trading in pakistan

Overview of Trading in Pakistan

The Islamic State of Pakistan occupies an area which was home to some of the earliest human settlements and where, historically, two of the world's major religions, Hinduism and Buddhism, were practiced. It is now an Islamic Republic with 96% of the population following Islam as their religion. Pakistan is 803,940 sq km, four times the size of the UK. It shares borders with four countries: India China, Iran and Afghanistan along the western and northern boundaries.
The State of Pakistan was born out of the partition of the Indian sub-continent in 1947. It was originally composed of what is present day Pakistan in the west and present day Bangladesh in the east. It has faced both domestic political upheavals and regional confrontations.
Shortly after independence, a war began with India over the northern territory of Kashmir. The two countries fought over Kashmir once again in 1965. Historically, corruption, inefficiency and confrontations between various institutions have played a major role in civilian politics in Pakistan. Alternating periods of civilian and military rule have also proved to be an obstacle in establishing stability.

In 1999, Pakistan came under military rule once again after the overthrow of the civilian government, which at the time had lost a great amount of public support. General Musharraf vowed to revitalize the country's economic situation and restore stability. However, he faced numerous economic challenges and law and order problems. A civilian government was re-established in October 2002 when general elections took place, with the pro-Musharraf Pakistan Muslim League (Quaid-e-Azam) emerging as the largest party in parliament.
Economic growth in Pakistan has accelerated under the current government, as evidenced by excellent financial figures and stock exchange performance. Its economic outlook is strong and its manufacturing and financial services sectors have experienced rapid expansion. There has been a considerable improvement in its foreign exchange position and a rapid growth in hard currency reserves. Export growth to the UK over the last three years has averaged in excess of 20% annually and Pakistan deserves its reputation as one of the leading emerging markets.

Political Structure :

The President chairs the National Security Council comprising of military chiefs and cabinet members. The Prime Minister heads the cabinet. In October 2002, the National Assembly was elected for a five-year term but has been regularly suspended due to constant challenges by opposition forces regarding changes to the political system.
In February 2003, an election to the Senate took place, where each of the four provinces has equal representation. Each province is represented in the National Assembly in proportion to the size of its population.
Tensions with India over Kashmir remain and have fuelled fears of a regional arms race. Despite this, an ongoing peace process has brought considerable optimism for the future.

Basic Economic Information :

GDP: (July 2006 – June 2007) US$143.60bn (UKTI)
GDP per capita: (2006) US$830 (UKTI)
Inflation: (July 2006-June 2007) 7.9% (UKTI)
Exchange Rate: (1 October 2007) £1 = 122.85 Pak Rupees, US$1= 60.69 Pak Rupees (UKTI)

Economic Policy:

Pakistan's largest state-owned energy exploration company, The Oil and Gas Development Company, is currently planning to double its budget and commence a series of overseas ventures for the first time in its history. Consistently strong real GDP growth will continue to force planners to seek its new energy supplies.
The Economist Intelligence Unit has recently revised its forecast for real GDP growth in 2006/07 from 6.4% to 6.6%. One of the main reasons why this figure was revised was their improved expectation for the monsoon season; the agricultural sector will most likely benefit from the favourable weather conditions.

Framework for Investment:

For an overview of the legislative environment and upcoming events concerning Pakistan, view the following link where Saira Najeeb Ahmed of the Pakistani High Commission has written an article entitled "Eastern Promise", discussing what Pakistan has to offer your business.

Investing in Pakistan:

Investment in Pakistan has never been more viable and attractive. A summary highlighting the reasoning behind this is provided below.

Investment Highlights: Compelling Economic Proposition

Accelerating Consumerism		Surging Domestic & Foreign Investment		Growing Trade Intensity
	Rising disposable income		Low cost raw materials & manpower		Comparable advantage
	Growing population		Educated work force		Favorable geographical location
	Compelling size of middle class		Pro investment policies		Corporates globalizing
	Asset values rising		Improving infrastructure		Low tariff regime
	Rising remittances		Entrepreneur culture
			Stable exchange rate

Investment Highlights: Attractive Policy & Regulatory Fundamentals

Government Strategy:

Infrastructure being brought up to international standard: power, water, telecom and transport networks being overhauled
Increasing expenditure on education: literacy rates rising with increasing enrolment in higher education
Business environment being made conducive: liberalization and deregulation policies
Access to capital: increasing focus on providing finance to SMEs
Leveraging physical location: Pakistan is being converted into Asia’s trade, energy and transport corridor
Cross party support for reform process e.g. privatisation

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