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Embassy of Pakistan Oct 13th , 2015

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Table of content

1. Pakistan: Country Snapshot & Economy

2. China Pakistan Economic Corridor 3. 10 Reasons to Invest in Pakistan

4. Investment Opportunities

5. Foreign Companies & Global Brands

6. How to capture the Opportunities– A piece of advice

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Pakistan

2,430 km

523 km

2,912 km

909 km

NORTH: Hindu Kush, Karakoram, & Himalaya

SOUTH: Arabian Sea stretching 1,000 km

EAST:

WEST:

Indus River & tributaries journeying3,200 km from Tibet

Baluchistan Plateau

Geo-Strategic Location

AREA:

796,095 sq kmLAND BOUNDARIES:

6,774 kmBORDER COUNTRIES:

AFGHANISTAN

CHINA

INDIA

IRAN

Surrounded by two Large Economies: India and ChinaProximity to Middle EastGateway to Central Asia

Significance as a Transit economy

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Pakistan: Perception vs. RealityThe Usual Headlines…

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Pakistan: Perception vs. Reality…Also about Bottom lines

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This is Pakistan Today…

7th largest pool of scientists and engineer s in the World 7th Nuclear country in the world.7th largest tractor market in the world

16th largest country in terms of global cement capacityWorld-class recognition in Banking, Textiles, Information Technology, Engineering Services & Sports Goods

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4th largest global 185

116million

Why Pakistan? Pakistan’s place in today’s Global Economy

Economy of PakistanGlobal Position ...

The economy of Pakistan is the 26th largest in the world in terms of Purchasing Power

Parity (PPP), and 43rd largest in terms of Nominal Gross Domestic Product

Cotton:Producer & 3rd largest consumer

Sugarcane: 7th largest Producer

Rice: 4th largest Exporter

Raw Milk: 3rd largest Producer

Coal Reserves:

Billion tons coal reserves at Tharalone

Telecom Users:Mobile Users , with Total Tele-density ofaround 60%

8Th Largest OilShale oil:Reserves

Irrigation: One ofthe largest canal irrigationsystems in the world.

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A LIVING EXAMPLEChina Pakistan Economic Corridor

Historic Event- July 05, 2013, Beijing

Leadership overseeing the signing of CPEC MOU

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CHINA

MANGOLIA

INDIA

PAKISTAN

IRANAFGHANISTAN

OMANYEMEN

SAUDIA ARABIA

TAJIKISTAN

KAZAKHSTAN

TURKMENISTANIRAQ

TURKEY

UAENEPAL

BHUTAN

BANG

LADESH MYANMAR

BANG`KOK

THAILAND VIETNAM

CAMBODIA

LAOS

KOREA

JAPAN

KYRGYZSTAN

UZBEKISTANSYRIA

AZERBAIJAN

CASPION SEA

ARAL SEAARMENIA

GEORGIA

SRILANKA

MALASIASINGAPOR

TAIWAN

UROMQI

SHANGHAI

KHUNJERAB

KARACHI

GWADAR

TRADITIONAL TRADING ROUTE FOR ASIAN INDUSTRIALISED NATIONS

4,160 Km1,863 Km

(419

5 Km

)

7,430 Km

1.THROUGH LAND/SEA ROUTEUROMQI-SHANGHAI-KARACHI /GWADAR: 15,785 Km (Approx)

2. LAND ROUTEUROMQI-KHUNJERAB-KARACHI /GWADAR4,132 Km (Karachi)/ 4,504 Km (Gwadar)

TO LONDON27,436 Km

N

Distance Reduction: 10,000 km (+) for every destination

Achievements--EHP (33 Projects/ b40 USD)

• Communication (13 ) Telecom Sector 2 Port & Shipping Sector 2 Railways 1 Mass Transit (LOL) 1

Road Sector 2• Mining Sector 3• Economic Zone 2

• Power (20)• Generation (Coal) 7• Generation (Hydal) 2• Generation (Solar)

1• Generation (Wind) 4• Power Transmission 2• LNG/ Gas transmission 2• Social Welfare 2

Embassy of Pakistan Beijing

Policy Parameters

Manufacturing Sector

Non -Manufacturing Sectors

Agriculture Infrastructure & Social

Services including IT & Telecom

Services

Govt. Permission Not required except 4 specified industries Not required except specific licenses from concerned agencies.

Remittance of capital, profits, dividends, etc.

Allowed Allowed

Upper Limit of foreign equity

allowed100% 100% 100% 100%

Minimum Investment Amount

(M $)No 0.3 0.3 0.15

Customs duty on import of PME 5% 0% 5% 0-5%

Policy Matrix

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The 10 Reasons to Invest in Pakistan2

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The 10 Reasons to Invest in Pakistan:It’s not too late

1 Rapid Population Growth / young Population

2 Rising Consumerism & Urbanization: Lower oil prices boom for the economy

3 Geographical Significance

4 Untapped Wealth of Natural Resources

5 Fertile Soil and Moderate Weather & Climatic Conditions

6 Presence of tremendous great good well for Chinese

7 Stable Politician Condition

8 Improvement in Law and Order situation

9 Improved international credit worthiness

10 Lucrative incentives and Tax holidays for investors

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Investment Opportunities in Pakistan3

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Energy & Power:Electrifying opportunities

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Mal

aysia

Indi

a

Indo

nesia

Chin

a

Sri L

anka

Thai

land

Paki

stan

At present Pakistan’s per capita Electricity consumption is one ofthe lowest in the region at 452 kwh/annum

A growing population, rapid urbanization and increasing per capita income the energy demand is increasing Today electricity supply outpaces the demand by 5000/ 8000 MWs

Government offers financial incentives:

Debt to Equity of 80:20

Guaranteed returns on equity• 15% IRR on Furnace Oil based plants• 17% IRR on Coal based Projects• 20% IRR on Wind Energy Projects• 14% IRR on Solar ProjectsAll costs are pass through (debt servicing, fuel cost,operations and maintenance cost and duty/taxes)

Source: PEPCO, Elixir Research

Energy & Power:Per Capita Consumption Lowest In Region

Energy & Power – Demand all set to grow

ElectricityPower Consumption

2,000

1,000

0

4,000

3,000

KWh /Capita5,000

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A ComparisonPakistan wind speed 7.7m/s – wind electricity ‘zero’China wind speed 5-6m/s – wind electricity 12,200MwhIndia wind speed 6.6m/s – wind electricity 9,600MwhDenmark wind speed 6.6m/s - wind electricity 3,100MwhNorwaywind speed 5.0m/s – wind electricity 429Mwh

Sky is the limitPakistan can potentially produce 132,000Mwh of wind energy,says USAID ReportSind wind corridor ( Gharo and Jhimpir ) alone has a potential to generate 40,000Mwh of Power

And all this with 20% guaranteedreturnsDebt to Equity of 80:20USD based guaranteed returns on equityAll costs are pass through (debt servicing, fuel cost, operationsand maintenance cost and duty/taxes)

Energy & Power:Deficit is the Opportunity

Wind Power – the ‘Green’ opportunity

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With coal reserves half the size of Pakistan’s proven reserves , Coal contributes 62% in Czech Republic’s energy mix whereasPakistan’s energy mix is still coal-free – A huge potential ignored

Coal is used as the primary source for electricity generation by regionalpower houses

Pakistan’s coal reserves 185 bn tons – share in energy mix ‘zero’China’s coal reserves 114.5bn tons – share in energy mix 81%India’s coal reserves 60.6bn tons – share in energy mix 68%

Hence, a substantial room for investment consideringAbundant coal reserves of Pakistana guaranteed 17% US based return

As per world energy council country’s coal reserves stands tallat 175-185bn tons

Energy & Power:No deficit in the Opportunity but

Coal Electricity – Plentiful yet Unexploited

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Agribusiness: Food & FertilizersCorporate farming & branding are the key!

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UnbrandedTradable Milk

92%

Engro Foods4%

MilkProducers

4%

Source: PARC, Elixir ResearchSource: Economic Survey, Household Survey Elixir Research

Pakistan is the world’s 4th largestmilk and meat producer

Packaged milk constitutes only 8% of total tradable milk i.e. 800mnlitresBranded meat is less then 5% of total consumptionThe juicy fruits market is negligible by brands

So why to invest in brandingPakistan’s emerging young population (57% under 24)And rising middle class (from 45% of population in 1990 to 58% in 2012)

Pakistan Meat Market

PackagedMeat5%

UnbrandedMeat95%

Pakistan Milk Market Shares

Other UHT

Agribusiness: Food & FertilizersBranding is the key

Milking the Future

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Foreign Companies & Global Brands in Pakistan5

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Aga Khan Fund forEconomicDevelopment

Foreign Companies & Global Brands in Pakistan

Financial Services: Banking & Insurance

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Foreign Companies & Global Brands in Pakistan

Energy & Power

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Foreign Companies & Global Brands in Pakistan

Automobiles

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Foreign Companies & Global Brands in Pakistan

Telecommunications, IT & Electronics

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Foreign Companies & Global Brands in Pakistan

Chemicals & Pharmaceuticals

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Foreign Companies & Global Brands in Pakistan

Agribusiness : Food & Beverage

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Foreign Companies & Global Brands in Pakistan

Retailing & Supermarkets

Transportation, Ports and Shipping

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Foreign Companies & Global Brands in Pakistan

Construction Materials & Real Estate

Hospitality: Hotels & Resorts

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How to capture the opportunities in Pakistan7

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Foreign Investors Should

Develop a ‘Pakistan' strategy;Have a long term viewChoose the right Joint Venture partnerChoose the right regional modelUse global best practicesConceptualize Pakistan-specific products

Optimally blend expatriate management with localtalent

Need to Pay Attention to the Operating to Business model

In Pakistan, “Everything Goes”

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THANK YOU