Pakistan

Islamic Republic of Pakistan

Country ReportIslamic Republic of Pakistan

By

Myat Soe

Facilitator: Jeffrey F. Sherlock, Ed.D.

Due May 18, 2006

Islamic Republic of Pakistan

Islamic Republic of Pakistan 1

Executive Summary:

This report gives useful insight to help executives and their employees live and

work successfully in Pakistan. Americans will find the Pakistani people to be very

respectful because they value traditional customs and beliefs. Business protocol is

different in Pakistan, compared business protocol in the United States. The executives

must establish a trust between them and their business counterparts before making any

business deals.

Pakistan has significantly improved the lives of many of its people and has

achieved steady economic growth. However, a third of Pakistan’s population remains

entrenched in poverty. According to World Bank report in 2006, women are at a

particular disadvantage, with lower literacy and school enrollment rates than men, and

less access to health care. It should also be noted that most of Pakistanis are Muslims, and

Pakistan is a male-dominated society.

Additionally, the Islamic extremism in Pakistan, growing in power and influence,

has found a new target: western countries. The extremists in Pakistan and their leaders

are targeting the U.S government, its citizens as well as members of minority indigenous

and religious groups. This information allows companies’ executives and their employees

to learn how to live a safe and quality lifestyle in Pakistan.

It is suggested that companies should offer training programs to employees. The

first program should inform employees on how to conduct business transactions and how

to interact with people in Pakistan. A second training program should be set up for

executives, managers, employees and their families to help them adjust to living in

Pakistan. Executives and all employees should be briefed about the religious sensitivity


of the people in Pakistan. It is evident that additional research must be done to set up the

recommended training programs.

Finally, they will learn how to do business in Pakistan and how to develop

relationships with their business partners. They will also find out what is the appropriate

protocol and business customs in Pakistan, how to negotiate, what are the proper business

gifts and much more.

Overview of Pakistan:

Location, Population, and History

Pakistan is located in South Asia. It shares an eastern border with India and a

north-eastern border with China. Iran makes up the country's south-west border, and

Afghanistan runs along its western and northern edge. The Arabian Sea is Pakistan’s

southern boundary with 1,064 km of coastline.

The people of Pakistan have a multi-linguistic and multi-ethnic background. In

regard to the U.S Department of State Background Notes on Pakistan, the majority of

the population is made up of Punjabis, Sindhis, Pashtuns, Baloch, and Muhajir. The

ninety seven percent of population are Muslim (Sunni 77%, Shi'a 20%), and three

percent are Christian, Hindu, and others. Pakistan is an Islamic federal republic with a

population of approximately 165 million. The national language is Urdu, but English is

widely spoken and is one of the two official languages. The name Pakistan is derived

from the Urdu words Pak (meaning pure) and stan (meaning country). Pakistan is

nearly twice the size of California.


In 1947, as British rule came to an end in India, Pakistan was created when the

Muslim-dominated parts of India (to the west and east) of Hindu India, were given

autonomy. Those two partitions were called East and West Pakistan and they were

separated (right down the middle) by India.

The city of Islamabad, with its mix of traditional Islamic architecture styles and

modern features, became the capital city when it was officially moved here from

Karachi in 1959. Then, in 1971, East Pakistan demanded independence, and after a

bloody civil war it was transformed into what is now called the country of Bangladesh.

West Pakistan, now present-day Pakistan has been in constant dispute with

India over the Kashmir Region, and after many wars and border disputes, the status of

the area remains in limbo. In response to Indian nuclear weapons testing, Pakistan

conducted its own tests in 1998. Today, the long-term goal of both nations is military

stability, and promising discussions continue.

Government:

Military rule was instituted in October. 1999, and a nominal democracy was

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declared in June 2001 by the ruling military leader, Pervez Musharraf. The Prime

Minister heads the cabinet, but the president chairs the powerful National Security

Council, which comprises military chiefs and cabinet members. The president can also

dismiss the prime minister, the cabinet and the parliament. The lower house of

parliament, the National Assembly, was elected in October 2002 for a five-year term, but

has been frequently adjourned as a result of protests by the opposition over the legality of

General Musharraf's changes to the political system. An election to the Senate (the upper

house), where all four provinces have equal representation, was held in February 2003.

Provinces are represented in the National Assembly according to the size of their

population.

Conflict history and political situation:

Pakistan gained independence on partition of British India 1947, leading to

massive refugee flows; creation of single state comprising two wings, West and East

Pakistan, separated by 1000 miles of Indian territory; and 1948 war with India. East

Pakistan (Bangladesh) seceded 1971 leading to civil war and further clashes with India

(Conflict history: Pakistan, 2005).

Since 1958 military has played a major role in formation of Pakistan’s

governments, frequently allied with religious right at expense of secular and mainstream

political parties. Pakistan’s 1973-77 democratic interlude under Zulfiqar Ali Bhutto's

premiership ended with installation of General Zia as military ruler 1978-1988. President

Pervez Musharraf came to power in 1999 coup against elected Prime Minister Nawaz

Sharif, promising to end corruption.

In the report of International Crisis Group, released in November 2005, the


military, through National Intelligence Service (ISI), supported the Taliban regime in

Afghanistan, financed and trained militias against Indian-administered Kashmir, and

overlooked nuclear proliferation. Pakistan joined U.S.-led “war on terror” follows the

September 11, 2001 attacks, promoting Musharraf’s image abroad as secular reformer

and U.S. ally.

Throughout the past years, political stability proved elusive for Pakistan.

Although election was held, stability was threatened by the terrorist tactics resorted by

opposition groups from both political and religious extremes. Coups and countercoups,

assassinations and suspension of civil liberties became regular occurrences.

Pakistan is a country with nuclear weapons capability. Pakistan tested nuclear

devices in 1998 after the Indian test. Head of Pakistan’s uranium enrichment facility, Dr.

Abdul Qadeer Khan, revealed in 2004 to have proliferated nuclear technology to North

Korea, Libya and Iran. Khan released after public apology (Country Profile: Pakistan,

2006).

Economy:

According to the C.I.A Factbook, agriculture is the mainstay of economy in

Pakistan. About 42 percent of the population is involved in farming, forestry and fishing

that together contribute to 21 percent of the GDP. Barring the regions of north and the

west, which are covered by mountains, the rest of the country has fertile plains where

crops like wheat, cotton, maize, sugar cane and rice are grown. Pakistan is self-sufficient

in wheat, rice and sugar.

The industries of Pakistan, which contribute to 25 percent of GDP, involve 20

percent of occupation. Main items exported by Pakistan include cotton cloth, tapestries,


leather, carpets and rice. In 2006 Pakistan's gross domestic product (GDP) was $ 384.9

billion.

Pakistan Key Economic Indicators Sources: CIA - The World Factbook

Population, pop. Growth rate 165,803,560

Infant morality 70.45 70.84 (M)70.04

(F)

Life expectancy male female 63.39 62.4062.44

(F)

HIV rate 0.10% 74,000.00 4,900.00

Literacy rate 48.70% 61.7 (M) 35.2 (F)

GDP 7.80% 384.90

Percent of GDP

Agricultural 21%

Industrial 25.10%

Service 53.30%

GDP per capita 2400

Percent of population below poverty 32%

Inflation rate 9.20%

Labor force 46.84

Percent of occupation

Agricultural 42%

Industrial 20%

Service 38%

Unemployment rate 6.60%

Exports and Imports 14.85b 21.26b

External debt 39.94b

Reserves of foreign exchange and gold 11.71b

Economic aid 2.4b

Identify what their currency is Rupees

Expenditure of military 4.26b

Communication and transportation

Tel( main line in use) 4502200

Cell/Mobil 5022900

Internet Users 7.5

Airport (91/43) 134


1Pakistan, an impoverished and underdeveloped country, has suffered from

decades of internal political disputes, low levels of foreign investment, and a costly,

ongoing confrontation with neighboring India. However, IMF-approved government

policies, bolstered by generous foreign assistance and renewed access to global markets

since 2001, have generated solid macroeconomic recovery the last four years (From

Crisis to Growth- Pakistan’s Poverty Reduction Strategy, 2006).

Although progress on more politically sensitive reforms has slowed, the

government has made substantial macroeconomic reforms since 2000. For example, in

the budget for fiscal year 2006, 2Islamabad did not impose taxes on the agriculture or real

estate sectors, despite Pakistan's chronically low tax-to-GDP ratio. While long-term

prospects remain uncertain, given Pakistan's low level of development, medium-term

prospects for job creation and poverty reduction are the best in more than a decade.

GDP growth, spurred by double-digit gains in industrial production over the past

year, has become less dependent on agriculture, and remained above 7% in 2004 and

2005. Inflation remains the biggest threat to the economy, jumping to more than 9% in

2005. 3The World Bank and Asian Development Bank announced that they would each

provide the US $1 billion in aid to help Pakistan rebuild areas hit by the October 2005

earthquake in Kashmir. Foreign exchange reserves continued to reach new levels in 2005,

supported by steady worker remittances. In the near term, growth probably cannot be

1 The U.S. Agency for International Development: “Helping Pakistan builds modern prosperous and democratic State.”

2Pakistan: “U.S. Department of State Background Note.”

3Pakistan 2005 Earthquake: “Preliminary Damage and Needs Assessment, Prepared By Asian Development Bank and World Bank.”


sustained at the 7% level; however, massive international aid, increased government

spending, lower taxes, and pay increases for government workers will help Pakistan

maintain strong GDP growth over the longer term.

Cultural Customs:

The core of culture is friendship, honor, religion and traditional hospitality.

Family, friends, and connections are very important on all levels in Pakistan.

Most people are Muslim and practice the Islam religion. Like any other countries’

Muslims, they are warm, emotional, and quick to explode (Deresky, 2003). Muslims

follow the doctrines of the Koran, which forbids alcohol and the flesh of scavenger

animals (i.e. pork), birds and fish (i.e. shellfish). It also discourages use of caffeine and

nicotine, although neither are forbidden; in fact, they tend to be consumed in great

quantity in Arabic and Middle Eastern countries.

The foreigners must be aware of the following religious and cultural

sensitivities when they develop the relationship with Pakistanis (International Gift Giving

for Business, 2006):

Avoid pork and pork products like ham, bacon, pate, hot dogs or sausage. Avoid

food prepared with pork products like lard, which can include even pastries. It is a

good idea to avoid any pork dishes at a banquet when Muslims are in attendance

because the other dishes might become contaminated in preparation or serving.

Don't serve shellfish like crab or lobster. Fish is an acceptable alternative to meat

and shellfish. Some Muslims prefer Zabihah meat which has been slaughtered

according to special rules. Zabihah meat is similar to, but not the same as, kosher

meat.


Do not serve alcohol in the presence of guests, especially government or religious

officials; even if you know that the individual may drink in private. Many

Muslims, however, do take exception to the rule forbidding alcohol. Pakistanis,

for instance, are more liberal and frequently consume alcoholic beverages. But,

it's best to err on the side of caution, especially in public. The hosts serve fruit

juices for toasts when alcoholic beverages cannot be consumed. Avoid food

cooked in alcohol, even if all the alcohol has burned off in cooking. Muslims fast

until sundown during the month of Ramadam.

Kissing on the cheeks is common among men. However, any public display of

intimacy between men and women is strictly forbidden by the religious code.

4Pakistanis are a very fashion conscious nation. Fifty percent of men and ninety-five

percent of the Pakistani women wear their national dress (Pakistan, 2006). The men wear

baggy pants that get narrow at the ankles. They are called salwar. They also wear long

shirts that hang down to their knees, called kameez. Woman wears scarves on their heads

called dupattas. When dressing casual, short-sleeved shirts and long pants are preferred

for men; shorts are acceptable only when exercising. Women must keep their upper arms,

chest, back, and legs covered at all times. Women should wear long pants when

exercising.

In the big cities, they wear western style clothes. Men are generally expected to

wear a suit and tie for business, although the jacket may be removed in the summer.

Women should wear conservative dresses or pantsuits. Pakistan is a male-dominated

4 Modern Muslima and Saraji Umm Zaid: “How to Hijab: Different Styles of Over (Outer) Garments.”


society, and women play little or no role in business or entertainment. It is impolite to

inquire about women.

Negotiation, Decision making, and Ethical Issue:

In order to develop relationships with Pakistanis business partners, foreigners

should know how to establish social ties in Pakistan. Hosting a meal at a nice restaurant

is always a good business practice. A fine dinner is a wonderful way to give a gift to

Pakistanis hosts, to show your guests you appreciate the business relationship you have

with them, and an opportunity to build connection.

Initial meetings are only for the purpose of getting acquainted. The

greeting is “Asalam Aleikum” (Peace be with you), followed by a firm handshake and

then, for courtesy and to pay homage to the host (you don’t necessarily have to), briefly

place your right hand over your heart. It is best to take a few minutes initially to engage

in pleasantries about each other's country, rather than going straight to business. Also,

people can say “Haai!” when they meet with Punjabis. That is Punjabi for, "Hi!

Preparing for a business meeting requires a working knowledge of the

information to be discussed or presented, careful attention to all details on the printed

material to be distributed, and perhaps a gift. The gift is a social gesture that may be

expected in Pakistan. It could not be considered a bribe in their business culture. It is very

important in Pakistan to only use your right hand, or both hands, to offer or accept a gift

(International Gift Giving for Business, 2006)

. Pakistan is a secularized Islamic nation. Politeness is important. The pace of

negotiation is slower in Pakistan compared to the US. Pakistanis are hard workers, but

they have a relaxed attitude towards time. Most businesses are family-owned and the key


decision maker is almost always the head of the family. Personal life revolves around

family and friends. A personal relationship between participants must be established

before any formal negotiations can take place. There is a definite social hierarchy. The

privileged elite control the country, with conspicuous consumption and education being

the main status symbols.

Pakistanis do business with the person, not the company. Therefore mutual trust

must be established. A successful negotiator uses references to people who are highly

respected by the opponents to persuade them to change their minds on some issues. They

prefer to negotiate through a trusted intermediary. Compared with westerners, Pakistanis

have a casual approach to deadlines and frequently lack the authority to finalize a deal.

Pakistanis managers have long traditions of consultative decision making,

supported by the religious beliefs. However, such consultation occurs more on a person-

to-person basis than in group meeting. Although business in Pakistan trends to be

transacted in a highly personalized manner, the final decisions are made by the top

leaders who feel that they must impose their will for the company to be successful.

The people in Pakistan are living under the military dictatorship.

Consequently bribery is generally accepted practice. According to the 2001 Corruption

Perceptions Index, Pakistan was ranked in seventy one and scored two point three

(Deresky, 2003). The score relates to perceptions of the degree of corruption as seen by

businesspeople, academics, and risk analysts, and ranges between ten (highly clean) and

zero( highly corrupt). These index numbers suggests that Pakistan scored high level of

perceived corruption in government and public administration.


Medical Facilities and Health Information:

The consular information sheet of the US embassy in Islamabad states that

adequate medical care is available in major cities in Pakistan, but is limited in rural

areas. Facilities in the major cities vary in level and range of services, resources, and

cleanliness, and Americans may find them below U.S. standards; facilities in rural areas

are consistently below U.S. standards. Medical facilities require prepayment and do not

accept credit cards. Many American-brand medications are not widely available, but

generic brands from well-known pharmaceuticals are widely available. The quality of

the locally-produced medications is not known.

Special Circumstances:

Americans planning travel to Pakistan should know about common business

transactions. Pakistan is largely a cash economy. Personal checks are not commonly

accepted. Most Pakistanis do not use checking accounts for routine transactions. Outside

of major cities and tourist destinations, credit cards and travelers' checks are generally not

accepted, and there have been numerous reports of credit card fraud (Travel Warning for

Pakistan, 2006). There are bank branches as well as registered money-changers in all

international airports. ATMs can be found in major airports. English is widely spoken

by professional-level airport staff

Conclusions:

By exploring the country of Pakistan, I have drawn five conclusions that are

especially relevant to the company’s executives, managers, employees and their families

who will be relocating from the United States to Pakistan. The conclusions I have

reached are the following:


Pakistan is a resource-rich country, and has strong human resources.

Pakistan has abundant land and natural resources that include

extensive agricultural land crop production, mineral reserves (coal, crude oil, natural gas,

copper, iron ore, gypsum, etc.), fisheries and livestock production. English is an official

language, and is widely used in government, the officer ranks of the military, and in

many institutions of higher learning. An English speaking work force, cost-effective

managers and technical workers are good advantages to do business in Pakistan.

Pakistan has large and growing domestic market.

Pakistan has 165 million consumers with growing incomes

and a growing middle-class moving to sophisticated consumption habits. The population

is estimated to grow to over 325 million by 2050 making it the third most populous

country in the world. Therefore, it is a good opportunity to introduce new products and

expand the market shares. Pakistan also has well-established legal systems and

infrastructure. That will allow doing business more effectively.

Pakistan is a strategic location as a regional hub.

Pakistan is a principal gateway to the Central Asia Republics and has strong and

long-standing links with the Middle East and South Asia. Pakistan has on average been

among the faster growing economies in the developing world, and has great potential for

long term investment.

The business protocol in Pakistan differs from Western business norms.

Like Pakistan culture, the business protocol used in Pakistan is drastically

different from the business protocol practiced in the United States. Appointment making,


negotiating, business entertaining, and giving gifts are just four of the areas where doing

business in Pakistan is not the same as doing business in the United States.

Pakistan has incentives for foreign investors.

5Pakistan has the most liberal investment policy in the South Asia region. New

incentives and further liberalization measures include:

Reducing minimum foreign equity from US$ 0.5 million to US$ 0.3 million,

Zero import duties on capital goods, plant and machinery and equipment not mad

locally.

Zero import duties on raw materials used in the production of exports

Recommendations:

Based on the conclusions of my research, I recommend that companies take four specific

actions to insure that their executives, managers, employees and their families are happy

and successful in Pakistan. I recommend that companies should:

1. Do more research.

This report should not be viewed as an exhaustive commentary on the

culture and business protocol used in Pakistan, for it is merely a brief overview of the

information one should know before attempting to live or do business in Pakistan.

Therefore to help insure the success of business operations in Pakistan, companies should

continue to gather and analyze relevant information regarding living and doing business

in Pakistan. 2. Setup a business protocol training program for executives,

managers, and employees.

5 Board of Investment: Government of Pakistan: “Pakistan's Business Strengths.”


To insure that executives and managers have a clear understanding

of the differences between Pakistan and the United States in the area of business protocol,

companies should set up a training program for executives, managers and employees who

will be doing business in Pakistan. The training program for executives and managers

should devote time to the discussion of appointment making, negotiating, and business

entertaining, and giving gifts in the Pakistanis business community.

3. Setup a cultural training program for executives, all employees and their families.

To make sure that executives, employees and their families are knowledgeable

about the cultural norms of Pakistan, companies should develop a training program to

educate them about the Pakistan culture. The training program for executives, employees,

and their families should focus on cultural customs in Pakistan with regard to greetings,

gestures, eating, and the role of women.

4. Warn executives, managers, employees and their families about the religious

sensitivity of the people in Pakistan and violence against westerners.

Before sending executives, managers, employees and their families to Pakistan,

companies must spend adequate time educating them about the past experiences of

violence against Americans in Pakistan. In fact, several incidents of violence against

American officials and U.S. mission employees in Pakistan have marred the relationship.

References:


Board of Investment: Government of Pakistan: “Pakistan's Business Strengths.”

Retrieved May 10, 2006, from http://www.pakboi.gov.pk/Overseas

/pakistan_s_business_strengths.html

CIA - The World Factbook – Pakistan: “Country Profile.” Retrieved May 10, 2006,

from http://www.odci.gov/cia/publications/factbook/geos/pk.html

Deresky, H (2003). International Management: Managing Across Borders and Cultures

(4th ed.). New Jersey: Prentice Hall.

International Crisis Group: “Conflict History: Pakistan.” Retrieved May 10, 2006,

from http://www.crisisgroup.org/home/index.cfm?action=conflict_search

&l=1&t=1&c_country=86

International Gift Giving for Business: Retrieved May 10, 2006,

from http://www.cyborlink.com/besite/international_gift_giving.htm

Modern Muslima and Saraji Umm Zaid: “How to Hijab: Different Styles of Over (Outer)

Garments.” Retrieved May 10, 2006, from

http://www.modernmuslima.com/jilbabhow.htm.

Pakistan: “U.S. Department of State Background Note.” Retrieved May 10, 2006, from http://www.infoplease.com/country/profiles/pakistan.html

Pakistan 2005 Earthquake: “Preliminary Damage and Needs Assessment, Prepared

By Asian Development Bank and World Bank.” Retrieved May 10, 2006, from

www.worldbank.org.pk

Supporting Human Rights and Democracy: “The U.S. Record 2005 – 2006 Released by

the Bureau of Democracy, Human Rights and Labor.” Retrieved May 10, 2006, from

http://www.state.gov/g/drl/rls/shrd/2005/63948.htm

http://www.state.gov/g/drl/rls/shrd/2005/63948.htm

http://www.worldbank.org.pk/

http://www.infoplease.com/country/profiles/pakistan.html

http://www.cyborlink.com/besite/international_gift_giving.htm

http://www.crisisgroup.org/home/index.cfm?action=conflict_search&l=1&t=1&c_country=86


The U.S. Agency for International Development: “Helping Pakistan builds a modern

prosperous and democratic State.” Retrieved May 10, 2006, from

http://www.usaid.gov/pk/

The World Bank: “From Crisis to Growth- Pakistan’s Poverty Reduction Strategy.”

Retrieved May 10, 2006, from http://siteresources.worldbank.org/PAKISTANEXTN/

Resources/CAS/Summary.pdf

The World Bank: “A Plan to Get Girls in School in Pakistan” Retrieved May 10, 2006,

from www.worldbank.org.pk

The US embassy in Islamabad: “Consular Information Sheet.” Retrieved May 10, 2006,

from http://usembassy.state.gov/islamabad/

The US embassy in Islamabad: “Travel Warning for Pakistan.” Retrieved May 10, 2006,

from http://travel.state.gov/travel/cis_pa_tw/cis/cis_992.html

http://travel.state.gov/travel/cis_pa_tw/cis/cis_992.html

http://travel.state.gov/travel/cis_pa_tw/tw/tw_930.html

http://usembassy.state.gov/islamabad/

http://www.worldbank.org.pk/

http://siteresources.worldbank.org/PAKISTANEXTN/Resources/CAS/Summary.pdf

http://siteresources.worldbank.org/PAKISTANEXTN/Resources/CAS/Summary.pdf

http://www.usaid.gov/pk/

Pakistan

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