November 2012

INVEST IN PAKISTAN

- The Time is NOW!

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Pakistan at a glance

Population ~ 177 million

Currency Pak Rupees

Exchange Rate PKR 95.5: USD 1

Adult Literacy Rate 56% (2008-09)

Exports USD 22.64 Billion (2011-12)

Imports USD 36.52 Billion (2011-12)

Major Crops Cotton, wheat, rice, millet & sugarcane

Religion Islam 95%, Other 5%

GDP Growth Rate 2.4% actual FY 10

GDP Per Capita USD 1,254

Forex Reserves USD 15.41 billion FY 11-12

FDI USD 0.812 billion FY 11-12

Inflation 12.9% FY 09-10

Source: State Bank of Pakistan, Federal Bureau of Statistics

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Pakistan, The Future Metropolis of Asia

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Doing Business in Pakistan

Global Ranking Pakistan India

Ease of doing Business 105 132

Protecting Investors 29 46

Starting Business 90 166

Trading across Borders 75 109

Financial Attractiveness Index 4th 8th

Source: IFC, The World Bank, A.T. Kearney’s Global Services Location Index, 2011

* A lower number shows better performance

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Where to Invest in Pakistan?

Energy

Construction & Real EstateAgriculture

Education

Mining

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ENERGY

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Pakistan is one of the emerging economies of South Asia, where the

government has declared the Power Sector as its top priority of

investment.

The Government of Pakistan is taking all the necessary measures to

build a more conductive environment, by simplifying procedures to

facilitate potential investors.

At present Pakistan’s total installed generation capacity from

Hydroelectric, Thermal, Independent Power Producers, and Nuclear

sources stand at 19, 754 MW.

The existing capacity of Thermal power generation in Pakistan stands at

12, 630 MW, which is almost 2/3 (64.6%) of the country’s total

generation.

Hydroelectric energy is the second largest source of electricity, and

accounts for 33.1% of total power generation in the country.

The rapid economic growth over the past few years has led a power

shortage in Pakistan, and the country today is looking for investment in

power production to meet its short and long term power needs.

Power ON

Quench The Thirst for Power !

Demand & Supply Electricity demand: 6% during FY2008-09

Installed Power Generation Capacity

19,754MW in FY2008-09

Major players with installed capacity

Thermal Central Power Generation Company Ltd. At Guddu

Hydel Plants Turbela plant (3.05GW), Mangla (1GW), Warsak (240MW), and Chashma (184MW)

IPPs – thermal Kot Addu (1GW); Hubco (1.3GW)

Nuclear Chashma-1(300MW) and Kanupp (125MW)

Electricity Supply WAPDA & KESC

Source: BMA Research

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Eco Friendly Power Generation

Wind Energy_’The Green Way’

On a Windy day countries like India, with only a ‘Good’ category wind speed

of 6.6 m/s, produces 9600 MWh of wind electricity. Likewise, China with also

a ‘Good’ category wind speed of 6.6 m/s, produces 12,200 MWh of wind

electricity.

Amazingly, due to it’s ideal geographical location, Pakistan falls under the list

of countries with ‘Excellent’ category wind speed of 7.7 m/s.

As per a USAID Report, Pakistan can potentially produce 132,000 MWh of

wind energy. The wind corridor, in Sindh province, alone has the ability to

generate 40,000 MWh of wind electricity. When it comes to investments in

wind power energy projects, Pakistan is a country, where sky is the limit.

In this investment, the ratio of Debt to Equity is 80:20, with a guaranteed

return on equity, by the government, in the form of partial paybacks of fuel

costs, operations and maintenance cost, and taxes/duty.

Source: USAID

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100% Clean & Natural Source of Energy

Germany produces ~24,700 MW of power with a solar irradiation level of just

1,000 – 1,100 KWh/m2 /yr., while Pakistan having double that irradiation level,

produces ‘zero’ solar power.

To litmus test the potential in this type of investment compare the following

countries who are already cashed in Solar Power:

Australia, with a solar irradiation of 1,000–1,100 KWh/m2 /yr, generates 1,200

MW of electricity.

China, with a solar irradiation of 1,679 KWh/m2 /yr., generates 2,900 MW of

electricity.

In Pakistan, Southern Punjab, Sindh, and Baluchistan holds the biggest potential

for solar power investment. Reason:

Significant portion of Pakistani population is currently living in isolated villages,

which are far from the national grid.

Widespread availability of unexploited land.

High demand, suitable weather conditions, and Low recurring cost, makes solar

power the ideal way to generate electricity.

Source: BMA Research

Solar Energy – The Sun is a Blessing

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With coal reserves of 20bn tons, only half the size of Pakistan’s proven

reserves, coal contributes 62% in Czech Republic’s energy mix.

Whereas, Pakistan’s energy mix is still coal‐free. Even though Pakistan’s

inferred coal reserves are 57bn tons, and Pakistan’s hypothetic coal

reserves are estimated 175bn tons.

Coal is used as the primary source for electricity generation by regional

power houses.

Countries like China, with coal reserves of 114.5bn tons – use coal for 81%

of their energy mix.

India’s coal reserve of 60.6bn tons, has a 68% share in its energy mix.

Pakistan’s coal reserve has ‘ZERO’ contribution in it’s energy mix. Hence,

there is a substantial room for investment considering , Abundant coal

reserves, and a guaranteed 17% USD based return.

Coal Electricity – Plentiful yet ignored

Power Deficit is A Golden Opportunity

Source: Barrick Gold Research

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MINING

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Moving Mountains

An Overview of the Minerals & Mining Sector in Pakistan

Mining & quarrying accounted for 11% of Pakistan industrial production in 2010, and output from mineral industry was 2.5% of GDP1

More than 1344 mineral concessions have been granted till Dec 2008 to various private/public sector firms2

Abundance of Natural Resources; Mineral reserves and extractions stats include:

Coal - inferred reserves: 57bn tons, hypotheticreserves: 175bn tons

Gold – 25mn ounces reserves in Rekodiq, Baluchistan3 only

Natural gas – extraction 30.9 Mn Cu. M (July 08-Mar 09), reserves 1.76 trillion cubic M1

Copper - 32bn pounds found in Baluchistan’s Tethyanbelt3

Granite - 1.5bn tons of reserves Gypsum - extraction 532,000 tonnes Crude Oil - extraction 24 mn barrels, unexplored

reserves 3.5bbl 1

Limestone - extraction 24500 tonnes Rock Salt - extraction 1.38 mn tonnes

More than 50 base metals and non-metals discovered in Baluchistan (2007-08)

Source: 1. CIA World Factbook2. Board of Investment, Pakistan3. Barrick Gold Research

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Mining - an untapped investment arena

Minerals & Mining Sector in Pakistan

Mineral Potential of Pakistan though recognized as excellent is still inadequately developed; contribution to GNP at presents stands at 2.4%

Exploration activities are in progress with foreign investors. About 79 mineral titles1 including Reconnaissance, Exploration and Mining leases have been granted under large-scale mining in Baluchistan.

Pakistan Government & Pakistan Mineral Development Corporation welcomes foreign/local joint ventures in:

Gold & Base Metals exploration in North Pakistan Coal Briquetting Plant Coal mining for small thermal power plants Production of ultra refined salt

Mining offers an untapped arena in Pakistan offering huge investment opportunities with high success ratios2, as illustrated in the graph

Source: 1. Board of Investment, Pakistan2. US Geological Survey Yearbook 2010

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Production Statistics

Pakistan Mineral Commodities

Commodity 2009 2010

Coal, all grades (000 M Ton) 3608 3600

Coke (000 M Ton) 320 330

Natural Gas: MNM3

Gross Production 41,658 42,000

Natural Gas Liquids (thousand 42-gallon barrels) 750 760

Crude Petroleum (thousand 42-gallon barrels) 23,870 24,000

Petroleum Refinery products (thousand 42-gallon barrels)

89,300 92,500

METALS & INDUSTRIAL MINERALS

Bauxite (M Tons) 11,500 32,000

Chromium Ore (M Tons) 174,000 120,000

Cement (Thousand M Tons) 28,000 30,000

Fire Clay (M Tons) 359,000 360,000

Aragonite & Marble (M Tons) 1,105,000 1,200,000

Dolomite (M Tons) 190,000 250,000

Talc (M Tons) 34,000 35,000

Source: US Geological Survey Yearbook-2010

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CONSTRUCTION

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Build a Better Tomorrow

An Overview of the Construction Sector in Pakistan

Construction industry of Pakistan had a total value of approx. USD 3.6 billion in 2009.

Expected projection for 2012 is USD 4.2 billions1.

Thickly populated big cities of Pakistan include Karachi, the world’s 3rd most dense city with a population density of 19,000 persons/sq.km

Increasing income levels have increased the affordability of the masses

Rapid appreciation in land prices in mega cities with continuous upward trend in rental revenues

Developing real estate at suburbs with cheap land prices has emerged as a sustainable occupation

High land prices have restricted villa development and is giving rise to high-rise apartment complexes and condominium growth

Sprawling shopping malls offer lucrative investment opportunities i.e. retailing, and are important congressional places for dining and relaxation activities

Developers are diversifying their risks in big cities and opting for mixed use developments, with high-end residential, hospitality, office and retail spaces offered under one roof.

Source: Board of Investment Pakistan

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Investor Friendly Environment & Construction Policies

Construction Sector Potential

The construction industry in Pakistan has tremendous potential; with a sizeable proportion of

trained professionals, i.e.

Approximately 80,000 graduate engineers

20,000 licensed constructors

1,000 registered civil engineering consultants

GoP has announced investor friendly duties and tax regimes for construction sector,

which includes:

All new construction of houses on plots measuring up to 150 sq.yrds and flats measuring

up to 1000 ft2 have been exempted from all types of taxes for 5 years.

Banks & DFIs will extend credit facilities for balancing, modernization and replacement of

machinery used for construction and housing industry.

Import of plant/machinery/spares by construction & housing companies, not manufactured

locally, shall be exempted from custom/import duties in excess of 10%

Construction companies shall be charged via presumptive tax regime not exceeding 1% on

yearly receipts

Stamp duty/registration fee for housing mortgage has been rationalized

Source: Board of Investment Pakistan

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AGRICULTURE

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Why Agriculture:

Weather patterns are changing quite rapidly affecting the crops

globally

The gap between supply and demand is huge, with grain

inventories falling to their lowest levels in 40 years

There has been an underinvestment in agriculture for the last 25

to 30 years with grain consumption increasing rapidly

Potential Bread basket for the Region

Agriculture

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Potential Bread basket for the Region

Agriculture

Source: FAO, BOI

Why Pakistan?

Pakistan has a rich and vast natural resource base, covering various ecological and

climatic zones

Great potential for producing all types of food commodities

Immense Potential for Corporate Farming which translates into >25% ROE for

entrants (Engro Foods, Nestle)

100 percent foreign equity allowed on case-to-case basis.

No upper ceiling on land holdings. The size of the proposed corporate farm may be

left to be determined by the prospective investor

State land can be purchased or leased for 50 years through open auction,

extendable for another 49 years

Agriculture Income Tax regime applicable in provinces, on income from agriculture,

would be applicable to CAF.

Zero percent Customs Duty and sales tax on import of agricultural machinery and

equipment

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A Snapshot

Agriculture

Source: FAO, BOI

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Investment Opportunities

Livestock and Fisheries

Source: BOI

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EDUCATION

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Educate The Future of Pakistan

Invest in Millions

Pakistan, a nation of almost 180 million people, have 35.4% of it’s population between ages 0-15, and 60.4% are

between 15-64 Years of age, out of which only 54.9% of Pakistanis ages 15 and over, can read and write.

With a high percentage of young Pakistanis, and a very low literacy rate, our country needs a complete education

makeover.

Not too long ago, Pakistan was only allocating 2.7% of it’s GDP on education, but now it has approved a new

education policy, which suggests raising the annual education budget to 7% of GDP, and increase the literacy rate

to 83% by 2015. Golden opportunity for investment in education sector.

Investment is vital and fruitful for an education system like Pakistan with only a few universities catering to over

180 million people, with a limited number of teaching staff and resources, and a very high student dropout rate.

There is a huge room for expansion in technical institutes, because an overwhelming majority of the school

dropouts continue to go to waste with no future for them.

Such a waste of talent is happening only because of lack of attention to vocational schools that can help in capacity

building as well as institutionalize large number of otherwise uneducated labor.

It is a fact despite 25 percent unemployment in Saudi Arabia, it still has an insatiable appetite for South Asian

Technical work force.

The Middle East is crying for skilled workers which Pakistan can provide, by jumping on the opportunity to open

vocational training centers, and educating the youth.

A little attention, and capital in the Education and Vocation sector, will pay huge dividends. Turn a piece of rock

into a beautiful diamond.Source: CIA Factbook

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THE TIME IS NOW

Abundant Land & Natural Resources

Geo StrategicLocation

Large & Growing Domestic Market

Low cost and Trained Work

Force

Good Climate & Welcoming Culture Well Established

Infrastructure

Liberal Foreign Exchange Regime

Favorable Investment Policies