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TITLE:
Analysis of Pakistan as a
Prospective Trade Partner


NAME:







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Abstract
The purpose of the dissertation is to have a detailed rationalistic peep into the numerous facets of
the Pakistans Economy, its Trade policy and trends as it is very important for critically
analyzing Pakistans eligibility and feasibility for the purpose of future investments. The main
outline serving the above purpose contains:
A descriptive Outline of Pakistan which contains all vital demographics which constitute the
whole country. All essential data is provided in this Outline.
A Detailed and rationalistic analysis of the multi-faceted attributes of Pakistans Economy and
trade policy evaluating the countrys performance and reviewing its past standings and
concluding it at the end based on the analysis as to whether the countrys profile is suitable for
investing and entering into its economy and market.











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National Analysis of Pakistan Outline
Official Name of Country:
Islamic Republic of Pakistan


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I. Geography:
Area:
796,095 km
2
or 307,374 sq mi
Major Cities:
Lahore
Islamabad
Karachi
Peshawar
Quetta
Faisalabad
Number of Provinces:
Pakistan has four provinces which are:
Punjab
Sindh
Blochistan
Khyber Pakhtunkhwa (formally known as NWFP)
Terrain:
Pakistan is one of the countries of the world that has every kind of geological structure. In
Pakistan people can enjoy all kinds of weathers at the same time in difference parts of the
country. Pakistan has all kinds of natural sources and beauties in it like seas and rivers, deserts,
mountains, waterfalls, forests etc. It has deserts in Punjab region, sea in Blochistan and Sindh
provinces, green mountains in Khyber Pakhtunkhwa and dry mountains in the province of
Blochistan.
Bodies of Water:
3.1% of total land is covered with water.
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Climate:
The land of Pakistan enjoys all four seasons on its top extreme. These are summers, winters,
spring and autumn. Winter season goes on from November to January. Autumn from mid
January to mid February. Spring from March to May and summers from June to September.
II. People
Nationality:
Pakistani
Population:
The estimation of Pakistan population for the year 2010 is over 170,506,500.
Ethnic groups:
Major ethnic groups are:
Punjabis
Pashtuns
Sindhis
Balochis
Muhajirs
Saraikis
Hindkowans
Hazara
Makranis
Tajiks
Baltis
Religions:
Islam
Sunni Muslims
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Shia Muslims
Ahmadi Muslims
Other Religions
Christians
Hindus
Bah's
Sikhs
Buddhist
Languages:
Urdu
Punjabi
Pashto
Sindhi
Saraiki
Balochi
Education:
Pakistan owns about 130 universities in the state. Out of these 130 universities, 71 are public and
59 are private universities.
Education is divided in 5 levels in Pakistan. These levels are:
Primary Grade 1 to 5
Middle Grade 6 to 8
High Grade 9 and 10
Intermediate Grade 11 and 12
University Programs Undergraduate and Graduate programs
Health:
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The expenditure made by state on health sector is 2 to 2.5% of GDP.
Life expectancy:
Life expectancy in Pakistan is 63 years for females however it is 62 years for males.
Infant mortality rate:
Infant mortality rate is 97 per 1,000 live births.
III. Government
Type:
Federal Parliamentary republic
Independence:
August 14, 1947
Major political parties:
Pakistan Peoples Party Parliamentarians
Muttahida Qaumi Movement
Pakistan Muslim League (N)
Awami National Party
Suffrage:
18 years of age is compulsory in order to vote in general elections.
Principal Government Officials
President (or equivalent title):
Asif Ali Zardar
Prime Minister (or equivalent title):
Syed Yousaf Raza Gillani
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Ambassador to the United States:
Husain Haqqani
Ambassador to the United Nations:
Hussain Haroon
IV. Economy
GDP:
6,254,900 Million Rupee
Per capita GNP:
41,008 Million Rupee
Natural resources:
Land
Gas Reserves
Petroleum (limited)
Coal
Copper
Salt
Mines
Rivers
Agriculture
Fishery
Agriculture:
Pakistan is one of the worlds largest producer of following agriculture products.
Apricot
Cotton
Sugarcane
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Milk
Onion
Mango
Rice
Wheat
Oranges
Industry
Agriculture industry is the largest industry of Pakistans economy. It contributes more than 25%
on total GDP of Pakistan. It involves more than three-quarters of the country's population and
employs half of total labor of state.
Trade:
The main industries upon which the Pakistani trade are dependent are:
Agriculture
Textile
Tourism
Natural Resources
Imports:
Total imports in the year 2009 were $28.31 billion. Major import commodities are:
Petroleum
Machinery
Plastics
Transportation equipment
Edible oils
Paper and paperboard
Iron and steel
Tea
Exports:
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Total exports for Pakistan in year 2009 were $17.87 billion. This makes a total trade deficit of
$9.7 billion. Major export commodities are:
Leather goods
Sports goods
Chemicals
Manufactures
Carpets and rugs
V. Currency
Type of Currency:
Pak Rupee is official currency of Pakistan. State Bank of Pakistan is the regulatory authority for
currency issuance in Pakistan.
Relation to US Currency:
1 US Dollar = 85.5500 Pak Rupee
VI. Transportation and Communication
Transportation:
Land (include roads):
There are two types of land transportation in Pakistan. These are:
Railways
Roads
Railway has 600 locomotive railway engines and 23459 good wagons. The length of roads in
Pakistan is 251661km which are 148877 km of good quality and 102784km of low quality
Air (include airports)
There are total 139 airports in Pakistan. Major airports are listed down.
Jinnah International Airport (Karachi)
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Allama Iqbal International Airport (Lahore)
Benazir Bhutto International Airport (Islamabad/Rawalpindi)
Peshawar International Airport (Peshawar)
Quetta International Airport (Quetta)
Faisalabad International Airport (Faisalabad)
Multan International Airport (Multan)
Sialkot International Airport (Sialkot)
Gwadar International Airport (Gwadar)
Sea
Port of Gwadar Gwadar, Balochistan
Port of Karachi Karachi City Center
Port Qasim East Karachi
Port of Pasni Pasni, Balochistan
Communication:
Television and Radio
Radio Pakistan and Pakistan Television Network is oldest way of television communication in
Pakistan. Now there are more than 100 TV channels owned both privately and publicly. More
than 30 radio channels are also being run in Pakistan.
Newspapers
Some of the major newspaper groups in Pakistan are:
Nawai-waqt Group
Jang Group
Express Group
Khabrain
Daily Pakistan
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Telephones
PTCL is government owned Telecommunication Company that provides landline and internet
services all over the Pakistan. Other cellular companies include:
Ufone
Warid
Mobilink
Telenor
Zong
Some of the big internet service providers are:
Worldcall
Wateen Telecom
Wi-Tribe
Link Dot Net
Economy and Trade Analysis of Pakistan
The economy of Pakistan bears certain attributes that can help in understanding the countrys
financial and economical standings and the extent of prospective aspects that can be utilized to
have a successful understanding of the suitability of conducting business and investing into the
Pakistani Market. The key attributes and factors responsible for the Economic and Trade
Analysis are discussed one by one categorically below.
Economy Background of Pakistan

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During 2000-March 2008, Pakistans Economy enjoyed itself as one of the 4 fastest progressing
economies of the Asian Region having an average growth of 7.0 yearly. It was due to this
Economic Growth that Pakistan was able to reduce one half of the countrys poverty and
successfully diminishing unemployment by creating nearly thirteen million jobs, reducing the
debt burden of the country with a reasonable foreign exchange reserve and a stable Exchange
Rate, reinstating the stake holders and investors trust and confidence.
The fiscal year 2009 proved to be a set back for the Pakistans Economic Growth supplied by the
major reasons like: down in the dumps Consumer Credit Market, Increase in Inflation, Decrease
in Subsidies, sluggish Public Sector Programs, Political Instability, Power and Energy Shortfalls,
Global Recession, Improbable Price fluctuations of Oil and Gas, Improper interest and no focal
emphasis for the improvement of Agriculture Sector. All these factors proved harmful for the
economic growth of the country resulting in declines in Exports(6%) and Imports(10%). Yet,
there was one hopeful and comforting prospect in the midst of such deteriorating situation, the
22% Increment in the Remittances which provided a support for the dwindling economy a bit.
Nevertheless of the ignorance, the agricultural strata of Pakistan showed a progressive conduct
and provided an increase in growth @ 7.7% besides the target of 4.5%.
The Energy Crisis of Pakistan has proved itself as one of the most deteriorating factor for the
downfall of economy and especially the Industrial sector. Moreover, the IMF regulations are also
a hindrance towards growth and as a result rise in poverty and unemployment became inevitable.
More-over the security crisis and terrorism rise in Pakistan has also greatly suppressed the uplift
to the economy resulting in the declined investments.
Economical Factors
Socio-economic Development
Socioeconomic barriers

However the poverty has been decreased up to 32.6%, and in spite of a common huge attributes
of 31.1, disproportion leftovers an enormous socioeconomic obstacle in Pakistan. It can be
checked from Human Development Report of United Nation 2007/2008, which indicates that
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Pakistans HDI placed at 0.551 (rank 136), which was slightly bigger than Bangladesh (at 0.547),
and quite less than India (at 0.619). If we evaluate it to some other developing countries, the on
the whole literacy rate of 49.9% is comparatively less. The women literacy rate is quite less at
34.4 %, contributing only one sign of gender discrimination. Beside with women, other religious
minorities such as Ahmadis, Christians, Hindus and Sikhs are partly expelled from society, for
instance in addition to advanced education or top offices.

Economic indicators

2004 2005 2006 2007

GDP $ mn. 97994.8 109502.1 127325.7 142893.4
Growth of GDP % 7.4 7.7 6.2 6.0
Inflation (CPI) % 7.4 9.1 7.9 7.6
Unemployment % 7.7 7.7 6.2 5.3

Foreign direct
investment
% of
GDP
1.1 2.0 3.4 3.7
Export growth % -1.5 9.6 9.9 2.3
Import growth % -8.6 40.5 18.7 -2.8
Current account balance $ Mn. -817.0 -3606.2 -6749.9 -8295.0

Public debt $ mn. 30878.1 29472.4 32277.9 35917.2
External debt $ mn. 35536.1 33158.1 35877.2 40679.8
Total debt service % of GNI 4.3 2.2 1.8 1.8

Cash surplus or deficit
% of
GDP
-2.0 -3.2 -4.2 -4.1
Tax Revenue
% of
GDP
10.3 9.6 9.4 9.8
Government
consumption
% of
GDP
8.2 7.8 10.8 9.1
Expand. on education
% of
GDP
1.9 2.3 2.6 2.9
Public expand. on health % of 0.4 0.4 0.3 -
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Economic indicators

2004 2005 2006 2007
GDP
R&D expenditure
% of
GDP
- 0.4 - 0.7
Military expenditure
% of
GDP
4.1 4.0 3.8 3.5

TableEconomic Indicators
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Market and Competition
Capital Markets
In Karachi Stock Exchange (KSE), overall 650 companies were registered, with Paid up capital
of Rs. 894.2 billion till of endMarch 2010. Combined market capitalization till the end of
March, was at Rs. 2,890 billion (US$ 35 billion). At the present, Market capitalization to GDP is
only 20%, which is less in Pakistan, as compared to many countries of the world.
From July to March FY10, the time period which is in examination, showed a healing stage in
the countrys leading capital market. KSE100 index raised its level up to 33%, in contour with
the wide improvement in international markets.
An arrival of foreign investment during July to March FY10 time period, with inflows of US$
440 million at their climax, have power-driven the index, but capacity which has been traded still
a little bit of the period previous to 2008. A huge portion of the aeration of liquidity in the market
is the nonexistence of powered goods.

1
The World Bank, World Development Indicators 2009 | UNESCO Institute for Statistics | International Labor Organization, Key Indicators of
the Labor Market Database | Stockholm International Peace Research Institute (SIPRI), Yearbook: Armaments, Disarmament and International
Security.
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Table Equity Market Developments (KSE)

Pakistani Stock Exchange Profile
Karachi Stock Exchange (KSE)
Mostly at the backside of foreign buying, the KSE100 index raised 74% while its trench in
January 2009. After the latest sell, the KSE100 index had obtained 33% at the beginning of
financial year 200910. Foreign portfolio investment (FPI) in the KSE has increased quickly for
July to March 200910. According to National Clearing Company of Pakistan Limited (NCCPL)
facts, the collective foreign portfolio investment is raised by US$ 431 million. Whereas on the
other side, the net buying by offshore financier the KSE100 index passed the 10,000 score on
12
th
March 2010 after a time period of 18 months.

Table Karachi Stock Exchange (KSE)
I slamabad Stock Exchange (I SE)
Currently, ISE has 118 members out of which 104 are business bodies taking into account of
commercial and investment banks, Development finance institutions (DFIs) and brokerage
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houses. The other remaining 18 Members are single entities. The daily return has crossed the
outline of 1 million shares. The ISE10 index has started the fiscal year at 1715.53 points and
finished the third quarter at 2442.39 points.
Table Islamabad Stock Exchange (ISE)
Lahore Stock Exchange (LSE)
In June 2008, LSE25 index has 2143.27 points, which has been improved to 3201.2 points in
March 2009. LSEs market capitalization got decreased in March 2009 from Rs. 1953.087 billion
to Rs. 2746.325 billion till March 2010. Two fresh companies and two openended funds got
registered in LSE during JulyMarch 200809, in comparison to 5 latest companies and 11
openended funds in 200910 FY. Overall remunerated funds with the LSE improved from Rs.
721.064 billion in 200809 to Rs. 827.482 billion in March 2009. During JulyMarch 200910,
the average regular return of shares on the exchange was 2.51 billion which was 8.16 one year
before that.
Table Lahore Stock Exchange (LSE)



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Capital Market Reforms
The main purpose of the change was to widen risk management of the marketplace. The idea of
Concentration Margins was established and corrections relevant to the accomplishment are
likewise in position of particular limitations on imitative goods, which were accepted in the
instructions leading Risk Management of the Stock Exchanges. An additional significant concern
was the accomplishment of the consumerlevel scheme at the stock exchanges and the NCCPL.
This system would help in removing options of wrong use of one consumers scopes against
disclosure chucks of other consumers. The Futures Contract Market was reappeared in sight of
the market requirement for an imitative product.
Also, the SECP make it possible to the stock exchanges in discovering opportunities for opening
of Index based Market close down, which is geared at falling the risk linked with buying and
selling at the stock exchanges by successfully improving the track breakers on entity, thus
permitting the securities a broad series for progress, in sequence with worldwide most excellent
performances.
Developmental Activities
In the past half of the year 2009, the SECP had comprised nationallevel discussion containing
all the Economic Survey 200910 with 182 outstanding stakeholders. A last model document,
later than comprehensive thought with all related stakeholders, has been put forward by the
SECP and the KSE and NCCPL have been informed to build up compulsory methods and to put
together essential regulatory structure for the said product. Such product will be offered in
cooperation to proprietary trade and consumers of brokerage houses.
The Consultative Group also proposed it suggestions with admiration to an improved brokers
government including the capital satisfactoriness needs and regulations for the brokers. A
significant characteristic of the supposed government is the connection it generates involving the
capital competence needs of a broker and his hazard profile.
In vision of the above mentioned things and the inprinciple agreement before approved by the
SECP to the NCCPL for the expansion of a Securities to lend and Borrow mechanism, the SECP
is presently in the practice of structuring the Securities (Margin Financing, Securities Lending
and Borrowing and Pledging) Regulations, in order to give a wide authorized system for the
already discussed ideas.
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Market Based Competition
The bases of market rivalry are mainly situated in Pakistan, with nearly unlimited struggle, near-
equivalent chances for market contributors. On the other hand, it is projected that almost about
two-thirds of non-agricultural employment still in the non-synchronized unofficial sector, the
institutional structure cannot be labeled totally adequate.
Anti-monopoly policy
In spite of inauspicious circumstances on both the domestic and foreign policy frontage, Pakistan
has un-wrapped markets and privatized big business in different areas of the economy since
1999. Whereas army-related organizations still overlooked a lot of money-making areas in both
industry and services. These big businesses are free from the legal structure intended to stop the
expansion of economic domination and business interest group.

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Liberalization of foreign trade
During Musharraf government, Pakistan constantly opened up overseas buying and selling and
privatized some other countrys businesses, including Karachi Electric Supply and Pakistan
Telecommunications. Various instances generate substantial public inquiry, and the privatization
of Pakistani Steel Mills was prevented by the Supreme Court. It still to be observed that either
the moderate strategies will go on in the latest democratic government or not and in the attentive
eye of the judges.
Banking system
However, the government is properly devoted to interest-free banking; an absolute Islamization
banking structure is implausible. Now a day normal banks and Islamic banks are working side by
side. After years of excellent work, the Karachi Stock Exchanges core 100-share index forced
from more than 15,600 to 10,000 in last quarter, stirring aggressive complaint by small kind of
investors and a short-term closing in July 2008. However the stocks has been achieved for the
time being after Musharrafs resignation, domestic and international investor self-confidence
stays low, revealing Pakistans reliance on outer aspects. Perhaps, the stock market disaster
replicates rising issues about future macroeconomic solidity in the new government.
Currency and Price Stability
Anti-inflation / forex policy

After a five-year of price steadiness with inflation rates starting from 3.1% to 4.5%, 2005
noticeable as the opening of unstable inflation, with rates increasing to 9.2%, declining to 7.7%,
and shooting all over again to an average rate of 11.9% in 2008, with a yearly rate of 21.1%
achieved by the closing of that year. Chief aspect after this progress has been integrated, food
and oil prices raised, intensified by the turn down of the Pakistani rupee, which cut down by
almost 14% in opposition to the U.S. dollar in 2008. Imitating terror of political unsteadiness as
well as economic ambiguity in period of worldwide financial disaster, global money preserves
cut down harshly from $15.6 billion to $8.9 billion.
Macro stability
Pakistans financial discrepancy has grown to 6.8%, and the nations 2008 trade unevenness
positioned at $15 billion. In order to keep away from insolvency, Pakistans administration
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contracted to a $7.6 billion package from the global financial support in November. There are
few suggestions that the increase in goods and services prices is sluggish and that the rupee is
alleviate. After years of firm financial expansion, sluggish or worst is forecasted for 2009.
Private Property
Property rights

Pakistans economy has been stood most of the time on private property. In latest years,
deregulation and the privatization of other countrys ventures (banks, telecommunications, oil
and gas) have added to economic expansion. Private property is confined by law, and private
businesses are competent to perform liberally. Whereas, the acquirement of personal property
including the giving of agreement, is still influenced by very huge stage of dishonesty and
favoritism. Preliminary records show that this is same like to aggravate more under the fresh
administration.
Equal opportunity
With few distinguished exemptions including the military and other business employers, official
and unofficial economic prospects, as well as other prospect in culture at huge, are linked with
social surroundings to a certain extent than merit. Women and religious groups endure mainly
from uneven access to learning, career, and public workplaces.
Economic Performance
Output strength
Pakistans economy in last five years has progressed a lot, with expansion rates starting from
4.8% to 7.7% per year. This expansion mainly comes from telecommunication and construction
explosion. Agriculture is still at risk due to deficiency and submergence, and the industrial
progress still mainly relies on textiles. It is a sector where Pakistans faces strong worldwide
rivalry.
During the last five years, an employment fact get higher from 39.9 million to 45.5 million
entities, but Pakistan is still mainly relies on unofficial struggle. Economic growth has been came
downward to some particular point by unpredictable inflation rates of between 2.9% and 9.1%
and population escalation rates of 2.1% to 2.4%. In 2006, Foreign investment improved to 3.4%
of GDP, with the existing account debit attaining 5.7% of GDP in 2007. Pakistans outer debt
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located at $38 billion in 2007, or one-part of GDP. This rate rose to $50.1 billion by March 2009,
with some new IMF loans.
Sustainability
Environmental policy

Pakistan has done some tremendous development in environmentally sustainable expansion. The
nations updated vehicles progressively running on a blend of lead-free petrol and compressed
natural gas, with the distinguished immunity of trucks and overland buses. Whereas, air pollution
intensity in metropolitan regions are still almost double with the world average, and all main
rivers are enduring from intense pollution. Sewage systems that are insufficient or on the whole
missing, as well as an environmental awareness that is in its early years enforce extra restrain on
environmental sustainability.
Education policy / R&D
The undersized prospect of Pakistans economic policy becoming apparent while studying
education system. Usually, educational bodies have a limited favoritism, supporting secondary
and third degree education in the English language. Private English-language institutions have
increasing rapidly in the last 10 years, with high quality education system in metropolitan areas.
When we look upon to primary education, Pakistan is still struggling with a low rate of literacy,
less contribution in rustic places and huge failure rates. As this type of dealings is difficult to
continue, because of education expenses is just 2.6% of GDP. As a result of the countrys draw
back from education, madrasas are on the go since 1980s, with the large number of religious
institutions which are more than 20,000 and the correct number of students, which are getting
education is unidentified. Including that more shocking thing is that, there are more than 20
million students under the age of 10, are not going to school or not getting any kind of education
at all.
Per Capita Income of Pakistan
In 2009-2010, the economic survey of Pakistan has revealed an insufficient boost in per capita
profits of Pakistan. That is just a 0.4% increase in accordance to the financial review of Pakistan
which was liberating by Ministry of Finance, Pakistan.
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No. Year Per Capita Income In Dollars PCI Previous Year Growth Rate Of PCI
1.
2009-10
$ 1051 $ 1046 0.4 %
2.
2008-09
$ 1046 $ 1042 0.3 %
3.
2007-08
$ 1042 $ 925 18.4 %
4.
2006-07
$ 925 $ 847
5.
2005-06
$ 847 $ 736 14.1 %
6.
2004-05
$ 736 $ 657 13.5 %

Exports
In JulyApril 200910, Exports in figure is about to $ 15.9 billion as adjacent to $ 14.7 billion in similar
time previous year, presenting an expansion charge of 8.0% in comparison to the depressing increase rate
of 3.0% in similar duration very last year. Superior quality export products like rice, fruits and rare cotton
appropriate to their enhanced making in Pakistan beside with improvement of global requirements and
replacement rate reduction were main causes for the boost in exports throughout the duration which is in
analysis.








26



The distribution of main, partiallymanufactured and created goods in opus of exports ever since
199495 have stayed more or less sluggish. As around about three fourths of Pakistans exports comprise
of contrived products.


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Mapping Pakistans Major Exports with Fastest Growing Products of World
A relative study of manufactured goods according to allocation in global exports and Pakistans exports
shows a varied portrait. Pakistans most important exports group includes textile, production, other
productions and foodstuff containing contribution of 51.0 %, 24.0 %, 24.0 % and 15.0 % correspondingly
during Fiscal Year 09 on other side, the international exports in 2008 are intense in production, machinery
& transport goods, fuel and mining items and fuels with the contribution of 67.0 %, 34.0 %, 23.0 % and
18.0 % accordingly. This study depicts that there is momentous difference between world demand and the
products which Pakistan is sending abroad.
The deviating pattern depicts the reality of structural inflexibilities in the export found of the country.


Evaluating expansion in these main export products of Pakistan, with the international export
escalation of the similar classes proposes that with the immunity of textiles, key export items
have supervise noteworthy increase in the previous five years. In actual fact, development rate of
many chief export items of Pakistan (with the exception of textiles) in the most recent five years
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has standard more than international growth rates. Whereas exports of textile, which is measured
to be the point of relative benefit, have demonstrated growth of 4.0 %, beside global growth of
8.0 % in the similar commodities in that order.
Imports
In JulyApril 200910, Import expansion turned down by 2.8 % beside the equivalent duration previous
year. Cheap worldwide price rates, compacted local requirement, replacement rate downgrading and
enhanced making of cotton crops still the key reasons following the whole turned down in import invoice.
Along with the main import cluster: food, machinery and telecom groups saw a bad turn down in
JulyApril 200910, whereas fuel, consumer durables and additional product classes observed a raise in
expansion during the duration in evaluation.


29



Attentiveness of imports in conditions of its opus proposes that unprocessed items for consumer products
govern the symphony of imports of Pakistan and its contribution has steadily been improving since
200506.

Many of Pakistans imports are intense in some marketplace in the globe such as Saudi
Arabia, Kuwait, Malaysia, U.S.A, Japan, Germany, and U.K. Statistics for JulyMarch 200910
shows that approximately 36.0 % of entire import marketplaces of Pakistan based on these seven
countries of the world.

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Foreign Direct Investment (FDI)
According to UNCTAD, the worldwide incoming overseas through speculation turn down by close up to
40.0 % in year 2009 owed to worldwide monetary and economic disasters. The impact of this disaster
conveyed in the worldwide FDI all the way through turn down in the firms propensity to endow due to
its declining prosperity, advanced ambiguity & threat dislike manners and condensed accessibility of
money to firms worldwide thereby lots of firms concentrated their speculation arrangements.
Pakistan also observed the waning FDI according to international FDIs style during the time which is in
evaluation. As later than rising at a normal pace of 61.0 % for four years, Pakistans FDI turn down
rapidly by 31.2 % in 200809 evaluated to similar time previous year. This condition more over declined
in the existing financial year due to a blend of inner aspects such as power disaster and regulation
condition alongside with outer aspects of worldwide economic decelerate. FDI in the Pakistan turn down
by 44.7 % in the time period of JulyApril 200910 in comparison to identical phase previous year.
Oil and Gas investigation still the chief eye-catching area for speculation as owing to its contribution of
34.1 % in general FDI in JulyApril 200910.






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Exchange Rate
Later than residual at steady place for other than four years, Pak rupee happening to go down important
worth in opposition to US dollar and its declined by 22 % in the duration of JanNov 2008.
This reduction was endorsed to reason like extensive failure of foreign exchange assets, political
vagueness, uncertain dealings in foreign exchange marketplaces and buying and selling interrelated
outflows. Further in recent times, unsettled to the on the whole outer account enhancement and steady
reserve place, Pakistans money in comparison with US dollar devalued by 3.9 % in JulyMarch 200910
against to quick turn down of 16.2 % in the be in contact time recent year. Unpredictability in the
kerbmarketplace on the other hand hang about considerable during the JulyMarch 200910 duration,
primarily on relation of Hajj related requirement and afterward owing to move of oil expenditure.


International Competitiveness
The Global Competitiveness Index (GCI) shows that Pakistan is at the 101 position as ranked on
worldwide level that for surely gives the large degree of challenges to over come. Consequently the
foremost challenge for Pakistan is to make a progressive pace a head of time to meet the higher
competitive hallmarks for a better and strong economy.
In world exports the contributed share of Pakistan that has been turn down poorly during the last decade
comprising the year 2002 @ 0.16% to the year 2008 @ 0.13% which clearly shows that the
competitiveness is still an important subject matter for Pakistan because in the same time frame the sum
total share of South Asia has increased from 0.27% to 0.34%. Beside from all the data, figures and
captions of informative statistics yet a fine gradation is required for the virtual progress and output yield
of Pakistans economy as an issue of competitiveness to be confront.
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First of all, the trade diversion is signified due to a large part of the modify change in comparative market
contribution involving Pakistan and other South Asian. As a result the consequent force of complex and
intricate state of security is in front of Pakistan since 2002. Furthermore, there is not even a single sign of
any consistent and steady improvements in the overall economy as regard to the subject matter of
competitiveness. But there are still few divisions and sections such as of the Textile industry which are
fighting fit in international markets, whereas some new export products such as Halal meat and Jewellery
in meticulous and up-to-the- minute are emerging speedily.
More over on the domestic market level there is still a strong and hard-hitting competition for various
other Pakistani services and goods. Electronic goods are an example because china is also making a huge
part and space of its products in many household electronic goods at a very cheaper price rates in
Pakistani markets.

Prospects for Growth
Despite of the fact a better change is reasonably occurring in the close proximity to tenure stance for
development, growth and investment. So as a result of persistence of the hard and complicated
macroeconomic environment there is still a feasible chance to stay controlled. On the other hand, if there
is an impulsion and a constant motion in chief sectors of the economy, where collectively the zone of
exports and the large size manufacturing, services sectors remain resistant and not ruined or disrupted
then the probability of an initial and primarily growth resurgence and improvement in the financial and
the whole economy can achieve an immense quantity of supplementary and extra grip. Presently a turn in
investor confidence can set-free large productivity growth still with small levels of fixed investment and
even if there are comparatively small levels of power consumption in the economy.
The shift in economic condition of Pakistan is still feeble and the economy is still engulfed with
significant risks, dangers and possible threats which include the following:
An advanced internal security corrosion
More deteriorated energy crises situation
The inclination of the world into Global Recession resulting from the Euro-Debt Crisis and this has
injured Pakistani Economy to a utmost degree due to the weak and ignorant behavior of the Pakistans
higher authorities and planning authorities and it has damaged Pakistani Exports and remittances, but at
the same time the price decline in Oil and other important commodities have helped Pakistan from
completely shattering down of its economy.
The scale, timing and nature of exterior supporting inward flow of investments will be an important factor
in strengthening the burgeoning resurgence of economy. Also, the prevailing risk of borrowings from
banks by private sector on a large extent was unseen in 2009-2010, contrarily, a feeble credit demand
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was observed from private sector and enhanced banking liquidity was observed. But consequently,
governmental borrowings from the banking system is inevitable, which in-turn lead towards an elevated
interest rate and this elevated state cannot be relaxed until or unless external inflows are catered to such
an extent.
Trade Remedies
In spite of Pakistan being a active participant to an open trade policy, Pakistan has continuously shown a
negligent and ignorant behavior towards a trade defense and bail out policies and other precautionary
measures for any unexpected contingencies. Any measures for designing such policies and remedies are
very slow paced in comparison to the ever growing economical insurgencies.
The extraordinary time taken by NTC (National Tariff Commission, the institution responsible for
contingency protection) to organize and implement the WTO compliant laws and the complex procedures
for filing and mentioning the cases, a fatal and severe pressure on domestic productions and for some
SMEs.
There are no effective counter-measures and particular precautionary measure been taken into account as
compared to other countries in peer reference group as in India, these measures are taken on a very
comprehensive scale.

TRADE POLICY:
The trade policy designing mechanics in case of Pakistan is observed as incoherent, and not well-focused
and a presence of a lot of influential external factors have a very negative impact over the economic
welfare of Pakistan.
The basic factor influencing the weakness of Trade policy designing mechanics is its priority and place on
the overall Governmental Policies and agenda. There is no individual and distinct place of Trade policy
and is rather a compartmental residual of the Fiscal Policy.
The trade policy of Pakistan seems rather a mere Export development mechanism than its much wider and
pivotal role as an instrument for Trade institution development and its accomplishment.
Moreover, tariff binding is also ignored despite of the fact that it can bring lots of reforms like expectancy
of incentives and much improved property rights. Also, lapses like declined stakeholder participations
and a frail political dealing with the dwindling trade matters are creating a lot of distrust and lack of
confidence to the trade environment of the country.
The arrangement of the trade policy with the institutional prospect is another missing lap. There is a grave
need of a sound and comprehensive empowerment of the pivotal role of the trade policy. By default, this
function should have to be undertaken by the Ministry of Commerce, but in case of Pakistan, this will
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create a gap of inefficiency because the ministry is over-duly dependent on FBR(Federal Bureau of
Revenue) and SBP(State bank of Pakistan). The structural edifice of the Ministry of commerce suggests
that it is not fit to perform such an advanced role due to attributes like lacking in analytical and research
capabilities for which it has to rely on the above mentioned agencies. For the need of the hour,
FEPB(Federal Export Promotion Board) is rather suitable, but it not for the purpose of policy formations
and directions.
CHALLENGES
1. The fast diminution of the country's overseas exchange funds has at the moment appeared as
the main looming menace in front of its autonomous ranking and country top limit.
2. Similarly, hindrance in the capability of its financial establishment to wean themselves
missing from central bank funding of the financial plan shortage also embody a alarming
hindrance for enhancing price rises probability and falling stress on the Pakistani Rupee.
3. Due to bad supremacy, war on terror and turn down in speculation are the major disputes mug
by countrywide saving and well-built political obligation is required to guide the country out of
present economic disaster.
Summary of Trade Reforms
1. Import Associated
Approximately the entire QRs detached limitations on imports from India and on second
hand equipment being constantly peaceful.
Prerequisite of importer listing (with EPB) completed away with certify necessity
decrease.
LC boundary necessities reserved Import procedure and dealings rephrased for better
ease and clearness.
Afghanistan transfer buy and sell regulations ease up.
2. Export Associated
Export outlaws, limitations on nearly every goods impassive
Lowest Export value reserved
Export obligations reserved
The majority export financial assistance reserved
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3. Tariffs
Highest levy pace condensed to 25 %
Uncomplicated regular MFN pace decrease to 14.5 %
Approximately every tariff charge have been hop with WTO
The majority charges are on commercial basis
Customs estimation moved from Import Trade Price basis to deal price
4. Custom Procedures and Trade Facilitation
Single Administrative Document (SAD) established
Electronic documents and authorization launched. Substantial goods check up charges
condensed to 4 %
Steps needed to clear vessels reduced from 26 to one; clearance time shortened to about
eight hours; part dwell times reduced from 11 to 4 days
Improved Kyoto Convention allowed to in accumulation to Nairobi and Istanbul
Conventions
5. State Trading
Rice and Cotton Export firms gash up
State trading constrained to outstanding conditions
Conclusions
Pakistan is a country with full of economic and natural resources. It is a developing economy.
But the problem is that these natural and economic resources are not fully used by any
government in the country. Agriculture sector can be used as economic bomb for the country.
The communication network is also very much developed in Pakistan. There is a continuous
growth in this sector that is strengthening the countrys economy.
Some of the lacking sectors in Pakistan are health, education and power sector. However by
supporting the economy of Pakistan, it can be made very strong and result oriented in the future
and in shorter period of time.
Having a limelight towards countrys economy, during the period between 2006-2008 the
business environment in Pakistan was very suitable as the annual trade policy was efficiently
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managed and this in-turn lead towards increase in GDP, Foreign Direct Investment, Exports,
increase in employment and a decreased poverty rate and Pakistan enjoyed being one of the most
progressing and advancing economies of Asia. But from mid-2008 the economy has constantly
experiencing demise.
The reasons contributing towards this downfall are the aftermaths of Global Recession which
can still be seen in Pakistan as the government has proved itself incapable, ill-prepared of
devising such policies that can help Pakistan get out of trouble.
Secondly the political turmoil in Pakistan and its instability is proving to have a very negative
effect on the Pakistans Trade as the government has many other issues up in its priority list and
there is no attention and importance given to the Pakistans economic reforms.
Thirdly the most discouraging factor for the foreign investors is the Impact of global terrorism on
Pakistan and the increased security threats that Pakistan has to cope up with. This has been a
pivotal factor for a decrease in the Direct Foreign Investment and drainage of the Investors
interest in Pakistani Market.
Last but not the least, the energy crisis of Pakistan is a major set back to almost every niche of
the society and economy. This is a very disastrous situation for Pakistan and it shows a complete
inability on the behalf of the government and the mismanagement and lack of a professional
policy.
Capital Markets i.e. KSE, LSE and ISE all showed a fluctuating trend during the recent decade.
A rise in the investments is seen during 2006, 2007, 2008 in all the capital markets but as soon as
the government changed, the countrys economic, financial and trade standings of the country
suddenly deflated and kept deflating till now and now market capitalization to GDP has fallen
under20% figure and this figure is drastically low if compared with other countries falling in this
domain of reference .
The Annual Trade policy is also not given the due focal attention for the reformation of the
business sector of Pakistan and it is still dangling in the oblivion of anonymity. This has also
produced a very negative impact over the business and economics of the country.
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But Apart from all this, Pakistan is a centre of attention for a long list of foreign investors and
companies due to the fact that Pakistans market is an open market for the foreign investors and
they can invest in almost any sector except a few. This whole process started in early nineties
when Pakistani market opened and privatization occurred. Due to the privatization, a prospective
bulk of market attractions catered many foreign investments. A large number of market analysts
have observed that any foreign company that entered Pakistani market never left the country and
a rationalistic observation shows that these companys harness ed with the Pakistani market and
economy since their inception and are nourishing and flourishing since then. This fact is evident
that in spite of such a deteriorating stance, Pakistan is still a centre of attention and is making a
lot of business.
Pakistan still proposes unparalleled Economic Elements that are very favorable for conducting a
business in Pakistan but the governmental regulations and lack of fundamental mechanics
towards attracting investments is of a serious concern.
Pakistani Market is much suitable to yield considerable profits but there is a very huge element
of uncertainty towards the Political system of Pakistan which has still proved itself ignorant
rather blind towards any reforms and attractive tariffs to offer.