ECONOMIC DIPLOMACY IN A CHALLENGED ECONOMY...China Footwear 34 103 3X 90% Pumps 47 171 3.6X 61% Glassware 13 74 5.6X 90% Tiles 50 170 3.4X 75% Blankets 17 46 2.7X 98% Fans 25 69 2.7X

1

ECONOMIC DIPLOMACY IN A CHALLENGED ECONOMYFEBRUARY 2020

2

“Financial solvency is the foundation of a country’s global standing and autonomy.

Economic diplomacy is even morecrucial in challenged times.”

em1

Slide 2

em1 ehsan malik, 1/29/2020

3

Research-based business advocacy body

Leading private sector Mfg & services

businesses from 15 sectors. No traders

Includes Pakistani groups

& MNCs

Critique and support the government

Not a trade body or a chamber. Pan-sectoral advocacy for the good of

Pakistan

Takes medium/ long

term view

THE PAKISTAN BUSINESS COUNCIL

4

5THE PAK ISTA N BUSINESS C O U N C I L - PROF I LE 25

PBC Members: The most prominent businesses from 15 sectors

11% of GDP

40% of Exports

25% of Taxes

2 MnJobs

1/3rd MNCs from 12

countries2/3rd Local companies

6

PBC’S CENTRE OF EXCELLENCE IN RESPONSIBLE BUSINESS

• Gender Equality • Creating Livelihoods • Environmental Stewardship • Transforming Business Culture• Inclusive and Sustainable Systems• Ethical Practices and Governance

7

….AND NOW OPEN TO THE KNOWLEDGE SECTOR, SUCH AS….

8

ECONOMIC CHALLENGES AND PROGRESS ON STABILIZATION

9

SEVERAL POSITIVES!

Incidents Fatalaties

-34% -37%

Generation Capacity

+46% since 2014

Third Democratic TransitionWith Fresh Hope of Change

Flight of Capital Abroad and into Hoarding of Real Estate Checked

10

….WE NEITHER MAKE, NOR EXPORT ENOUGH… WE IMPORT AND CONSUME..…..

77.10%

94.20%

31.23%

16.70%

-8.30%

-11.00%

-20.00% 0.00% 20.00% 40.00% 60.00% 80.00% 100.00%

Bangladesh

Pakistan

Net Trade Investment Consumption

2018 GDP Components as % of GDP

World Bank

17pp higher Consumption

Half the investment

Higher Trade Deficit

11Exceptforbriefepisodes (e.g. 2000‐2006), Pakistan’sgrowth hasbeen driven by domestic consumption

-6.0

-4.0

-2.0

0.0

2.0

4.0

6.0

8.0

10.0

12.0

14.0

-6.0

-4.0

-2.0

0.0

2.0

4.0

6.0

8.0

10.0

12.0

14.0FY

92FY

93FY

94FY

95FY

96FY

97FY

98FY

99FY

00FY

01FY

02FY

03FY

04FY

05FY

06FY

07FY

08FY

09FY

10FY

11FY

12FY

13FY

14FY

15FY

16FY

17FY

18FY

19

Consumption

Pakistan: GDP Growth and its driversGrowth in %, contribution in ppt.

Investment Exports (G&S) Imports (G&S) GDP

3Source: PBS

12

…..HENCE RECURRING TRADE IMBALANCES:22 IMF PROGRAMMES SINCE 1958. 13TH IN THE LAST 30 YEARS

1.7

3.2

1.9

0.91.36

1.361.9 1.7

3.6

7

8.1

5.2

4.1 3.94.4

2

4.14.7

3.1

1.7

3.1 3.2

4.5 4.5

3

1.8

2

0

1

2

3

4

5

6

7

8

9

93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18 19

Impo

rt C

over

in M

onth

s

13

PAKISTAN IS SUFFERING FROM PREMATURE DEINDUSTRIALIZATION

13.8 13.612.8

12

16 16.4 16.8 17.3

12

13

14

15

16

17

18

2011 2013 2015 2017

Manufacturing as % of GDP

Pakistan Bangaldesh

14

GDP GROWTH IS CLOSELY CORRELATED WITH MANUFACTURING

6.1

-4.18

1.37 2.5 2.08

4.9 5.73.9

3.7

5.84.99

0.36

2.58 2.7 3.5

3… 4.1 3.9

4.5

5.3

-6

-4

-2

0

2

4

6

8

08 09 10 11 12 13 14 15 16 17

MFG % GDP %

15

…..SLOWEST GROWTH OF MANUFACTURING. RESULT: DECLINING SHARE OF EXPORTS….

3.7

7.9

11.7

5.8 5.9

11

6.2

8.1

13.4

3

5

7

9

11

13

Pakistan India Bangladesh

% Growth of Manufacturing

2016 2017 2018

0.16 0.09 0.170.120.23

1.25

0

0.2

0.4

0.6

0.8

1

1.2

1.4Pakistan Bangladesh Vietnam

% Share of World Exports

2003 2018

>7x+2.6x

16

-

19,742

23,826 28,020

33,668

60,451

-

10,000

20,000

30,000

40,000

50,000

60,000

70,000

1st 2nd 3rd 4th 5th

Aver

age

Mon

thly

Wag

e (P

KR)

Quintiles

Pakistan Household Wages (HIES 2016)

US$

Mill

ion

Note: 42MN people in each Quintile

Pakistan needs to replace $2.5 Bn of LSG (Low-Sophistication Goods) imports through local manufacturing to address the needs of just the three middle quintiles aggregating to 125 Mn of a total population of 210 Mn people.

125 MN

*PRODY Index

Source: PBS HIES 2016

….SCOPE TO SERVE A LARGE DOMESTIC MARKET, YET WE IMPORT BASIC GOODS….

ItemsImports 2007* US$MN

Imports 2016* US$MN

Growth Multiple

Est % from China

Footwear 34 103 3X 90%Pumps 47 171 3.6X 61%Glassware 13 74 5.6X 90%

Tiles 50 170 3.4X 75%

Blankets 17 46 2.7X 98%

Fans 25 69 2.7X 80%

17

HENCE PBC'S THRUST IS “MAKE-IN-PAKISTAN”

MAKE-IN-PAKISTAN

JOBS VALUE-ADDED EXPORTS IMPORT SUBSTITUTION

DOCUMENTION OF THE INFORMAL SECTOR

18

SNAPSHOT OF PROGRESS ON PBC’S KEY “MAKE-IN-PAKISTAN” RECOMMENDATIONS

Progress Key Recommendations

Competitive exchange rate

19Themove to a market‐based exchange rate system hasmadetherupee competitive andwill support exports

Real exchange rate (REER)2013=100

U70

80

90

100

110

120

130

Jan-

13

May

-13

Sep-

13

Jan-

14

May

-14

Sep-

14

Jan-

15

May

-15

Sep-

15

Jan-

16

May

-16

Sep-

16

Jan-

17

May

-17

Sep-

17

Jan-

18

May

-18

Sep-

18

Jan-

19

May

-19

Sep-

19

REER range of major competitorsPakistan

Note: Competitors’ include India, China, Malaysia, Thailand, Sri Lanka, Philippines, Indonesia, Mexico

Index, inverted scale

↑in REER= depreciation

9Source: SBP

PKR Over-Valued by up to 20%

PKR REER 95%

20



Competitive exchange rateRenegotiate FTA with China

21

CPFTA 2: DUTY FREE ACCESS TO CHINA DOUBLED IN WHAT WE EXPORT

$5.69 bn

$11.34 bn $11.38 bn $11.5 bn

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

CPFTA1 CPFTA2 1 yr CPFTA2 5 yr CPFTA2 10 yr

Per c

ent o

f Pak

wor

ld e

xpor

t bas

ket i

n 20

18

(HS

6-di

git)

x=0 0<x<5 x=5 5<x<10 x=10 10<x<15 15<x<20 x=20 20<x<30 30<x<40 x>40

HOWEVER …..

- Pakistan lacks capacity to supply

- Further sophistication will require Investment

- Pakistan needs to address the trend towards man-made fibres

- Non-tariff barriers need to be overcome

Source: Author’s calculations using Ministry of Commerce data for CPFTA tariffs and ITC Trademap for trade data. All trade data is for 2018

22



Competitive exchange rateRenegotiate FTA with ChinaCascading tariffs to encourage local value-addition

23

CASCADING TARIFFS

Switch from revenue seeking to promoting industry

National Tariff Board to be composed of all relevant ministries, not just Finance and the FBR

Raw Materials to be levied lowest duty and Finished Goods the highest

Average tariff to be reduced to promote GVC integration

BUT POLICY U-TURN ON CELL PHONE MANUFACTURING.

PRIME MOTIVE: PLUG LOSS OF REVENUE FROM IMPORTS

24



Competitive exchange rateRenegotiate FTA with ChinaCascading tariffs to encourage local value-additionWithdraw presumptive taxes on imports and stem under-invoicing and smuggling

25



Competitive exchange rateRenegotiate FTA with ChinaCascading tariffs to encourage local value-additionWithdraw presumptive taxes on imports and stem under-invoicing and smugglingMake energy available at a competitive cost to industry

26

POLICY U-TURN RENDERS EXPORTS UNCOMPETITIVE

7.5

109 9

8

13

6789

1011121314

Pakistan Bangladesh India China Vietnam

Cost of Power for the Five Export SectorsCents/KWh

1st-Jan-19 13th-Jan-20

70% backdated increase!

27



Competitive exchange rateRenegotiate FTA with ChinaCascading tariffs to encourage local value-additionWithdraw presumptive taxes on imports and stem under-invoicing and smugglingMake energy available at a competitive cost to industrySeparate fiscal policy and tax audit from the collection of taxes. Simplify and document

28



Competitive exchange rateRenegotiate FTA with ChinaCascading tariffs to encourage local value-additionWithdraw presumptive taxes on imports and stem under-invoicing and smugglingMake energy available at a competitive cost to industrySeparate fiscal policy and tax audit from the collection of taxes. Simplify and documentEncourage capital formation and scale through consolidation

29



Competitive exchange rateRenegotiate FTA with ChinaCascading tariffs to encourage local value-additionWithdraw presumptive taxes on imports and stem under-invoicing and smugglingMake energy available at a competitive cost to industrySeparate fiscal policy and tax audit from the collection of taxes. Simplify and documentEncourage capital formation and scale through consolidation Promote investment and capacity addition

30

A U-TURN: INVESTMENT TAX CREDIT WITHDRAWN

17

31 31 29

55

27 24

0

10

20

30

40

50

60

Pakistan Lags Neighbours in Investment……

Pakistan India Bangaldesh Sri Lanka

Nepal Vietnam World Avg

10%

5%

0%

2%

4%

6%

8%

10%

12%

Before FA '19 After FA '19 forInv to June 2020

After FA '19 forInv after June

2020

Yet Tax Credit Previously Valid to June 2021 Withdrawn!

0%

31

SCORECARD ON PBC’S KEY “MAKE-IN-PAKISTAN” RECOMMENDATIONS – 4 OF 8 POSITIVE + 2 SOME PROGRESS


Competitive exchange rateRenegotiate FTA with ChinaCascading tariffs to encourage local value-additionWithdraw presumptive taxes on imports and stem under-invoicing and smugglingMake energy available at a competitive cost to industrySeparate fiscal policy and tax audit from the collection of taxes. Simplify and documentEncourage capital formation and scale through consolidation Promote investment and capacity addition

32

ECONOMIC HIGHLIGHTS

--+30% to 65%-- -30% 6.5 13.25

6.8%11.6%

Electricity Gas Exch. Rate Policy Rate Inflation FED on Autos

2.5-7.5%

--------------COST PUSH FACTORS-------------- leading to: ------------DEMAND COMPRESSION---------

Trade Deficit Tax Base Fiscal Deficit Borrowing Cost LSM Employment Agri Priv SectorBorrowing

Fed: 1st Qtr:13%of FY Target

Prov: 1st Qtr:6%of FY Target

33

SOME SIGNS OF STABILITY IN THE MACRO ECONOMY

5.50% 3.30

% 2.40%

3%

FY18 FY19 FY20 F FY21 F

7%13% 11%

FY19 FY20 F FY21 F

GDP Growth % Inflation %

19.913.5

6.0

FY18 FY19 FY20 F

Cur A/C Def US $Bn

6.4%8.8% 9.0%

FY18 FY19 FY20 F

Fiscal Deficit % GDP

2.6%3.1% 3.2%

FY19 FY20 F FY21 F

World Trade Growth

34

35

PBC’S IMMEDIATE STEPS FOR ECONOMIC REVIVAL

Objective MeansCash Flow Release tax refunds and rebates, especially to exporters

Remove LC margin on import of industrial inputsCost of Doing Business Reduce the cost of borrowing

Revert to 7c/KWh electricity tariff for the export sectorReform import tariffs to facilitate value-addition

Ease of Doing Business Rationalize food and environment standardsInvestment Restore tax credit for investment in plant

Remove Min. Tax on Turnover, at least for first 5 years and in tax holidaysDevelopment Revive the PSDP spend

……… The “9 R’s”

36

THE IMPORTANCE OF EXPORTS

37

PROJECTED TRADE DEFICIT TO REVERT TO THE 2019 LEVEL

-55 -52 -56 -58-60

23 25 27 2829

-32 -27 -29 -30-31

-65

-45

-25

-5

15

FY'19 FY '20 FY '21 FY '22 FY '23

Imports Exports Trade Deficit

If Imports Grow @ GDP Growth Rate

If Exports Grow @ World Growth Rate

38

EXPORTS ARE NARROWLY BASED

50%

50% Reliant on EU/UK/USA

56%

56% of Exports are Textiles

68%

68% of Textiles go to the EU/UK/USA

39Growing at the same rate as the top 25% of emergingmarkets will require much higher export growth

Contribution ofExports and other factors in GDP growthAverages over 2001‐2018, real growth in %, contribution in ppt.

Pakistan Top quartile countriesNotes:1. Top quartile of countries selected w.r.t. GDP growth form 98 countries over the period of 2001-2018.2. Beside others, these countries include Pakistan’s textile competitors like India, Bangladesh, Vietnam, and Cambodia.

0.0

1.0

2.0

3.0

4.0

5.0

6.0

7.0

8.0

0.0

1.0

2.0

3.0

4.0

5.0

6.0

7.0

8.0Export contribution to growthContribution from other demand-side factors to growthGDP growth

3. Other demand-side factors include public and private consumption/investment and imports (G&S). Source: World Bank 5

40Pakistan: Export diversification has been limited

41

Long term export policy overseen by the PM Attitude shift from “control” to “empowerment” Tailor for branding Allow prospective instead of retrospective investment Enable B2C through portals such as Amazon Wash exports clean of all taxes – standardize refunds Export Credit Guarantee Bank especially to fund SMEs Competitive energy costs Why no rebates for export of services?

PBC’S NATIONAL CHARTER FOR EXPORTS: THE POLICY FRAMEWORK

42

PBC’S NATIONAL CHARTER FOR EXPORTS: PRIVATE SECTOR’S ROLE

Invest in capacity, broaden, sophisticate and diversify offerings Invest in overseas brands, warehousing, sales and online networks Inward FDI to promote exports (and import substitution) SME training for global outreach

43

PAKISTAN AND VIETNAM: CONTRASTING STRATEGIES (AND RESULTS)

60

237

24

243

0

50

100

150

200

250

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018Pak Imports Viet Imports Pak Exports Viet Exports

2018 TradeSurplus $6Bn

2018 TradeDeficit $36Bn

44Diversification has driven Vietnam’s Exports to >$260 Bn

45

KEY COMPONENTS OF ECONOMIC DIPLOMACY

46


FATF Export diversification Parity market access GSP Plus Travel Advisories Investment priorities Diplomatic trade-off: Malaysia vs Indonesia

47



48

FATF: WHITE IS RIGHT!

Formalize, document and broaden the tax baseBoost bank deposits by discouraging cash transactionsStem flight of capital abroad and into non-productive hoarding of landPromote investor confidence Improve security conditions, hence ease travel advisories…..Tremendous amount of work done to move out of the grey list…..PBC played a modest role e.g. in Track 2 talks with the USA

49



50

Two Under-Addressed Geographies

51

• 54 countries• 1.3 Bn people• Growing at 3% pa – projected to reach

1.6 Bn by 2030• Combined GDP $ 2.2 Tr ($ 6.4 Tr PPP)• Young Population – half under 20• Annual Imports $ 577 Bn• Annual Exports $461 Bn

Africa – now and the potential

52

PAKISTAN’S EXPORTS TO AFRICA DWARFED BY INDIA AND CHINA

92

22.6

1.3

95

24.4

1.5

105

26.9

1.5

-10

10

30

50

70

90

110

China India Pakistan

US$ BN

53

PAKISTAN SIGNIFICANTLY UNDER-REPRESENTED IN AFRICA

Africa’s Total Imports 2018 US $ 577 Bn. 10 Largest importers $367 Bn; 10 Largest Import Items $362 Bn

Pakistan India India Multiple Pakistan

Exports to Africa US$ Bn 2018 1.5 26.9 x18

Share of Africa’s Total Imports 0.25% 4.7% x18

Share of Imports into 10 largest Import Markets 0.2% 3.8% x19

Share of 10 Largest Import Items0.2%

(almost all Rice)

4% x20

Number of Trade Agreements 1(Mauritius) 13 x13

Number of in-country Trade & Investment Officers 4 18 x5

54

UNFAVOURABLE TARIFFS ON PAKISTAN’S EXPORTS TO AFRICA

Cement from Pakistan subjected to Anti-dumping Duty in South Africa

$0.7 Bn of Rice from Pakistan @ 48% duty into Kenya

$0.6 Bn of Tea from East Africa @ 10% duty into Pakistan

$1 Bn of Coal from Africa @ 3% duty into Pakistan

55

CENTRAL ASIAN REPUBLICS

• 73 Mn population• $270 Bn GDP• $61 Bn Imports

• Russia 30%• China 19%• India 1% ($ 422 Mn)• Pakistan 0.2% ($116 Mn)

• Largest Imports• Pharma $2.3 Bn (India $150 Mn)• Fruit $0.8 Bn• Sugar $0.8 Bn• Meat $0.35 Bn• Sports Goods $0.25 Bn

Quadrilateral Traffic in Transit Agreement (QTTA) needs to be finalized. Need to agree a fast track for transit via China

56

PHARMACEUTICALS: A MAJOR OPPORTUNITY

$3 Bn of Exports20% of Africa’s TotalFor Pharmaceuticals

$150 Mn ExportsTo Central Asia

57



58

$3.2 BN OF EXPORT POTENTIAL FROM PARITY TARIFF ACCESS TO CANADA, JAPAN AND AUSTRALIA

Export Potential of $26 MnAt parity tariffs with

Bangladesh

Bangladesh Exports at 0% tariff$1.2 Bn

Pakistan Exports at upto16% tariff$0.196 Bn

Substantial potential at paritytariff

Export Potential of $2.2 Bnat parity tariffs with China,

ASEAN and Bangaldesh

59



60

IMPORTANCE OF TEXTILES & EU’S GSP + TO PAKISTAN

Textiles represents 60% of Pakistan’s total exports

Employs 40% of industrial labour, many are women

40% of Pakistan’s textile exports are reliant on GSP+

Mostly value-added, hence more jobs and foreign exchange earnings

Despite GSP+ Pakistan has just 4% share of EU’s imports of textiles.

Cotton availability, energy cost and exchange rate competitiveness have been factors limiting exports

Export of leather and agricultural commodities. Impacted by testing facilities

61

IMPORTANCE OF GSP+ ACCESS INTO THE EU & POST BREXIT INTO THE UK

EU 28 Exports under the GSP+2018 $Bn % Growth

since 2013% of Pak

Exports ofthese items

Apparel 2.7 95% 51%Home 1 71% 25%Leather 0.4 -3% 42%Cotton Yarn

0.6 16% 18%

Footwear .08 45% 80%Total GSP+ 5.51 63% 40%

…of which exports to the UK2018 $Bn Of Pak

Exports to EU, % to UK

Apparel 0.74 27%Home 0.6 60%Leather 0.05 12.5%Cotton Yarn 0.05 8.3%Footwear .08 100%Total GSP+ 1.52 28%

62

EXPORT PRIORITIESMain Markets Market Access New Export

MarketsTrade Advisories Business and

Tourist VisasMaintain Current Negotiate NewUSA Beyond GSP esp.

for Textiles Differentiated and more

positive view on travel to the

main commercial

cities of Pakistan

Implement the online visa

policy in its full spirit. Challenge

is visas for Indian and Bangladesh

nationals who now occupy key buying positions

EU GSP+UK GSP+ post BrexitJapan

Parity with BangladeshCanada

AustraliaAfrica New MarketsLatin America New MarketsCentral Asia New Markets

63



64

TRAVEL ADVISORIES AND EASE OF TRAVEL

UK’s travel relaxation, a major positive development

Some countries yet to recognize the improvement in Karachi’s security

Others make sweeping assumptions of conditions in Lahore, Sialkot, Faisalabad

“Avoid all travel;” “Extreme Caution;” “High Risk;” are terms still in vogue

Despite the online facility, difficult to obtain visas to visit Pakistan

Pakistani exporters face difficulty in obtaining visas for travel abroad

Buyers’ access is essential for textile exporters

A challenge is visas for Indians and Bangladeshis who now represent buying houses in South Asia

65

BESIDES EXPORT OF GOODS, SOME BPO AND IT COMPANIES THAT WILL BENEFIT FROM IMPROVED SECURITY CONDITIONS

66

Pakistan Bangladesh Sri Lanka India

USALevel 3: Reconsider travel

Do not travel to: Balochistan, KPK, Azad Kashmir, India‐Pakistan border

Level 2: Exercise Increased Caution



Canada

Avoid non‐essential travelAvoid all travel to: Balochistan, KPK, Kashmir, India‐

Pakistan borderAvoid non‐essential travel to: Rest of Pakistan except

IslamabadExercise high degree of caution: Islamabad

Exercise a high degree of caution



UK

Advise against travel to Baluchistan, former FATA, certain other areas of KPK, a section of the Karakoram Highway and the line of control in Kashmir; care when

travelling elsewhere in Pakistan.

Advise against all but essential travel to the Chittagong Hill Tracts

‐‐

Advise against all travel to: border with

Pakistan, other than at Wagah

Jammu and Kashmir

SpainExtreme caution during the trip. Certain areas must be

avoided except for reasons of extreme needThe trip is advised for

reasons of extreme need

Recommended to travel with extreme

caution during the trip

Recommended to travel with caution and refrain from doing so for certain areas

Travel Advisories are much more limiting for Pakistan

67

Germany Strongly discouraged to travel to: KPK, Balochistan, LoC. Take special careTravel with increased

cautionTravel with increased

caution

Belgium

Non‐essential journeys are discouragedAdvise against all travel to: KPK, tribal areas on the border with Afghanistan, Baluchistan, Azad Jammu and Kashmir and around the disputed border with India, rural areas of Punjab,

and rural areas of Sindh.Travel to these areas only if necessary: Islamabad and its surroundings, the big cities in Punjab (Rawalpindi, Lahore,

Faisalabad), and Karachi.

Exercise utmost vigilanceNormal caution recommended

Usual vigilance is required

Denmark

Advise against all unnecessary tripsAdvise against all travel to: Baluchistan, KPK, Kashmir and the

tribal areas against the border with Afghanistan.Advise against all unnecessary trips to: The rest of the country including Islamabad and the provinces of Punjab, Sindh and

Gilgit‐Baltistan.

Take special care Take special care Take special care

France

High RiskTravel discouraged to: Baluchistan, Tribal areas (ex‐FATA), KPK,

Azad Jammu and Kashmir, The border with India. Punjab province, with the exception of the area between Faisalabad, Lahore and Islamabad, not recommended unless imperative.Travel not recommended unless imperative to: Sind, Gilgit‐

Baltistan, area between Faisalabad, Lahore and Islamabad, the cities of Sialkot, Faisalabad and Multan in Punjab province.

Vigilance required in: Islamabad and Lahore

Medium RIsk High Risk Medium Risk


Some Travel Advisories: an unlevel playing field vs key countries

68

Italy High Risk‐ Advisable to limit tripsMedium Risk – Exercise caution in certain areas

High Risk – Exercise utmost caution

High Risk‐ Maximum vigilance

recommended

SwedenExercise utmost caution

Advise against all trips to KPK and BalochistanExercise caution Exercise caution

Exercise utmost caution in border areas

with Pakistan

Switzerl‐and

Vigilance recommendedHigh risk areas: GB, KPK, Border with India, Lahore, Balochistan, Northern Sindh, South Punjab, Karachi

Vigilance recommendedVigilance

recommendedVigilance

recommended

New Zealand

Avoid non‐essential travelDo not travel to the FATA, Balochistan, Khyber‐

Pakhtunkhwa, and border areas with Afghanistan and India (excluding the Wagah).

Avoid non‐essential travel elsewhere in Pakistan.

Exercise increased caution

Exercise increased caution

Avoid non‐essential travel

Australia

Reconsider your need to travelDo not travel to Balochistan, Khyber‐Pakhtunkhwa (excluding Chitral district) and border areas with

Afghanistan and India (excluding Lahore, Wagah, Kasur, Narowal and Sialkot).




Japan

Evacuation is recommended (Level 4 threat) at border with Afghanistan, Quetta, LoC.

Stop traveling (Level 3 threat) to certain counties in Balochistan.

Stop unnecessary travel (Level 2 threat) to cities such as Islamabad, Lahore, Karachi.

Stop unnecessary travel in Chittagong. Normal caution in other areas

Normal caution in all areas.

Evacuate from LoC, Srinagar, Ladakh. Normal caution in

other areas


Some Travel Advisories: an unlevel playing field vs key countries

69



70

VIETNAM: GLOBAL VALUE CHAIN INTEGRATION STRATEGY

Vietnam’s Trade Agreements China ASEAN US Japan CP Trans Pacific

Partnership EU (ratification pending)

71

FDI: VIETNAM IS EXPORT FOCUSED; PAKISTAN'S IS CONSUMPTION DRIVEN

Samsung alone 25%

of Vietnam’s Exports

72

MNCS DOMINATE MANY CATEGORIES: NONE EXPORT FOCUSED

Sector>>> Packed Dairy Home & Personal Care

Ice Cream Bottled Water MobileTelephony

MNC Share % 80% 75% 80% 70% 100%

MNC Operators

73

MAJOR INVESTMENT SECTORS FOR FDI

Exports/Forex Earnings

Import Substitution Jobs Technology/Know how

AgricultureHorticultureLivestockTourismIT/IT-Enabled ServicesMiningOil & gas ExplorationHealth ServicesFisheries

74

SOME RECENT EXAMPLES OF DESIRABLE FDI

75

EXAMPLES OF OTHER DESIRABLE FDI WORTH PURSUING

76

RELOCATION OF CHINESE FACTORIES

• Apparel

• Luggage

• Light Engineering

• Domestic Appliances

77



78

TARIFF PREFERENCE FOR MALAYSIAN OVER INDONESIAN PALM OIL NOT ECONOMICALLY JUSTIFIED

Malaysia IndonesiaPakistan’s Exports 2018 $157 Mn $ 302 MnExport Potential $662 Mn $1036 MnDuty on Pakistan Rice 40% 0% since July 2019Duty on Indian Rice 20%Total Rice Imports from anywhere $403 Mn $868 MnRice Imports from Pakistan $23 Mn $98 MnPalm Oil imports $0.48 Bn $1.45 BnC&F cost differential per ton $7-$10 more expensive than

IndonesiaRevenue loss if duty relief granted to Malaysia to equalize landed cost

Rs. 1.25 Bn

79

80

REGIONAL TRADE – CHALLENGES AND OPPORTUNITIES FOR EXPORTS. $3.4 BN REGIONAL EXPORT POTENTIAL FOR PAKISTAN

IRAN - Sanctions

AFGHANISTAN - War

INDIA – Tense Relations& Non-Tariff Barriers

+$350 Mn

+$1.3 Bn

+$1.75 Bn

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Documents

ECONOMIC DIPLOMACY IN A CHALLENGED ECONOMY...China Footwear 34 103 3X 90% Pumps 47 171 3.6X 61% Glassware 13 74 5.6X 90% Tiles 50 170 3.4X 75% Blankets 17 46 2.7X 98% Fans 25 69 2.7X