landless rural poor. Livestock has witnessed a
marginally higher growth of 4.04 percent against the growth of 3.97 percent last year. The
production of milk, poultry products and other livestock items has increased at the rate of 3.3
percent, 7.1 percent and 2.24 percent respectively.
Fisheries: The fisheries sector witnessed a growth of 1.78 percent against the growth of 1.94
percent last year. Components of fisheries such as marine fishing and in-land fishing, contributed
to an overall increase in value addition in the fisheries sub-sector. The gross value addition of
marine fish increased by 1.35 percent and that of inland fish by 1.96 percent.
Forestry: The growth of the forestry sub-sector is recorded at 0.95 percent as compared to
the contraction of -0.40 percent last year. Forests are a key component of our environment and
degradation of forests can pose severe socioeconomic challenges for the coming generations.
The main components of forestry, timber and fire wood, grew at 0.90 percent and 0.46 percent
respectively.
Manufacturing Sector: The manufacturing sector contributes much to the progress of
our economy. The manufacturing sector has remained under stress for the last several years, due
to energy shortages, poor law and order situation. The heavy floods also depressed the supply
chain and affected market demand. The share of the manufacturing sector in GDP was 17.7
percent in 2001-02. This has increased in 2011-12 to 18.6 percent of GDP. The manufacturing
sector has been hard hit by international and domestic factors, which caused manufacturing
sector was 3.56 percent compared to the growth of 3.06 percent last year. Manufacturing has
three main sub-components; namely the Large-Scale Manufacturing (LSM), Small Scale
Manufacturing and Slaughtering. Small scale manufacturing maintained its growth of last year at
7.51 percent and slaughtering growth is estimated at 4.46 percent against 4.38 percent last year.
Large Scale Manufacturing (LSM) has also witnessed a slight improvement. It has shown a
growth of 1.78 percent against the growth of 1.15 percent last year. The major LSM industries
which registered notable growth include; refrigerators 7.56 percent, sugar 27.09 percent,
beverages 10.60 percent, liquid/syrup 15.93 percent, injection 6.53 percent, soaps and detergents
8.15 percent, buses 25.0 percent, electric bulbs 15.02 percent, electric transformers 27.72 percent
17
etc. On the whole 38 major industries group recorded positive growth. The industries which
reported negative growth include; cooking oil -1.61 percent, motor tyres - 25.73 percent, T.V.
sets -22.19 percent and deep freezers -49.47 percent etc.
Construction Sector: The construction sector has shown 6.46 percent growth as
compared to negative growth of -7.09 percent in last year. The increase in growth is due to rapid
execution of work on the rehabilitation of the flood affected areas, increased investment in small
scale construction and rapid implementation of PSDP schemes which are near completion.
Mining and Quarrying: Extraction of minerals and ores through efficient mining and
quarrying provides convenient and economical access to raw materials and a competitive edge to
the country. The mining and quarrying sector recorded positive growth of 4.38 percent during the
year 2011-12 against the negative growth of -1.28 percent last year. The contribution of this
sector in GDP has remarkably and now accounts for 9.45 percent of the industrial value addition.
The output of chromite, bauxite, gypsum, chalk and fluoride increased by 591.54 percent, 82.15
percent, 24.43 percent, 82.18 percent and 111.28 percent respectively. This growth was also
made possible in some part due to the increase in natural gas production. The extraction of
bentonite, however, registered substantial decline of -47.82 percent. Much of the country’s
mining reserves exist in remote areas. Infrastructure improvements are necessary to sustain and
achieve higher growth rates in future. Improvement in the security situation in the country would
also lead to greater production.
Services Sector: The importance of the services sector has been recognized all over the
world. This sector has emerged as the main driver of economic growth. The services sector also
plays a vital role in sustaining economic activities in Pakistan. The economy has gone through a
major transformation in its economic structure. The share of the services sector has increased to
53.5 percent in 2011-12. In developed countries the share of services sector in GDP is around 75
percent. This share is 65 percent in Singapore, 52 percent in India and 42 percent in Indonesia.
The services sector consists of the following subsectors:
1. Transport, Storage and Communication;
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2. Wholesale and Retail Trade;
3. Finance and Insurance;
4. Ownership of Dwellings; Public
5. Administration and Defense;
6. Social Services.
The Services sector has registered a growth rate of4.02 percent in 2011-12. This performance is
dominated by Finance and Insurance at 6.53 percent, Social and Community Services 6.77
percent and Wholesale and Retail Trade 3.58 percent. The contribution of transport, storage and
communication is estimated at 1.25 percent. The recovery in agriculture and industry have
resulted a positive impact on the performance of the whole sale and retail trade. Our services
sector has a great potential to grow at a rapid pace. In order to develop the services sector,
Pakistan has recognized the needs to liberalize operating rights and has separated regulators from
operators.
3.2 Contribution to Real GDP Growth (Production
Approach)
As in previous years the improvements in economic growth in the fiscal year 2011-12 came
mainly from the services sector. The services sector contributed 58.58 percent to overall
economic growth; while the commodity producing sector (CPS) contributed only 41.4 percent.
The agriculture sector contributed 17.98 percent to economic growth compared to 23.43 percent
contribution by the industrial sector. The overall growth of 3.67 percent is shared between the
Commodity producing sector and Services sector.
Within the commodity producing sector, agriculture contributed 0.66 percentage points to overall
GDP growth, while industry contributed 0.86 percentage points. The services sector contributed
the remaining 2.15 percentage points. The percentage share of agriculture, manufacturing and
services in overall growth was 17.98 percent, 23.43 percent and 58.58 percent respectively. The
sectoral contribution to the GDP growth is shown below in Table.
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Sectoral Contribution to the GDP growth (% Points)
Sector 2007-08 2008-09 2009-10 2010-11 2011-12
Agriculture 0.23 0.86 0.13 0.50 0.66
Industry 0.38 -0.03 1.57 0.18 0.86
Manufacturing 0.92 -0.69 0.10 0.57 0.66
Services 3.08 0.89 1.37 2.36 2.15
Real GDP 3.68 1.72 3.07 3.04 3.67
(Source: Pakistan Bureau of Statistics)
4. S.W.O.T. Analysis
4.1 Strengths:
Large Market Size and attractive location for exports to South Asia, Central Asia and Middle
East.
Per Capita Income of PPP $ 2000 and 40 years’ record of 6 percent GDP growth annually
Abundance of Water Resources, Natural Gas. Easy Sea Port, Airport Connections with
Europe, Asia and Middle East.
A large emerging middle class with growing demand for consumer durables, autos, services
English speaking educated and trainable manpower with aptitude for fast learning
self-sufficiency in food production and a buoyant agriculture.
A liberal foreign exchange regime which allows un-restricted repatriation of profits,
dividends and remittances.
Quantitative restrictions on imports have largely been removed and tariff rates being brought
down to maximum rate of 25% with average incidence of 14-15%.
Financial Sector is open to foreign investors is diversified and has been Strengthened in the
last three years.
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Capital markets offer a range of instruments for raising domestic finance.
A fibre optic backbone infrastructure up and running for Information Technology enabled
services
4.2 Weaknesses:
Poor governance record 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 have
nurtured political uncertainty, discontinuity and inconsistency in policy implementation.
Lingering dispute with the Hubco and freezing of foreign currency accounts in May 1998
have shaken foreign investor confidence.
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 poor and inefficient and under investment has
led to congestion, shortages and access limited to the privileged far.
Non-governmental Organizations (NGOs) have not so far played a major role in social
development and Micro Credit allocation to the poor
4.3 Opportunities:
Oil and Gas resources: To be further explored, developed and distributed.
Investment in Physical Infrastructure Development : Open to private sector to meet the
growing demand in the areas of power, highways,ports, airports etc.
Information Technology: Relatively low cost manpower available with ample scope for
investing in Information Technology Education.
Agriculture: Productivity still behind production possibility frontier and requires technical and
financial inputs.
Agro-based Processing and Industries: Highly Competitive and oriented towards Exports but
still in state of infancy and need to beupscaled.
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Value added exports in textile sector: Has plans to modernise itstextile industry for capturing
world market share and positioning in post MFA period through technology, marketing and
design improvements and investment in machinery.
Financial Sector: Deepening to improve the mobilisation and allocation of financial resources.
Exports in non-traditional commodities: Fisheries, Gems and jewellery, Fruits and
Vegetables, Information Technology, are still under utilised.
Privatization: Public Sector assets worth $ 3-4 billion are available for sale to strategic
investors including foreign investors.
Non-Resident Pakistanis: Offer a large and rich reservation of talent, skills and capital for
joint venture partnerships.
4.4 Threats:
External and Domestic Debt burden is quite high relative to the capacity to service and need
to be reduced to manageable levels.
Tax-GDP ratio is one of the lowest among the developing countries and resource mobilization
effort has to be stepped up.
Fiscal deficits have been traditionally high and need to be gradually narrowed down.
Public Sector Corporations riddled with excess manpower, poor management and weak
financial base have to be restructured and strengthened
Incidence of poverty has risen during the last decade and poverty targeted interventions need
to be accelerated.
Stagnation in Domestic and foreign investment during the last several years has increased and
given rise to educated unemployment
High degree of centralization had eroded provincial autonomy and local government capacity
both of which need to be enhanced and strengthened.
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5. PESTEL
ANALYSIS
5.1 Political Factor:
Pakistan has been ruled by both democratic and military governments.[2] The first decade was
marred with political unrest and instability resulting in frequent collapses of civilian
democratic governments. Since 1947 till present now, Pakistan has been governed by various
of both right-wing conservative governments and left-wing socialistic oriented governments,
while neither far-right and far-left had failed to achieve enough majority to claim the
exclusive mandate.
From 1947 to 1958 as many as seven Prime Ministers of Pakistan either resigned or were
ousted. This political instability paved the way for Pakistan’s first military take over. On
October 7, 1958 Pakistan’s civilian and first President Iskander Mirza in collaboration with
General Mohammad Ayub Khan abrogated Pakistan’s constitution and declared Martial Law.
General Ayub Khan was the president from 1958 to 1969, and General Yahya Khan from
1969 to 1971, Chief Justice Habib Khan Marvath elected first Chairman Senate of Pakistan.
Civilian, yet socialist-oriented autocratic, rule continued from 1972 to 1977 under Zulfikar
23
Ali Bhutto, but he was deposed by General Zia-Ul-Haq. General Zia was killed in a plane
crash in 1988, after which Benazir Bhutto, daughter of Zulfikar Ali Bhutto, was elected as
the Prime Minister of Pakistan. She was the youngest woman ever to be elected the Head of
Government and the first woman to be elected as the Head of Government of a Muslim
country. Her government was followed by that of Nawaz Sharif, and the two leaders
alternated until the military coup by General Pervez Musharraf in 1999. From the resignation
of PresidentRafiq Tarar in 2001, to his own resignation in 2008, Musharraf was the President
of Pakistan. In 2008, Asif Ali Zardari was elected president
The bicameral legislature comprises a 100-member Senate and a 342-member National
Assembly. The President is the head of state and commander-in-chief of the armed forces
and is elected by an electoral college. The prime minister is usually the leader of the largest
party in the National Assembly. Each province has a similar system of government, with a
directly elected Provincial Assembly in which the leader of the largest party or alliance
becomes Chief Minister. Provincial governors are appointed by the President. The Pakistani
military establishment has played an influential role in mainstream politics throughout
Pakistan's political history. Presidents brought in by military coups ruled in 1958–1971,
1977–1988 and 1999–2008.
Pakistan's foreign policy focuses on security against threats to national identity and territorial
integrity, and on the cultivation of close relations with Muslim countries. A 2004 briefing on
foreign policy for Pakistani Parliamentarians says, "Pakistan highlights sovereign equality of
states, bilateralism, mutuality of interests, and non-interference in each other's domestic
affairs as the cardinal features of its foreign policy." The country is an active member of the
United Nations. It is a founding member of the Organisation of Islamic Cooperation (OIC),
in which it has promoted Musharraf's concept of "Enlightened Moderation". Pakistan is also
a member of Commonwealth of Nations, the South Asian Association for Regional
Cooperation (SAARC), the Economic Cooperation Organisation (ECO) and the G20
developing nations. India's nuclear tests were seen as a threat to Pakistan and led it to
establish itself as a nuclear power. Pakistan now maintains a policy of "credible minimum
deterrence".
Pakistan maintains good relations with all Arab and most other Muslim countries. Since the
Sino-Indian War of 1962, Pakistan's closest strategic, military and economic ally has been
24
China. The relationship has survived changes of governments and variations in the regional
and global situation. Pakistan and India continue to be rivals. The Kashmir conflict remains
the major point of rift; three of their four wars were over this territory. Pakistan has had
mixed relations with the United States. As an anti-Soviet power in the 1950s and during
Soviet-Afghan War in the 1980s, Pakistan was one of the closest allies of the US, but
relations soured in the 1990s when the US imposed sanctions because of Pakistan's
possession and testing of nuclear weapons. The US war on terrorism led initially to an
improvement in the relationship, but it was strained by a divergence of interests and resulting
mistrust during the war in Afghanistan and by issues related to terrorism. Since 1948, there
has been an ongoing, and at times fluctuating, violent conflict in the southwestern province
of Balochistan between various Baloch separatist groups, who seek greater political
autonomy, and the central government of Pakistan.
5.2 Economic Factor:
The Economic development record is mixed one for Pakistan throughout its life i.e. now more than a
half century. Away from poor initial endowments and dismal forecast of crumbling on economic front
after its independence the growth rate is fair enough to counter the forecasts. The growth rate till the
date averages to five percents approximately (Zaidi, 2006) throughout the history despite of all types
of fluctuations the country has seen on economic, political, geographical fronts etc. In 2004-05, it
defeated every nation in the region except China with an approximate growth rate of 8.6 %1.
Economy - overview: Decades of internal political disputes and low levels of foreign
investment have led to slow growth and underdevelopment in Pakistan. Agriculture accounts
for more than one-fifth of output and two-fifths of employment. Textiles account for most of
Pakistan's export earnings, and Pakistan's failure to expand a viable export base for other
manufactures has left the country vulnerable to shifts in world demand.
Official unemployment is 6%, but this fails to capture the true picture, because much of the
economy is informal and underemployment remains high. Over the past few years, low
growth and high inflation, led by a spurt in food prices, have increased the amount of poverty
- the UN Human Development Report estimated poverty in 2011 at almost 50% of the
25
population. Inflation has worsened the situation, climbing from 7.7% in 2007 to more than
13% for 2011, before declining to 9.3% at year-end. As a result of political and economic
instability, the Pakistani rupee has depreciated more than 40% since 2007.
The government agreed to an International Monetary Fund Standby Arrangement in
November 2008 in response to a balance of payments crisis. Although the economy has
stabilized since the crisis, it has failed to recover.
Foreign investment has not returned, due to investor concerns related to governance, energy,
security, and a slow-down in the global economy. Remittances from overseas workers,
averaging about $1 billion a month since March 2011, remain a bright spot for Pakistan.
However, after a small current account surplus in fiscal year 2011 (July 2010/June 2011),
Pakistan's current account turned to deficit in the second half of 2011, spurred by higher
prices for imported oil and lower prices for exported cotton. Pakistan remains stuck in a low-
income, low-growth trap, with growth averaging 2.9% per year from 2008 to 2011. Pakistan
must address long standing issues related to government revenues and energy production in
order to spur the amount of economic growth that will be necessary to employ its growing
population. Other long term challenges include expanding investment in education and
healthcare, and reducing dependence on foreign donors.
Source: CIA World Factbook - Unless otherwise noted, information in this page is accurate as of
July 26, 2012
26
Inflation rate (consumer prices) (%)
Country 2005 2006 2007 2008 2009 2010 2011 2012
Pakistan 9.1 7.9 7.6 20.3 13.6 13.4 11.9 8.10
Inflation rate (consumer prices): The annual percent change in consumer prices compared with the
previous year's consumer prices. The Inflation rate was highest in the 2008 and showing decrease in
the year 2011 & 2012 respectively.
Investment (gross fixed) (%)
Country 2005 2006 2007 2008 2009 2010 2011 2012
Pakistan 15.3 15.6 21.3 20 17.4 15 11.8 10.8
Investment (gross fixed): This entry records total business spending on fixed assets, such as
factories, machinery, equipment, dwellings, and inventories of raw materials, which provide the
basis for future production. It is measured gross of the depreciation of the assets, i.e., it includes
invesment that merely replaces worn-out or scrapped capital. Fixed investments are showing a
decrease by 10.8 percent in the year 2012.
GDP (purchasing power parity) (Billion $)
Country 2006 2007 2008 2009 2010 2011 2012
Pakistan 437.5 411.9 427.3 432.9 464.9 494.8 498.5
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GDP (purchasing power parity): This entry gives the gross domestic product (GDP) or value of all
final goods and services produced within a nation in a given year. A nation's GDP at purchasing
power parity (PPP) exchange rates is the sum value of all goods and services produced in the country
valued at prices prevailing in the United States. This is the measure most economists prefer when
looking at per-capita welfare and when comparing living conditions or use of resources across
countries. The measure is difficult to compute, as a US dollar value has to be assigned to all goods
and services in the country regardless of whether these goods and services have a direct equivalent in
the United States (for example, the value of an ox-cart or non-US military equipment); as a result,
PPP estimates for some countries are based on a small and sometimes different set of goods and
services. In addition, many countries do not formally participate in the World Bank's PPP project
that calculates these measures, so the resulting GDP estimates for these countries may lack precision.
For many developing countries, PPP-based GDP measures are multiples of the official exchange rate
(OER) measure. The difference between the OER- and PPP-denominated GDP values for most of
the weathly industrialized countries are generally much smaller.
GDP - real growth rate (%)
Country 2005 2006 2007 2008 2009 2010 2011 2012
Pakistan 9.0 5.8 6.8 3.7 1.7 3.1 3.0 3.7
GDP - real growth rate: The 3.7 percent growth based on the nine months data 2012, up from 1.7 percent in 2009 and 3.0 percent last year, indicates the potential growth trajectory. The country has enormous potential to grow at much higher rates which is demonstrated by the achievement of the 3.7 percent growth this year despite the numerous internal and external shocks that the economy has been forced to withstand.
GDP - per capita (PPP) (US$)
Country 2005 2006 2007 2008 2009 2010 2011 2012
Pakistan 2,200 2,400 2,600 2,400 2,500 2,400 2,500 2,800
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GDP - per capita (PPP): GDP on a purchasing power parity basis divided by population as of 1
July for the same year.
Unemployment rate (%)
Country 2005 2006 2007 2008 2009 2010 2011 2012
Pakistan 8.3 6.6 6.5 7.4 14 15 5.6 5.7
Unemployment rate: The percent of the labor force that is without jobs. Substantial
underemployment might be noted. Unemployment rate increases by 5.7 percent in the year
2012.
29
5.3 Socio-Cultural Factors:
Social cultural factors include the cultural aspects and include health consciousness, population
growth rate, age distribution, career attitudes and emphasis on safety. Trends in social factors
affect the demand for a company's products and how that company operates. This factor varies
from country to country.
These are the factors which cannot be changed and the organization has to adapt these
factors or adjust with these.
Religion: As Pakistan is an Islamic country and people are very strict in case of Islam. Most of
the people come from ethnic background. Any things against the philosophy of Islam on either
print or electronic media are treated as against Pakistan.
Culture: Pakistani peoples are very cultural. Most of the people dislike anything extra-ordinary
or something which sabotage their culture or subculture. So anything against their culture means
against the peoples.
Language: The national language is Urdu and literacy rate is very low only 50% peoples
understand English .So they have to advertise and publish most of their ads in Urdu or show a
Pakistani culture otherwise it may impact on their service.
Companies who are targeting upper-end of market mostly published and aired their
advertisement in English language.
Cheap labor: Most of the people in Pakistan are jobless. Labor rate is very low as compare to
other countries because Pakistan is a developing country.
Youth generation: Young generation of Pakistan is 45%. This generation is more interested in
this kind of thing. So they can be easily attracted by special offers, special packages and
emotionally ads.
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Women roles: In metropolitan cities women are doing work along with their other
responsibilities but other than metropolitan cities it is difficult for women to convince their
parents and spouses for work.
Rural areas: most of the peoples live in rural areas. Anything which favors these peoples would
be more profitable. They understand Urdu language. They are also very near to Pakistani culture
and religion as compare to urban society. They also like those things which are close to Pakistani
culture and religion Islam.
Leisure time: Peoples have much leisure time. As most of the women are households. So they
have much time for this kind of things .also the population of Pakistan is also increasing day by
day.
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5.4 Technological Factors:
In Pakistan, science and technology served as an important part of national politics, practices,
and extreme national identities. From 1960s till the present, both science and technology were
immediately linked to the national ideology and practical functioning of Pakistan, notably
the Pakistan Armed Forces, while science and technology is a growing and flourishing field in
Pakistan. Many scientists, who worked in India and United Kingdom (like, e.g. Razi
Siddiqui and Salim Siddiqui), migrated to Pakistan and helped give birth to science in Pakistan.
Since its independence from Great Britain in 1947, the newly-found nation of Pakistan has seen a
large influx of scientists, engineers, doctors, and technicians assuming an active role in its fields
of science and technology. Liaquat Ali-Khan (office: 14 August 1947 – 16 October 1951), the
first Prime minister, invited hundreds of scientists from India and made various reforms to
initiate improvement in higher education and scientific research.
Unlike some Western countries, the majority of the research programmes are conducted not at
the institutions (such as universities) but at the specially set up research facilities and institutes.
These institutes are performed under the government's Ministry of Science that overlooks the
development and promotion of science in the country, while others are performed under
the Pakistan Academy of Sciences, other specialized academies and even the research arms of
various government ministries. At first, the core of fundamental science was the Pakistan
Academy of Sciences, originally set up in 1953 and moved from Karachi to Islamabad in 1964.
The Pakistan Academy of Sciences has a large percentage of researchers in the natural sciences,
particularly physics. From 1947 to 1971, the research was being conducted independently with
no government influence. The High Tension Laboratories (HTL) at the GCU was established
by R.M. Chaudhrie with funds given by the British government in 1950s. In 1967, Prof. Abdus
Salam led the foundation of the Institute of Theoretical Physics (ITP) at the Quaid-e-Azam
University, and the establishment of the Institute of Nuclear Science and Technology and
the Centre for Nuclear Studies; all were independently established by Pakistan's academic
scientists with financial assistance provided by European countries. However, after Zulfikar Ali
Bhutto became President, he took over the control of scientific research in 1972 as part of his
intensified socialist reforms and policies. With advice taken from Dr. Mubashir Hassan, Bhutto
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established the Ministry of Science with Ishrat Hussain Usmani, a bureaucrat with a doctorate in
atomic physics
5.5 Legal framework:
Constitution
The Pakistani Constitution upholds the fundamentals for a vibrant democracy and guarantee
freedom of expression and the basic premise for media freedom. While emphasizing the state’s
allegiance to Islam, the Constitution underline the key civil rights inherent in a democracy and
state that citizens.
“Shall be guaranteed fundamental rights, including equality of status, of opportunity and before
law, social economic and political justice, and freedom of thought, expression, belief, faith,
worship and association, subject to law and public morality.”
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6. Trade Relation between India and
Pakistan
Introduction
India and Pakistan have been trying, though not very successfully, since the Shimla Agreement,
1972, to create political harmony. Several attempts later, the political and security issues have
only become worse.
It is imperative to explore the bilateral trade relations between India and Pakistan, so as to seek a
way towards a deeper engagement, as these two countries have the potential to change the
geopolitical dynamics of Asia.We shall first explore the history of bilateral trade relations
between the two nations.
History of Trade between India and Pakistan
Bilateral trade between India and Pakistan could be of mutual gain to both as they were not
separate once. Mumbai and Karachi, their major business centres are near each other, which
serves another advantage. But these advantages are marred by disadvantages such as, non-tariff
barreiers, poor trade facilitation measures like customs and porcedural barriers, difficult visa
regime, poor infrastucture resulting in costly transportation, and many more.
At the time of independence, almost3/5th of Pakistan’s total exports were directed towards the
Indian market, and 1/3rd of its imports came from India (Sangani and Schaffer 2003). But
discord in political relations obstructed bilateral trade. After India’s devaluation of its currency in
1949, Pakistan refused to devalue its currency and later imposed import restrictions, thus making
the situation worse. Due to political and other tensions and conflicts, bilateral trade declined
sharply. Trade between India and Pakistan almost ceased from the mid-1960s to mid-1970s due
to the 1965 India–Pakistan war and the 1971 East-Pakistan war, which led to the creation of
Bangladesh.
More recently, bilateral relations between the two countries became tense after the 1999 Kargil
war, as well as after the attack on the Indian parliament building in December 2001 by allegedly
34
Pakistan-trained terrorists. Overall, it took four long decades before trade volumes (measured in
nominal terms) between the two countries exceeded the levels of the early 1950s.
A historical review showed that at the time of independence, India and Pakistan were heavily
dependent on each other.
In fact, India’s share in Pakistan’s global exports and imports accounted for 23.6 per cent and
50.6 per cent respectively in 1948-1949 which declined to 1.3 per cent and 0.06 per cent
respectively in 1975-1976. Pakistan’s share in India’s global exports and imports was 2.2 per
cent and 1.1 per cent respectively in 1951-1952 which gradually went down to 0.7 per cent and
0.13 per cent in 2005-2006.
Table-1 India’s Trade Balance with Pakistan (US $ million)
Year 2007 2008 2009 2010 2011 2012
Exports 1584.3 1772.8 1455.8 2235.8 2842.3 2331.1
Imports 286.7 372.0 272.1 248.4 268.3 297.8
Trade 1297.0 1400 1183. 1987. 2574 2155.3
Source : “A Win Win Trade for India and Pakistan, Financial Express, New Delhi.””
35
In 2007, India’s exports to Pakistan accounted for US $1584.3 million which increased to US
$2331.1 million in 2012. The imported value of goods from Pakistan was US $286.7 million in
2007, which increased to US $297.8 million in 2012.
This clarifies that the two nations have not been able to harness their true potential. India has
been consistently enjoying a positive trade balance with Pakistan, India’s trade balance with
Pakistan, which was US $94.7 million in 2001 had increased to US $ 948.6 million in 2006 and
currently stands at US $ 1987.4 million as of 2010. Furthermore, the share of Pakistan’s import
from India in its global imports has increased from 4 per cent in 2008 to 6 per cent in 2010. On
the other hand, India’s imports from Pakistan remain negligible. This often results in political
rhetoric, further hindering cross-border trade.
Though the statistics reveal a definite growth in favour of India, yet it does not define the true
potential that can emanate from strong bilateral relations. Owing to high trade costs, an estimated
US $ 3 billion of informal trade happens between the two countries, which can well be brought
into the mainstream economy through better trade facilitation measures.
36
7. Region Geo-Economics and Prospects of
Bilateral Trade
India and Pakistan are looked upon as arch rivals. Adverse political factors have badly affected
bilateral economic relations between the two countries. In order to enhance peace and harmony,
the two nations are taking measures to have closer economic ties with each other. India granted
MFN1 status to Pakistan in 1996 under the WTO2 agreement, which, however, was not
reciprocated by Pakistan.
Considering the low volume of bilateral trade and both countries’ urge for a higher degree of
regional integration in south Asia, especially through improved physical integration, it is
inevitable that they focus on enhancing trade. The process of trade normalization duly supported
by stakeholders is, thus, pushing both nations towards a better rapport. .
7.1 India’s Exports from Pakistan:
India’s top ten Exports to Pakistan (US $ million)
Sector 2007 2008 2009 2010 2011 2012
Sugars and sugar confectionery 81.68 12.47 1.11 613.33 688.03 723.12
Cotton 319.66 313.69 135.67 320.04 328.03 229.07
Manmade Filaments 17.78 111.42 414.34 300.39 365.49 435.02
Organic Chemicals 387.70 467.36 295.51 252.13 235.07 335.07
Wastage of food industry, animal fodder 89.08 102.94 82.64 75.52 88.01 107.09
Vegetables and certain roots and tubers 53.13 68.82 95.47 74.52 83.07 103.03
Coffee, Tea, Mate and Spices 17.84 63.49 33.04 67.58 72.02 78.13
Rubber and articles thereof 49.08 49.93 34.14 46.76 52.11 58.07
Oil seed , Grain, seeds, fruit, etc 20.33 18.39 30.65 45.42 47.03 53.68
Miscellaneous chemical products 19.45 34.58 23.22 42.85 35.61 41.12
1 MFN = Most favored nation, Pakistani High Commissioner Bashir said, “Indian goods & one-sided trade balance shall create serious problems. Indian exports are much higher than Pakistani exports. India has lot of business before MFN status is given. 2 WTO = World trade Organization
37
Source : Trade Map, International Trade Centre, Geneva
In 2012, India’s exports to Pakistan accounted for US $723.12 million which is highest in
top ten India’s exports to Pakistan. There is a average ratio of remains product of india’s
top ten exports to Pakistan
The visit of Indian commenre secretary, Rahul Khullar to Islamabad in April 2011 followed by
the visit of his counterpart Zafar Mahmood, and the visit of Makhdoom Amin Fahim, Commerce
Minister of Pakistan, to New Delhi has created optimism in the strengthening of bilateral trade
ties. This hope of establishing peace through trade is getting strong support not only from the
policy makers but also the business communities of both sides and most crucially, the citizens,
at large. Though, contrary voices are also heard, as may be expected.
Thus, the Pakistan cabinet’s proposal to grant Most Favoured Nation status to India and the
Indian Prime Minister’s optimism for gradually moving toward preferential trade agreement
have become the underpinning philosophy on which the process of trade normalization is likely
to traverse.
38
In a recent statement, Pakistan’s commerce secretary, Zafar Mehmood announced that India has
no Pakistan-specific tariff and non-tariff barriers. But in order to attain trade normalization with
India, Pakistan has asked for signing of four agreements which include customs co-operation
agreements, mutual recognition agreement, redressal of grievances agreement and preferential
tariff under SAFTA.
Trade Complementarity index between India and Pakistan
Two countries need to assess their trade complementarities and move ahead in a clearly defined
direction. The trade complementarity index (TCI) , which measures the degree to which the
export pattern of one country match the import pattern of another.
The TCI between the two countries reveals that India has moderate level of trade
complementarity with Pakistan but the reverse is not true.. In 2003 India’s TCI with Pakistan
was 50 per cent while Pakistan’s TCI with India was only 14 per cent. India’s TCI was highest in
2007 and Pakistan enjoyed the highest TCI in 2010, thus improving its complementarity with
India which is a positive sign for Pakistan.
39
7.2 India’s Import form Pakistan:
India’s top ten Import from Pakistan (US $ million)
Sector 2007 2008 2009 2010 2011 2012
Edible fruit,nuts,peel of citrus fruit, melons 59.12 34.93 44.82 49.31 52.11 57.04
Mineral fuels,Oils, Distillation products, etc 62.01 154.04 44.15 37.25 42.07 47.12
Organic Chemicals 10.15 7.02 38.95 29.93 33.12 57.18
Salt, Sulphur, earth, stone, plaster, lime and cement 8.96 74.17 37.38 28.39 37.38 48.43
Cottons 48.06 46.66 34.94 19.12 28.19 32.17
Lead and articles therof 25.39 4.09 7.87 12.96 19.28 22.08
Raw hides and skins and Leather 11.52 13.04 7.93 10.71 13.87 19.22
Plastics and articles thereof 2.59 3.99 4.90 9.61 17.68 22.33
Inorganic chemicals, Precious metal compound,
isotopes
0.07 0.63 6.27 8.97 9.82 12.07
Wool, Animal hair, fabric thereof 4.76 4.47 2.47 6.82 7.32 9.09
Source : Trade Map, International Trade Centre, Geneva
40
In 2012, Organic Chemicals accounted for US $57.18 million which highest in over all
imported products of India’s top ten Imports from Pakistan.
Several studies have been conducted on Indo-Pak trade relations, since it is imperative that trade
relations be enhanced between them. These studies bring out two broad lines of thinking. One
emphasizes on the importance of bilateral trade relations even in the presence of political
tension. The examples of progressive trade enhancement between China-Taiwan, Indo-China,
US-China and US-Russia are presented on the platform of economic and political discourse
between these two nations to explain this point.
The other line of thinking speaks about increasing trade deficit that Pakistan faces with India and
argues that more import from India will further distort the level playing field of Pakistani
entrepreneurs.
41
8. How to start a new business in
Pakistan Visit the Securities and Exchange Commission of Pakistan’s (SECP) website (see
resources) to file your company name online. Make sure the name does not exist already
by searching for your desire company name.
Pay the name and registration fees on the SECP website through your bank
account.
Register your company through the registrar of companies under the eServices
section of the SECP website. You will need to refer to information from your company
incorporation forms, national identity card, memorandum and articles of association.
Obtain digital signature and proof of registration. The digital signature and proof
of registration will come through the SECP website from the national institutional
Facilitation Technologies (NIFT) two days after you register your company (given that
you follow the registration guideline properly on the SECP website and have the proper
documents.)
Register for income tax with your national tax number (NTN) on the SECP
website. Apply for an NTN by providing proof of registration, your memorandum, article
of association and bank account number. You will also need the NTN of your directors
and an attestation of your registered address.
Register for sales tax. Once you have registered for income tax, you can obtain a
PIN code, a unique identifier number and a secure password by visiting the Federal
Board of Revenue’s website(see resources).
Register for the Pakistani professional Tax with your local tax authority. Find out
where your local tax authority is located and than visit the office. There you will have to
42
meet the District Excise & Taxation Officer to request to enroll your business as an
“assessed.”
Register with the Employee Social Security Institution (ESSI). Visit the ESSI
main office in Karachi to meet the registrar for new companies. Bring your
memorandum, article of association and company incorporation documents.
Register for old age benefits with the Pakistani Employee Old-Age Benefits
Institution (EOBI). You can visit the EOBI website (see Resource for link) to download
registration forms and find the e-mail address of your regional office to send them to.
Register with the Pakistan shops and Establishment Ordinance. Find out where
your local Deputy Inspector’s office is. Visit the office to register. You will have to pay a
registration fee.
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9. List of trading partners of
Pakistan
The following is a list of Pakistan's main trading partners as of 2011-12
Sources:-http://en.wikipedia.org/wiki/Foreign_trade_of_Pakistan
Pakistan's Import and Export Indicators and Statistics at a Glance (2011-12): Total value of exports: US$20.29 billion
Primary exports - commodities:textiles (garments, bed linen, cotton cloth, yarn), circe,
leather goods, sports goods, chemicals, manufactures, carpets and rugs
Primary export partners: US (15.87 percent of total valorof exports), UAE (12.35
percent), Afghanistan (8.48 percent), UK (4.7 percent), China (4.44 percent).
Total value of imports: US$32.71 billion
Primary imports - commodities: petroleum, petroleum products, machinery, plastics,
transportation equipment, edible oils, paper and paperboard, iron and steel, tea
44
Primary import partners:China (15.35 percent of total imports), Saudi Arabia (10.54
percent), UAE (9.8 percent), US (4.81 percent), Kuwait (4.73 percent), Malaysia (4.43
percent), India (4.02 percent).
10.Import – Export Procedure
10.1. Import Procedure:
For import of all goods (including controlled and non-controlled items) into Singapore, you are required to:
Obtain an IN Permit through TradeNet® before goods are imported into Singapore, and
Pay the duty and/or Goods and Services Tax (GST) due at the prevailing rate at the time of importation.
A. Import under License Warehouse Scheme (LWS)
If you are importing dutiable goods such as liquors, tobacco, petrol and motor vehicles under the LWS, the duties and GST will be temporarily suspended when these goods are stored in a licensed premise. The duties and GST will be payable when the goods are later released from the licensed premises for local consumption.
B. Import under Zero GST Warehouse Scheme (ZGS)
If you are importing non-dutiable goods under the ZGS, GST will be temporarily suspended when these goods are stored inside the licensed premises. The GST will be payable when the goods are later released from the ZGS warehouse for local consumption.
45
Duty-free Import of Gold: To promote the export of gold jewellery from Pakistan, the Ministry of Commerce Public Notice No: 15(2)/98-Import-I dated 23.11.98 allows import of gold by exporters of gems and jewellery, subject to the following conditions:
Exporters of gems and jewellery will be registered as importers of gold on deposit of US$ 10,000 and will be allowed to import upto 400 ounces of gold without payment of import duty and other charges for the exclusive purpose of export in the form of jewellery.
Jewellery either studded or plain will be exported within 120 days of import of gold.
Imports will be allowed only against firm export orders.
Exporters will be allowed refund of Sales Tax paid on the jewellery.
Wastage and value-addition will be allowed for studded/plain jewellery to the extent admissible in SRO-131(KE)/96 dated 22.11.96.
10.2 Export Procedure:
46
Export Registration: All exporters (as well as importers) have to be registered with the Export Promotion Bureau under the Registration (Importers and Exporters) Order 1993, notified as SRO-595(I)/93 dated 17.7.93. The renewal, cancellation and suspension of registration, as well as the right of seeking review or appeal, is also governed by the relevant provisions of the Registration Order 1993.
Application for Registration: An application for registration as exporter (or importer) has to be made to the concerned office of the Export Promotion Bureau, in the prescribed form. The prescribed documents required to be provided with the application for registration are also listed at the end of the application form.
Registration Fee: The registration fee (same for exporter and importer) of Rs. 1000/- only once on registration, and Rs. 100/- yearly including the year of registration, is deposited, using a treasury challan in quadruplicate, in the State Bank or an authorized branch of National Bank of Pakistan under the following head of account –
1300,000 = Misc. Receipts 1390,000 = others 1391,000 = Other Receipts 1391,013 = Fees realized under the Imports and Exports (Control) Act 1950.
The first annual fee is payable alongwith registration fee, and the annual fee for subsequent years, is payable by 31st December of the preceding year. The original of the receipted treasury challan should reach the Director General EPB concerned in 14 days after 31st December. The export (or import) registration certificate is issued for a period of five years, renewable for five years. For each renewal, a fee of Rs. 100/- per year is payable in the same manner as for original registration.
Exemption from Registration:
The following categories are exempt from export registration:
Federal and Provincial Governments and Departments and other authorized public sector agencies.
Exports by passengers as accompanied baggage under any Baggage Rules or Transfer of Residence Rules.
Any exporter or class of exporters specifically exempted from registration in terms of para 10 of the Registration (Importers and Exporters) Order 1993.
11.Top News of Pakistan – India Trade
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11.1 Pakistan willing to buy Indian petroleum products at 'right
prices'
Pakistan will import petroleum products like diesel and petrol from India if it gets “right
prices”, so says Pakistan's minister of Petroleum and Natural Resources Asim Hussain..
“A team from HPCL (Hindustan Petroleum Corporation Ltd) will come to Pakistan very
soon to discuss prices (for exporting fuels),” Hussain told reporters on the sidelines of Petrotech
2012. “If right prices are given, we have no problems importing.” In April, HPCL inaugurated
the nine million tonne Bathinda refinery under a joint venture with Mittal Energy Investment Pte
Ltd. Trade ties between the two nations have shown signs of a thaw recently. Early this year,
Pakistan notified its negative list for India, which means barring 1,209 items. New Delhi can
now export all products to the neighbouring country. The negative list contains products like
automobiles and textiles.
Pakistan also agreed in-principle to grant India the ‘most favoured nation’ status over 15
years after it was given the same status by India. In March this year, Pakistan’s then Petroleum
and Natural Resources secretary Muhammad Ejaz Chaudhry had discussed with his Indian
counterpart G C Chaturvedi the possibility of Pakistan importing petroleum fuels from India.
Hussain said that if prices can be agreed upon, Pakistan can import petroleum fuels from India
both through pipelines and sea routes.
India and Pakistan plan to set up a 200 km pipeline from Bathinda in Punjab to Lahore in
Pakistan to facilitate the trade of petroleum products. India has surplus refining capacity, and is a
major exporter of oil products, while Pakistan meets most of its needs through imports from
West Asian countries. Apart from HPCL, Indian Oil will also benefit as the company has an oil
storage depot in Bathinda, and a 12 million tonne refinery in Panipat, Haryana.
11.2 Diamond players see Pakistan as a potential export destination
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Even as India's jewellery trade body, Gems and Jewellery Export Promotion Council
(GJEPC) has forecast nearly flat growth of gems and jewellery exports from the country in the
current year, diamond players are hopeful of new trade avenues emerging with the neighboring
country, Pakistan.
"There is slackness in overall export demand (for diamonds). Demand from conventional
export destinations like US and Europe is low and exporters have increased focus on domestic
market. But with easing of trade possibilities with Pakistan, it will give a big push to direct
export of diamonds from India to Pakistan," said Pravin Nanavati, former President, Surat
Diamond Association and a leading diamond exporter from Surat.
Currently, export of diamonds from India to Pakistan is nil. However, Pakistani buyers
import Indian cut and polished diamonds via Dubai or Hong Kong. According to industry
insiders, diamonds imported to Pakistan via Dubai or Hong Kong costs about 10-15% more than
direct import sfrom Pakistan.
"Pakistan is a big market for diamonds. No direct export is happening from India, but
we hope that it would start happening. Initially, traders may begin with small quantities and later
we can see good business coming from there," said Aagam Sanghvi, Director, Sanghavi Exports
- a leading diamond export firm.
It is expected that Pakistan will give India Most-Favoured Nation (MFN) status by this
year end, thereby boosting the trade sentiment between the two nations. Currently, Indian
diamonds are exported to Dubai and from there, it is exported to Pakistan. According to trade
estimates, India exports significant part of its total diamond exports to middle east nations
including Dubai.
11.3 India-Pakistan trade expected to receive another boost
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The proposal came about in February when the trade ministers of both the countries
met. Pakistan plans to give India the status of most favoured nation (MFN) again and has
announced a list of negative items which will not be traded between the countries as opposed to a
small list of positive items which would be announced every year. Whilst the decision proposed
by Commerce and Industry Minister, Anand Sharma awaits approval of cabinet members, India
will ensure that Pakistan keeps its end of the bargain by fulfilling all the main commitments.
India will fix three major milestones which will help in the assessment of targets met.
India will monitor Pakistan’s initiative to eliminate the negative list of approximately 1,209
items and only retain the sensitive list. The second strategy will be to refine the sensitive items so
that the list stays at minimum.
Moreover, Indian government plans to increase the items on the list that can be traded by
land, via Attari-Wagah border. Indian officials have emphasised on the importance of all the
strategies without which the progress will remain negligible. If both the governments can chalk
out a strategy to increase the list of items that can be traded through the route of land, many
items including hosiery, garment and sweets can be easily traded between Indian and Pakistani
Punjab.
If the land route remains inaccessible for the countries, then ttrade is likely to suffer as
the extra cost of transportation via sea route is estimated to be $2.4 billion. India also plans to
reduce the custom duty on the said items to five per cent over the period of three years. The
decisions will contribute positively in boosting trade between South Asian nations and bring
about economic integration abridging the political and historical divide.
11.4 Pakistanis allowed to buy Indian shares
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According to a circular released by the Reserve Bank of India (RBI), and a press release
issued by the Indian High Commission in Islamabad, such investment would have to be made
after prior approval of the Foreign Investment Promotion Board of the Government of India. It
will also be subject to certain terms and conditions.
“The Indian company, receiving such FDI, must not be engaged in sectors/activities
pertaining to defence, space and atomic energy and sectors/activities prohibited for foreign
investment,” the RBI said.
The move comes quickly on the heels of the Aug 1 decision by the Indian commerce
ministry that overturned a ban on foreign investment (in industrial ventures) from Pakistan,
permitting a citizen or entity from Pakistan to make such investments in India.
The decision to accept the FDI from Pakistan was taken in April this year when the two
trade ministers met in New Delhi and was thought to be in response to Pakistan’s decision to
grant India the `Most Favoured Nation (MFN)` status by the end of the year.
Traders and investors on this side of the border were glad over the second step in ‘trade
diplomacy’ in a single month, as they believe that it would help tackle troublesome issues such
as Kashmir which has soured relations between the two countries, since their creation 65 years
ago.
A senior stockbroker, however, thought the Indian decision to be “symbolic”.
He did not expect an imminent rush of funds to equity markets on the other side of the
border. The Managing Director of Karachi Stock Exchange, Nadeem Naqvi, however,
commented that the decision by RBI to allow investment in shares and debentures of Indian
companies was a welcome step. He said that it was a natural evolution of the thawing of relations
between the two neighbors where the potential for bilateral business and investment relationship
was huge.
An industrialist said: “Now that India has permitted Pakistani nationals and corporates’
investment in industrial ventures and equity markets, everyone looks forward to the RBI to
remove a Pakistan-specific regulation that bars Indian companies from investment in Pakistan.”
11.5 Pak-India trade suffers for inaction
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Trade between Pakistan and India could go up to $10 billion from the current $2 billion
within the shortest possible time provided both the sides take sector-specific measures, said
Badal at a meeting at the Lahore Chamber of Commerce and Industry (LCCI) on Tuesday.
“The distance between Lahore and Amritsar is only of 35 minutes duration while the
goods coming through a third country cost 10 times more than that through direct trade,” said
Badal. “India is one of the biggest economies in the region and offers innumerable opportunities
to Pakistani businessmen and they must not feel any threat from their Indian entrepreneurship.
Rather they should workout strategy to be competitive. Indian Punjab has a big consumer market
that should be captured by the Pakistani businessmen,” he added.
The banking system between the two sides should be upgraded while student exchange
programme needs to be activated in the larger benefit of the people of the two sides, he said.
With surplus electricity by 2013, Indian Punjab would be more than willing to export it to
Pakistan. A major portion of electricity was being produced in Indian Punjab through coal while
more than 500 MW from renewable sources like biomass, wheat-straw and rice-straw.
Another 500 megawatts of solar electricity would be added to the national grid during the
next five years, said the deputy chief minister of Indian Punjab and added that electricity for
agriculture has been free in his province while the industry enjoyed a lot of incentives.
Earlier, LCCI President Farooq Iftikhar said that non-tariff barriers being faced by
Pakistani exporters were creating enormous problems. At present, almost equal quantum of trade
was going on between Pakistan and India from third destinations like Dubai and Colombo etc. “It
increases the cost for nothing in the form of freight, taxes and loss of time,” said Iftikhar and
called for a win-win start for the greater benefit.
“There are many possibilities which can lead our economies to supplement each other for
growth. We need to identify areas of economic cooperation. Joint ventures, out-sourcing and
sharing of technology will further pave the way for trade expansion,” said the LCCI president
referring to the two-way trade between India and Pakistan.
12. Retail Industry / Sector
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12.1 Introduction The importance of the retailing is seldom subject to serious questioning from the standpoint of its economic and social contribution .Yet, the value of retailing as an academic scholarly endeavor worthy of the serious student in the professional school of business administration has been challenged. This challenged has been successfully met on most fronts, and retailing continues to be offered throughout most, if not all, of the two –year colleges and universities and throughout the community colleges of the country. Retailing deals with important economic and management problems and thus constitutes an important area for management activity. If we were to compare Pakistan just three decades ago (not a particularly long period in the life of nations) to what it is today, the extent and nature of the difference would be of startling proportions. Liberalization and communications revolution has also brought the global corporate culture to Pakistan; the habits of people are changing rapidly with changing life styles, changing ways of living, customer pattern and buying behavior. All the things are changing. These corporate sector-promoted activities and the glamour and pomp that surrounds in Pakistan is in sharp contrast to the physical and social conditions in lower and lower-middle income settlements. There is an introduction of fast-food chain stores, garments stores and international branded stores of different consumer items is available everywhere, they have opened up their branches in all the big cities of Pakistan. Huge advertisements, colorful and well-lit, dominant the urban landscape and dwarf badly constructed, badly lit businesses and homes. It is the emergence of new aspirations related to consumerism, and the desire for belonging to “contemporary” world as portrayed by the media. In this report regarding “Retailing Business in Pakistan, every aspect of these new stores where the aspiration of many people are met. As the societal culture is changing so do the purchasing pattern of people. To meet their demands there is an advent of new shopping stores that have a new look now the shopping is not the matter like of old days.
Retailing has been defined as the distribution of goods and services to the ultimate consumer. Retailing is the pivotal point around which all marketing of consumer goods revolves. Manufacturers and wholesalers rely on retailing to provide the structure in which their goods flow quickly, smoothly, and in large volume. Now consumers depend on retailers to buy goods to meet their needs and to make it as convenient and enjoyable as possible to do the shopping that fills those needs. Now retailing is dynamic. It is the world of merchandizing, embodying a world of things and ideas, contributing to a world of excitement and beauty. There are beautiful, well lighted, air-conditioned stores where the customers leisurely shop. The stores are operating near the target
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market and staying o0pen at times most convenient to customers. The stores have adjusted their merchandise offerings to provide for one-stop shopping. 12.2 The importance of retailing in economy of Pakistan
Retailing is very important in economy of every country. In Pakistan with changing life styles and customer needs, the marketers are sensitive to equating new and improved good and services with the needs, desires and fancies of consumers. Retailing in the institution that is most closely in touch with consumers, and in many ways is best able to interpret these needs. Here we have made an effort to analyze that to what extent that retailers are skillful in interpreting consumer needs, servicing as the consumer’s purchasing agent, and to the extent that they develop good assortments of merchandise (styles, materials, colors, prices and sizes) and present them in an effective manner so that consumers find it easy and attractive to buy.
Here in this report “Retailing Business in Pakistan” is discussed, taking in view the three big markets of Pakistan. 1. Karachi 2. Lahore 3. Multan
1. KARACHI Urban population of both sexes: 9,269,000 people Male population: 4,978,000 men Female population: 4,291,000 women Annual growth rate: 3.45 p.a. Average family size: 6.45 people / family
2. LAHORE Urban population of both sexes: 5,063,000 people Male population: 2,660,000 men
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Female population: 2,403,000 women Annual growth rate: 3.22 p.a. Average family size: 6.84 people / family
3. MULTAN Urban population of both sexes: 1,182,000 people Male population: 628,000 men Female population: 554,000 women Annual growth rate: 2.86 p.a. Average family size: 7.28 people / family
For studying the “Retailing sector in Pakistan” these 3 cities are enough as 2 of them are the largest cities of Pakistan and it is necessary to have a look on their Retail Stores and comparing them with Multan’s Retail Stores. Thus from these figures, it is shown that the retailers and consumers of these cities play a important role in economy .The retailer response to economic and consumer changes. Buying power changes because of the rate of inflation and the mobility of the population. These changes affect the volume of business between retailers and consumers, and between retailers and supplier’s .In times of increasing inflation, consumers demand higher quality and more durable products. They are quick to complain if products do not satisfy them. As people with higher incomes move from urban areas to suburban areas, retailers with stores in urban areas go out of business. They carry merchandise appropriate for the new suburban consumers or carry merchandise for the low-income consumers left behind. In short the retailers in these cities must respond to economic change by carrying products that will satisfy their consumers. They must also carry reduced inventory in response to the reduced demand that is likely to occur as consumers find that their rupees are buying less and less. Changes in the line of products offered by the retailer may also bring about a whole set of retailer-suppliers relationship.
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1.1 12.3 Structure of retailing
12.3.1 Store Retailing
Retail stores come in a variety of shapes and sizes, and new retail types keep emerging. One or more of several characteristics can classify them:
i) Departmental Store Carry several products lines-typically clothing, home furnishing, and house hold goods –
with each line operated as separate department managed by specialist buyers or merchandisers. Examples: prince departmental store, pace etc.
ii) Discount stores Sell standard merchandise at lower price by accepting lower margins and selling higher
volumes. A true discount store regularly sells its merchandise at lower prices offering mostly national brands, not inferior goods. Discount retailers include both general merchandise and specialty merchandise stores. Examples: utility stores.
iii) Independent off Price Retailer Owned and run either by manufactures or by division of larger retailer corporations.
Example: Tony shoes iv) Specialty Stores Carry a narrow product line with a deep assortment within that line: apparel stores,
sporting goods stores, furniture stores, florists and bookstore. Specialty store can be sub classified by the degree of narrowness in their product line .A clothing store a single line store; a men ‘s clothing store would be a limited line store; and a men’s custom-shirts store would be a super specialty store. Example: Cotton & Cotton.
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v) Off-Price Retailers Sell a changing and unstable collection of higher –quality merchandise, overruns, and
irregulars obtained at reduced prices from manufacturers or other retailers. They buy at less than regular wholesale prices and charge consumers less than retail. They include three main types: Example: Spencer, Maxell
vi) Supermarket Relatively large low-cost, low-margin, high-volume, self-service operations designed to
serve the consumer’s total needs for food, laundry, and household maintenance products. Example: AwamiMarkaz
vii) Convenience Stores Relatively small stores that are located near residential areas, open long hours seven days
a week, and carry a limited line of high –turnover convenience products.Their long hours and their use by consumers mainly for “fill-in “purchases make them relatively high–price operations. Example: General Stores
viii) Warehouse Clubs Sell a limited selection of brand name grocery items, appliances, clothing, and
hodgepodge of other goods at deep discounts to members who pay Rs.250 to 500 annual membership fees. They serve small businesses another club member out of huge, low overhead warehouse like facilities and offer few frills or services. Example: Service cut price shops 12.3.2 Non store retailing
Although most goods and services are sold through stores .Non store retailing has been growing much faster than store retailing. Traditional store retailers are facing increasing sales competition from catalogs, direct mail, telephone, home TV shopping shows, on-line computer shopping services, home and office parties, and other direct retailing approaches. Non-store retailing includes direct marketing, direct selling, and automatic vending
i) Direct selling: This method is started centuries ago with roving Peddlers, has grown into a huge industry. Direct selling and door to door selling, office to office, or at home sales parity’s selling are consumers’ convenience and personal attention. But the cost of hiring, training, paying and motivating is usually high.
Trends working against this form of selling include 1. Increase in single-person and working-couple households decreases the chances of finding someone at home; 2. Home-party companies are having difficulty finding non-working women who want to sell product part-time;
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3. Increases in crimes against individuals have made consumers reluctant to invite strangers into their homes; and 4. Recent advances in interactive direct-marketing technology mean that the telephone, the television, and the home computer may replace the door-to-door salesperson.
ii) Automatic vending It means selling through vending machines use space age and computer technology to sell
a wide variety of convenience and impulse goods. Such as Books, Hosiery, Newspaper, Audiotapes etc.
iii) Direct Marketing
Marketing through various advertising media that interact directly with customers, generally calling for the consumers to make direct response. Vehicles are used to obtain immediate orders directly from targeted consumers. Although direct marketing initially consisted mostly of direct mail and mail-order catalogs, it has taken on several additional forms, including telemarketing, direct radio and TV, and on-line computer shopping. Its growing use in consumer marketing is largely a response to the "demassification" of mass markets, which has resulted in an increasing number of fragmented market segments with highly individualized needs. Trends that have increased the use of direct marketing include
1. Number of women in the workforce; 2. Higher costs of driving, including traffic congestion and parking problems; 3. Shortage of retail helps; 4. Longer checkout lines; 5. Toll-free telephone numbers; 6. Availability of credit through proliferation of credit cards; 7. Growth of computer power & communication technology; and increasing time pressures on consumers.
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12.4 Investment regulation and barriers in Pakistan
12.4.1 Barriers to Trade Shaping the International Activities of Retailers
Two broad types of barrier have important affects on the development of trade in retailing. First, the institutional, cultural, and organizational barriers which must be overcome by retailers in order to achieve market competitiveness in the economies (both emerging and ‘mature’) which they enter. Second, a wide range of regulatory barriers covering a spectrum from inward retail-FDI, market competition, land/property and zoning, shareholder-equity and minimum capital requirements, to store opening hours, ‘below cost’ selling and so on. Each of these will now be considered in turn
12.4.2 Institutional culture and Organizational Barriers Social scientists have recently argued that of critical importance to the market
competitiveness of retail TNCs in the international markets they enter is their ability to achieve high levels of what is described as territorial embeddedness in the local cultures of consumption, business practices, real estate and land-use planning systems, supply networks, etc of those markets (Wrigley et al, 2005; Hess, 2004). That is to say, their capacity to adapt in organizational terms to the institutional and cultural characteristics of those markets. The following Figure illustrates some of these key dimensions of territorial embeddedness in the case of emerging markets. Each dimension offers its own set of potential barriers to the development of trade in retailing. Some of those - e.g. constraints imposed 20 by local supply capacity/quality standards and the need perceived by several of the retail-TNCs to provide capacity-building technical or credit assistance to local suppliers - have been touched on above. Others include barriers to entry which derive from complex land ownership systems and property markets (notably some of the Chinese systems confronted by retail-TNCs in Asian markets), and cultural/institutional subtleties expressed through local business practices.
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12.4.3 Regulatory barriers A wide range of regulatory barriers can be, and have been, employed by countries facing
inward retail FDI and/or rapid multinational-retail-induced transformation of their existing retail systems following retail FDI. At one end of the spectrum, whilst those countries will legitimately and necessarily have land, property and competition laws - laws which will inevitably reflect cultural and institutional variations between countries - they can be written and/or interpreted in such a way that they are restrictive of particular forms of ownership and levels of control by foreign firms. For example, registration of land ownership may be restricted for companies with a significant percentage of foreign ownership, such companies may also be proscribed from purchasing particular types of commercial property, and competition laws which seek to control unfair trade practices can be interpreted in a way that produces an anti-competitive assessment of multinational retail expansion on business competition in the host economy. More explicitly, anti-FDI laws can be employed to impose restrictions on the share of a firm’s capital that can be owned by foreign nationals, and equity requirements can be imposed on foreign investors who wish to hold majority stakes. At the other end of the spectrum, both the market entry costs and ongoing operational costs of retail TNCS can be raised differentially by a wide range of what, on the one hand, can be seen as merely legitimate and necessary regulatory responses to the need to protect culturally-valued aspects of the urban and/or rural environment, or to maintain competitive markets in the host economy in the context of multinational-retailer driven concentration of the retail sector. That is to say by regulations covering land-use zoning, building and outlet size codes, hours of operation restrictions, environmental impact assessment requirement, and so on. On the other hand, however, those regulations can be designed in such a way that they differentially impact on the operational costs of the multinational retailers and therefore become restrictive in terms of trade and investment
Academic research on this wide spectrum of host economy regulatory barriers to the development of international trade in retailing is surprisingly limited. Table 5, however, adapted from one of the few academic papers to explore the issue (Mutebi, 2007) provides a useful summary of the range of regulatory measures which have been used by governments in South East Asia to slow retail-FDI and multinational-retail-induced concentration and transformation of the sector – a summary which clearly has wider applicability. Mutebi divides the measures into two groups: those (FDI restrictions, land/property and competition laws) which are applicable generally (but sometimes at varying levels) to all inward FDI; and those (equity thresholds, capital requirements, environmental and community/business impact study requirements, zoning restrictions, building and outlet-size codes, store opening hours restrictions, minimum serviced population sizes) are seen as having been more specifically targeted at multinational retailers - and, in particular, at the large-format stores which have been their preferred market entry vehicle - in terms of having a potentially differential impact on their ongoing operating costs.
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12.5 Overview of Pakistan’s Economy
Pakistan is among the next eleven economies driving global growth – Goldman sachs Jim O’ Nell
Pakistan is a resilient economy, its real GDP, showing positive growth in recent years despite significant challenges like the global recession.
The service sector contributes %53 to the total economy. The share of wholesale and retail in services is around %33, and in overall GDP
around %18. Retail is the 3rd largest sector in Pakistan after agriculture and manufacturing and the
second largest employer, employing %16 of the total labor force. Pakistan retail market is estimated at USD 42 billion with expected annual sales in
excess of USD 105 million by 2012 end. Important contributing factors include a young population (%73 under 35 years),
growing middle income class (currently 81-77 million), increasing total and urban population, and overall globalization and liberalization of trade.
Real GDP(at constant factor
cost) PRK billion)
Service sector (PKR billion)
Share of services in Real GDP (%)
2003-04 3,992 2,054 51.50% 2004-05 4,216 2,174 51.60% 2005-06 4,593 2,359 51.40% 2006-07 4,860 2,512 51.70% 2007-08 5,192 2,687 51.80% 2008-09 5,383 2,847 52.90% 2009-10 5,476 2,855 52.90% 2010-11 5,682 2,979 52.40% 2011-12 5,817 3,102 53.30%
A particularly encouraging aspect about Pakistan growth is the services of the services sector during recent years. Currently contributing 53.3% to real GDP the services sector has maintained a majority average since at least a decade. The continuous growth in Pakistan service sector since 2005-2006 is indicative of many positive changes in the economy. It signifies overall economic growth and hints at the presence of an increasing consumer base with expanding incomes or purchasing power to enjoy a larger share of services in their consumption bundles.
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Indeed with nearly 73% of the Pakistan population less than 35 years of age, the country is recording an increase in active earning members of society.
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12.6 Punjab’s potential
Punjab, Pakistan’s most populous province, is the investment destination for most local and foreign companies
Lahore, the capital of Punjab, with a population of over 9 million is the 2nd largest city of Pakistan after Karachi and ranks 122 amongst the richest cities of the world
Much of Lahore’s commercial activity has developed along important roads like Mall Road, Main Boulevard and M.M Alam and in regional pockets like Liberty, DHA and Model Town Link Road
Lahore’s traditional multi-storied plazas, however, are no longer fit to serve the purpose of retail in the city. The city is in serious dearth of large shopping malls like the Dolmen in Karachi and Centaurus in Islamabad
Lucrative real estate investment opportunities therefore exist in the construction of large shopping complexes in Lahore with thousands of square feet of floor area to attract international chains, and amenities like escalators, wide corridors/walking spaces, clean toilets and ample covered parking to attract consumers.
City Population (Estimates for 2012 based on 1998 census data)
Infrastructure service (Ranked in order of
importance) Punjab(total) 94,401,000 Lahore 15,925,000 1 Rawalpindi 8,379,000 2 Gujranwala 14,336,000 3 Faisalabad 12,324,000 4 Sargodha 6,982,000 5 Sahiwal 6,689,000 6 Multan 10,840,000 7 Bahawalpur 10,069,000 8 D.G.Khan 8,856,000 9
Punjab’s capital however remains the wonderful city of Lahore which has historically been the provinces center of economic political entertainment and cultural activities. After Karachi, Lahore, with a current population of over 9 million, is the 2nd largest city of Pakistan and ranks 122 amongst the richest is the of the world showing consistent intake of various international chins despite political turbulence, real estate experts and businessmen have come to believe that Lahore is a natural breeding ground for multination companies, banks & international brand.
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12.7 Present Position and Trend of Business in Pakistan
12.7.1 Food & Beverages:
It is estimated that the average Pakistan consumer spends up to 42% of his income on food (USDA, 2000). As far as fresh food produce is concerned, consumer have historically preferred to shop at traditional kiryana stores, obtaining the satisfaction of handpicked fruits and vegetables and negotiable prices. The trend, however, gradually shifted towards local supermarkets like HKB and Imtiaz store and more recently, towards wholesale centers like Metro, Marko and Heperstar (correfour), where consumer now increasing shop for better quality, quantity, variety as well as competitive price in much more consumer-friendly environment. The development of such supermarket it still in infancy though, and carries much potential for future growth. Apart from individual and household consumption, these wholesalers have also experienced great interest from commercial/professional buyers including bakeries, restaurants and hotels.
The market for processed foods is also booming. With life becoming fast-paced in Pakistan, food on the go and ready to cook has become increasingly popular being reflected in the popularity of bakers and brands like shezan, country, National, Shan,K&N’s, value chicken, Menu and Dawn. With increased trade trade and a better taste for quality products, the demand for imported items is also on the rise. Only a decade ago it was estimated that a good fifth of Pakistan consumer were already consuming imported products (USDA, 2000). This ratio is expected to have enhanced significantly in the past decade. Items like juices, canned fruit, sauces honey, coffee, candy, condiments, nuts dressing snack foods, chocolates, powdered milk and other dairy products, particularly ice cream are becoming increasingly popular.
12.7.2 Apparel
Having experienced a fashion revolution in the last couple of decades, Pakistan has become home to a number of powerful fashion house and countless exquisite local and international apparel brands. The Pakistan fashion Design council (PFDC) deserves special mention hare which has in mater of half a decade had over 50 exclusive designers from Lahore, Karchi and other Pakistan cities flock together and conduct several successful large scale fashions shows. The result a well informed rather transformed, fashionable Pakistan society.
The fashion boom in Pakistan has invited great attention; both form local and international players. The local apparel market is ever expending. Being an inevitable consequence demand stemming from growing awareness of the general public the market is also well segmented providing for man, women and children of all ages and offering a range of lines. From casual to
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semm formal, work and bridal wear to mention a few Amir, Adna , Junaid Jamshed and Ammar Belal are popular men’s wear designers while Umar sayed HSY, Karma and Meria B are popular women wear lines. More recently, the booming sector has also compelled focus on exporting abroad.
Perhaps the buggest surge in demand has come about in the designer lawn segment with extremely repaid propitiation of brands in the last few years. From Textile houses like Bareeze (kayeriya), Gul Ahmad (Ideas). All karm khaadi and Nishr to individual designers like Maria B, Vaneeza, Warda and yahsir waheed the PKR9.6 Billion worth designer lawn market catches flue from the onslaught of innumerate fabric designers every day. It is estimated tahat Pakistan is home to at least 128 designer’s lawns at the moment the market booming in 2011 and 2012 exhibited as exhibited in the timeline of a selected few.
12.7.3 Footwear
With more than 500 manufacturing units spread across the country Pakistan footwear industry produces 120 million parts annually for domestic consumption and over 2 million pairs for export on average. Lahore is the hub of footwear activity, being home to 306 or 59% of the total manufacturing unit.
The local footwear industry has produced some very fine brands like serves, Ehsan chapoal house (ECS) style, metro, starlet etc. which have recorded encouraging growth in retail outlets in recent years. Many like lark & finch which already has 10 exclusive outlets, are planning expansions all across Pakistan. Serves, a 50-years-old leading local brand started its single retail footwear outlet. The brand today has a400 stores presence in pakistan,2000+dealer-base, and a growing international footprint in Europe, middle
12.7.4 Health & Beauty
With its people becoming ever-increasingly health conscious the commercial health club industry in Pakistan is emerging as a lucrative business. Although currently segmented and unorganized the industry carries tremendous potential to flourish in year to come. In addition to fitness centers spas and beauty treatments readily available in hotels and clubs like the Lahore gymkhana. Model town club and defiance clubs in Lahore many such independent units have dotted the country shapes for instance is a renowned fitness canter with several branches across Pakistan. Other worth mentioning includes body talk, structure gym, gold spa & fitness inside mail of Lahore & gold's gym.
In Pakistan, there is as much emphasis on health, if not more. Pakistan has emerged as huge in the for both local and international cosmetic brands in the past two decades. Three local companies. Kohinoor chemical international laboratories (ponds) and region possess a majority of the market share. International brand of the highest order like ordeal, Clinique and max factor are also extremely popular among females. With regards to cosmetics and other beauty care
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items, body shop, location and more recently crater & Evelyn with its debut store at dolmen mall, Karachi, are just few other names worth mentioning.
12.7.5 Electronics
Pakistans consumer electronics market is expected to grow by an annualized average of about 13.3% to USD 3.3 billion.the most booming subsector within the electronics market,however,is telecommunications.with a current mobile subscriber penetration of over 77%, pakistan is home to approximately 15000 cell phon retailer where early players like nokia, sony ericson , samsung and motorolla continue to possess significant market share.however,more recently, the potential of the telecommunication industry in pakistan has invited top notch brands like HTC and Apple to operate under franchises across the metropolitam cities of the country.Mobile handset sales are expected to grow at a compound annualized growth rate of 13% to USD 32 million units in 2016 while the awarding of 3G licenses is expected to boost the high-end mobile handset segment of the market even further.
The demand for desktop computers and laptops in pakistan is also on the rise and accounted for arounded 17% of its consumer electronics spending in 2012.With increasing consumer awareness and expanding incomes, Raffles and store continue to record encouraging sales
12.7.6 Home Furnishing
Chiniot in psakistan is well known for its beautiful wood carved furniture and brass inlays.It is no surprise, therefore, that the city alone meets 80% of furniture demand in the country.With several medium /large scale industrial units operative, the wooden furniture industry in Gujarat also produces world class furniture with immaculate finish.
The demand for quality furniture, like other quality home accessories in pakistan , is constantly on the rise and a number of state of the art showrooms have been devoted to it currently,interwood i.e. one of the leading furniture companies in pakistan is the only one-stop solution for several products including office furniture,home furniture , kids furniture kitchens ,doors, wardroobes and flooring.
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13 Telecommunication Industry/ Sector
13.1 Introduction of Telecommunication Industry
Telecommunication is the exchange of information over significant distances by electronic
means. The simplest form of telecommunications takes place between two stations. However, it
is common for multiple transmitting and receiving stations to exchange data among them. Such
an arrangement is called a telecommunications network. The Internet is the largest example.
Telecommunication sector comprises of six major segments; Mobile Sector, Fixed Line Sector,
Wireless Local Loop Sector, Payphone Services, Internet Services, Voice over IP.
Pakistan telecommunication market is one of the world’s fastest growing industries; the telecom
sector is growing at a pace of 170% yearly. Pakistan has a population of more than 160 billion
and the numbers of mobile phone subscribers are 118 million as of March 2013. According to
Pakistan Telecommunication Authority (PTA), 2.7 million subscribers are added monthly.
Telecom sector is one of the most potential sectors that remained important contributor to the
national economy by depositing Rs 363 billion during the year 2012 and showed increase of 5.4
percent compared to last year.
In line with the teledensity the cellular sector also has the highest share in telecom revenue as
during 2011 cellular revenue increased by 11 percent to reach Rs 262,761 million as compared to
Rs 236, 047 million in the previous year. During the first two quarters of 2012, Rs 197,686
million worth of revenue has been generated by the telecom sector.
In 2011, the telecom sector invested US$ 495.8 million with the cellular mobile sector being the
major contributor. In addition USF invested Rs 3.5 billion in the 2011.The telecom sector made
its higher contribution to the national exchequer in 2011 as almost Rs 117 billion deposited by
the telecom companies showering 7% growing in 2011. Owing to terrain/security situation
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companies were reluctant to invest further however in 2011 telecom sector attracted over US$ 79
million FDI in the country which is about 5 percent of the total FDI in Pakistan in 2011.
Despite all the factors the cellular industry managed to double its growth rate from the previous
year and according to the World Economic Forum's Global Information Technology Report
2001-11 Pakistan ranks no 1 in the internet and telephony competition. The total of mobile
subscriber reached 118.3 million at the end of 2012.
The mobile market over the years has come more stable due to intense competition. Market
shares are now more balanced among the five operators with almost insignificant changes over
the years. At the end of March 2012 Mobilink had a market share of 30.25 percent followed by
Telenor with 24.80 percent and Ufone with 19.54 percent.
The auction of 3G license is expected that will bring more investment into the country and
improved economic condition of the country would further encourage investors to bring the
capital into the country.
The telecom sector in Pakistan is a major contributor to government revenues. During the last
decade, Pakistan has made tremendous progress in the telecom industry because of deregulation
and privatization of the sector. Unfortunately, for the past 3 years, unwarranted complacency and
vested interests have arrested rapid growth in the telecom industry.
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13.2 Companies of Pakistan’s Telecommunication
Industry
13.2.1 Cellular Companies
Pakistan Mobile Communication Limited (Mobilink)
Pakistan Telecom Mobile Ltd. (Ufone)
CMPak Limited (Zong)
Telenor Pakistan Ltd.
Warid Telecom Ltd.
13.2.2 Fixed Local Line Companies
Pakistan Telecommunication company Limited. (PTCL)
National Telecommunication Corporation Limited (NTC)
Brain Limited
World Call Telecom Limited
Union Communication Limited
Nayatel (Pvt.) Limited
13.2.3 Wireless Local Loop Companies
Pakistan Telecommunication company Limited. (PTCL)
National Telecommunication Corporation Limited (NTC)
Telecord Limited
Wi-Tribe Pakistan (Formerly Burraq)
Waleen Telecom (Pvt.) Limited
Link Direct International (Pvt.) Limited
World Call Telecom Limited
Great Bear Int’l (Pvt.) Limited
Cyber Internet Services (Pvt.) Ltd.
Defence Housing Authority
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Sharp Communication (Pvt.) Ltd.
13.2.4 Broadband Market
EvDO
FITH
WiMax
HFC
DSL
Others
Graph.1 Cellular Market Share in terms of subscribers
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13.3 Introduction of Telephony Companies in
Pakistan
13.3.1 MobiLink (www.mobilinkgsm.com)
Mobilink GSM (PMCL) started its operations in 1994. The first cellular service provider
to operate on a 100% digital GSM technology in Pakistan, offer both Postpaid(Indigo)
and Prepaid(JAZZ).
At the top of the list of Pakistani mobile companies is
Mobilink, the Pakistani unit of Egypt based telecom company Orascom. It has born in
Pakistan since 1944 till today with 32million subscribers by 2011.
It has the largest market share, Its shares are listed on the Egyptian and London Stock
markets (OTLD)
13.3.2 Ufone (www.ufone.com)
Ufone GSM is a cellular Telephony whixh started its service in January 28, 2001 under
the branded name of Ufone from Islamabad and launched by the PTCL.
Ufone, a wholly owned subsidiary of Pakistan Telecommunication Co.Ltd.(PTCL), is
now under the control of Estisalat group of UAE, with 20million subscribers it is the
runner up. For those in Pakistan it is the one company when they can easily invest
locally.
13.3.3 Warid (www.waridtel.com)
Warid, owned by the Abu Dhabi group of the United Arab Emirates and sister of Wateen
group started its operation in May 26, 2005.
Recently it sold 30% share to SingTel. Warid started its services in Pakistan May 2005.
Since then Warid Telecom successfully launched the services covering Pakistan.
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Total subscriber bt 2011 are 17.5 million.
13.3.4 Telenor (www.telenor.com.pk)
Telenor acquired the license for providing GSM services in Pakistan in April 2004 and
launched its services commercially in Islamabad, Rawalpindi and Karachi.
Norway Telenor, a recent entrant with about a billion US dollar investment in Pakistan
has been doing well.
Currently having 25million subscriber.
Telenor stock is listed in the OSLO stock market (TEL) and Nasdaq NY (TELN)
Mainly have two packages.
13.3.5 Zong (www.zong.com.pk)
CMPak (Zong brand), formerly PakTel, was the latest target of foreign acquisition, After
it got acquired by china mobile it was rebranded as zong and launched one of the most
successful and aggressive campaigns. Within a matter of few months, Zong has achieved
a 9% market share.
Having about 9.2 million subscribers.
Graph.2 Mobile Phone Subscribers
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13.4 Introduction of Wimax
WiMax meaning world wide Interoperability of Microwave access is a
telecommunications technology that provides for the wireless transmission of data using
a variety of transmission modes.
There are several companies providing WiMax in Pakistan is Wateen, Wi-Tribe,
Mobilink, Qubee.
Graph.3 WiMax Subscribers
13.4.1 Wi-Tribe (www.wi-tribe.pk)
Pakistan’s number one broadband company is part of an international broadband service,
bringing a new era of internet access.
Launched 30th June 2009
Wi-Tribe provides quality wireless connectivity, Low cost and High Volume packages.
Enterprise Packages
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Consumer Packages
13.4.2 Pakistan’s No.1 Broadband company in Quality
Pakistan Telecommunication Authority (PTA) announced that Wi-Tribe Pakistan
successfully ranked number one in both the “Technology Neutral and Wireless”
categories for highest quality of services despite being the youngest broadband company,
after just over one year of launching commercial services.
13.4.3 Wi-Tribe’s services is currently available in the following cities-
Karachi
Lahore
Islamabad Rawalpindi
Faisalabad
4.4 Qubee (www.qubee.com.pk)
Augere’s Qubee launched
Qubee-“An Augere Brand” we discussed earlier, have now been officially launched in
Karachi.
Qubee has become the fourth player offering
WiMax services in Karachi, Wifi sevices providers a company owned by Augere.
Wireless Internal Broadband
Qubee is available in all major cities of Pakistan including Karachi, Lahore, Islamabad
and Rawalpindi & Hyderabad
13.4.5 WATEEN (www.wateen.com)
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Wateen Telecom is the Abu Dhabi Group’s latest venture in Pakistan. After the
successful launch of Warid Telecom in Pakistan, Which has a subscriber base of over
17.5 million customers in 145 cities.
Wateen Telecom has been set up to become the leading “Carrier’s Carrier” providing
services based on quality, reliability and affordability in the communication and media
sector.
Wateen-which is using WiMax solution from Motorola and its cable/fiber network to
offer triple play of phone, TV and broadban
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13.5 Revenue Contribution of Telecom Industry
Annual revenues from telecom sector of Pakistan reached Rs. 411.4 billion during the fiscal year
2011-12 up from Rs. 362.9 billion a year ago, registering a growth of 12 percent, said a recent
report published by Pakistan Telecommunication Authority.
Report said that this growth in telecom revenues this year is significant especially when growth
rate was marginal during last two years, i.e. 5.4 percent during FY 2011 and 3.1 percent during
FY 2010.
Report said that increase in revenues is largely attributed to increase in subscribers’ numbers,
introduction of new value added services and increased usage of data services. Below graphs
depict the growth in overall and data revenues of Telecom sector over the years.
Graph-4
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13.5.1 Revenue Share of Telecom Services
Telecom operators have different streams of revenue generation, which can be broadly
categorized into voice, data and other services. Voice services have the major share, i.e. 84
percent in the total telecom revenue that stood at Rs. 343.9 billion during the FY2012.
With increasing use of data services including broadband, dial-up, mobile internet, SMS and
MMS, the revenues of data services of telecom operators have reached Rs. 67.5 billion during
FY2012. The share of revenues from data services increased from 7.5 percent in 2008 to 16.4
percent in 2012.
Broadband subscribers in the country crossed 2 million mark, majority of which are served by
LL and WLL operators, such as PTCL and Worldcall. Therefore, data revenues of LL, WLL,
CVAS and LDI companies have shown a notable increase and stood at Rs. 40.7 billion during
the reported year, showing 52 percent YoY growth.
Data services from mobile cellular operators grew 14 percent YoY and revenues reached 26.8
billion during the FY2012. Cellular sector’s data revenues are currently 9 percent of overall
revenues, showing that there is huge untapped potential available for the operators. This can go
up tremendously with the emergence of 3G.
Graph-5 Data and Voice Revenues Share – Cellular Operators
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Graph-6 Data and Voice Revenues Share – Local Loop Operators
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13.6 Foreign Direct Investment in
Telecommunication Sector
Telecommunication sector has attracted substantial amount of Foreign Direct Investment in the
country. Following table describes the share of FDI in Telecom sector relative to total FDI in the
country.
Table-1 Foreign Direct Investment in Telecom Sector
(Us $ Million)
Year FDI in Telecom Sector Total FDI Telecom (%) Share
2008-09 1,824.20 5,140.00 35.5
2009-10 1,436.60 5,410.00 26.6
2010-11 815.00 3,720.00 21.9
2011-12 373.62 2,199.44 17.0
2012-13 79.2 1,574.0 5.9
Graph-7
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13.7 Comparison with Regional Economies
Following is a comparison of the figures and statistics with special reference to
Telecommunication sector from the three South Asian countries i.e. India, Pakistan and
Bangladesh.
Table-2 Comparison of GDP
Countries Total GDP
(US $)
GDP of Telecom
Industry
Share of Telecommunication in
GDP (%)
India 1430b 27b 1.8
Pakistan 162b 4.3b 2.7
Bangladesh 105b 2.52b 2.4
Table-3 Comparison of Tax Revenue
Countries Total Tax
Revenue
Tax Collection
from Telecom
Industry (US $)
Share of Telecommunication in
Tax Revenue (%)
India 117b 3.8b 3.24
Pakistan 19.6b 1.28b 6.54
Bangladesh 8.9b 0.87b 9.4
FEDERAL BOARD OF REVENUE, GOVT OF PAKISTAN (www.fbr.gov.pk)
UNION BUDGET OF INDIA 2009-2010 (www.indiabudget.nic.in)
NATIONAL BOARD OF REVENUE, GOVT OF BANGLADESH (www.nbr-bd.org)
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Graph-8
The data reveals that in case of India, Telecommunication’s contribution to GDP is 1.8%
while its contribution to Tax Revenues is 3.2%. In case of Pakistan the contribution to
GDP is 2.7% but the contribution to Tax Revenues is almost double i.e. 6.5%. This
means that Telecommunication sector is being taxed more heavily in Pakistan as
compared to India. However the situation is better than Bangladesh where the
Telecommunication sector is being taxed even more heavily at around 9.7% of total tax
revenues.
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13.8 Social Aspects of Telecommunication in
Pakistan
13.8.1 Problems and Issues
The Telecom sector is the most vital part of any economy. Economic activities today revolve
around information technology especially the Telecom sector. The rapid increase in the Telecom
sector not only generates jobs but income as well for all the segments of the society, namely:
Salaried individuals, businessmen, companies and governments from taxation. Individuals living
in one country are acquiring services or delivering services to other individuals or companies
online, via the internet or telephone etc. New Companies propped up and came into Pakistan
from abroad, new employment opportunities were created in the form of jobs and businesses,
however our growth hasn’t been as much as compared to India, who is expected to contribute
15% to its Gross Domestic Product by 2014 from the Telecom sector alone.i The growth in the
Telecom sector in Pakistan has been extensive and complex. Upon searching literature it was
notable that issues and problems are being discussed and highlighted by various researchers for
other countries but not much could be found for the same purposes for Pakistan. We would like
to state the problems identified from various sources and in the last would discuss the
consumers’ perspective with the help of a survey conducted by our syndicate team. The issues
identified include:
Tax Domain
Heavy Taxation
Ambiguity in Tax Law
3G Spectrum and Pakistan Telecommunication
Terrorism
Rates And Exemptions In Pakistani Tax Laws:
Low Investment
Consumers’ Perspective
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13.8.1.1. Tax Domain:
By Tax domain it is meant that which government would be charging tax on this sector
within a country, whether would it be done by the federal government or the provincial
governments or local governments, or by all? To confront such problems and issues many
research works have been carried out by scholars and academicians, for example, one
such case study was done by Johan Deperez by the name ‘The Telecommunication
Sector in the Information Age: A Case Study in Globalization, Deregulation, and Tax
Competition’, which highlights that the recent growth in this sector has created
complications in the Tax domain. If one is to analyze this situation, immediately it would
be clear that this problem is not only related to tax domain in the country only but also
related to the form of taxations i.e. should direct or indirect taxes be placed and by which
government in a country i.e. the Federal government or the provincial government etc.
This problem has been subject of debate within the US Congress as well. Legislators
have quarreled whether to allow Federal government, State governments or local
governments to tax this sector and to which extent.ii While in India the Telecom sector is
taxed by the Federal and state governments, while further reforms are taking place.iii But
we have to analyse our country’s situation and choose the most beneficial system of
taxation, and not replicate any country even our neighboring countries. This is a task that
needs to be resolved as it would create manifold problems as the two provinces of
Pakistan i.e. Punjab and Khyber Pakhtunkhwa are placing their own taxes while the other
two provinces are not.iv Until this issue is resolved the federal government should keep
this domain to itself only to avoid complexities.
13.8.1.2. Heavy Taxation:
The growing amount of taxation in various modes on this sector has been highlighted in
Pakistan by representatives of the Telecom sector in a meeting with the federal secretary
Investment of Pakistan, while officials from Federal Board of Revenue and Pakistan
Telecommunication Authority were also present. According to the Telecommunication
sector representatives these taxations are in the form of activation tax, sales tax and duties
on mobile sets which has raised the cost of acquiring a mobile phone the highest in the
world. They specifically mentioned 21 percent general sales tax, import duty amounting
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Rs.500 and handset duty of Rs.250.v There is constant pressure on the government to
maintain low taxation on the Telecom sector but the government wishes to generate
revenue as well, but not wanting to discourage this sector. Working out something which
would be agreeable to all parties is somewhat a difficult task.
The current taxation on this sector might be considered heavy taxation by the private
sector but there already ample exemptions on this sector in other areas besides the
handsets, see paragraph “Rates and Exemptions in Pakistani Tax Laws” in this
document.
13.8.1.3. Ambiguity in Tax Law:
Income Tax Ordinance in Pakistan is not explicit on various cases which have arisen due to the
growth in Telecom sector. for example:
How entities in Pakistan would be taxed if they are operating a call centre business in
Pakistan that is providing services abroad via telephone or internet. Would the income of
such individuals be taxed as foreign source or Pakistan source income? Or would this
income be exempt?
Computer programmers are running software houses from their homes or single rooms
etc, the above mentioned problems are applicable here as well. Besides the above
mentioned there are other challenges for the revenue collectors as well,e.g.
How would FBR bring into the tax net the individuals, association of persons or
companies that are developing software for clients abroad and need only small place and
an internet connection to start work?
Would the government tap into private email accounts or online messages to detect such
businesses? Would the courts allow such a violation of privacy? Or would this be catered
by introducing further laws or ordinances?
13.8.1.4. 3G Spectrum and Pakistan Telecommunication:
3G technology would allow the consumer not only to read messages and hear calls, it
would allow video picture of the other person on the handsets as well. In the
aforementioned meeting between the Pakistani government officials and the Telecom
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sector representatives, the issue of auctioning 3G spectrum was also raised by the
Telecom sector representatives. They were of the view that the Telecommunication sector
in Pakistan is capable of handling this technology and its process be simplified for
benefit.vi The future of the sector is in 3G technology, and by acquiring this technology
the Pakistani sector can achieve great strides. The government should allow all
technologies to be used unhindered but regulated.
13.8.1.5. Terrorism
Terrorism is a growing global phenomenon, which has adversely affected everyone
everywhere including Pakistan. Scholars have struggled to give a universally acceptable
definition to terrorism but nonetheless agree that the killing of innocent people is an
abhorrent act, and there is no justification for it. Pakistan after becoming the frontline
state in the NATO’s war on terror led by the US in Afghanistan, has suffered enormously
from various attacks by terrorists, and terrorists have resorted to bombing, executing and
kidnapping innocent people inside the urban centers of the country. It has been much of a
debate that who is responsible for these attacks and what should be the policy to tackle
this issue, but nonetheless it is quite evident that these inhumane activities have adversely
affected the entire Pakistani society including business activities in Pakistan. Terrorists
have deliberately resorted to sabotage and bombings of infrastructure of the public and
private sector as well, all of this mayhem is resulting in low investment as well, as the
investors are being scared off from Pakistan.
The Telecom sector naturally can’t be aloof from all these problems and is struggling.
According to an estimate, the Telecom sector has suffered a loss of Rs.330 million in the
province of Khyber Pakhtunkhwa and FATA (Federally Administered Tribal Area) due
to terrorism. The infrastructure destroyed is 127 buildings, 51 mobile towers and 87
PTCL exchanges in all of this.vii To add fuel to fire the Telecom sector is and has been
suffering from the government’s counter-terrorism measures occasionally. Pakistan has
faced terrorism since its inception, due to regional complexities the government has
struggled to curb this menace. The government in the past and the present has taken
measures to curb terrorism by banning cell phones. For example to counter criminal and
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terrorist activities there was a ban for 17 months in Karachi during the 1990sviii Perhaps
at that time this measure wouldn’t have been counterproductive to an extensive extend as
all businesses were yet to adopt to cell phones and wirelesses then, but similar actions
were taken presently in Dera Ismail Khan to fight the surge in terrorist activities
throughout Pakistan.ix
Terrorists have detonated bombs in mosques, Imam Bargahs and religious processions.
They have also have resorted to kidnapping for ransom, to get their accomplices released
and for making political statements. In all of these terrorist activities, cell phones, internet
and wirelesses are being extensively used for contacting their terror outfits and for
informing their high ups. While the terrorists have also used cell phones for detonating
self made bombs by affixing another cell phone on the explosive devices as well. Since
Dera Ismail Khan has been adversely affected by sectarian terrorism in recent years, the
government of Pakistan has banned the use of mobiles and all wireless technologies for
the past one year in the south of the province Khyber Pakhtunkhawa which includes areas
such as Dera Ismail Khan and Tank to curb terrorism.
Such situations are clearly unwanted as such measures in the past and present have
adversely affected the Telecom sector and of course are source of revenue loss for the
government. To fight this war the government has to resort to drastic measures which are
adverse to businesses and definitely all of this would inevitably cause harm to the
collection of revenue. If the ban on mobiles are used as precedents and extended to other
parts of the country then this would be a serious crisis. However, it is but inevitable that
to save human lives any measure can be taken by the government, but it would be
appropriate that the government takes some other measures instead of banning of cell
phones and wirelesses etc, otherwise these measures would adversely affect the Telecom
sector and businesses, and inevitably result in revenue loss for the government.
13.8.1.6. Rates and Exemptions in Pakistani Tax Laws:
Income from exports of computer software and IT services have been exempt under the
Pakistani Income Tax Ordinance 2001, furthermore tax collected on import of telephone
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sets is at 1% on the import value as increased by other taxes, while the sale of computer
software has also been exempted in the Sales Tax Act 1991. The government is
concerned with the collection of revenue while on the other hand it is clearly manifested
in the relevant tax laws that either government has exempted the lucrative portion of the
Telecommunication sector or has placed a very minimum amount of tax on it. This
attitude of tax exemption is clearly a policy of the government which is harmful to the
revenue collection.
13.8.1.7. Recent Decline in Investment:
There is recently a shortage of investment in the Telecommunication sector due to
manifold reasons, such as, the global financial crisis in the banking sector worldwide,
deteriorating law and order situation in Pakistan, energy crisis in Pakistan and the
devaluing Pak rupee. Such problems have altogether adversely affected the Telecom
sector in Pakistan and hamper its further expansion and permanence. The major problem
for the low investment in the sector is due to energy problem, which has compelled the
Telecom operators to use alternative power sources for providing of uninterrupted
services. Increased investment on alternate power resources has brought extra cost on the
operators’ business plans and the result is either the investor suffers low profit margins
and low return on investment or there is quality of service issues. The law and order
situation also had not been very optimistic in relation to investments further prevent the
investors to invest in the businesses and the investors think twice about future
investments.xii If these crises are not overcome even though some might not be of
Pakistan’s making then there will be an acute shortage of funds for all sectors including
the Telecom sector.
The government is already facilitating this sector with low rates of taxations and
exemptions, but circumstances are discouraging this sector because of other reasons.
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13.8.1.8. Consumers’ Perspective:
Telephones, Cell phones and wireless phone sets etc are necessary to facilitate businesses
and there is a constant desire by people to be available for contact at least most of the day
if not 24 hours. From their perspective, these taxes are burdensome, furthermore these
forms of taxes are charged indiscriminately without taking into account the consumer’s
income. Indirect taxes’ burden is usually shifted to the consumers while that may have
not been the intention of the government; hence the consumers find themselves over
burdened. All of this increases the cost of living and cost of businesses. While many
consumers consider that Pakistan Telecommunication Authority is only protecting vested
interests not of the consumers. The government is pressured to consider that the
consumers are suffering from various tiers of taxation which result in economic burden,
however, this segment is a luxury for many who have no compulsion to keep them, and
hence the government is right to charge tax on this segment of the sector. To get an
accurate picture of the consumers’ perspective, we conducted a survey to include in our
research. Due to constraints in time and location we sought a sample of 100 consumers in
Lahore to survey. The sampling was random and consisted of a heterogeneous group
from all ages, professions and classes.
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13.9 Boom in the Telecommunication Sector
Telecom sector is booming throughout the country as two million mobile subscribers
were added every month throughout the last year.
In 2007 the sector grew by 80 percent while average growth rate in last four years has
been more than 100 percent.
As per March 2008 quarter report all companies in total added about 5.7 million
subscribers to mobile networks but PTCL dropped in Dec 2007 bringing to a mere 4.8
million by 5.24 million across Pakistan, 2.1 million subscribers of WLL services.
Payphone services had 471,410 subscribers in Dec 2007; currently there are about 3.5
million internet subscribers all across in Pakistan.
Network coverage of almost 90 percent of the total population of Pakistan has made the
industry even more attractive and there is still a great margin of growth in this industry.
By 2006-07 the industry had generated 1,366,698 employment opportunities.
An intense competition is seen in the telecom sector and all the companies are trying to
take edge on each other, which is helping the subscribers as they are getting advanced
and new packages at low prices.
According to the Pakistan Telecommunication Authority (PTA) Industry Analysis Report
2007, out of 376 tehsils across Pakistan, almost 77 percent are covered with mobile
networks, bringing the figure to 290.
If we look at subscribers’ data of 2009, we end up concluding that growth has been
hindered but it hasn’t vanished yet.
If we look at growth rate over the year, two dips are because of 668 system introduced by
PTA in January and Ufone’s massive churn in year mid, otherwise there has been a fairly
straight upward trend for addition of mobile subscribers by all cellular companies.
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13.10 Boom Period Effects On Existing Businesses
As we have discussed earlier that there are a number of new businesses, have been introduced
due to the telecom boom in Pakistan, meanwhile this boom also affected the existing business.
And existing business are progressing more due to this new technology. We will see a few of
them here.
13.10.1. Banking
Earlier the banking was just confined to the individual branches and the individual banks. But
now online banking is becoming more and more popular. Now people can access their accounts
from the remote locations. They just don’t need to go to their respected branches for the
transactions. (Mahmud 2005)
Online banking was the first step towards the use of technology in banking. Now people can do
transactions through their mobile phones. People can pay their utility bills through the simple
method from their mobile phones. The chances of bank robberies would go down automatically
and bank customers would be more secure and safe in making banking transactions. It not only
saved cost but also provided convenience for the customers as they are now able to carry out
transactions from their place without travelling to the nearest bank branch. (Hussain 2005)
13.10.2. Agriculture
Telecom also affected agriculture industry of Pakistan. Earlier the farmers had to travel to
different urban areas to sell out their products through some middle man. Due to which they
were not earning the right way. But now they can easily get access to all the markets and sell
their products. Telenor is also launching “APNAKISAN” scheme through which people can call
to some specific number and can get the information about the crops about the prices. (Cellular
News 2007)
By the boom of telecom and development of the tele-centers in the rural area, farmers are getting
more benefit than that of before. Now they can easily get market information, supplier’s
information (chemical, pest and disease control), indigenous knowledge and better farming
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methods. Support programs and services, quality improved (seeds and animals breeds) are some
of the other information that can be
easily accessed due to the telecom. (Ansari 2006)
13.10.3. Software and IT Industry
Telecom Sector and Software industry are closely related and telecom growth has boosted
Software industry in Pakistan. Minister for Information Technology, Awais Ahmad Khan
Leghari said “Given the expansion and growth of the telecom sector, it is high time that the
software industry concentrated its resources on developing expertise and domain knowledge
within the telecom sector. It is but natural that the dramatic growth in the telecom sector has
some synergies with the software industry in the country. Now that it is clear that the telecom
sector is growing rapidly, and that international telecom manufacturers and operators are all
setting up offices in Pakistan, it makes sense to focus our energies on developing solutions that
can be piloted locally and subsequently marketed internationally once they have been
successfully implemented within Pakistan,” (Pakistan Times 2005)
There are some major steps from telecom sector which helped in powering IT and Software
industry growth.
Bandwidth costs reduced, from $ 60,000 to $ 6,000 a month for E1 circuits.
Activation of 155 M bits IP connectivity.
Deregulation of Internet delivery on Cable TV has been granted full permission.
License processing time period for telecom services reduced to 7 days. (Knowledge
management 2006)
13.10.4. Others
Telecom services have enhanced productivity of a lot of businesses and made their access easy,
anywhere and anytime. Organizations are facilitating their employees with mobile phones so that
they can be accessed any time if needed. People related to different businesses like trade, stock
exchange, security services and even small shop keepers are getting advantage from blessings of
the telecom services.
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These services are becoming essential for small and large businesses alike. It has affected to the
grass root level like a fisherman returning with their catch can now find the prevailing market
prices before reaching shore in order to get the best price. Small tradesmen like carpenters,
plumbers, can connect with their clients, going directly from one job to the next and spawn more
businesses.
13.10.5. Impacts on Pakistani Culture Now, we will present the impacts of Boom of Telecom Sector on Pakistani culture which we have
mainly analyzed through a survey with the help of questionnaire and as we are a part of that Society
so our personal experiences and observations will also reflect in this context. We all know that when
something becomes a part of our life, obviously it affects our living style, our ways of performing
daily routine works or in other words it affects our Culture and Society. And of course every thing
has positive and negative effects. We will see here that what positive and negative impacts are being
faced by the people of Pakistan with respect to their specific cultural and traditional values due to
telecom services and especially cellular ones. We have done this by keeping in mind the five
dimensional cultural model of Professor Hofstede. We have done all this keeping in mind the inter-
link between culture and marketing that how these social and cultural values affect the consumer’s
behaviour. A lot of surprising things came in our notice during our survey which we will share that
how people from different communities are perceiving these services and how these services are
being thought as Blessings of God by some people and on the other hand some people have an
opinion like “Cell phones or Hell phones”. Many things will be amazing for those readers who do not
know about the myths and specific thinking of the people of that area. But people from all over the
world have their own set of traditional values and look at different things with their own point of
view which is of course affected by many things like religion, local values and their set of
experiences. So, in this context it will be an interesting report and will help to create awareness that
how people of Pakistan think about telecom services and what problems they are facing from this and
what benefits they are enjoying due to easy access of these services.
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13.11 Telecommunication De-Regulation Policy
13.11.1. Telecommunication Sector of Pakistan
Pakistan has made steady progress in expanding telecommunication networks and
services in recent years. Key features of the present telecommunication infrastructure in
Pakistan are:
13.11.2. Pakistan Telecommunication Company Limited (“PTCL”)
PTCL is the incumbent service provider for provision of fixed line telecommunications.
Established as public limited company in 1996, PTCL is 88% owned by the Government
of Pakistan. It has shown impressive growth in the past 5 years and manages a well-
developed domestic telecommunication infrastructure of 4.85 million access lines (June
2003), nationwide fibre-optic backbone and international communication through sub-
marine cable (SMW3) and satellite links.
PTCL has installed more than 1.5 million new telephone lines since June 1997. As a
result, teledensity (defined as the number of operational telephone lines as a percentage
of population), at about 2.7%, has increased by 6% per year.
The telecommunication network is almost entirely digital.
As a result of tariff rebalancing program initiated by the Government in 1997, the prices
of long distance and international calls have been significantly reduced in recent years.
13.11.3. National Telecommunication Corporation (“NTC”)
National Telecommunication Corporation was formed in 1996 in order to meet
telecommunication requirements of Government and Defense Forces. It has nationwide
presence with a network of 72,000 customer access lines and nationwide fibre-optic
backbone infrastructure.
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13.11.4. Special Communications Organization (“SCO”)
The Government created SCO in 1976 and gave it the task of installing and maintaining
telecommunication facilities in the entire Azad Jammu and Kashmir and Northern Areas.
SCO operates a network of 60,000 lines in its territory.
13.11.5. Cellular Mobile Telephony
Cellular usage is growing strongly after the introduction of Calling Party Pays (“CPP”)
regime in the year 2000. Currently, four operators (2 GSM, 1 D-AMPS, 1 AMPS)
provide service to over 2.2 million cellular subscribers all over the country. The number
of subscribers has more than tripled in the past two years.
13.11.6. Internet Services
More than 70 active Internet service providers provide Internet access, which is
accessible in more than 1400 cities and towns. Low Internet access charges have
encouraged Internet usage and acceptance by the Pakistani public. Internet services are
accessible at a cost of unit local call without discrimination of distance, in most parts of
the country. Low-priced data communication services are available to companies in the
information and communications technology sector in order to encourage these
companies to establish and grow in Pakistan.
13.11.7. Role of Other Private Sector Operators
Private sector operators have played a very important role in developing the value added
services market in Pakistan. Their key achievement is installation of over one hundred
and twenty thousand pay phones and public call offices in addition to operations of value
added services, premium rate calling systems and so forth. Some private sector service
providers have deployed fibre optic infrastructure in main cities to provide Cable TV and
Internet services. In addition, PTCL has entered into O&M contracts with private sector
partners to offer services such as Wireless Local Loop (WLL) pay phones, DSL based
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Internet access, pre-paid calling cards, International voice termination using VoIP
technology. Companies in the Information Technology business can set up satellite based
direct international connectivity for call centers / IT services under franchise agreement
with PTCL.
13.11.8. Regulatory Perspective
Efforts to develop a fully competitive market in telecom sector were initiated in the early
90’s. The Pakistan Telecommunication (Re-organization) Act was promulgated in 1996.
Pakistan Telecommunication Authority (“PTA”) – the industry regulator, was established
to regulate the telecom industry. PTA is a fully functional organization and has played a
key role in developing private sector’s role in telecommunication services.
Frequency Allocation Board (“FAB”) is an independent organization entrusted with the
responsibility of allocating and assigning frequency spectrum to Government, telecom
system / service providers, broadcasting operators and private users of wireless systems.
It operates within the provisions of Telecom Act of 1996 and the guidelines /
recommendations lay down by International Telecom Union (ITU).
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13.12. Telecom Imports in Pakistan over Past Five
Years
Telecom industry is responsible for huge amount of Imports, especially in area of Mobile Phone
sets, accessories along with Telecom Equipment.
These imports are burden on national economy; however, we can’t avoid them as they are
responsible for many other benefits that get from Telecom sector.
Government of Pakistan tried to cut down at least mobile phone import, which it succeeded in a
way (evident from the graph below), by imposing taxes on import of mobile phone sets in 2008-
09 budget, however, taxes were lifted in 2009 budget due to sheer pressure from Mobile Phone
manufacturing representative offices in Pakistan.
Along with taxation, saturation, inflation and political scene in Pakistan happen to be another
factor impacting the imports of mobile phone handsets. On other side, we are witnessing a
smooth growth over the period for import of Telecom apparatus, which has hit USD 1470
million marks in 2008-09.
Following is the chart that represents certain data regarding the Telecom imports of Pakistan
during last five years. These stats are till year ending 2008-09 (July 2009)
Table-4 Telecom Imports (US Million Dollars)
2007-08 2008-09 2009-10 2010-11 2011-12
Mobile Phones and Battery 371 569 670 446 130
Other Telecom Apparatus 406 628 679 885 1470
Total Telecom Imports 777 1197 1349 1331 1600
Source: State Bank of Pakistan
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13.13 Telecom Imports News in Pakistan
Pakistani Telecom industry imports huge amount of telecom equipment, including mobile
phone sets and its accessories, which is unavoidable and also provides certain benefits to their
telecom sector.
Pakistan Government did make an unsuccessful attempt to curb mobile set imports in 2008-
09 by imposing taxes on import, with saturation, inflation and the political scene playing a part
too, however, in spite of all this, the import of telecom apparatus has steadily grown, as is
revealed by the chart.
13.13.1. MOBILE PHONES AND MOBILE EQUIPMENT IMPORT SLOWS DOWN
The Mobile phone imports declined in July-December 2008 by 239 million dollars due to
imposition of taxes in the budget, inflation hike and overall the overall economic downfall.
Telecom imports witnessed a deceleration by 250 million dollars due to the sluggishness of
foreign direct investment coming into the country. Saturation of telecom market has been stated
as another reason for the decline.
13.13.2. COUNTRY’S EXPENSE OF IMPORTED HANDSETS INCREASING
The current fiscal year has witnessed a hike in imports of mobile handsets, thus hugely
burdening the country's import bills, which have reached Rs. 33.549 billion in July 2010 to
March 2011.
According to the Federal Board of Statistics, a tremendous growth of 85% in the sale of
mobile handsets has been noted in the third quarter of the current fiscal year. The import and
sales costs are almost the same. There is little difference due to the high demand in the local
market owing to change in technology and the introduction of new brands.
13.13.3. HANDSET IMPORT BILL CROSSES Rs. 40 BILLION IN ONE YEAR
The cellular import bill has been ballooning constantly due to their high demand in the
local markets, thus surging to Rs. 40.8 billion in the period July 2010 to May 2011.
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The FBS figures shows a steep growth of 71% on the expenses of mobile handsets over the
period of 11 months compared with the same period of the previous fiscal year. The hike in sales
happened due to change of technology and replacement of old/ impaired handsets by large
subscriber base of the cellular sector in the country.
According to an estimate, the sale of handsets has crosses 1 million per month, varying
the quality, brand and price range.
13.13.4. PAKISTAN IMPORTED MOBILE PHONES WORTH Rs. 15.77 BILLION IN
LAST THREE MONTHS OF 2012
Pakistan has reportedly imported mobile phones of around Rs. 15.77 billion during July -
September, 2012 compared to Rs. 14.25 billion during the same period last year, showing a
growth rate in imports of around 11%.
Market sources say that the trend of importing high end smart phones is increasing, thus
putting tremendous burden on the country's national import bill.
13.13.5. INDIA BEAT PAKISTAN IN TELECOM SECTOR GROWTH
India has superseded Pakistan among the SAARC nations with an overwhelming
adoption of technology and telephony services by its masses. India attained a crown status in the
region with its faster growth in the number of telephony services subscriptions and also in
technology and investment flow.
Pakistan's total tele-density had reached 66.8% by February 2011 whereas Indian tele-
density had reached 68.4%. Pakistan cellular phone subscription has witnessed a constant growth
amid stiff price war and services by operators crossing the 105 million mark with the tele-density
reaching 63.2% by February, 2011.
Pakistan Telecommunication Authority's latest update authority states a tremendous
growth in the subscription of mobile operators in the current fiscal year an increase of 5.96
million on the networks of different operators from July to February. The landline connections
have shown a decline. In terms of population and number of users, the position of the country
with the highest tele-density till 2011. Now, however, India is ahead of Pakistan.
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India is ahead of Pakistan in having launched an advance phone service - 3G, with nearly
1 million customers in nine cities having high per capita income. On the other hand, Pakistan is
yet to introduce this technology. Pakistan is leading in the cellular users who migrated through a
service called Mobile Number Portability launched in 2004.
13.13.6. THERE ARE FEW FEATURES OF THE TWO COUNTRIES AND TELECOM
SECTORS REMAIN SIMILAR
The tele-density remained high in the 20 heavily populated cities of the two countries,
mainly with high economic activities and high income power. The rest of the cities are
witnessing slow penetration.
The rural areas with huge land and population is showing an increase in the number of
subscription in both the countries.
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13.14. Indian Telecommunication Policies
Indian telecom is world’s fastest growing telecom expected grow three fold by 2012.Tremendous
strides in this industry have been facilitated by the supportive and liberal policies of the
Government. Especially the Telecom Policy of 1994 which opened the doors of the sector for
private players. Rising demand for a wide range of telecom equipment has provided excellent
opportunities for investors in the manufacturing sector.
Provision of telecom services to the rural areas in India has been recognized as another thrust
area by govt.which also helps for the enormous opportunities in this sector.
Therefore telecom sector in India is one of the fastest growing sectors in the country and has
been zooming up the growth curve at a feverish pace in the past few years. And even the Indian
Wireless Market is booming which has plenty of room for growth.
13.14.1. Regulatory policy The Department of Telecommunications (DOT) under the Ministry of Communications and
Information Technology is the concerned authority for all matters relating to telecom. The
department is responsible for formulating the developmental policies; granting licenses for
various telecom services; promoting standardization, research and
development as well as private investment in the sector.
An independent regulatory body called as the Telecom Regulatory Authority of India (TRAI)
was established in 1997, under the Telecom Regulatory Authority of India Act, 1997.The
Telecom Regulatory Authority of India Act, 1997 was amended by the Telecom Regulatory
Authority of India (Amendment) Act, 2000. By the Amendment Act, an Appellate Tribunal
known as the Telecom Disputes Settlement and Appellate Tribunal (TDSAT) has been set up to
protect the interests of service providers and consumers of the telecom sector.
74% to 100% FDI permitted for various telecom services.
FIPB approval required for foreign investment exceeding 49% in all telecom services.
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100% FDI permitted in telecom equipment manufacturing on automatic approval basis.
Indian has a telecom policy viz. Telecom Policy of 1994 aims to encourage private and
foreign investment. Which has opened the doors of the sector for private players and the
process was given a further boost by the telecom policy announced in 1999 viz. New
Telecom Policy 1999.
13.14.2. Other enactments which govern the telecom sector are as follows:
Indian Telegraph Act, 1885
Indian Telegraph (Amendment) Rules, 2000
Indian Wireless Act, 1933
Cable Television Networks (Regulations) Act,1995.
Information Technology Act, 2000
Broadband Policy 2004
13.14.3. Incentives to invest
Tax incentives under the current Budget
Customs duty on convergence products to be reduced from 10% to 5%.
Exemption from excise duty for specified inputs and raw materials for manufacture of
specified electronics/ IT hardware to lower the network cost for telecom service
providers.
Specified parts of set top boxes and specified raw materials for use in the IT/electronic
hardware industry to be exempted from customs duty.
Internet telecommunication service brought under the service tax net. And countervailing
duty on wireless data modem cards with exempted by way of excise duty exemption.
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13.15 Business Opportunities in Telecommunication
Industry in Pakistan
As mankind starts its journey into the new millennium we notice the two major forces shaping up
the future of this world, reducing geographic boundaries, bringing cultures and societies closer to
each other — are Globalization and Information Communication and Technology (ICT) —
creating a paradox of wealth and poverty; bridging gap between individuals and isolating them at
the same time; creating simultaneously the information haves and information have-nots;
empowering people contribute and restricting communities to participate.
In an age of ICT (Information, Communication and Technology) the digital divide, means more
than just a lack of computers and connections. Technology means nothing if it is not used. There
are a number of obstacles which refrain unleashing the prowess of ICT. There remain huge
disparities in quality of human existence despite the fact many steps have been taken to improve
the social economic conditions of the societies at large around the world. At this important
crossroads, where ICT is facilitating unprecedented global flows in information, products,
people, capital and ideas the potential of sustainable human development dream remains
unfulfilled.
13.15.1. Technology Trends Challenges/Opportunities
Pakistan: Progress in ICT
The Telecom Industry – phenomenal growths: Attracting one of the highest
Foreign Direct Investment in Pakistan Deregulation of the telecom sector Six
mobile companies 14 LDI & 18 WLL companies cutting edge new services at
lower costs number of cell phone subscribers from 0.2 million to about 70 million
(last 7 years)
The Internet Industry – phenomenal changes: The number of cities connected to
the Internet: from 29 to about 2400. Tariffs for PTCL’s International Internet
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bandwidths: from US$87,000 to US$1,000 per month for a 2MB circuit. Number
of Internet users: from 200,000 to over 12 million.
Growth of ICT Usage
Banking Sector Focus on Technology – competitive edge Numbers of ATMs in
Pakistan: tripled in the last 5 years to around 1500 ATMs across 30 major cities
ATM networks: 1 Link and MNET The number of online branches in Pakistan:
from 400 in 1999 to 2,000+ at present E-enabled plastic cards in banks: from 0.3
million in 1999 to over 4 million
Issues & Opportunities
Network Readiness Index Pakistan Ranked 67/115 in 2011 and now down to
84/122 in 2012 Pakistan still categorized in the Low Access Category Total
Teledensity in Pakistan at ~ 45% However rural Teledensity ~ 1%.
The BPO industry E.g. Call Centers, data processing, 150+ bn (India has over $10
bn share growing at 70%) Potential to provide large scale job opportunities.
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14. Agriculture Industry/ Sector
14.1 Background
Pakistan has a rich and vast natural resource base, covering various ecological and climatic zones; hence the country has great potential for producing all types of food commodities. Agriculture has an important direct and indirect role in generating economic growth. The importance of agriculture to the economy is seen in three ways: first, it provides food to consumers and fibers for domestic industry; second, it is a source of scarce foreign exchange earnings; and third, it provides a market for industrial goods.
14.2 Land use, farming systems and institutions
The total geographical area of Pakistan is 79.6 million hectares. About 27 percent of the area is currently under cultivation. Of this area, 80 percent is irrigated. In this regard, Pakistan has one of the highest proportions of irrigated cropped area in the world. The cultivable waste lands offering good possibilities of crop production amount to 8.9 million hectares. Growth in cropped area is very impressive: from 11.6 million hectares in 1947 to 22.6 million hectares in 1997.
Most of Pakistan is classified as arid to semi-arid because rainfall is not sufficient to grow agricultural crops, forest and fruit plants and pastures. About 68 percent of the geographical area has annual rainfall of 250 mm, whereas about 24 percent has annual rainfall of 251 to 500 mm. Only 8 percent of the geographical area has annual rainfall exceeding 500 mm. Thus supplemental water is required for profitable agricultural production, either from irrigation or through water harvesting.
Agriculture is largely dependent on artificial means of irrigation. Of the total cultivated area, about 82 percent or around 17.58 million hectares is irrigated, while crop production in the remaining 3.96 million hectares depends mainly upon rainfall. The Irrigation Canal Command Area (CCA) has been grouped into classes on the basis of the nature and severity of its limitations water logging, salinity, sodicity and texture. At present about one-fifth of the cultivated land in CCA is affected by water logging and salinity to varying degrees. An additional area of 2.8 million hectares suffers from sodicity. Notwithstanding huge investments, the water table was 0 to 1.5 m under 2.2 million hectares of irrigated land, 1.5 to 3 m under 6 million hectares and 0to 3 m under 8 million hectares. Thus Pakistan needs to overhaul its entire drainage and reclamation strategy reduce its cost and make it efficient.
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14.3 Significance of the agricultural sector in the economy
Agriculture is an important sector, providing food to the fast-growing population of the country. According the 1998 census, the total population of Pakistan is 130 million. With a population growth rate of 2.6 percent there is a net addition of 3.4 million people each year. In 1947 the population of Pakistan was 32.5 million; in 50 years it has increased fourfold. During this period the production of wheat, the major food crop, has increased only 2.9 fold. During 1970/71 the amount of wheat imported was 0.3 million tonnes; it has increased to 4.1 million tonnes in 1997. Tremendous efforts have been carried out to narrow the gap between population growth and food production.
Agriculture contributes about 24 percent of the gross domestic product (GDP) and employs 47 percent of the national employed labour force. The contribution of the agricultural sector to the GDP has declined gradually since Pakistan came into existence, from over 50 percent in 1949-50 to about 24 percent in 1996-97. Agriculture still remains the major sector of the GDP composition. A major part of the economy depends on farming through production, processing and distribution of major agricultural commodities.
The average annual growth rates in the agricultural sector during the 1960s, 1970s and 1980s were 5.07, 2.37 and 5.4 percent, respectively. With the announcement of a new agriculture package by the government in April 1997, the growth rate during 1997/98 has improved to 5.9 percent.
More specifically; the agricultural sector plays an important part in Pakistan's economy by:
Contributing 24 percent towards GDP; Providing food to about 130 million people; Earning about 60 percent of the country's total export earnings; Providing employment to 47 percent of the total work force; Providing the main source of livelihood for the rural population of Pakistan; Providing raw materials for many industries and a market for many locally
produced industrial products.
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14.4 Overview of agricultural sector development
Significant progress has been made in development of the agricultural sector in Pakistan since the time of independence in 1947. At that time, the Indus Basin was irrigated with an extensive system of canal irrigation, sown with low-yielding traditional seed varieties, fertilized mainly with animal manure and cultivated by means of animal draught power and by hand.
In the early 1960s, conditions that favoured more rapid growth were put in place: the Indus WateAgreement was signed under the chairing of the World Bank; the Indus Basin Development Fund westablished with multidonor support; government improved the terms of agricultural trade; and tube we were installed as a viable investment. That decade witnessed a green revolution in Pakistan, and crcproduction accelerated during the first part of the decade, primarily because of the increased use of inputs.
Pakistan's agriculture has made a long and difficult journey. Its performance is marked by a mixed trend. There have been some years of dismal growth and some years of cruising growth. Since 1980, agricultural GDP at constant factor cost has more than doubled, increasing from Rs 76 billion in 1980 to more than Rs 141 billion in 1996/97, with a steady growth rate of 3.91 percent annually. Agriculture's share of total GDP however, declined from about 31 percent to just 24 percent over the same period. Crop production contributed the largest share of agricultural GDP (62 percent in 1996). with livestock contributing 34 percent and fisheries and forestry the remaining 4 percent.
During the past 50 years a significant increase in production of the major crops has been achieved. Wheat production rose from 3.3 million tonnes in 1950/51 to 18.6 million tonnes in 1997/98. Similarly during this period rice production rose from 0.86 million tonnes to 4.32 million tonnes. There was also a records increase in cereal production. The production of cotton reached 9.4 million bales during 1996/97.Sugarcane production reached 5.3 million tonnes during 1997/98.
Policy measures in the last four years, i.e. from 1993/94 to 1996/97, were positive for the agricultural sector. Undue benefits provided to the industrial sector over the years were reviewed and modified. The agricultural sector as a result responded with new buoyancy. Export taxes on agricultural commodities were reduced or eliminated, which benefited the agricultural sector. In the policy reforms package, better support prices, better tillage and soil preparation practices and adequate and timely availability of fertilizer and certified seed have added to the positive response from the farming community. In 1996/97, production of wheat reached a level of 16.7 million tonnes, and there was also a 13.7 percent increase in the production of Basmati rice. The
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overall production of rice registered an increase of 8.5 percent - the total production of rice during the year was 4.3 million tonnes, compared with 3.97 million tonnes in the previous year.
There was, however, a decrease in the production of pulses, particularly of gram, during 1996/97 to 832 000 tonnes from 918 000 tonnes during the previous year (1995/96). Production of potatoes and onions in 1997/98 is estimated at 1 205 000 and 1 160 000 tonnes respectively, as compared with 963 000 and 1131 000 tonnes in 1996/97.
Over the past 20 years some important structural changes have taken place in the sector. In particular, livestock has emerged as an important subsector, today contributing more than one-third of agricultural GDP, compared with about 28 percent 20 years ago. Similarly, fisheries and forestry, while still minor contributors to agricultural GDP, have grown rapidly. Structural changes have also taken place within the crop sector. Cotton is now as important as wheat in terms of value added with a one-fifth share of total earnings. Rice and sugar have, however, fallen from a 20 percent share in the early 1970s to 15 percent today.
The 2000-01 wheat crop was forecast at a record 19.3 million tons, compared to 17.8 million tons produced during the previous year. This increase is due largely to favorable weather and a 25-percent increase in the procurement price to about US$135 per ton. About 85 percent of the crop is irrigated. Despite the record production, Pakistan will continue to be a major wheat importer. The government has imported an average of US$2.4 million annually over the past 5 years. The United States and Australia are the major suppliers. Demand for wheat is increasing from Pakistan's rapidly growing population as well as from cross-border trade with Afghanistan.
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Pakistan is a major rice exporter and annually exports about 2 million tons, or about 10 percent of world trade. About 25 percent of exports is Pakistan's famous fragrant Basmati rice. Rice is Pakistan's second leading source of export earnings. Private traders handle all exports. Pakistan's main competitors in rice trade are Thailand, Vietnam, and India.
Pakistan's fishing industry is relatively modest, but has shown strong growth in recent years. The domestic market is quite small, with per capita annual consumption of approximately 2 kilograms. About 80 percent of production comes from marine fisheries from 2 main areas, the Sindh coast east from Karachi to the Indian border, and the Makran coast of Baluchistan. Ninety percent of the total marine catch is fish; the shrimp which constitute the remainder are prized because of their greater relative value and demand in foreign markets. During 1999-00, total fish production was 620,000 tons, of which 440,000 tons consisted of sea fish and the remainder were fresh-water species. About one-third of the catch is consumed fresh, 9 percent is frozen, 8 percent canned, and about 43 percent used as fish meal for animal food.
Livestock accounts for 40 percent of the agricultural sector and 9 percent of the total GDP. Principal products are milk, beef, mutton, poultry, and wool. During 1999, the livestock population increased to 120 million head. That same year Pakistan generated 970,000 tons of beef, 640,000 tons of mutton, and 190,000 tons of poultry. In an effort to enhance milk and meat production, the government recently launched a comprehensive livestock development project with Asian Development Bank assistance. Poultry production provides an increasingly popular low-cost source of protein. Modern poultry production is constrained by high mortality, high incidence of disease, poor quality chicks, and poor quality feed, combined with an inadequate marketing system. Frozen poultry have only recently been introduced.
Forests cover an area of 4.2 million hectares or about 5 percent of the total area of Pakistan. The principal forest products are timber, principally for house construction, furniture, and firewood. Many of the country's wooded areas are severely depleted as a result of over-exploitation. The government has restricted cutting to protect remaining resources—though corruption often jeopardizes environmental efforts—and has lowered duties to encourage imports. Forestry production has since declined from 1.07 million cubic meters in 1990-91 to 475,000 cubic meters in 1998-99. Pakistan imports an estimated US$150 million of wood products annually to meet the requirements of a growing population and rising demand by a wealthy elite.
Source: http://www.nationsencyclopedia.com/economies/Asia-and-the-Pacific/Pakistan AGRICULTURE.html#ixzz2TnubyYNI
Pakistan occupies the North-eastern part of the Indo-Pakistan sub-continent between 23° and 37° north latitude and 62° and 75° east longitude. The length and width, it covers is approximately 1400 kilometers and 500 kilometers, respectively. Pakistan is basically an agricultural country and thus agriculture is the 'backbone' of the economy and the mainstay of our national economic life. It contributes about 25% to the GDP, employs about 50 % of the total labour-force, provides livelihood directly to 70 % of the rural population, and earns about 60 % of the total value of exports. Overall, it meets the food needs of the population. But unfortunately, the backbone is aching badly now and may suffer crack under the pressure on soil discordance and natural calamities .
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The total geographical area of Pakistan according to agricultural statistics of Pakistan 1998-99 is 79.61 million hectares (mha) (about 197 million acres), of which only 25 % or 19.82 million hectares (about 48.96 million acres) are currently under cultivation. Out of the total land area of Pakistan, the total land area of Punjab is 20.6 mha (about 50.90 million acres), out of which 54 % or 11.04 mha (or 27.28 million acres) are cultivated. The total land area of Sindh is 14.1 mha (or 34.84 million acres), out of which nearly 39 % or 5.45 mha (or 13.45 million acres) are cultivated. The total land area of Balochistan is 34.7 mha (or 85.74 million acres), out of which only 4 % or 1.4 mha (or 3.46 million acres) are cultivated, and the total land area of NWFP comprises of 10.2 mha (25.20 million acres), out of which nearly 10% or 1.93 mha (or 4.77 million acres) are cultivated. The vast areas of country generally own good fertile soil, a favourable climate and with the world's largest elaborated canal irrigation network. Pakistan is fortunate in that the soil, topography and climate are generally suitable for the year round agriculture. Major agricultural areas lie within the plains formed by Indus river and its tributaries namely Kabul, Jhelum, Chenab, Ravi and Sutlej, which run in a general northeast/south-west direction. Indus plains are like a tunnel with number of water sources at the top, converging into single stream, which flows into the Arabian Sea, east of Karachi.
The country produces wheat, rice, cotton, sugarcane, maize and other cereal in sufficient quantities. Wheat is the leading food grain in Pakistan. Now the wheat production has reached to over 21 million tons annually. Rice is the second most important food grain. It requires irrigation and is grown as a Kharif crop. Maize is mostly grown in Kharif season. Cotton is an important cash crop of the country. It is exported in sufficient quantity. Other crops of food products millet, sorghum, soybean, dry beans, chickpeas, tomatoes, pepper, tobacco. The important fruits are date palm, apples, citrus, mangoes, bananas. The production of all major food commodities in Pakistan have shown as upward trend, but the increase was most significant in the case of poultry meat, fruits, eggs, red meat and vegetables. Pulses also showed substantial increase in production. Pakistan's major imports of food commodities include
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edible oils, sugar, tea, dry milk and pulses. The country however, is a major exporter of rice and cotton and other exports include fruits and some vegetables. Since independence, the population increased many folds, similarly the grain production increased several times. Besides green revolution, significant production advances have been made in milk, fish, fruits and vegetables. To propel agriculture of the country into 21st century, the quality of technical skills and management of agricultural manpower must improve. Science, technology and generation of new technology will of course be helpful in increasing the agricultural productivity of the country.
Area and Production of all crops:
i) Food crops (Area 12598 x 103 hectares and production 24775 x 103 tons).
ii) Cash crops (Area 4140 x 103 hectares and production 56923 x 103 tons).
iii) Pulses (Area 1531 x 103 hectares and production 9$1 x 103 tons).
iv) Edible oilseeds (Area 641 x 103 hectares and production 3602 x 103 tons).
Food crops cover about 75 % of cropped area, while cash crops cover nearly 25 % of the cropped areas.
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1. Area and production of important food grain crops in Pakistan and Province-wise: (wheat, rice, maize, bajra, jowar, barley, etc.):+ Total wheat in Pakistan (Area 8229.9 x 103 hectares and production 1785.6 x 103 tons and yield kilograms per hectare).Province-wise Area, Production and Yield in kilograms per hectare, respectively of important food crops:
i)Punjab (Area 5934.6 x 103 hectares, Production 13212 x 103 tons and Yield 2226 kg/ha).
ii)Sindh (Area 1123.7 x 103 hectares, Production 2675.1 x 103 tons and Yield 2381 kg/ha).
iii)NWFP (Area 857.6 x 103 hectares, Production 1221.8 x 103 tons and Yield 1425 kg/ha).
iv)Balochistan (Area 314 x 103 hectares, Production 748.7 x 103 tons and Yield 2384 kg/ha).
Wheat is the most important staple food of Pakistan. This year there was a surplus production of wheat in the country. The total production of wheat for the year 1999-2000 was over 21.0 million tons. Out of this, government had to export certain quantity of wheat to the foreign country. +Rice in Pakistan (Area 2423.6 x 103 hectares, Production 4673.8 x 103 tons and Yield 1928 kg/ha).
i) Punjab (Area 1492.9 x 103 hectares, Production 2176 x 103 tons and Yield 1458 kg/ha).
ii) Sindh (Area 704.1x 103 hectares, Production 1930.3 x 103 tons and Yield 2742 kg/ha).
iii) NWFP (Area 68.2 x 103 hectares, Production 133.6 x 103 tons and Yield 1959 kg/ha).
iv) Balochistan (Area 158.4 x 103 hectares, Production 433,9 x 103 tons and Yield 1928 kg/ha).
Pakistan is very much sufficient in the production of rice and cotton. The country had to export the surplus quantity of rice and cotton to the foreign countries and in this way, the country received a remarkable amount and of foreign exchange
+ Maize in Pakistan (Area 962.2 x 103 hectares, Production 1665 x 103 tons and Yield 1730 kg/ha).
i) Punjab (Area 413.9 x 103 hectares, Production 828.2 x 103 tons and Yield-2001 kg/ha).
ii) Sindh (Area 10.5 x 103 hectares, Production 5.5 x 103 tons and Yield 524 kg/ha).
iii) NWFP (Area 534.4 x 103 hectares, Production 827.6 x 103 tons and Yield 1549 kg/ha).
iv) Balochistan (Area 3.4 x 103 hectares, Production 3.7 x 103 tons and Yield 1088 kg/ha).
+ Bajra in Pakistan (Area 462.6 x 103 hectares, Production 212.9 x 103 tons and Yield 460 kg/ha).
i) Punjab (Area 280.9 x 103 hectares, Production 136.2 x 103 tons and Yield 485 kg/ha).
ii) Sindh (Area 175.0 x 103 hectares, Production 73.1 x 103 tons and Yield 418 kg/ha).
iii) NWFP (Area 6.4 x 103 hectares, Production 3.3 x 103 tons and Yield 516 kg/ha).
iv) Balochistan (Area 0.3 x 103 hectares, Production 0.3 x 103 tons and Yield 1000 kg/ha).
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+ Jowar in Pakistan (Area 382.7 x 103 hectares, Production 227.8 x 103 tons and Yield 595 kg/ha).
i) Punjab (Area 240 x 103 hectares, Production 134 x 103 tons and Yield 561 kg/ha).
ii) Sindh (Area 110.3 x 103 hectares Production 64.4 x 103 tons and Yield 584 kg/ha).
iii) NWFP (Area 8.6 x 103 hectares, Production 5.4 x 103 tons and Yield 628 kg/ha).
iv) Balochistan (Area 23.5 x 103 hectares, Production 23.1 x 103 tons and Yield 983 kg/ha).
2. Province-wise area (103 hectares), Production (103 tons) and Yield (kilograms per hectare) of cash crops. The cash crops include sugarcane, cotton, tobacco, jute etc.+ Sugarcane Area, Production and Yield kg/ha in Pakistan is (Area 1155.1 x 103 hectares, Production 55191.1 x 103 tons and Yield 47.8 kilogram per hectare).
i) Punjab (Area 780 x 103 hectares, Production 33382.8 x 103 tons and 42.8 kg/ha).
ii) Sindh (Area 270.8 x 103 hectares, Production 7050.7 x 103 tons and 63.0 kg/ha).
iii) NWFP (Area 103.3 x 103 hectares, Production 4719.5 x 103 tons and 45.7 kg/ha).
iv) Balochistan (Area 0.7 x 103 hectares, Production 38.1 x 103 tons and 54.4 kg/ha).
+ Cotton Area, Production and Yield kg/ha in Pakistan is (Area 2922.8 x 103 hectares, Production 8790.2 x 103 bales (one bale = 373 lbs) and Yield 512 kilogram per hectare).
i) Punjab (Area 2282.8 x 103 hectares, Production 6628 x 103 tons and 494 kg/ha).
ii) Sindh (Area 630.2 x 103 hectares, Production 2134.1 x 103 tons and 576 kg/ha).
iii) NWFP (Area 0.4 x 103 hectares, Production 0.7 x 103 tons and 298 kg/ha).
iv) Balochistan (Area 9.4 x 103 hectares, Production 27.4 x 103 tons and 496 kg/ha).
+ Tobacco Area, Production and Yield kg/ha in Pakistan is Area 57.3 x 103 hectares, Production 108.8 x 103 tons and Yield 1899 kilogram per hectare.
i) Punjab (Area 19.6 x 103 hectares, Production 24.6 x 103 tons and 1255 kg/ha).
ii) Sindh (Area 03. x 103 hectares, Production 0.4 x 103 tons and 1333 kg/ha).
iii) NWFP (Area 34.5 x 103 hectares, Production 78.8 x 103 tons and 2284 kg/ha).
iv) Balochistan (Area 2.9 x 103 hectares, Production 5.0 x 103 tons and 1724 kg/ha). In addition to these, other cash crops are sugar-beet guar-seed etc.
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Pulses:The pulses include gram, mung, masoor (lentil), mash, mattar and other pulses of Rabi and Kharif season. The area and production of all pulses in Pakistan are (Area 1530.5 x 103 hectares, Production 951.4 x 103 tons).
Edible oils: The edible oils crops include soybean, sunflower, sesamum, groundnut, mustard, linseed, canola, rape-seed, castor-seed etc.The total area, production and yield of all oilseed crops are (Area 690 x 103 hectares, Production 3790 x 103 tons).The oilseed crops do not fulfil all the requirements of our increasing population, therefore Government of Pakistan have to spend billions of dollars on the purchase of palm oil and soybean from the foreign countries.
Vegetable: The important vegetable crops grown in the country are potato, tomato, egg plant, lady finger, kakri, bitter gourd, loki, pumpkin, chillies, ginger, cucumber, garlic, radish, carrot, turmeric, corrianderetc.Livestock: Pakistan is self-sufficient in the production of livestock. The livestock includes, cattle, sheep, buffalo, goats, canals, asses, horses, mules and poultry. All the four provinces are enriched in livestock production. However, the production of livestock in the country are: cattle (17541 x 103), buffaloes (15705 x 103), sheep (23287 x 103), goats (29945 x 103), camels (958 x 103), asses (2998 x 103), horses (388 x 103), mules (69 x 103) and poultry (57503 x 103).Fish Production: Fish are also an important diet for the people of country. The total production of fish both from inland (164x 103 tons) and marine (434 x 103 tons). Thus, through high sea, ponds and rivers of the country are (597.0 x 103 tons).Fruits: The important fruits, which grow in Pakistan are: citrus, mango, banana, apple, guava, grape-fruit, apricot, peach, pears, plum, grapes, pomegranate, dates, almonds.
(Courtesy:Dr. SYED MANZOOR ALAM)
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14.5. Policies and Norms
14.5.1. Section I. Food Laws:
The Ministry of Food Security and Research has drafted a proposed National Food Safety, Animal, and Plant Health Regulatory Act, 2012 that would formalize the National Food Safety, Animal, and Plant Health Regulatory Authority (NAPHIS). NAPHIS would be responsible for regulating food safety, sanitary, and phytosanitary measures, thus creating a much needed nationally integrated regulatory framework.
Pakistan’s food imports are regulated by the federal government and food safety standards are regulated by the provincial governments.ThePFL(Pakistan Pure Food Laws) is the basis for the existing trade-related food quality and safety legislative framework. It covers 104 food items falling under nine broad categories: milk and milk products, edible oils and fat products, beverages, food grains and cereals, starchy food, spices and condiments, sweetening agents, fruits and vegetables and miscellaneous food products. These regulations address purity issues in raw food and deal with additives, food preservatives, food and synthetic colors, antioxidants, and heavy metals.
The federal government applies Codex standards and guidelines in its regulation of imported food products. A list of permissible food colors is updated every year. For animal products, "Halal" certification (slaughtered in accordance with Islamic law) is required.
The Pakistan Standards and Quality Control Authority( PSQCA) has the mandate to inspect and test products and services, including food items, for their quality, specification and characteristics during use, and for import and export purposes.
The Department of Customs and Plant Protection and Quarantine (PPQ) are the two main agencies involved in regulating food imports, while the Department of Animal Quarantine (DAQ) is responsible for regulating imports of live animals.
The Customs Department’s primary functions are to ensure that imported foods meet Pakistan’s labeling and shelf-life requirements, prevent imports of banned items, and assess appropriate import tariffs. PPQ ensures that shipment of bulk commodities Meet phyto sanitary requirements while DAQ is responsible for enforcing sanitary requirements for live animal shipments.
Each retail pack must have the production and expiration dates printed on the label. In addition to shelf life and labeling, certain products are banned for religious reasons.
The importation of food products containing pork or pork products is prohibited. Meat and dairy products may be imported if certified to be "Halal." Commercial import of alcoholic beverages or products containing alcohol is also prohibited.
Pakistan controls certain imports through a "negative list." The negative list is comprised of (a) items banned for reasons of religion, security or luxury consumption; (b) capital and consumer goods banned to protect a domestic industry; and (c) intermediate goods used to produce protected goods. Pakistan also maintains a "restricted list" of items that may be imported only by certain parties (i.e., the government or other specified users) or under certain arrangements (such
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as imports against credit).
At the time of import, the Federal Customs Department checks the PFL standards to determine whether an item is deemed importable. To ensure that an imported product meets provincial health requirements, the exporter and/or his agent should contact the Provincial Health Departments to verify that the product meets the requirements of the Pure Food Laws.
14.5.2. Section II. Labeling Requirements:
General Requirements:
1. Imported food products, including ingredients, must have at least 50 percent of their original shelf life remaining at the time of importation. Labels in English or Urdu languages are required.
2. Packages or containers must also indicate:
a. The date of manufacture and date of expiration,
b. That the contents are free from pork and pork products,
c. That the contents are fit for human consumption and that any animal product was obtained from an animal slaughtered according to ‘Halal’ requirements,
d. That import of edible oils is on the basis of landed weight and landed quality.
e. That packing may not contain any word or inscription of a religious connotation or any obscene picture that may offend the religious feeling of any sect, class or group in Pakistan.
5. Samples are governed by the same regulations as products for direct retail sale.
6. Authorities strictly enforce label requirements and do not grant exceptions. They are authorized to reject or to destroy any cargo with improper labels.
7. In case of food items containing artificial flavoring substances, the label may not declare the chemical names of the flavors, but in the case of natural flavoring substances or nature-identical flavoring substances, the common name of flavors, including whether natural or synthetic, shall be mentioned on the label.
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Requirements Specific to Nutritional Labeling
1. Authorities generally have no objection to the importation of products with specific health claims. However, if a product claims to be a source of vitamins or minerals, it must be registered with the federal government prior to arrival, jointly in the name of importer and manufacturer.
14.5.3 Section III. Packaging and Container Regulations:
Pakistan does not have any packaging requirements related to environmental concerns, such as waste disposal or recycling. The following information must be placed in a durable and legible manner on all packages in the consignment or container:
The name of the product ,the name and address of the manufacturer ,the net contents the date of manufacture and date of expiration ,the percentage of dye contents.
14.5.4 Section IV. Food Additives Regulations:
Pakistan generally follows Codex rules for food additives and preservatives.The Ministry of Commerce regulates the importation of food coloring.
The importer must obtain a certificate from the concerned agency of the government of the exporting country. The certificate shall accompany each consignment and shall state that the food additives/colors are in use in the country of origin at the time of shipment or are registered for use in that country. The exporter’s invoice must show the percentage of dye content in the product.
14.5.5 Section V. Pesticides and Other Contaminants:
Pakistan generally follows Codex rules and guidelines on maximum residual limits (MRLs) of pesticides and other contaminations in foodstuff.
Department of Plant Protection regulates the registration of pesticides. All pesticides must be registered by filing an application with the Department.
14.5.6 Section VI. Other Regulations and Requirements:
Ministry of Commerce is the agency responsible to govern imports and exports across custom frontiers, undertake multilateral trade negotiations and formulation and Implementation of annual trade policy. All imports into Pakistan are governed by the Import Policy Order issued by the Ministry of Commerce annually.
The importer shall ensure that:
Importation is in accordance with regulations and the item(s) are not on the negative list. The terms and conditions of importation are specified in the letter of credit.
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Imports of plants and animals have the necessary approval from the Ministry of Food and Food Security and Research.
Imports of livestock genetics must have the necessary clearance from the Ministry of National Food Security and Research.
Pakistan currently does not allow imports of cattle from countries with reported cases of BSE, which includes the United States along with several others countries.
Laboratory testing may be required for food products containing medicines. Bulk vegetable oils are the only food products subject to random testing to ensure fitness for human consumption at time of arrival.
14.5.7.1Specific Documentation and Certification Requirements
The exporter must provide a certificate of origin for all shipments. For animal products, the exporter also must certify that the product is "Halal.” Pakistan may require other specific certificates based on worldwide alerts or other emergency situations. In such instances, the Government of Pakistan will alert the appropriate countries and trade organizations of these requirements. Exporters should verify with their importers that all required certificates for customs and quarantine clearance have been obtained prior to shipment.
14.5.8. Section VII. Other Specific Standards:
Pakistan generally follows European standards for weights and measurements. U.S. weights and measures are also acceptable. Other standards applied by product include:
Codex rules to regulate importation of vitamin-enriched products. Food products containing a genetically enhanced component (GMO) are not restricted. Fresh or frozen seafood may be imported in consumer packs or in bulk, provided the sale of the
same product is permitted in the country of origin. For live animal shipments, the importers must provide a quarantine certificate from the relevant
authority in the country of origin, which contains all the information required for quarantine clearance.
Alcoholic beverages may not be imported for commercial sale. Importation of alcohol for other than commercial sale requires approval of the Ministry of Commerce.
Organic foods and health foods are not regulated. However, exporters may use FDA and Codex rules as a general guideline. Product samples and free samples must follow the same regulations as commercially imported items.
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14.5.9. Section VIII. Copyright and/or Trademark Laws:
Pakistan does not provide for a regulatory framework that provides for the protection of plant varieties, as outlined in article of TRIPS agreement.
Pakistan’s current seed law does not provide the seed industry with the necessary enforcement and legal dispute mechanisms to protect enterprises from theft, and misbranding of new and existing varieties. This has created trade barriers for the commercialization of U.S. cotton seed in Pakistan, as it has had to withdraw from the Pakistani market due to widespread pilfering and misuse of its seed. Although an amendment to the existing law, and a breeders’ rights law have been drafted to remedy this situation, the laws have yet to pass Parliamentary approval.
Trademarks and brand names are protected under domestic laws and are registered through the Intellectual Property Organization.
Pakistan has addressed Intellectual Property Rights by forming an independent body, the Intellectual Property Organization - Pakistan (IPOP). This agency has streamlined access to the organization by having one point of contact compared to the involvement of many ministries in the past. A copyright on a registered design is initially granted for five years extendable for another ten years. Patents are granted for up to 16 years from the date of application and may generally be extended for another five-year period and, under some circumstances, for an additional five years. Legal remedies, such as injunctions, are available in cases of patent infringement.
Trademarks are registered under the 2001 Trade Marks Ordinance through the Trademark Registry, a department in the Ministry of Commerce. Trademarks are registered for a 10-year period from the date of registration and may be renewed for a further 10 years.
14.5.10 Section IX. Import Procedures:
Pakistan has removed the registration requirement for importing firms in the private sector. Importers are required to obtain special authorization from the Ministry of Commerce to import items on the negative/restricted list. The requisite import documents include: bills of lading, invoices, packing lists, certificates of origin, copies of letters of credit and insurance certificates.
Ample public and bonded warehouse facilities, most of which are owned by the port trust organizations, exist for the storage of goods. Goods must be landed within the period specified on the bill of lading or within 15 days after entry of the vessel into port. Once the goods have entered and duties have been assessed, the importer must clear them for consumption (by paying all duties) or warehouse them.
Customs and Plant Protection and Quarantine officials inspect imported product to ensure they conform to labeling and other import requirements. Imports of live animals or plants require necessary certification from the country of origin. After Customs and PPQ issue their respective clearance reports, the goods are released on payment of import duty.
The Export Policy permits re-export of commodities except to the extent such exports are regulated by any other provisions of this Policy or any other law for the time being in force. Items prohibited for export are not permitted to be carried in the personal baggage also.
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All imports and exports of wild animals and plants are permitted only through the Customs points.
14.6 Potential for Gujarat Market
Policies in agriculture should be consistent and pro farmer. Uncertainty and agitation in the mind
of the farmer is not in the national interest. Prosperity in the rural economy is essential for a healthy
growth rate of the economy as a whole. I am constrained to draw the attention of the Deputy Chairman to
anti farmer policies and decisions of the Central Government which has led to widespread distress,
agitation and anger amongst farmers in Gujarat.
Gujarat contributes 1/3rd cotton production in the country. More than 40% cotton seeds and 50%
cotton export from India is from Gujarat. Frequent changes in policies by the Textile Ministry have
lowered the confidence of cotton growers. The cotton farmers of Gujarat have incurred more than Rs.
14,000 crore loss in 2010-11 and also huge losses in 2011-12 due to arbitrary banning of export of cotton.
Government of India and its agency Cotton Corporation of India have failed to mop up even 3% of cotton
from Gujarat. The prices of cotton crashed from Rs. 62,000 per candy to Rs.34,000 per candy in this
season.
The Central Government went to the extent of taking away the cotton seed price control power
from the states and reserved it for the Union Government under Essential Commodities Act. This action
has resulted in the private seed companies arbitrarily charging high prices and also selling cotton seeds at
a premium, putting farmers under further pressure. This year the Textile Ministry has taken upon itself to
control the entire cotton trade and introduce license raj – cotton farmers, traders andginners have to
account for bales under the threat of punishment. Cotton farmers of Gujarat have got no help from either
the Textile Ministry or the Agriculture Ministry.
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15. Conclusion
The Islamic Republic of Pakistan or Pakistan is a country located in South Asia. With a 190 million inhabitants, Pakistan is a sixth most populous country in the world with a growth rate of 1.828%. Pakistan, also a second largest Muslim Country is one of the important members of Organization of Islamic Conference (OIC). Karachi, the capital of the Sindh province and the largest city in Pakistan. Pakistan shares its eastern border with India and north-eastern with China, with Afghanistan running along the northwest and Iran in the southwest. Roughly twice the size of California, Pakistan covers an area of approximately 877,365 square kilometres. The majority of southern Pakistan’s population lives along the Indus River; in the north, most of the people are concentrated in the cities of Faisalabad, Lahore, Rawalpindi/ Islamabad, and Peshawar. The National Language of Pakistan is Urdu & other widely used languages are Sindhi, Pashto, Saraiki, and Baluchi.
Pakistan’s economy is resilient. . The economy has witnessed numerous domestic and external shocks from 2007 onwards. The economy is now showing signs of modest recovery. The commodity producing sectors and especially the agriculture sector are doing better. The overall growth of 3.67% is shared between the Commodity producing sector and Services sector. Within the commodity producing sector, agriculture contributed 0.66% to overall GDP growth. The services sector contributed the remaining 2.15%. The percentage share of agriculture, manufacturing and services in overall growth was 17.98%, 23.43% and 58.58% respectively. Bilateral trade between the two neighboring States of Pakistan and India is steadily improving, though by fits and starts, due to constructive and conscious efforts being made towards its improvement. As regards trading in petroleum, there has been much improvement. India being an oil exporter, Pakistan need not buy from far off places, when it can do so more effectively and economically from its next door neighbor. Diamond exporting India has a potential and large market in Pakistan. This aspect also is being tapped. Pakistan buys Indian diamonds in a roundabout way, when it can do so directly and more cost-effectively by buying it straight from India. A positive step has been taken in the sense that Pakistan has brought out a small list of positive items to be exported from India, which will be enhanced every year, as opposed to a long list of negative items which will not be exported. This too, is a step ahead in strengthening bilateral trade between the two countries. Steps are being taken by the Indian government to increase items of trade via road. This would make the list of items of trade between the two countries longer. Decrease of custom duty by India is another such step to enhance bilateral trade relations between the two neighbors.
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Furthermore India has opened her doors to investors from Pakistan, which were formerly closed. This allowing of shares and debentures of Indian companies to investors from across the border is a step which was welcomed and would surely enhance faith and trade among the two countries. Much more needs to be done in order to further and strengthen bilateral ties between the two nations. There are many areas which need to be tapped, explored and put to optimum use by both the countries. Business should grow, student exchange programs can be started, banking system between the two countries should be upgraded, prospects like electricity export by India should be explored, and lots can be done in order to strengthen ties and to supplement each others' growth. This project outlines about the business registration reform in Pakistan and the steps to start a new business there. It further throws light on the media in Pakistan, which media is preferred, available and its role. It also acquaints one with the legal aspects of it, its freedom and regulation. It also bring forth the role of Pakistan in cyber world, difficulties faced and how removed. The project enumerates the socio-cultural factors as they affect the trends of business. Finally, this study brings forth knowledge about the important major industries of Pakistan and which can be tapped in order to create business and business ties between the two countries. Retail Sector of Pakistan: Pakistan is a resilient economy, its real GDP, showing positive growth in recent years
despite significant challenges like the global recession The services sector contributes %53 to the total economy The share of wholesale and retail in services is around %33, and in overall GDP, around
%18. Retail is the 3rd largest sector in Pakistan after agriculture and manufacturing and the
second largest employer, employing %16 of the total labor force Pakistan’s retail market is estimated at USD 42 billion with expected annual sales in
excess of USD 105 million by 2012 end Important contributing factors include a young population (%73 under 35 years), growing
middle income class (currently 81-77 million), increasing total and urban population, and overall globalization and liberalization of trade.
Pakistan’s retail sales are likely to increase by USD 30 billion in the next 3 years, at a high average growth rate of 8%
Retail formats in Pakistan are transforming rapidly-the share of mom and pop and general stores is expected to decline by 50% in future years in favor of large wholesalers and retailers
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In 6-7 years, retail giants like Metro, Makro and Carrefour have established 12 branches in Pakistan with immediate expansion plans for at least 7 more
Demand for such is driven by individual characteristics like income, education and household size and external factors like quality, quantity, variety and convenience of shopping
Innumerate retail investment opportunities exist in a range of sectors in Pakistan like food, apparel, footwear, health &beauty, consumer electronics and home furnishings
Retail developments are also fueling the demand for commercial real estate. Low share of organized retailing, comparatively low real estate rents and growing consumer aspirations are attracting investments in both retail and real estate
Telecommunication Sector of Pakistan:
PTA successfully liberalized the telecom sector of Pakistan in an efficient, transparent
and fastest deregulation of telecom in the region. The Government of Pakistan gave the
status of Industry to Pakistan Telecommunication Sector. Pakistan Telecom Authority is
capable of tracking gray traffic (illegal traffic) thanks to a technical facility installed, after
which PTA in collaboration with Police has raided and closed many illegal telecom
businesses.
PTA got implemented IMEI system to curb handset thefts, through this facility,
customers can block their mobile phones if they provide IMEI and other details. Pakistan
Telecom Sector successfully implemented the Mobile Number Portability (MNP) and
became first country in South Asia to have MNP
Almost 92 Percent of Pakistani Population has access to telecom services. Total Mobile
Subscribers in the country are 90.5 million with cellular teledensity of 56 percent. Total
fixed line subscribers stand at 4.4 million. PTCL share more than 90 percent share in
Fixed line market. Total broadband subscribers in Pakistan are 170,000.Total dial-up
users in Pakistan are 3.7 million. Telecom sector of Pakistan has a share of almost 2
percent in National GDP. Mobile Cellular Companies share 56 percent of total telecom
revenues.
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Agriculture Sector of Pakistan: The agriculture sector continues to play a crucial role in Pakistan’s economy. Currently it
contributes 21 percent to GDP, and provides employment to 45 percent of the country’s labor force, while 60 percent of the rural population derives its livelihoods from this sector.
The agrarian situations relating to Pakistan dealt above generally holds good for future planning.
Despite the floods of 2012, the sector recorded a growth of 3.1 percent in 2011-12. The profitability of agriculture sector during 2011-12, remained high because the farmers received good prices for rice, cotton and sugarcane, which allowed for greater financial resources passed on to the rural economy.
The country has countess, small and marginal farmers, in whose farm, the productivity is very low.
Recognizing the vital role the sector plays in ensuring food security, generating overall economic growth, reducing poverty and the transforming towards industrialization, the present government is determined to support the sector by promulgating policy that will continue to make agriculture an efficient, productive and profitable sector of the economy.
Science and technology must be suited to this peculiar situation of the country. There are wide gaps both in yields obtained against the potential and technology transfer is very weak.
The concerns of environmental protection, sustainability, employment, equity, energy, profitability and exports have become important. At present, the idea of economic reform process, competitiveness, efficiency and quality factors of agricultural production and export have assumed critical significance threatened loss of biodiversity, climatic change, burgeoning population are yet another major issues confronting the country.
Further, declining real investment in agriculture especially agricultural research posses a real challenge to increase productivity in agriculture. There should be a comprehensive planning to boost up the crop productivity with honest and devotion, this problem can easily be overcome in the long run.
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