Presentation by Secretary BOI

7/30/2019 Presentation by Secretary BOI

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BOI

Jehangir BasharSecretary, Board of Investment28th September 2004


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Yazd

Kabul

Delhi

Patna

Herat

Kashi

U

Alma ty

Lahore

JaipurKanpur

Frunze

Masqat

Mashhad

Lucknow

Benares

Zahedan

Karachi

Amrit sa r

C

Dushanfe

Qandahar

Toshkent

Abu Zaby

Samarkand

Ashkha ba d

Islamabad

New Delhi

Kathmandu

Hyderabad

Ah ma da bad

Rawalpindi

Faisalabad

China

India

Iran

Kazakhstan

Pakistan

Afghanistan

Oman

Uzbekistan

Turkmenistan

Nepal

Kyrgyzstan

Tajikistan

b Emirates

Jummu &Kashmir

(Disputed Territory)


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INVESTMENT ENVIRONMENT


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Fiscal Reforms

Deregulation & Privatization

Capital Market Reforms

Policies Pursued

4

Improved Governance

Liberal Investment Regime


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Improving Economic Indicators

Source: State Bank of Pakistan (SBP), Federal Bureau of Statistics (FBS), Central Board of Revenue (CBR)

Indicators 2000 - 01 2001 - 02 2002 - 03 2003-04 + (-) %

Exports (Billion $) 9.20 9.13 11.16 12.27 9.9Imports (Billion $) 10.72 10.34 12.22 15.47 26.6Trade Balance (Billion $) (1.52) (1.20) (1.06) (3.17) 199.1Net Revenue (Billion Rs.) 393.91 404.07 460.59 518.80 12.6FDI (Million $) 322.40 484.70 798.00 949.40 18.9Workers Remittances (Billion $) 1.09 2.39 4.24 3.87 (8.7)Forex Reserves (Billion $) 3.22 6.43 10.72 12.33 15.0Exchange Rate (Rs./ US$) 58.4 61.0 57.7 58.0 0.51Stock Exchange Index 1300 1520 3402 5,279 55.17GDP Growth 2.6% 3.6% 5.1% 6.4%Inflation 4.4% 3.4% 3.3% 3.9%

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Board of Investment

Equal treatment of local & foreign investors All economic sectors open to FDI

Foreign equity upto 100% allowed

No Government permissions required

Attractive incentive packages Remittance of capital, profits, dividends, royalty, technical &

franchise fee, allowed

Network of Export Processing Zones/ Industrial Estates

Import of raw material for export manufacturing zero-rated

Bilateral Agreements : Investment Protection: 46 countries

Avoidance of Double Taxation: 52 countries

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POLICYPARAMETERS Manufacturing Sector

Non-Manufacturing Sectors

Agriculture Infrastructure& Social

Servicesincluding IT &

Telecom Services

Governmentpermission

Not required except for specifiedindustries *

Not required except specific licences fromconcerned agencies

Remittance of capital,profits, dividends, etc. Allowed Allowed

Upper limit of foreignequity (%) 100 60 100 100

Minimum investment(M $) No restrictions 0.3 0.3 0.15

Customs duty onimport of PME (%) 5 0 5 0-5

Tax relief (IDA, as % ofPME cost) 50 50

Royalty & technical fee No restrictions Initial lump-sum upto $100,000Max rate 5% of net sales

* Specified Industries:i) Arms and ammunition ii) High explosives iii) Radioactive substances

iv) Security printing v) currency and mint

Policy Package

PME= Plant, Machinery and EquipmentIDA= Initial Depreciation Allowance

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Board of Investment

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Two seaports (third one under construction)

Well established network of dry ports

Air links to all major cities

Extensive rail and road network

Modern telecom facilities

Trade facilitation (reduced clearance time and simplification ofcustoms procedures)

Well established banking system

Low mark up charged by banks Securities & Exchange Commission of Pakistan (SECP)

oversees the Company Law and ensures good corporategovernance

Quick registration process by SECP

Established Trade &

Physical Infrastructure


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Board of Investment

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Attractive Investment Climate

Strong privatization, liberalization, deregulation

Stable exchange rate

Increasing reserves

Vibrant capital market

Independent regulators

Reformed banking system

Increasing FDI & foreign remittances

Improving Credit Rating ( B2, B+)


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Board of Investment

ABC PBBAG Companies participated 41 45

Opinion of the business climate

enthusiastic/optimistic 63% 36%

Domestic economy improved 93% 80%

External political situation improved 78% 53%

Internal political situation improved 29% 69%

Law & order improved 34% 93%

Consistency of policies 45% 64%

Implementation of policies improved 31% 58%

ABC: American Business Council

PBBAG: Pakistan Britain Business Advisory Group10


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Board of Investment

Source:Company Reports (annual accounts)

ROE: Return on Equity

Corporate Performance - ROE

Company Sector 1999 2000 2001 2002 2003 Average

Shell Pakistan Oil & Gas 22% 27% 20% 18% 21% 22%

Hubco Power 24% - 39% 28% 24% 29%

British OxygenCompany Industrial Gas 27% 25% 11% 43% 48% 31%

Glaxo Welcome Pharmaceutical 19% 22% 8% 15% - 16%

Lever Brothers ConsumerItems 52% 106% 45% 148% - 88%

Gillette Pakistan ConsumerGoods 33% 33% - 41% - 36%

Colgate Pakistan -do- 18% 21% - 31% 36% 27%

Nestle Milkpak Food 33% 32% 25% 75% - 41%

General Tyre Tyres 21% 29% - 23% 24% 25%

Siemens Engg. Engineering 10% 20% 17% 22% - 17%

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Board of Investment


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0

200

400

600

800

1000

1200

1400

1600

1996 1997 1998 1999 2000 2001 2002

World FDI In Bln $ Pak FDI in Mln $

BillionUS$

MillionUS$

World FDI Comparison With

Pakistan

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Board of Investment

Pakistan Investment Inflows

(1990 2004)

237

335306

354

442

1,102

682

601

472 470

322

485

0

200

400

600

800

1,000

1,200

90/91 91/92 92/93 93/94 94/95 95/96 96/97 97/98 98/99 99/00 00/01 01/02 02/03

Source: State Bank of Pakistan

798

MillionUS$

950

03/04

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Board of Investment

ValueinMillion

US$

Korea

2.5%Others

22.3%

Japan

5%OIC

10%

USA

37.7%

UK

19.9%

Germany

3.1%

Pakistan: Sources of FDI

(1990 2004)

Total : $ 7.782 Billion

Source: State Bank of Pakistan 15


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Board of Investment

Power

17%

Others

6 %

M anufacturing

2 3 %

Services

2 6 % IT & Telecom

7%

Oil& Gas, M in.

Quarrying

2 1%

Pakistan: Sectoral FDI

Total : $ 7.782 Billion

Source: State Bank of Pakistan 16


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BOI

Board of InvestmentFDI Inflows (2003-04)

Source Million $ Leading Sectors Million $

USA 238.4 Oil & Gas and Refining 273.3

Switzerland 205.3 Financial Business 242.1

Norway 146.6 Telecommunication 221.9

U.A.E. 134.6 Trade 35.6

U.K. 64.9 Textiles 35.4

Others 159.6 Others 141.1

Total 949.4 Total 949.4

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http://images.google.com.pk/imgres?imgurl=http://sumagazine.syr.edu/fall98/hill/art/textiles.gif&imgrefurl=http://sumagazine.syr.edu/fall98/hill/hill.html&h=235&w=321&sz=48&tbnid=sNmh0LeIyqoJ:&tbnh=83&tbnw=113&start=2&prev=/images%3Fq%3DTextiles%26hl%3Den%26lr%3D%26ie%3DUTF-8http://images.google.com.pk/imgres?imgurl=www.catalyst121.com/images/communication.jpg&imgrefurl=http://www.catalyst121.com/communications.htm&h=200&w=152&sz=18&tbnid=bqyj5AzaHtIJ:&tbnh=98&tbnw=75&start=74&prev=/images%3Fq%3Dcommunication%26start%3D60%26hl%3Den%26lr%3D%26ie%3DUTF-8%26sa%3DN


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Pakistan

- Home To Over 600 Multinationals

Deutsche Bank

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US Companies in Pakistan


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Board of Investment

US Companies in PakistanMembers of American Business Council

Sector No. of Companies

Pharmaceuticals 10

Services 8

IT & Telecom 7

Food & Beverages 7

Chemicals 6Financial Business & Banking 5

Consumer Products & Cosmetics 5

Oil & Gas 2

Electrical & Electronics 2Textiles & Leather 2

Power 1

Others 2

Total 5719


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Board of Investment

- American Express Bank - Citibank

- American Life Insurance - New Hampshire Insurance

- ACE Insurance - DHL

- Gerrys International - Beckton Dickson

- KODAK - Coca-Cola

- Intel Corporation - NCR Corporation

- Unisys Pakistan - 3M Pakistan

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Prominent US companiesin Pakistan


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Board of Investment

Oil & Gas

Offshore

& onshore

exploration

Refining

Pipelines

Storages

Call centers

Cell phone

E-Commerce

Software

IT Parks

IT & Telecom

Agri-business

Corporate farming

Fruits & vegetables

Livestock & dairy

Fisheries

Cool chains

Storages

Seed production

Hydel

Thermal

Coal

Solar

Wind

Biogas

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Board of Investment

Textiles

Cotton fabrics Madeups

Cotton yarn

Knitwear & readymade garments

Leather & leather products

Footwear

Surgical instruments

Sports goods

Carpets

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http://images.google.com.pk/imgres?imgurl=http://www.veralabs.com/veramap.jpg&imgrefurl=http://www.veralabs.com/exports.htm&h=396&w=600&sz=39&tbnid=JX2G_4r4XFEJ:&tbnh=87&tbnw=131&start=44&prev=/images%3Fq%3Dexports%26start%3D40%26hl%3Den%26lr%3D%26ie%3DUTF-8%26sa%3DNhttp://images.google.com.pk/imgres?imgurl=http://www.veralabs.com/veramap.jpg&imgrefurl=http://www.veralabs.com/exports.htm&h=396&w=600&sz=39&tbnid=JX2G_4r4XFEJ:&tbnh=87&tbnw=131&start=44&prev=/images%3Fq%3Dexports%26start%3D40%26hl%3Den%26lr%3D%26ie%3DUTF-8%26sa%3DNhttp://images.google.com.pk/imgres?imgurl=http://www.veralabs.com/veramap.jpg&imgrefurl=http://www.veralabs.com/exports.htm&h=396&w=600&sz=39&tbnid=JX2G_4r4XFEJ:&tbnh=87&tbnw=131&start=44&prev=/images%3Fq%3Dexports%26start%3D40%26hl%3Den%26lr%3D%26ie%3DUTF-8%26sa%3DNhttp://images.google.com.pk/imgres?imgurl=http://www.veralabs.com/veramap.jpg&imgrefurl=http://www.veralabs.com/exports.htm&h=396&w=600&sz=39&tbnid=JX2G_4r4XFEJ:&tbnh=87&tbnw=131&start=44&prev=/images%3Fq%3Dexports%26start%3D40%26hl%3Den%26lr%3D%26ie%3DUTF-8%26sa%3DNhttp://images.google.com.pk/imgres?imgurl=http://www.veralabs.com/veramap.jpg&imgrefurl=http://www.veralabs.com/exports.htm&h=396&w=600&sz=39&tbnid=JX2G_4r4XFEJ:&tbnh=87&tbnw=131&start=44&prev=/images%3Fq%3Dexports%26start%3D40%26hl%3Den%26lr%3D%26ie%3DUTF-8%26sa%3DN


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Board of Investment

PRIVATIZATION

BOI


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BOI

Board of InvestmentPrivatization Program

Covers all sectors of the economy

Major transactions in finance, industry,telecom and power

Two pronged strategy:

- Strategic sale

- Selling shares via stock market

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BOI


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Privatization Recent Successes

18 transactions (Rs. 49.6 billion)

Cement, hotel, banks, oil & gas

Habib Bank Limited Rs. 22.4 billion

Pakistan Petroleum Limited Rs. 5.6 billion

Sui Southern Gas Co. Rs. 1.7 billion Pakistan International Airline Rs. 1.3 billion

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Period No. ofYears Proceeds (Rs. Billion)Total Average per year

1989 - Oct 1999 10 60 6

Oct 1999 - Nov 2002 3 36 12

Nov 2002 - Aug 2004Less

than 2 50 26

Privatization Proceeds

BOI


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Board of Investment

Strategic Sale:

Faisalabad Electricity Distribution Jamshoro Power Pakistan State Oil (PSO) Karachi Electricity Supply (KESC)

Oil & Gas Development Corporation Ltd. (OGDCL) Pakistan Telecom Co. Ltd. (PTCL) National Investment Trust (NIT) Pak Arab Fertilizer Pak American Fertilizer

Shares to General Public

Kot Addu Power Company

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BOI


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Board of Investment

BOARD OF INVESTMENT

BOI


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Board of Investment

Investment promotion

Investors facilitation

30 HICs in 22 countries; 3 in USA

Visa assistance

Website

Publications

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Board of Investment

BOI

Board of Investment

Thank You

Presentation by Secretary BOI

Documents

Transcript of Presentation by Secretary BOI