By H.E. Mr Muhammad Khalid Jamali, Ambassador of the Islamic Republic of Pakistan in the Czech Republic
Pakistan, historically part of the Indus River basin is a diverse region, culturally, politically and economically. Today, Pakistan, sits at the confluence of great geo-economic potential with China & the Central Asian Republics in the north and the rich Gulf states in its south. With a population of 220 Million + with some 30% between the ages of 15 – 30 years it is an economic powerhouse waiting for meaningful engagement & investment.
Over the years Pakistan’s image has been sullied by a disinformation campaign run on behalf of the Indian Government and exposed by the EU Disinfo Lab. Contrary to the claims of the campaign, the generally depressed global economy & FATF grey listing Pakistan’s economic performance has shown resilience. Pakistan Economic Survey ‘21 estimates that GDP growth rate stood at 3.94%. Pakistan Stock Exchange has emerged as the best performing market in Asia and the 4th best performing market in the world & Moody’s credit rating for the country has improved to B3+. With economic indicators all showing an uptick, Pakistan is the investment market to be explored by European companies and investors.
The China Pakistan Economic Corridor (CPEC) valued at US$62 billion includes addition of 1100 Km of new motorways; connecting the Chinese border in the north via the Karakorum Highway to the Arabian Sea at Gwadar, and 5300 MW of power projects; total planned increase of 17000 MW, has entered into the 2nd phase with the establishment of 9 Special Economic Zones (SEZ’s) as part of the project
The priority sectors as part of CPEC SEZ’s include food processing, logistics, automotive, IT and housing construction. Food processing is the second largest industry contributing 27% to the value-added production after Textiles. Investments in Frozen Food and value addition in major feed crops are areas for investment.
Closely tied to the food processing sector is the need for warehousing and cold chain facilities. With 17 million middle class households in Pakistan automotive sales in Pakistan have been growing in double digits with 171% increase in 2020. There is a big demand for compact and mid-size vehicle manufacturing. Special incentives are in place for electric/green technology vehicle manufacturing. The IT industry set to grow to US$20 billion by 2025 has received special status with turnover tax exemptions. With some 20,000 IT graduates each year in Pakistan and strong English language skills this is a key area for investments.
Pakistan has an acute housing shortage with only 150,000 units of the demand of 350000 unit per annum being currently met. Under the Prime Ministers “Naya (New) Housing Scheme” there is a plan to build 5 Million units and special incentives including financing options have been put into place for contractors and buyers. The fiscal incentives for investments made in these SEZ’s include a one-time custom duty and tax exemption on all capital goods imported into Pakistan for the development, operations and maintenance of the SEZ and for any enterprise being setup for operations in it. Moreover, there is an income tax holiday of 10 years on all industries set up in the SEZ’s. To promote investment in the hospitality and tourism sector the government has given it the status of an industry and tax incentives have been offered in the Federal Budget 21.
Pakistan’s investment policy has been consistent for the last 5 years with the aim to creating a conducive business climate for FDI. According to the WB ease of business survey, Pakistan emerged 2nd in the South Asia region. Out of six reform areas acknowledged in the 2020 report, the highest improvement of 58 points has been made in the “Starting a Business” indicator. With this said, Pakistan is ripe for European business investments.
And as we say in colloquial urdu خوش آمدید –Welcome we are open for business. Pakistan Zindabad.
For further Information
Embassy of Pakistan in Czechia: http://mofa.gov.pk/prague-czech-republic-our-team/