SOUTH ASIAN TAX SUMMIT 2008-SOUTH ASIAN TAX SUMMIT 2008-GROWTH OF ASIAN ECONOMIES,GROWTH OF ASIAN ECONOMIES,

Trade, Investment & FinanceTrade, Investment & Finance

BY DR. MIRZA IKHTIAR BAIG

CHAIRMAN STANDING COMMITTEE ON DIRECT TAXESCHAIRMAN STANDING COMMITTEE ON DIRECT TAXES

FPCCIFPCCI

Karachi, April 15,2008Karachi, April 15,2008

ECONOMIC INDICATORS Bangladesh Bhutan India Maldives Nepal Sri Lanka Pakistan Afghanistan

Population (million) 150.4 2.32 1129.8 0.36 28.9 20.92 164.74 31.9

GDP (US$ bn) 65 967 849.9 934 7.9 25.9 119 8.9

GDP per capita ( US$) 420 1235 769 2,706 335 1308 833 354

Real GDP growth ( % change YOY) 6 13.2 7.3 8 3 5.6 6.6 12

Goods & Services Exports (% GDP) n.a. n.a. 22.8 n.a. n.a. 37 n.a. n.a.

Inflation ( % change YOY) 6.1 6 4.8 7 5.3 8 7.9 12.3

Unemployment (%) 2.5 2.5 7.8 --- --- 7.6 7.7 n.a.

Total Exports(US$ bn) 12.05 0.35 120.168 0.222 0.76 6.86 16.45 0.4

Total Imports(US$ bn) 16.1 0.32 174.376 0.94 2.1 10.226 28.85 2.85

KEY ECONOMIC INDICATORS OF SAARC COUNTRIES

Growth in real trade less growth in real GDPPercentage points

1990 Latest 1990 Latest Current Decade 1990 Latest 1990 Latest 1990 Latest

SAARC

Pakistan 32.6 37.3 8.8 10.1 –0.5 4.2 4.3 0.6 2.0 - 0.1

Bangladesh 17.6 38.5 3.6 5.7 4.20 0.9 2.9 - 1.3 - -

India 13.1 28.5 3.4 8.2 4.40 0.8 5.9 0.1 0.8 - 0.2

Bhutan - - - - - - - - - - -

Maldives - - - - - - - - - - -

Srilanka 57.3 64.7 13.4 15.5 2.50 13.1 5.9 0.5 1.2 - -

Nepal 24.1 36.1 10.2 11.0 - 3.5 4.2 0.2 - - -

Afghanistan - 51.4 - - - - - - - - -

South Asia 16.5 31.2 4.2 8.2 - 1.4 5.4 0.1 1.0 - 0.2

Middle East & N. Africa 43.5 57.6 9.2 - - 5.0 - 0.3 2.4 - -

Europe EMU 44.0 61.4 11.0 15.9 - 13.5 58.7 1.1 3.2 1.7 2.7

World 32.3 47.3 7.8 11.0 - 10.3 32.4 1.0 2.2 1.2 2.1

% of GDP Net inflows Net outflows

INTEGRATION WITH THE GLOBAL ECONOMY

COUNTRY

Merchandise trade Trade in services Gross private capital flows

Foreign direct investment % of GDP

% of GDP % of GDP

Last Decade Current Decade Last Decade Current Decade Last Decade Current Decade Last Decade Current Decade 1990 2005

SAARC

Pakistan 9.1 3.4 2.9 4.4 18.3 11.6 11.8 14.9 109.0 75.0

Bangladesh 7.1 10.5 1.8 4.1 7.8 12.4 3.6 8.2 117.0 88.0

India 4.2 11.5 4.7 10.8 7.3 9.7 4.2 10.3 86.0 76.0

Bhutan - - - - - - - - - -

Maldives - - - - - - - - - -

Srilanka 4.2 5.5 1.6 6.9 13.5 15.1 10.7 15.2 75.0 101.0

Nepal - - - - - - - - - -

Afghanistan - - - - - - - - - -

% of GDP 2000=100

GROWTH OF MERCHANDISE TRADE

COUNTRY

Export Volume Import volume Export Value Import Value Net barter terms of trade index

Average annual % Growth Average annual % Growth Average annual % Growth

Employing workers Protecting Investors

Closing a business

Number of procedures

Time required days

Cost % of per capita

income

Number of procedures

Time required days

Number of procedures to

build a warehouse

Time required to build a

warehouse days

Regidity of emploument index 0

(less rigid) to 100 (more rigid)

Number of procedures

Time required days

Disclosure index 0 (less

disclosure) to 10 (more

disclosure)

Time to resolve insolvency years

SAARC

Pakistan 11.0 24.0 21.3 6.0 50.0 12.0 218.0 43.0 55.0 880.0 6.0 2.8

Bangladesh 8.0 37.0 87.6 8.0 425.0 13.0 185.0 30.0 50.0 1,442.0 6.0 4.0

India 11.0 35.0 73.7 6.0 62.0 20.0 270.0 41.0 56.0 1,420.0 7.0 10.0

Bhutan - - - - - - - - - - - -

Maldives - - - - - - - - - - - -

Srilanka 8.0 50.0 9.2 8.0 63.0 17.0 167.0 27.0 20.0 837.0 4.0 2.2

Nepal 7.0 31.0 78.5 3.0 5.0 15.0 424.0 52.0 28.0 590.0 6.0 5.0

Afghanistan 3.0 8.0 67.4 11.0 252.0 - - 46.0 - 1,642.0 0.0 -

South Asia 8.0 33.0 46.6 7.0 136.0 16.0 227.0 35.0 39.0 969.0 4.0 3.6

Middle East & N. Africa 10.0 40.0 89.5 7.0 48.0 19.0 223.0 42.0 42.0 643.0 6.0 2.8

Europe EMU 8.0 22.0 7.8 6.0 54.0 15.0 196.0 46.0 25.0 473.0 6.0 1.3

World 9.0 48.0 69.0 6.0 86.0 18.0 205.0 37.0 35.0 540.0 5.0 2.9

BUSINESS ENVIRONMENT: Doing Business Indicators

COUNTRY

Starting a business Regestering property Dealing with licenses Enforcing contracts

Crime

Major ConstraintsLack confidence

coutrs uplhod prperty rights %

Major constraint %

Tax rates as major

constraint %

Time dealing with officials % of management

time

Average time to clear

customs days

Pakistan 2002 40.1 40.3 20.0 62.6 21.5 45.6 8.7 8.9 47.5 39.2 12.7 15.0

Bangladesh 2002 44.3 57.6 - 83.0 39.1 35.3 3.7 8.3 56.7 72.9 19.2 8.3

India 2006 9.2 25.0 2.7 25.3 11.8 27.5 6.7 113.6 19.4 32.0 7.9 8.6

Bhutan - - - - - - - - - - - - -

Maldives - - - - - - - - - - - - -

Srilanka 2004 34.0 16.9 - 31.2 14.0 19.1 3.5 3.1 28.0 41.3 21.3 25.6

Nepal - - - - - - - - - - - - -

Afghanistan - - - - - - - - - - - - -

SAARC

INVESMENT CLIMATE :Major Constriant % (Survey)

COUNTRY Survey Year

Policy uncertainty

Corruption

Courts Regulation and tax administration

Finance Electricity Labor

Legal rights index

0 (weaker) to 10

(stronger)

Credit information

index 0 (less) to 10 (more)

Public Credit registry coverage

Private credit bureau

coverage

Lending rate minus deposit

rate percentage points

Prime lending rate

minus treasury bill rate

percentage points

Pakistan 4.0 4.0 0.3 1.1 7.7 10.6 43.6 - -

Bangladesh 7.0 2.0 0.6 0.0 3.8 15.3 43.9 5.9 -

India 5.0 3.0 0.0 6.1 6.3 5.2 60.4 - -

Bhutan - - - - - - - - -

Maldives - - - - - - - - -

Srilanka 3.0 3.0 - 3.1 6.7 9.6 44.3 -3.20 -2.00

Nepal 4.0 2.0 0.00 0.1 - - - 5.9 5.9

Afghanistan 0.00 0.00 0.00 0.00 - - - - -

South Asia 3.8 1.8 0.1 1.3 6.3 10.1 57.2 5.9 -

Middle East & N. Africa 3.7 1.9 4.1 - - - 53.6 4.8 -

Europe EMU 5.4 4.9 17.6 39.9 5.0 2.0 128.6 4.3 -

World 4.8 2.6 3.8 17.4 8.6 4.4 164.6 6.5 -

SAARC

FINANCIAL ACCESS, STABILITY AND EFFICIENCY

COUNTRY

Getting Credit

Bank capital to asset ratio

%

Bank non-performing loans to total gross loan

%

Domestic credit provided by banking

sector

Interest rate spread

Risk premium on lending % of adults

2000 2006 2000 2005 2000 2005 2000 2006 2000 2006 2005 2006

Pakistan 6,581.0 45,518.0 9.0 41.5 45.0 127.3 475.5 251.4 762.0 652.0 58.5 1.3

Bangladesh 1,186.0 3,610.0 2.5 5.1 1.6 1.7 74.4 31.7 221.0 269.0 –27.7 12.9

India 148,064.0 818,879.0 32.2 68.6 110.8 55.0 133.6 96.4 5,937.0 4,796.0 33.6 46.7

Bhutan - - - - - - - - - - - -

Maldives - - - - - - - - - - - -

Srilanka 1,074.0 7,769.0 6.6 24.4 0.9 4.8 11.0 14.8 239.0 237.0 29.3 45.3

Nepal 790.0 963.0 14.4 13.0 0.6 0.3 6.9 2.4 110.0 105.0 .. ..

Afghanistan - - - - - - - - - - - -

South Asia 157,695.0 875,775.0 26.2 60.4 90.3 58.2 167.6 108.7 7,269.0 5,954.0 .. ..

Middle East & N. Africa 60,573.0 201,450.0 20.0 49.1 5.0 16.4 12.6 27.0 1,807.0 1,087.0 .. ..

Europe EMU 5,425,933.0 6,465,158.0 87.5 64.8 80.8 72.8 90.6 116.8 4,405.0 5,995.0 .. ..

World 32,187,882.0 43,642,048.0 103.0 99.6 153.4 108.1 122.4 78.2 47,884.0 49,946.0 .. ..

SAARC

STOCK MARKETS

Countires& Region

Market Capitalization Maket Liquidity value traded % of

GDP

Turnover ratio values of shares

traded % of market capatilazation

Listed domestic companies number

S&P/EMDB INDEXS %change$million % of GDP

Number of

payments

time to prepare,

file, and pay taxes

hours

Total tax rate

% of profit

% On income

over $

Corporate %

SAARC

Pakistan 9.5 47.0 560.0 43.4 35.0 11,763.0 37.0

Bangladesh 8.1 17.0 400.0 40.3 - - -

India 10.2 59.0 264.0 81.1 30.0 5,669.0 34.0

Bhutan - - - - - - -

Maldives - - - - - - -

Srilanka 14.3 61.0 256.0 74.9 35.0 4,975.0 35.0

Nepal 10.1 35.0 408.0 32.8 - - -

Afghanistan 3.9 2.0 275.0 36.3 - - -

South Asia 10.1 30.0 305.0 45.1 - - -

Middle East & N. Africa - 33.0 276.0 43.8 - - -

Europe EMU 18.1 19.0 250.0 56.0 - - -

World 16.1 35.0 334.0 54.0 - - -

TAX POLICIES

COUNTRY

Taxes Payable by businesses Highest marginal tax rate (Individual)Tax revenue collected by

central government as % of GDP

1990 Latest 1990 Latest 1990 Latest 1990 Latest

Pakistan 245.0 2183.0 0.0 1092.0 0.0 451.0 -63.0 -158.0

Bangladesh 3.0 802.0 0.0 0.0 0.0 1.0 55.0 -9.0

India 237.0 6598.0 147.0 -3959.0 0.0 11968.0 1458.0 4338.0

Bhutan - - - - - - - -

Maldives - - - - - - - -

Srilanka 43.0 272.0 0.0 0.0 0.0 -216.0 10.0 -89.0

Nepal 6.0 2.0 0.0 0.0 0.0 -- -14.0 --

Afghanistan -- -- -- -- -- -- -- --

South Asia 542.0 9,869.0 147.0 -2868.0 1.0 12204.0 1446.0 4,086.0

Middle East & N. Africa 741.0 13,765.0 -76.0 2581.0 5.0 2311.0 -350.0 2,350.0

Europe EMU 61,012.0 315,043.0 -- -- -- -- -- --

World 203,236.0 974,283.0

SAARC

GLOBAL PRIVATE FINANCIAL FLOWS

Countires& Region

Foreign Direct Invesment Portfolio Invesment flows Bank and trade-related lending

$MILLIONS $MILLIONS $MILLIONSBONDS EQUITY

Binding

coverage

Simple

mean

bound rate

Simple

mean

tariff

Weighted

mean

tariff

Share of lines with

international peaks

Share of lines with Specific

rates

Simple mean

tariff

weighted

mean

tariff

Simple

mean

tariff

weighted

mean tariff

SAARC

Pakistan 2005 44.8 52.2 14.6 12.4 42.6 - 13.8 8.6 14.6 14.5

Bangladesh 2005 14.9 162.1 16.8 55.8 36.0 - 21.8 19.4 16.0 76.7

India 2005 73.8 49.6 17.0 14.5 15.5 3.5 24.4 16.5 15.9 12.8

Bhutan - - - - - - - - - -

Maldives - - - - - - - - - -

Srilanka 2005 36.8 29.6 11.3 7.7 23.4 0.4 18.2 9.5 10.3 6.8

Nepal 2005 - - 14.7 14.3 21.6 - 13.9 9.3 14.7 16.4

Afghanistan - - - - - - - - - -

South Asia 61.1 42.6 15.2 16.1 31.4 1.6 18.4 15.1 14.6 16.8

Middle East & N. Africa 93.4 34.8 10.6 8.9 23.7 - 15.8 8.9 9.8 8.8

World 77.4 30.8 7.7 3.3 13.8 0.5 9.9 3.3 7.4 3.2

TARIFF BARRIERS

COUNTRY

All Products % Primary Products Manufactured products %

Most recent year

Approved Projects for Foreign Investment and Technology TransferSAARC Countries

Up to F.Y. 2062/63                                                                                        Value in Million Rs.      

Country

Total Number of approved

Project

Total Project

Cost(Rs.in Mln.)

Total Fixed Capital

(Rs.in Mln.)

Foreign Investment (Rs in Mln.)

Total Employment

India 361 36631.4 28343.71 14038.51 45755

Bangladesh 13 448.64 209.04 213.7 3766

Bhutan 3 27.26 20.58 3.61 98

Maldives -- -- -- -- --

Pakistan 12 315.75 228.71 137.33 2365

Sri Lanka 3 79.15 55.9 37.41 83

SAARC Total

392 37502.2 28857.94 14430.56 52067

Others 851 59362.14 51337.54 17765.67 61632

Total 1243 96864.34 80195.48 32196.23 113699

Note: FNM stands for First Nine months only.

TThank hank YYouou