Investment Opportunities INDUSTRIAL SECTOR OF PAKISTAN
Ministry of Industries, Production and Special Initiatives
PAKISTAN Gateway to Opportunities
Gwadar
2/15/2007
Karachi
Investment Opportunities in Pakistan
PAKISTAN – A Promising Land GDP US$ 128 B GDP Growth rate 6.6 % in 2006
Pakistan Home to 160 million People
Trade 2006 Imports: US$ 28.6 B Exports: US$ 16.5 B
Skilled & Competitive Workforce
Growing Engineering Sector
2/15/2007
Investment Opportunities in Pakistan
PAKISTAN - On a High Growth Trajectory z z z z z z z z
2/15/2007
Economic revival Large scale manufacturing leading the growth momentum LSM growth broad based i.e. Electronics, Engineering incl. Autos, Textiles, Cement, Food and Beverages etc. Capacity utilization increasing across the board. Exports growing Construction and housing markets picking up--Reviving 44 industrial sectors. Rapid Telecom expansion Banking and services Sector profitable and growing
Investment Opportunities in Pakistan
MNC's Views of Business Environment in Pakistan • Reported improvement in Domestic Economy. • Reported increase in their gross revenues in Dollar terms as well as rupees. • Were optimistic about Pakistan's overall prospects. • Indicated increase in their pre-tax profits. • Indicated improvement in external political situation. • Reported planning investment in Pakistan. • Were optimistic about Business Climate in Pakistan. • Observed improvement in law and order situation. 2/15/2007
Investment Opportunities in Pakistan
INDUSTRIAL BASE INDUSTRY Textile
1947 3
Chemical 1 Polyester PVC Vegetable Ghee Sugar 1 Cement 1 Automobile (assemblers +vendors) Fertilizer Steel Mill (flat rolled/re-melters/ re-rollers) Refineries 1 ISPs Software Cos. Cellular Phone Subscribers -
2/15/2007
2004-05 456 1129 5 6 87 77 25 47 11 500 + 6 131 750 6
Investment Opportunities in Pakistan
Performance of Selected Industries (1999-05) INDUSTRY
1999-00
2004-05
Cotton yarn
1.7 M Kgs
2.3 M Kgs.
Cotton cloth
438 Mn.Sq.Mtr
6,297 Mn.Sq.Mtr
Sugar
2.429 Million Tons
3.092
Fertilizer
5.059
5.989
Cement
9.32
15.038
Vegetable Ghee
0.698
0.96
Oil Refineries
7.73
12.9
Steel
2.6
3.4
Cars
32,461 Numbers
126,817
Light Vehicles
5,502
23,613
Tractors
23,201
43,578
Motor Cycles
86,959
515,640
Cellular Phone Subscribers
306,493
12,865,602
2/15/2007
Investment Opportunities in Pakistan
Economic Performance GDP Growth Rate % 9
Manufacturing. Growth Rate % 16
8.4
8 7
6.6
6.4
6
12.5
12 10
5
4.8
6.9
6
3.1
3
9.3
8
4
2
14.1
14
4.5
4
1.8
2
1 0
0 2001
2002
2003
2004
2005
2006
2001
2002
Per Capita Income US$ 900
736
700 600 500
582 501
652
3,500
3000
2,500
503
2,000
1524
1,500
300 200
1,000
100
500
0
2002
2005
3,000
400
2/15/2007 2001
2004
FDI (Mill$) 847
800
2003
2003
2004
2005
2006
798 322
485
0 2001
949
2002
Investment Opportunities in Pakistan 2003
2004
2005
2006
PAKISTAN – A Land to Explore PAKISTAN
AUTOMOBILE
Home to 600 Foreign Companies
156 in Industrial Sector 60 Listed on Stock Exchange
ENGINEERING Polycon (Pvt) LTD
Johnson & Phillips 2/15/2007
Investment Opportunities in Pakistan
PAKISTAN – A Land to Explore
Chemical & Pharmaceutical Sector ICI Pakistan GlaxoSmithkline Aventis Novartis Park Davis
Telecommunication Sector
FMCG Sector 2/15/2007
Investment Opportunities in Pakistan
INVESTMENT ENVIRONMENT Policy Reforms Cost of Doing Business in Pakistan is Getting more Competitive
z z z z z
2/15/2007
Investment Liberalization Deregulation & Privatization Improved Governance Fiscal Reforms Capital Market Reforms
Investment Opportunities in Pakistan
PAKISTAN Investment Scoreboard 1994 - 2006 3000
3000 2500 2000
Dominated by FDI in the Power Sector
1500
1102
1000 500 0
2/15/2007
1524
820.1 352
442
682
601
472
949
470 474.6
93-94 94-95 95-96 96-97 97-98 98-99 99- 2001- 2002- 2003- 2004- 20052000 02 03 04 05 06 Source: State Bank of Pakistan
Investment Opportunities in Pakistan
PRIORITY SECTORS z z z z z z z z z z z z z
2/15/2007
Engineering Goods Automobile Industry Textile Machinery Agro Base Industry Mining and Minerals Steel Sector Chemical and Petrochemical Construction Gem & Jewelry Fish Processing Equipment Furniture Sector Leather /Sports Fruit and Vegetables Processing equipments
Investment Opportunities in Pakistan
ENGINEERING SECTOR: To Lead the Growth z
Govt. focus on Engineering Sector: Making it the main driver of economic growth.
z
Share of Engineering Sector in manufacturing: Enhancing from present 19% to 25 % by 2008.
z
A rationalized tariff structure: Facilitating availability of raw material and machinery not manufactured locally.
2/15/2007
Investment Opportunities in Pakistan
Home Appliances Production Refrigerator
Television 1,000,000
900,000
861,604
800,000
784,561
700,000
617,439
843,079 757,710
700,000 600,000
500,000
500,000
373,000
400,000 272,352
311,189
450,000
400,000 300,000
200,000
200,000 97,404
100,000 0
900,000 800,000
600,000
300,000
966,468 908,805
100,000 2001
2002
2003
2004
2005
2006
0
Deep Freezer
2001
2002
2003
2004
2005
2006
Air conditioners 400,000
200,000 178,970
180,000
185,684
160,000
363,000
350,000 300,000
140,000 111,059
120,000 100,000 80,000
250,000 198,099
77,616
77,749
86,595
200,000 150,000
60,000 40,000
100,000
20,000 0
2/15/2007
50,000 2001
2002
2003
2004
2005
2006
0
32,000
2001
50,000
2002
64,421
2004 2005 Investment Opportunities in2006 Pakistan
Home Appliances Production Due to rapid growth in demand the home appliance industry is expected to double its production capacity of TV, Refrigerators and Deep freezers by 2009
2/15/2007
Investment Opportunities in Pakistan
Opportunities in Home Appliances Numbers in the Home Appliances sector (television, refrigerators air conditioners, & deep freezers) are reached to a level where components manufacturing become viable in the country.
2/15/2007
Investment Opportunities in Pakistan
Growth in Automotive (Cars) industry 500,000
500,000 450,000 400,000 350,000 300,000 250,000
160,0000
200,000 150,000
128,381 98,000
100,000 50,000 0 2/15/2007
39,500
2001
40,000
2002
62,000
2003
2004
2005
2006
201112
Investment Opportunities in Pakistan
INVESTMENT OPPORTUNITIES With Auto sector on the growth path, sub-sectors industries needs to upgrade manufacturing facilities by acquiring modern technologies & equipment.
2/15/2007
Investment Opportunities in Pakistan
Requirements for productions of 0.5 Million Cars PROCESS
TIER 2 & TIER 3 VENDORS 2/15/2007
ANNUAL REQUIRED CAPACITY
Tire
2.5 Million pcs.
Casting
65,000 Tons
Interiors / Trims
15,000 Tons
Forging
15,000 Tons
Plastics
60,000 Tons
Rubber
32,000 Tons
Fasteners
1589 Million pcs.
Sheet Metal
225,000 Tons
AC
500,000 units
Wire Harness
5,000 Tons
Shock absorbers
2.0 Million pcs.
Ball Bearing
61.5 Million pcs.
Aluminum Castings
40,000 Tons
Machining (Castings)
65,000 Tons
Investment Opportunities in Pakistan Cont.
PROCESS
ANNUAL REQUIRED CAPACITY 1,500 Tons
Machining (Al. castings)
40,000 Tons PROCESS
Heat Treatment Plant (contract) Lights
4,000 Tons
Silencers
2,000 Tons
Door Hardware
2,500 Tons
Brake Assemblies Glass
1.25 million m2
Engine Manufacturers Gear box / Transmission Axles Suspension / McPherson struts Steering / power steering Assemblies Interiors / Trims
Die & Mold Making Machining (Forgings)
15,000 Tons
Batteries
500,000 units
Friction Material
4,750 Tons
Audio Systems
500,000 units
Speedometers
500,000 units
2/15/2007
TIER 1 VENDORS
TIER 2 & TIER 3 VENDORS
Radiators
Investment Opportunities in Pakistan
Motor Cycles Production 1,000,000
1,000,000 900,000 800,000 700,000 600,000 474,609 518,609
500,000 400,000
303,000
300,000 200,000 100,000 0
2/15/2007
109,000 121,000
2001
2002
165,000
2003
2004
2005
200506
201011
Investment Opportunities in Pakistan
Potential in Motorcycle Sectors Domestic production volumes have reached a levels from where local component manufacturing has become a potential area for investment.
2/15/2007
Investment Opportunities in Pakistan
Opportunities for CNC Machine Tool Assembly in Pakistan. Rapid Industrial Growth calls for expanding capacities • • •
0.5 million cars by year 2010 1.5 million motorcycles by 2010 Doubling capacity in domestic appliances manufacturing by 2010
Only production of 0.5 million cars will require ~ Machining of ¾
65,000 Tons of Ferrous Castings
¾
15,000 Tons of Forgings
¾
40,000 Tons of Aluminum Castings
¾
Dies & Molds for Plastic & Rubber Parts
~ Production of 60,000 Tons of Plastic Parts ~ Production of 32,000 Tons of Rubber Parts
2/15/2007
Investment Opportunities in Pakistan
CNC Machine Tool Assembly FORECAST Projected CNC Machine Tool Population Requirements based on AAGR of 2002-03 ~ 2004-05 152,460
160,000 140,000 120,000 100,000 80,000
57,415
60,000 40,000 20,000 0 2/15/2007
357
720
1,825
4,122
9,413
22,616
2002-03 2003-04 2004-05 2005-06 2006-07 2007-08 2008-09 2009-10 Investment Opportunities in Pakistan
CONSTRUCTION SECTOR •Housing backlog is projected at 6.19 million during 2005-06. •Overall housing production has to be increased by 500,000 housing units annually •50% present housing stock is also old
OPPORTUNITIES Opportunities available due to revival of Construction industry which give kick start to the ailing economy by reviving forty (42) allied industries
2/15/2007
Investment Opportunities in Pakistan
Opportunities due to revival of Construction industry which give kick start to the ailing economy by reviving forty (42) allied industries S.No
Industry
S.No
Industry
S.No
Industry
1.
Cement
15.
Marble Tiles
29.
Polyethylene Sheets
2.
Steel
16.
Sanitary Wares
30.
Thermopore Sheets
3.
Steel Fabrication
17.
Sanitary Fittings
31.
Glass
4.
Wooden Door making
18.
Stone Crushing
32.
Door/Window Fixture
5.
Plywood
19.
Sand Mining
33.
Door Locks
6.
Electric Cable
20.
Marble Chips
34.
Bulbs & Tube Lights
7.
Wire Netting, Binding Wire
21.
Transport (Material)
35.
Geyser & Cooking Range
8.
Electric Fans
22.
Bricks
36.
Washing Machine
9.
Electric Switches
23.
Coal for firing bricks
37.
Air Conditioner
10.
PVC Pipe
24.
Pumps
38.
Aluminum
11.
G.I. Pipe
25.
Paint
39.
Furniture
12.
R.C.C. Pipe
26.
Engg. Good (Music)
40
Material Testing Equipment
13.
Cast Iron Span Pipe
27.
Electric Control Panels
41
TV Sets
14.
Ceramic Tiles
28.
Plastic Pipe
42
Door bells Opportunities in Pakistan Investment
2/15/2007
ELECTRICAL FITTING INDUSTRY • Electrical fittings Industry have a huge potential for growth • Technological obsolescence • Lack of standardized products. • Lack of testing facility for checking mould hardness, metallographic and material testing of mould etc.
OPPORTUNITIES • Manufacturing of Bakelite Powder • Printing and Packaging for electrical fittings packing • Manufacturing of Glass Tube for Energy Saver has unprecedented demand as currently 50-60 containers of Energy Savers are imported from China. • Hardware • Brass / copper components 2/15/2007
Investment Opportunities in Pakistan
FAST FOOD MACHINERY MANUFACTURERS Existing hotel and fast food processing industry has not yet developed to its full potential, though this industry is now expanding rapidly
OPPORTUNITIES •
Joint venture agreement with foreign firms for transfer of technology in following areas: 1. Ice Cream Machinery 2. Coffee Machinery 3. Shawarma Machinery 4. Pressure Fryer 5. Chips Machines
2/15/2007
Investment Opportunities in Pakistan
SOURCES OF MACHINERY Machinery and equipment is mostly imported from USA, Germany, Belgium, France, Korea, Japan China and Thailand z Foreign investors can become bridge between European and local Manufacturers of components to buy latest machine tools and equipment at Competitive Prices as well as technology transfer arrangements 2/15/2007
Investment Opportunities in Pakistan
INDIGENOUS PRODUCTION OPPORTUNITIES IN MACHINERY AND EQUIPMENT Machinery imports constituted a robust 27% of total imports over the past three years signifying the need for Pakistan to gradually commence indigenous production of machinery and equipment.
2/15/2007
Investment Opportunities in Pakistan
Relocation of Machinery and Equipment Opportunities for relocation of industries for manufacturing variety of machinery & equipment .
2/15/2007
Investment Opportunities in Pakistan
ENGINEERING GOODS: Textile Machinery Textile Sector: Balancing, Modernization, Replacement & Expansion (BMRE) by Textile Units
Textile Machinery Imports:
2/15/2007
2002-03
2003-04
2006-07 (Expected)
US$ 531M
US$ 599M
US$ 1.5 to 2 billion
Opportunities to Manufacture locally & Sell European Textile Machinery and Spares
Investment Opportunities in Pakistan
ENGINEERING GOODS: Textile Machinery We have provided special incentives to make these machines in Pakistan
Stitching Machines Spinning Machinery
Computer controlled embroidery machines 2/15/2007
Dyeing & Finishing
Shuttleless Looms
Investment Opportunities in Pakistan
POTENTIAL SECTORS FOR INVESTMENT: Gas Sector
PLANT, MACHINERY & EQUIPMENT REQUIREMENTS: z z z z z z
Prospecting & Exploration High pressure gas pipelines Automation systems on pipelines High compression equipment Gas storage facilities Gas Treatment Plants
2/15/2007
Investment Opportunities in Pakistan
CHEMICALS AND PETROCHEMICALS • Pakistan does not have enough petroleum resources • Some downstream industries are flourishing, i.e. Polyester, PVC, PP, PE and paint products. • Plan upstream integration of these products. • Investment required to install a hydro cracker project to provide basic building blocks for the petrochemical products.
2/15/2007
Investment Opportunities in Pakistan
DAIRY PRODUCTS
•
Pakistan is the fifth largest milk producing country in the world
•
At present infrastructure, especially chilling and storage facilities is the major issue
•
Low value addition
OPPORTUNITIES •
Set up energy efficient mini pasteurization plants.
•
Establish milk chilling units and storage facilities as well as refrigerated transports system
2/15/2007
Investment Opportunities in Pakistan
CERAMICS
• No proper facility exits (except in Master Tiles) for frit manufacturing which is used as raw material for glaze. • Pakistan produces approximately 12 million sq.meter of tiles and 40,000 tons of sanitary ware per annum, • Raw material requirement is approximately 25,000 tons of frit per annum. • Opportunity exists for the commercial need for setting up of another large frit manufacturing facility. 2/15/2007
Investment Opportunities in Pakistan
FISHERIES • •
Total coastline: Fishing area :
1,090 km 300,000 sq. km.
Investment Opportunities for: • •
Seafood Processing and Canning at Gwadar. Manufacturing of GRP Boat Building technology for easy maintenance; efficient operation and in-built facilities to keep fish catch fresh.
• • • •
Net Making Facilities Ice flake plant(s) at the existing as well as in the planned harbours. Pre-processing industry at Karachi and Gwader Fish Harbours. Local production of HDPE-based fish crates.
2/15/2007
Investment Opportunities in Pakistan
FURNITURE • Furniture Industry is meeting the domestic requirement of wooden furniture.
Investment Opportunities • Steel and plastic furniture industry is yet to develop in a big way ,Hence opportunities exist in this sub sector.
2/15/2007
Investment Opportunities in Pakistan
GEMS, PRECIOUS STONES AND JEWELRY • Most of the jewelry is produced manually using waxcasting procedure as opposed to more modern techniques. • Substantial wastages; • Processing (cutting and polishing) of gems is also based on obsolete techniques and technologies. The value addition in this industry is extraordinarily huge; The cost difference between uncut and cut gemstone is one to hundred. Therefore, huge investment opportunities exists to develop this important sector on the lines of ThailandInvestment Opportunities in Pakistan 2/15/2007
LEATHER GOODS & ACCESSORIES Leather sector is the most dynamic export oriented sector after textiles
Investment Opportunities •
To establish institute of Fashion & Design
•
Setting up of auxiliary industries for the manufacture of international quality trimmings, accessories and components required by the leather industry
•
Equipments for modernize slaughtering and butchering centers with latest technology Investment Opportunities in Pakistan
2/15/2007
SPORTS GOODS AND ACCESSORIES Present industry needs product diversification Investment Opportunities • Opportunities exists to convert manual system mechanization with latest technology. • Opportunities to enter in to a manufacturing of new products and accessories for sports cycle, swimming sports, water sports, ice sports, motorcycle sports, car racing, and camping equipment. • Design institute needs to be established in Sialkot
2/15/2007
Investment Opportunities in Pakistan
SURGICAL GOODS • Opportunities available for the establishment of industry to produce instruments from plastics and other synthetic materials. • Transfer of modern manufacturing techniques in the country.
2/15/2007
Investment Opportunities in Pakistan
FRUITS AND VEGETABLE PROCESSING Comparative Advantage z z z z z z z z z
2/15/2007
Agro-Ecological diversity Geographical location – large regional markets Abundant local raw material Large & growing domestic market Product distinction High value addition Available skilled labor force Government’s priority sector Increased international demand
Investment Opportunities in Pakistan
Opportunities z
Fresh produce – – – – – –
z
Processing technology /equipments – – – – –
2/15/2007
Cools chain system- CA storage, reefer distribution Packaging Technology Hybrid seed & plant material production Plasticulture Vegetables under green houses/plastic tunnels Cut Flowers (Green Houses)/Foliage nurseries/Flora bulbs Dehydrated fruits & vegetables Fruits juices, concentrates, pulps, nectars Tomato paste Canning of fruits Potato French Fries, powder, flakes Investment Opportunities in Pakistan
Investment Policy Reforms Permission Required
1984
1988
1989
1991
1997
2006
Sectors eligible for FDI
Industrial
Industrial
Industrial
Industrial
All sectors
All sectors
Foreign Equity
Any %age
Any % age except in key Industries
50% or more
100% allowed (No Permission)
100% allowed (No Permission)
100% allowed (No Permission)
Project cost
Rs. 300 m or more
> Rs. 700 m
> Rs. 1000 m
No limit
No limit
No limit
Specified industries
23
12
7
4
4
5
Imported plant & Machinery
> Rs. 50 m forex reqd
> Rs 60 m forex reqd
No limit
No limit
No limit
No limit
Repatriation of Capital
Allowed
Allowed
Allowed
Allowed
Allowed
Allowed
Royalty. Tech. Fee etc.
Govt. approval
Govt. approval
Registration with SBP
No restriction
No restriction (all sectors)
No restriction (all sectors)
Ceiling on Paid-up capital to list on SE (Public Co.)
Rs. 10 million
Rs. 10 million
Rs. 10 million
Rs. 100 million
No limit
No limit
2/15/2007
Investment Opportunities in Pakistan
Industrial Estates in the Country Punjab
Sindh NWFP Balochistan Islamabad
Already Established
19
30
15
7
3
Being Established
4
4
4
3
-
Plan for new investors estates
4
4
5
3
-
2/15/2007
Investment Opportunities in Pakistan
Export Processing Zones z
Karachi Export Processing Zones – Phase I
z
Karachi Export Processing Zones – Phase II
2/15/2007
Fully developed Operational over 211 acres of land All infrastructure facilities available
Being developed on 100 acres of land 70% plots in Phase-II are already allotted Infrastructure department in progress Investment Opportunities in Pakistan
Export Processing Zones under joint Ventures z z z
Risalpur Export Processing Zones (REPZ) Sialkot Export Processing Zones (SEPZ) Gujranwala Export Processing Zones (GEPZ)
Locations offering Investment Potentials z z z
Gwadar EPZ Sargodha EPZ Pasni EPZ
Exclusive Project Converted into EPZ z z z z
Saindak EPZ Duddan Export Processing Zone (DEPZ) Reko Diq EPZ Tuwairqi EPZ
2/15/2007
Investment Opportunities in Pakistan
INCENTIVES z
Full ownerships rights.
z
Full Repatriation of capital and profits.
z
No minimum or maximum limit for investment.
z
Duty free imports of machinery, equipment and material.
z
No sales tax on electricity and gas bills.
z
Obsolete/old machinery can be sold in domestic market of Pakistan after payment of applicable duties and taxes.
z
Freedom from national import restrictions.
z
Foreign Exchange Control Regulations of Pakistan no applicable.
z
Defective goods/waste can be sold in domestic market after payment of applicable duties, maximum upto 3% of total value of export.
z
Domestic market of Pakistan available on same conditions as for imports from each countries.
z
Production oriented labour laws to be solely regulated by the authority.
z
Relief from double taxation subject to bilateral agreement.
2/15/2007
Investment Opportunities in Pakistan
Facilities Offered at Karachi EPZ i.
Facilitation Desk
ii.
Clearing / Forwarding Services
iii.
Water, Electricity, gas, telephone at site by EPZA
iv.
Construction Byelaws
v.
Issuance of VIP cards/car stickers to investors
vi.
Investors not required to file Income Tax returns to I.T Department
vii.
Generalized System of Preference Certificate
viii.
Authentication of Identity cards to Labour
ix.
Offshore Banking Units
2/15/2007
Investment Opportunities in Pakistan
THANK YOU
& Welcome to Pakistan
