INTERNSHIP REPORT

ON

UNITED NATIONS

INDUSTRIAL DEVELOPMENT ORGANIZATION

SUBMITTED BY:

Mirza Faris Ijaz

BBA (Hons.)

DEPARTMENT OF BUSINESS ADMINISTRATION

BAHAUDDIN ZAKARIYA UNIVERSITYSAHIWAL CAMPUS

Name: MIRZA FARIS IJAZ

Ph: +92 345 7447537

E-mail: fari__mirza@hotmail.com

Institute: Bahauddin Zakariya University

Degree: BBA (Hons)

Session: (2007-11)

Organization: United Nations ( UNIDO)

Department: Investment Promotion Unit

Internship Duration: 6 weeks

(June 01, 2010 to July 16, 2010)

Internship supervisor: Sami Bajwa

National Expert

Ph: +92 321 5001213

E-mail: sami.bajwa@unido.org.pk

PREFACE

Page | 1

Competition in practical field is growing due to no. of Govt. and private institutions

making students who have their worth. So, situation is getting challenging for students of

Business Education.

To avoid this discrepancy it seems compulsory for the business student to visit various

business organizations for 6 Weeks practical training. This training makes them familiar with the

practical system of management, which prevails in various business organizations. So in this

connection I had the opportunity to perform internship at United Nations Industrial Development

Authority, Lahore Pakistan.

The internship program is to broaden the vision of practical experiences with theoretical

knowledge as it increases one’s capabilities to handle problems at various stages and ability of

decision.

Mirza Faris Ijaz

Acknowledgment

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I think honestly reflects on who I am, how I got here, what I think I might do well, and so

forth, I discover a debt to others that has shaped my life. The work of some unknown people

makes our lives easier every day. I believe it’s appropriate to acknowledge all of these unknown

persons, but it’s also necessary to acknowledge those people I know have directly shaped my life

and my work.

Firstly, I wish to place on record my indebtedness to My Family, Teachers and Friends

for the continuous support and encouragement I received during my academic career.

I would like to express my gratitude to those people who personally help me through out

in studying.

Last but not the least; I’ll be obligated a great deal to who helped me gaining the practical

knowledge of Industrial Marketing and promotion of SME’s and their continuous support during

my internship program.

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Dedication

“I dedicate this report to My Beloved Ati praaa”

Table of Contents

Executive Summary

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1. Introduction 21.1. UNIDO 21.2. UNIDO (Pakistan) 3

1.3. SMEDA 41.4. SMEs 6

2. IPU 8

3. 4 P’s of IPU 9

4. Operations of IPU 104.1. Financial Assistance 104.2. Technical assistance/ Int’l marketing of SMEs 13

5. Work Program 14

6. Activities 176.1. Identification of investment opportunities 176.2. Trade Promotion 216.3. Participation in fairs and exhibition 28

7. PEST analysis 31

8. SWOT analysis 34

9. Financial analysis10. Things Learned11. Internship Activities 35

12. Conclusion 36

13. Annexure

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EXECUTIVE SUMMARY

The United Nations Industrial Development Organization (UNIDO), French/Spanish

acronym ONUDI, is a specialized agency in the United Nations system, headquartered in

Vienna, Austria. The Organization's primary objective is the promotion and acceleration of

industrial development in developing countries and countries with economies in transition and

the promotion of international industrial cooperation.

UNIDO believes that competitive and environmentally sustainable industry has a crucial role

to play in accelerating economic growth, reducing poverty and achieving the Millennium

Development Goals. The Organization therefore works towards improving the quality of life of

the world's poor by drawing on its combined global resources and expertise in the following

three interrelated thematic areas:

Poverty reduction through productive activities;

Trade capacity-building; and

Energy and environment.

Pakistan is one of the countries hosting a UNIDO Country Office. Established in 1968 and

located in the capital city, Islamabad, the UNIDO Representative office in Pakistan has extensive

and successful experience in industrial development cooperation. This experience has been

gained through a continuous interaction with the public and private sectors, and by implementing

over 50 projects covering many industrial sectors. A general feature of all these projects was and

still is that they are aimed at building indigenous (human and/or institutional) capacity to

enhance the industrialization process of Pakistan in a sustainable way.

I have been working in the Investment Promotion Unit at Lahore Office where the promotion

of the local SME’s is done by introducing them in the Italian market and to bring investment for

the SME’s in Pakistan by conducting several seminars conducted by the joint collaboration of

IPU and SMEDA.

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Introduction

1.1.United Nations Industrial Development Organization:

UNIDO believes that competitive and environmentally sustainable industry has a crucial role

to play in accelerating economic growth, reducing poverty and achieving the Millennium

Development Goals. The Organization therefore works towards improving the quality of life of

the world's poor by drawing on its combined global resources and expertise in the following

three interrelated thematic areas:

Poverty reduction through productive activities;

Trade capacity-building

Energy and environment

In order to fulfill these objectives, UNIDO assists developing countries in the formulation of

development, institutional, scientific and technological policies and program in the field of

industrial development; analyzes trends, disseminates information and coordinates activities in

their industrial development; acts as a forum for consultations and negotiations directed towards

the industrialization of developing countries; and provides technical cooperation to developing

countries for implementing their development plans for sustainable industrialization in their

public, cooperative and private sectors.

UNIDO thus works largely in developing countries, with governments, business associations

and individual companies. The Organization's "service modules" are Industrial Governance and

Statistics, Investment and Technology Promotion, Industrial Competitiveness and Trade, Private

Sector Development, Agro-Industries, Sustainable Energy and Climate Change, Montreal

Protocol, and Environmental Management.

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1.2.United Nations Industrial Development Organization (UNIDO) Pakistan:

Pakistan is one of the countries hosting a UNIDO Country Office. Established in 1968 and

located in the capital city, Islamabad, the UNIDO Representative office in Pakistan has extensive

and successful experience in industrial development cooperation. The United Nations Industrial

Development Organization (UNIDO) is the specialized agency of the United Nations dedicated

to promoting Sustainable Industrial Development in developing economies.

UNIDO acts as a catalyst to help generate national economic wealth and raise industrial

capacity through our roles as a worldwide forum for industrial development and as a provider of

technical cooperation services. As such, we harness the joint forces of government and private

sector to foster competitive industrial production, develop international industrial partnerships

and promote socially equitable and environmentally friendly industrial production. . This

experience has been gained through a continuous interaction with the public and private sectors,

and by implementing over 50 projects covering many industrial sectors. A general feature of all

these projects was and still is that they are aimed at building indigenous (human and/or

institutional) capacity to enhance the industrialization process of Pakistan in a sustainable way.

As of today, strong needs for UNIDO’s services persist, which shows a number of on-going

projects and an ever-increasing flow of new requests for UNIDO’s services from both public and

private sector. Requested services concern technical assistance through projects, but also

fellowships, industrial information on investment opportunities, new emerging technologies,

statistics, potential industrial partners and so forth. Since UNIDO is a technical implementing

agency and as such does not administer project funds, granting these requests does not always lie

within the direct control of UNIDO. However, UNIDO will always strive to provide (or facilitate

the provision of) the requested services to the maximum of its abilities.

To ensure the most effective fulfillment of its mandate to support sustainable industrial

development in Pakistan, UNIDO will have to focus its activities to the most pressing needs of

Pakistan’s industrialization process. In this connection two focus programmed areas are being

distinguished: Direct Technical Assistance and Investment & Technology Transfer.

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1.3.Small and Medium Enterprise Development Authority:

Small and Medium Enterprises Development Authority (SMEDA) Premier institution of the

Government of Pakistan under the Federal Ministry of Industries and Production, SMEDA was

established in October 1998 to take on the challenge of developing Small & Medium Enterprises

(SMEs) in Pakistan. With a futuristic approach and professional management structure, it has

focus on providing an enabling environment and business development services to small and

medium enterprises. SMEDA is not only an SME policy-advisory body for the Government of

Pakistan but also facilitates other stakeholders in addressing their SME development agendas

SMEDA is the flagship organization of Pakistan which is providing the necessary services to

help SMEs overcome the weaknesses that are endogenous to their very nature. It is an

autonomous body working under the umbrella of the Ministry of Industries & Production and

contributes towards the growth and development of SMEs in Pakistan through:

The creation of a conducive and enabling regulatory environment

Development of industrial clusters

The provision of Business Development Services to SMEs in all areas of business

management.

Adhering to a clear mandate and a logical path to achieve quantitatively verifiable targets,

SMEDA carries out comprehensive analyses of international trends, national policies and other

macroeconomic factors affecting SMEs in Pakistan for a gradual progress towards the creation of

a favorable business environment for its key clients – the SMEs of Pakistan. At the same time,

we also interact with the SMEs working in industrial sectors such as Agriculture, Fisheries,

Textiles, Handloom Weaving, Transport, Leather, Marble & Granite, Carpets and Light

Engineering. This interaction takes place at the individual as well as collective level to provide

proactive and responsive financial, technical, management and marketing services to SMEs.

At the collective level SMEDA addresses the problems and needs of SMEs in the form of an

industrial cluster – a concentration of largely homogenous enterprises within a certain

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geographical area. SMEDA interacts with the stakeholders operating in such clusters on a regular

basis and collects first hand information about their problems and needs. During this interaction,

the issues are prioritized and the important problems are selected for detailed working through

which the projects/programs are identified.

SME support through cluster development program is provided on two fronts:

1. Regulations and policy level support

2. Institutional & networking support

Policy level support:

In this support SMEDA deals with the problems related to any Government department

or Government policy/regulation are studied and, if found valid, are advocated with the

concerned authorities.

Institutional level Support:

SMEDA provides support to SMEs by creating networking amongst the concerned

stakeholders or by directly starting development projects in the clusters. Such projects may

include establishing a training institute, building a common facility centre, building a model

plant with state-of-the-art technology for SMEs to emulate through reverse engineering. These

projects also include upgrading technology in a particular industrial sector and starting a

program-lending scheme for this purpose in collaboration with the financial institutions.

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1.4.What Are SMEs?

As defined by State Bank of Pakistan - SME (Small and Medium Enterprise) means an

entity, ideally not a public limited company, which does not employee more than 250 persons (if

it is manufacturing concern) and 50 persons (if it is trading / service concern) and also fulfills the

following criteria of either ‘a’ and ‘c’ or ‘b’ and ‘c’ as relevant:

(a) A trading / service concern with total assets at cost excluding land and buildings up to Rs 50

million.

(b) A manufacturing concern with total assets at cost excluding land and building up to Rs 100

million.

(c) Any concern (trading, service or manufacturing) with net sales not exceeding Rs 300 million.

i. Significance of SME’s

SME’s are considered the engine of economic growth in both developed and developing

countries, as they:

Provide low cost employment since the unit cost of persons employed is lower for SME’s

than for large-size units.

Assist in regional and local development since SME’s accelerate rural industrialization

by linking it with the more organized urban sector.

Help achieve fair and equitable distribution of wealth by regional dispersion of economic

activities.

Contribute significantly to export revenues because of the low-cost labor intensive nature

of its products.

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Have a positive effect on the trade balance since SME’s generally use indigenous raw

materials.

Assist in fostering a self-help and entrepreneurial culture by bringing together skills and

capital through various lending and skill enhancement schemes.

ii. Problems Faced by Pakistan’s SME Sector?

Pakistan’s economy has amazing potential for development but sadly, we haven't been able

to derive optimal benefits despite a series of efforts launched by various policy makers at

different times. The impetus of all these endeavors was on the large scale industries and

manufacturing concerns.

High rate of failures

Economic slumps

Institutional malpractices

Political motives

And damaging activities of labor unions in that sector

All the above mentioned factors have left the formal lending institutions with huge infected

portfolios, in addition to adverse effects on the entire economy e.g. insufficient and low quality

production to meet the demands of local and international markets, deficit in balance of

payments and ever rising unemployment, etc. Pakistan’s SMEs are still unable to achieve their

maximum potential and are in dire need of ‘hand-holding' and business support services.

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2. Investment Promotion Unit (IPU):

Investment Promotion Unit, Pakistan is a joint initiative of United Nations Industrial

Development Organization (UNIDO), Italian Government and Small and Medium Enterprise

Development Authority (SMEDA), Government of Pakistan. The unit has been launched in

December 2008. Two fold mission of the unit is to mobilize and support local institutions for

investment promotion in one hand and to support local entrepreneurs through technical and

financial assistance on the other.

The unit is linked with UNIDO network of Investment and Technology Promotion Offices,

following its pattern of operation and adopting its methodology, particularly with the ITPO in

Italy.

Target Beneficiaries:

Institutional Level:

SMEDA is the counterpart Pakistani Agency to facilitate IPU operations. During three

years of work, IPU will equip SMEDA, through provision of training and transfer of knowledge,

enabling it to continue the activities initiated by IPU.

Enterprise Level:

Industrial companies and entrepreneurs in Pakistan, especially those operating on small

and medium scale, as well as foreign companies, particularly from Italy, involved in industrial

cooperation with Pakistani companies.

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3. 4 P’s of IPU:

Product:

IPU is a project of development agency UNIDO which is providing development

services for the SMEs of Pakistan. Its services include Italian credit line and the market

access in Italy for the local SMEs of Pakistan

Price:

As per the agreement SMEs will be charged 8% rate of return on the Italian credit

line. Being a part of a development agency IPU does not charge for its services. However,

SMEs can independently spend on any promotional activity.

Place:

IPU is housed in SMEDA head office premises as SMEDA is the counterpart

organization already working for the local SMEs on the behalf of the Government of

Pakistan. SMEs can access IPU through SMEDA walk in’s and apart from walk in’s

which SMEDA may refer to IPU.

Promotion:

At the time of IPU launching seminar, SMEDA introduced IPU to the private

sector SMEs, Trade Associations, Chambers and other trade related bodies to create

awareness about its operations. IPU also periodically hold meetings with sectoral

development agencies and trade bodies regarding its promotional activities.

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4. Operations:

Financial Assistance

Technical Assistance

4.1. Financial Assistance:

Credit Line in Pakistan:

The Government of the Italian Republic and the Government of the Islamic Republic of

Pakistan have signed an agreement of understanding regarding the concession of a soft loan of

Euro 7. 75 million for the implementation of a credit facility to the private sector support.

The UNIDO Investments Promotion Units (IPU) in Pakistan assists local SMEs and

eligible institutions in order to facilitate the access to the Italian credit line of 7.75 Million Euro.

UNIDO/IPU in collaboration with ITPO Italy plays a role of coordination of projects during the

various stages and steps of the application for financial support.

IPU methodology intervention for the credit line:

The Pakistani SME interested in the credit line, must submit their project to the IPU/UNIDO

which has the task of contributing to the formulation of the dossier to access the funding. The

assignment includes:

Information on the procedures for applying to the credit line and for equipments supply

Assistance in the evaluation of the project and in the preparation of the application to the

credit line

In this framework, UNIDO ITPO Italy cooperates with IPU Pakistan in the preparation of the

dossier by collecting the information on the Italian suppliers. UNIDO ITPO Italy also provides

Italian suppliers with information on procedures concerning the credit line made available by the

Italian Government.

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Terms of financing:

The credit line is meant to support Pakistani SME development and shall be open only to

private enterprises or enterprises with a public participation up to 20%. Research centers and

Universities may also have access to the credit line in order to set up pilot plans or demonstration

centers in the field of technology innovation and environment protection.

The soft loan finances the following:

Manufacturing machineries

Technology transfer

Technological support and training related to productive investment

Industrial licensing and patents

Insurance and transportation costs

The soft loan cannot be used to finance the following:

Local taxes, customs duties, VAT;

Debts of the enterprises;

Working capital (including the initial stock necessary to the start up of the plant;

Temporary joint venture commercial and financial enterprises;

Investment in leisure sector, estate sector, civil works, arms and related industry sector,

tourism sector

Can not access the credit line:

Financial Institutions

Companies actives in construction, service and tourism

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Commercial enterprises

The credit line shall be solely used for acquiring goods and services purchased in Italy,

except that a maximum amount of 20% of the required financing may be utilized to cover local

cost and/or importations of goods of non-Italian origin. Supply contracts financed through the

soft loan shall be denominated in Euro.

Loan value Euro

Maximum limit 550.000 Euro

Minimum limit 30.000 Euro

Maximum limit for goods of non Italian-origin 20% of the amount requested

Grace period٭ From 1 to 3 years

Repayment period٭٭ From 4 to 7 years

Interest rate 4 % (Euro)

.In the period grace only the interests are paid٭ The repayment period is negotiated between the buyer and the٭٭

agent bank on the basis of projections of cash flow.

Priority criteria of eligibility for financing shall be following:

Equity joint venture

Employment generation

Technology upgrading

Technology innovation

4.2. Technical Assistance:

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a. Identify and promote investment opportunities in Pakistan

1. Assistance to local and foreign companies

2. Company and Project profile analysis for Italian credit-line

3. Accompany Delegations to Italy from Pakistan

b. Promotional events

1. Sectoral workshop, seminars and events

2. Participation to fairs in Italy and Pakistan

c. Joint venture between Italian and Pakistani companies

1. Assisting potential partners in negotiation

2. Providing support for pre-feasibility study (IPP)

d. Capacity building

1. Provide assistance and training to SMEs and institutional partner

2. Develop linkages between Pakistani and Italian Investment promotion agencies,

especially ITPO

5. IPU Work Program 2010. (January-December)

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Summary of Work Program:

SMEDA – UNIDO IPU in cooperation with Italian Government has identified the below

priority sectors as strategic for the cooperation between Italy and Pakistan;

Agriculture

Marble & Granite

Gems & Jewelry

Leather

Handicrafts

SMEDA – UNIDO IPU past activities focused particularly on the Marble & Granite sector

and touched the entire added value chain of it. Promotion included activities from extraction of

marble and granite, to logistics, polishing and finishing. SMEDA – UNIDO IPU aims to

continue to follow-up the marble sector while focusing on the remaining sectors adding to them a

sub-sector – Handicrafts. The priority sectors are not to be intended as binding and can be

broadened or changed upon request by the parties involved in the Agreement. Furthermore the

sectors, as mentioned below, do not condition in any way the access to the Italia Credit Line by

eligible SMEs.

On the basis of IPU mandate, following goals have been defined as guidelines for 2010 IPU

activities.

a. Realizing investment promotion activities through sectoral program in Pakistan and in

Italy

b. Facilitating business oriented cooperation between Pakistani and Italian enterprises

c. Capacity building programs for Pakistani agencies and entrepreneurs.

d. IPU integration with Italian and Pakistani Agencies as well with UNIDO ITPO network.

Outcomes, outputs & activities and indicators

Outputs and indicators can be summarized as follow, as per IPU mandate.

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Outcomes Outputs & Activities Indicators

1. Promotion of Investment

A. Awareness campaign of

IPU services and mandate

among stake holders of

priority sectors

No. of meetings conducted

with concerned associations /

agencies

No. of introductory seminars

conducted

No. of participants attended

the seminars and workshops

2. Promote business oriented

industrial cooperation between

Pakistani and foreign

industrial counterparts

B. Identification of

investment opportunities in

Pakistan

No. of sector reports prepared

No. of feasibility studies

prepared

No. of sector brochures

prepared

C. Promotion of identified

opportunities in Italy,

through ITPO network.

No. of Italian businessmen

visited Pakistan to participate in

fairs and events

No. of companies contacted

via emails

No. of Italian companies

provided with brochures &

sector studies

D. Matchmaking services

and assistance to potential

joint venture companies

No. of IIPP forms prepared

No. of B2B meetings

arranged

No. of companies

participated in Fairs in Italy

No. of companies assisted

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in negotiation

Number of project

concluded

Value of investment

generated

E. Financial assistance

through access to Italian

credit line of Euro 7.75

Million with the limits

mentioned in the financial

assistance chapter.

No. of companies

facilitated in preparation of

loan application (with

proposals)

No. of loan applications

submitted

Amount of loan disbursed

3. Capacity Building of

Pakistani entrepreneurs and

developmental agencies

F. Upgrade skills and

capabilities of

entrepreneurs, managers

and government staff

involved in investment

promotion work

Number of companies

institutes assisted

Number of delegates trained

Number of trainings provided

Contact established between

Pakistani and Italian

Investment Promotion

Agencies

6. Activities:

6.1.Identification of investment opportunities (sector Study):

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A. Scope of Sector Studies

Scope of sector studies is to identify strength and opportunities in five priority sectors.

IPU promote these opportunities among potential foreign partners for realizing business

partnerships. Sector studies have also highlighted needs of Pakistani entrepreneurs in the fields

of technology, marketing, human resources and finance. Additionally, sector studies have

highlighted training needs of Pakistani entrepreneurs.

B. IPU Strategy for Sector Reports

IPU undertook in-depth analysis of reports and studies prepared by different International

and Govt. agencies. On the basis of this information, IPU have prepared sector briefs with a

perspective of foreign potential investors. Besides providing an overview of the sector, these

studies have also underline concrete projects for investment.

Methodology of Sector Reports

1. Value Chain Analysis

IPU analyzes all components of value chain, starting from raw material to marketing and

distribution channels. Following group of stake holders are identified for each component

of value chain;

1. Actual Players (companies doing business)

2. Concerned Govt. Agencies

3. Associations

2. Identification of current situation and needs of the sector in following fields;

1. Technology

2. Marketing

3. Finance

4. Human Resources

5. Regulatory Framework

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3. SWOT (Strengths, weakness, opportunity, Threat)

4. Statistical analysis of production, capacity utilization, imports, exports, number of

companies working in sector etc.

Activities and Modalities

IPU takes support from SMEDA for formulation of sector studies. Process of sector studies

will start in first week of April and studies will be made for following sectors, respectively.

Agriculture

Marble & Granite

Gems & Jewelry

Leather

Handicrafts

Activity Modalities

Identification of 1st sector

IPU defines 1st sector for study, in lined with

priority sectors of IPU and availability of

information about sector

Identification of counterpart SMEDA

Sector expert

IPU requests SMEDA to designate one sector

expert for each sector, to work with IPU team

for sector study

Initial Meeting with SMEDA

nominated staff and IPU

To decide following,

List of activities to be undertaken

Activity flow chart

Time line

Expected cost (Traveling, meetings,

outsource expert etc.)

Inputs required from both sides

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In-depth study of available

reports/information for each sector

SMEDA expert guides for recommended

readings

IPU collects information/reports from all

credible sources

IPU thoroughly study and analyze

information

Recruitment of sector expert

(IF REQUIRED)On need basis

Meetings with key players in each

component of value chain

SMEDA expert then identify key players

IPU set meetings with these companies to

collect first hand information. If required

SMEDA expert will also accompany.

Meeting with relevant associations of

each sector

SMEDA expert identify key associations

To share our findings of the sectors and solicit

their inputs. If required SMEDA expert will

also accompany.

Meeting with concerned Govt.

agencies for each sector

SMEDA expert identify key bodies

To share our findings of the sectors and solicit

their inputs. If required SMEDA expert will

also accompany.

Meeting with other donor / int’l

agencies working in the same sectors

SMEDA expert identify key bodies

To share our findings of the sectors and solicit

their inputs on the initial drafts. If required

SMEDA expert will also accompany.

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Preparation of initial drafts of Sector

Studies

IPU, involving SMEDA expert, prepares Initial

draft

Preparation of Final draft of each

sector study

Sharing Final draft with all stake holders,

including

1. SMEDA

2. Italian Embassy

3. ITPO Italy

4. UNIDO Network of 300 points

5. Others (ICE Italy etc.)

6.2.Trade and investment promotion seminars

i. Activity Report – IPU Action Plan for Marble Sector of Pakistan September

2, 2009

Background:

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IPU presented Action Plan for promotion of Pakistan Marble sector to steering committee

during the meeting at Economic Affairs Division on August 6, 2009. On behalf of the steering

committee, it was subsequently approved by CEO SMEDA.

The objective of the Plan is to “Facilitate Local Entrepreneurs in Participation to

Marmomacc Fair and Promotion of the Opportunities in Pakistani Marble Sector among Italian

Businessmen”.

Activity Detail:

Following the approved strategy, IPU conducted three seminars for marble sector

companies in Islamabad, Lahore and Karachi. More than 200 companies were contacted trough

SMEDA, PASDEC and APMI (All Pakistan Marble industries). In total almost 50 Companies

attended the Seminars, out of which 24 enterprises submitted expression of interest, whereas 16

have been selected to be promoted by IPU. Selected companies were assisted by ITPO during the

Marmomacc in Verona. 15 of these companies are also interested to apply for the credit line. The

companies have been selected on the following criteria;

1. The interest of company to participate personally in Marmomacc and/or with a stand

2.    The interest of Company to purchase machinery through the credit Line

3.    The availability of their own quarry and/or processing factory

4.    Proper annual turnover

Among selected companies, 3 are from Punjab, 5 from NWFP, 4 from Sind, 2 from

Baluchistan and 1 from Islamabad. Selected companies will be offered following services;

a. Facilitation in Visa processing

b. IPU prepare Promotional catalogue of the companies

c. Briefing to the delegation in Verona, Italy

d. Bilateral Meetings with Italian companies, in coordination with ITPO. A guided visit for

the Pakistani delegation has been arranged at Videomarmoteca on 29 September 2009.

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The study tour continued in the afternoon by visiting Antolini Spa (www.antolini.it ), a

very important company operating at worldwide level in the marble extraction,

processing and trading.

e. SMEDA delegate has worked in ITPO for around 2 months. Besides his training at ITPO,

he will be responsible for promotion of the selected Pakistani companies, through ITPO

network, among Italian businessmen.

f. IPU recommend the companies, especially those who attract Italian partners, in acquiring

Italian soft loan.

Overview of the seminars

1st Seminar on August 17, 2009 in Islamabad.

1. 13 Marble companies from Peshawar and Islamabad attended the Seminar.

2. CEO PASDEC chaired the seminar. Provincial Chief, NWFP represented SMEDA.

3. IPU presented the action plan to the participants.

2nd Seminar on August 18, 2009 in Lahore.

4. Seminar was chaired by CEO, SMEDA.

5. 14 companies from Lahore participated in the Seminar.

6. IPU presented the action plan to the participants.

3rd Seminar on August 20, 2009 in Karachi.

1. Seminar was chaired by Provincial Chief, SMEDA.

2. 22 companies from Karachi and Baluchistan participated in the Seminar.

3. IPU presented the action plan to the participants.

ii. Activities performed by IPU in Leather sector:

Briefing Session for Participants of Garda Fair 2010 Footwear (Leather) Sector

Companies, June 1, 2010, Lahore:

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SMEDA – UNIDO Investment Promotion Unit, in coordination with Pakistan Footwear

Manufacturers Association (PFMA) has developed a plan to facilitate matchmaking and

business cooperation between Italian and Pakistani shoe manufactures and machinery

suppliers. A briefing session for the footwear companies was arranged at SMEDA Head

office Lahore on June 1, 2010. Mr. Roberto Schuller, Head IPU, presented updates on the

plan to PFMA members. Highlights of the plan, discussed during session, are as fallows;

Business-to-Business Meetings during Garda Fair 2010, Italy

11 leading Pakistani shoe manufacturers are exhibiting their product range at forthcoming

Garda Fair 2010. Expo Riva Schuh (Garda Fair) represents the world’s best showcase for the

exhibitors of footwear manufacturers and serves as most effective negotiation table for the

visitors and the operators to meet face to face and study the new trends, discuss business

cooperation, organize working procedures and discover emerging opportunities. IPU has

arranged business-to-business meetings of each Pakistani exhibitor with Italian shoe

companies. B2B meetings are arranged for following Pakistani companies;

Bata Pakistan Limited

Elegant (Pvt.) Ltd

EPCT Private Limited

Fircos Private Limited

Firhaj Footwear Private Limited

Paramount Trading Co.

Sartaj Shoe Factory

Shafi (Pvt.) Ltd.

Simba Enterprises

Starlet Products (Pvt.) Limited

Sector Brief/Brochure:

IPU prepared a sector brochure which highlights potential and strengths of

Pakistani footwear companies, investment opportunities in Pakistan as well as short

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profiles of Pakistani exhibitors in Garda Fair 2010. The brochure will be shared with

Italian and other potential foreign partners of local footwear companies. IPU will share

the brochure during Garda Fair and through network of UNIDO Investment &

Technology Promotion Office (ITPO), Italy. A similar brochure has been prepared in

Italian language, in cooperation with ITPO Italy. The brochure has already been shared

with around 1300 Italian companies.

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Facilitating Linkage between PFMA and Italian Shoe Association:

In order to create linkage between Pakistan Footwear Manufacturers Association

and Italian Shoe Association and hence pave way to future bilateral cooperation between

two associations, IPU organized a dinner meeting at Binaco Hotel, Garda on June 12,

2010. ASSOMAC, Italy is invited to the dinner for meeting with PFMA representatives.

Consultancy Services:

The PFMA intends to engage consultancy services for some of its members,

particularly those who will adhere to the initiative. Objective of the program is to assist

proactive Pakistani footwear manufacturing companies in transformation of their

designing and production techniques to the international standards. IPU has facilitated

PFMA in developing Terms of References for the consultant(s). Additionally IPU has

identified suitable Italian consultancy service providers who can meet PFMA’s

requirement. Meetings have been arranged between such Italian firms and PFMA during

Garda Fair.

PFMA, on behalf of footwear sector, appreciated the initiatives being taken by

IPU to develop the sector and assured of their active participation.

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iii. IPU Seminar for Gems & Jewellery Sector Companies

Organized by Federation of Pakistan Chambers of Commerce & Industry 8th

June 2010, Lahore

Federation of Pakistan Chambers of Commerce and Industry organized a seminar for

promotion of IPU services among private sector Gems and Jewellery (G&J) companies on

June 8, 2010 at FPCCI’s regional office Lahore. Around 100 companies from major cities of

Punjab attended the seminar.

Mr. Roberto Schuller, Head IPU presented action plan to prepare a catalogue, comprising

of sector overview, potential for Italian investors in Gems & Jewellery sector and profiles of

prominent Pakistani companies. The catalogue will be shared among 5000 G&J Companies of

Italy through IPU office in Rome, Italy. IPU further arranged individual business – to –

business meetings for each Pakistani company with its potential Italian partner.

IPU also briefed participants regarding Italian Credit Line of 7.75 Million Euro for

private sector support. Under this credit line SMEs will be provided loans on soft term

financing condition. The loan is specific to the purchase of machinery and (or) expertise from

Italy.

The promotional plan is outcome of series of consultative workshops and meetings with

Gems and Jewelry Sector stake holders. Earlier a seminar of stake holders from jewelry

designing, manufacturing, retailing, Gems & Jewelry Development Company, Gold Art

Promotion Council and related academia was held on April 22 at SMEDA Head office,

Lahore.

Mr. Hameed Akhtar, vice President FPCCI appreciated the role of SMEDA – UNIDO

Investment Promotion Unit for development of the G&J sector. He urged private sector

companies to actively participate in the plan. Assistance provided by IPU was foreseen by the

participant as a gateway for local companies to gain exposure of Italian G&J market and

promote business ties of the businessmen of both countries.

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6.3.Participation in Fairs and exhibition:

i. Marmomacc:

Held annually at Veronafiere, MARMOMACC is the global showcase of stone

materials and machinery. In 2009, over 1,500 exhibitors from 54 countries attracted more

than 63,000 trade visitors including 27,000 foreign visitors from 120 countries.

MARMOMACC is the ideal place to see the latest stone-related machinery and

technologies, to directly source stone for commercial projects, and to view the full

spectrum of stone materials available for residential applications. Each year, the show

features a number of architectural exhibits and conferences devoted to designing with

dimensional stone.

ii. Expo Riva Schuh Riva del Garda:

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Twice a year, Expo Riva Schuh takes place, presenting the latest trends and new collections

for the coming season. This trade and order fair belongs to the biggest events of the branches

with over 1000 exhibitors and more than 11,000 buyers to be expected from nearly all European

countries. Surely, the geographic position of Trentino Alto Adige within the heart of Central

Europe is one key to the great success of the exhibition.

LIST OF PARTICIPANTS In Garda Fair

S.# Name Company Phone #

1 Mehmood Qadir Dar Bata Pakistan Limited 42-111044055

2 Nasir Anwar/ Mr. Nickos Petrou Elegant Pvt Ltd. 0322-453000

3 Rizwan Shahid EPCT Pvt Ltd. 42-35756192

4 Majid Sohail bhutta Fircos Shoes Pvt Ltd. 52-3552771

5 Imran Tasaduq Firhaj Footwear Pvt. Ltd. 42-35272688

6 Wasim Zikariya/ Saad Lodhi Footlib Pvt. Ltd. 49-4540325

7 Asghar Sagarwala Paramount Trading Company 21-36060642

8 Zahid Ahmen Khan Sartaj Shoes Factory 42-36554916

9 M. Ali Shafi Pvt Ltd. 42-37970638

10 Mian M. Afzal Simba Enterprises 42-37538300

11 M. Younus Starlet Products Pvt Ltd. 42-37722948

7. PEST Analysis:

Political:

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Government Type:

Existing democratic Government in Pakistan enables UNIDO to perform and facilitate

Pakistani SMEs with every type of services it provide. IPU is one of such initiatives.

Government Stability:

Instable Government regulations can interrupt in the operations of any development

agency just like UNIDO.

Bureaucracy:

The bureaucratic system in Pakistan, it slows down the activities of any agreement made

by Government of Pakistan at procedural level to get clearance or to get in running

position.

Regulations:

As the Government has complete influence on the operations of a development agency

so the regulation of law has a great impact.

Employment Legislation:

There exists no practical implementation of the employment legislation so it causes job

dissatisfaction which has a great negative effect on the performance of any organization.

Economical:

Growth Rate:

Growth rate of Pakistan’s economy is near to 0% which deregulates the economy

drastically so the development of any part of the economy becomes difficult.

Inflation:

There exists high inflation rate in Pakistan which is greatly devaluing Pakistani Rupee

that’s why foreign investors and creditors are turning away from Pakistan just due to the

exchange risk that they have to bear.

Interest Rate:

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IPU is working for the SMEs to get access to the Italian Credit Line but the SME Bank

wants to charge a high rate of interest which leaves no difference between loaning from a

local bank or from the Government of Italy because in no area it compensates the SMEs.

Globalization:

Success in capturing new, emerging markets will depend on the industries ability to

compete in different environments and that is mandate of the IPU programme to do

capacity building of the SME to survive internationally.

Socio-Cultural:

Population:

As world population increases, the SMEs can serve more customers with high quality

just in case if they have the capacity. And such initiatives of capacity building are in

progress like IPU.

Lifestyle and attitudes:

More and more people are trying to migrate to other developed countries and adopting a

standardized lifestyle and this attitude of people is getting practiced just due to the brain

drain.

Socio-cultural Change:

Socio-cultural change is in practice extensively because local businessmen are looking

forward to collaborate with the international markets in order to stay competitive.

Technological:

Technological change:

Technological change can have a great impact on the industries related to Information

Technology. Regarding the operations of a development agency it is least affected by

such kind of change.

Impact of technology transfer:

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The SMEs now have an opportunity to accelerate its development by advanced

manufacturing technology and innovation to use materials and energy more efficiently.

Research and development:

Research and development, new technologies and innovations are the greatest drivers of

productivity enhancement which is being done by IPU for the local SMEs of Pakistan.

8. SWOT Analysis:

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Strengths:

The unit is linked with UNIDO network of Investment and Technology Promotion.

It is a dedicated unit working for trade promotion between Pakistan and Italy only.

This unit being a venture of UNIDO-SMEDA holds great resources for its operations.

The unit is linked with Italian market, entrepreneurs and SMEs through ITPO Italy which

enables it to B2B linkages between SMEs of the two countries.

The unit helps SMEs to have market access in the Italy.

The unit helps SMEs to have access to finance through the Italian soft credit line.

Weaknesses:

The involvement of two Governments, one international agency makes the environment

highly bureaucratic which causes delays in approvals.

Credit line is ill in functioning due to the misunderstanding between the Government of

Pakistan and Italy.

Opportunities:

Government of Pakistan should propose same model of initiative like IPU to other

countries like China Japan and such other.

SMEDA can utilize its experiences learned from IPU and UNIDO in trade promotional

activities for Pakistani SMEs in other countries of the world and reciprocal trade

activities in Pakistan to attract International investors.

This project is visage to run for 2 years under ITPO Italy after which the complete

ownership and functionality can be owned by Government of Pakistan which can utilize

its full resources to its benefit.

As the programme expands the staff of IPU, SMEDA can be invited by UNIDO in Italy

for capacity building.

Threats:

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The security instability of Pakistan is quite threatening for the UNIDO operation because

UNIDO is highly sensitive to security issues.

Unstable economic situation of Pakistan is turning IPU’s strength into its weakness(credit

line).

Unstable political situations.

Foreign exchange risk management can become a problem on the part of bank for

conversion of Italian credit line may charge high interest rate to the credit borrowing

SME. This may jeopardize the whole idea of credit line which is based on loan with

lower rate of return.

9. Financial Analysis:

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Investment Promotion Unit, Pakistan is a joint initiative of United Nations Industrial

development organization (UNIDO), Italian Government and Small and Medium Enterprise

Development Authority (SMEDA), Government of Pakistan. And the operational head ITPO in

Italy which do not keep financial racket in Pakistan. So the financial information of the

organization is neither accessible nor available. A signed letter from the National Expert is

attached in the annexure.

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10. Things Learned:

Some new things, which I learned here, were:

How to work individually as well as in groups under relaxed and stressful environment.

Patience is very important in dealings, as anger can lose your customer.

It is necessary to keep your clients happy by giving them proper guidance.

How to coordinate with the other departments of SMEDA which are in direct contact

with us.

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11. INTERNSHIP ACTIVITIES

I have performed these duties during my internship program. I have performed these

activities at IPU in this duration. All doings and activities are checked by my supervisor.

Supporting activities in seminars conducted by IPU for local as well as foreign

delicates.

Generating a comprehensive repot of the seminar conducted.

I also provide the seminar photo clippings and major discussion points to press and

media.

Arranged the existing database of the previous activities, projects, seminars

conducted by IPU.

Maintaining the daily records of the activities performed both in hard as well as in

soft copy.

I have also performed the duties of dispatch

Preparation of final project report of the Footwear sector.

I have also prepared a sector brief brochure of the Footwear sector attached in

annexure.

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12. Conclusion:

Investment Promotion Unit is a dedicated unit working for the trade capacity building of the

local SMEs in the Italian market. For this IPU is providing its services for getting access to the

Italian soft credit line which is helpful in getting new technology and expertise from Italy.

Secondly IPU is promoting Pakistani SMEs in Italian market by assisting them in participation

to Italian fairs and exhibitions. Following can be the future advantages that can be beneficial for

the SME sector of Pakistan as well as for the economy also:

Technological innovation will provide many new market opportunities

The SME sector now has the opportunity to devise strategies to achieve targeted short-

term returns while at the same time attracting the capital needed for investment in longer

term projects and facilities.

Investment in advanced manufacturing technologies, logistics and management of the

supply chain, information technology, and new engineering technologies are vital for

achieving the country’s goal of leading the SME sector in profitability.

R&D, new technologies and innovations are the greatest drivers of productivity increases.

Increased financial, trade, investment and technology flows will enhance the profitability.

New managerial and organizational systems can play a vital role in boosting the

economy.

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