INVESTMENT ACTIVITIES IN PAKISTAN

Submitted to: SIR KHALID JAMIL ANSARI

Submitted by: FOUZIA IQBAL Roll No:16 KUBS University of Karachi

Date of Submission: 28-04-2012

INVESTMENT ACTIVITIES IN DIFFERENT SECTORS:

EXPO PAKISTAN: Expo take the opportunity to invite you this fall to the 7th edition of "Expo Pakistan" from 04-07 October 2012 at Karachi Expo Centre. The event was first held in 2005 and over the years it has become the largest showcase of Pakistan's export merchandise and services. Every year the event is visited by a large number of buyers from across the world. Only in 2010, export orders worth US$ 80 million were placed during the show. Despite all recent challenges, Pakistan's economy and exports have shown remarkable recovery and growth. The exports have been growing at a steady pace and have increased from US$ 17.69 billion in 2008-09 to US$ 19.3 billion in 200910 and in the 10 months of fiscal year 2010-11 (July to April) the exports have crossed US$ 20 billion mark. We are confident of reaching US$ 25 billion by the end of this fiscal year. This shows confidence of our buyers in the manufacturing and trading prowess of Pakistan, and it continues to grow. Expo Pakistan is a thoroughfare to the true commercial and cultural diversity of Pakistani products and services. It provides, an opportunity to forge new alliances and business ventures. Geo-Commercially, Pakistan has emerged as an international hub for trade and commerce; it augurs well for structuring business relationships and investment opportunities. This year's event is leveraged with a conference on "Foreign Investment Opportunities & Exports from Pakistan". The other side events will offer our valued guests an opportune moment to not only see first hand what Pakistan has to offer but also the learn about our people, customs, culture, arts and crafts that have a 5,000 year old history, tradition and richness of heritage. For further information and assistance to visit "Expo Pakistan 2011", please feel free to contact us or our Pakistan Consulate/ Embassy/ High Commission in your country to assist you for your registration, hotel bookings and other arrangements. FDI Opportunities in Pakistan Foreign Direct Investment (FDI) and encouragement of investors is the need of the hour for the elimination of poverty and unemployment keeping this in views

Pakistan aims to attract foreign investment worth five billion dollars this year, but needs to tackle reform, maximize anemic growth and stem rampant violence to clinch its ambitious target. Investment opportunities in Pakistan: Hafeez invites US investors April 22, 2012 RECORDER REPORT Emphasising the importance of private sector's role towards full realisation of Pakistan-US relations potential, Finance Minister, Abdul Hafeez Shaikh, has asked the American entrepreneurs to benefit from tremendous investment opportunities in Pakistan. Speaking to members of US-Pakistan Business Council at the US Chamber of Commerce, the finance minister said it is clear that the two countries would have to move beyond governmental interaction and facilitate the private sector, particularly in trade and investment areas, to bolster bilateral ties. Islamabad's ambassador in Washington Sherry Rehman also attended the interaction between the visiting finance minister and American business leaders. Dr Shaikh apprised the American business leaders of the "extraordinarily liberal investment regime" and the immense business prospects that Pakistan offers. The finance minister said that from his experience in several countries around the world, he can safely say that Pakistan's most liberal investment regime has brought phenomenal returns to foreign investors, who can invest as much as they want, can take out as much capital as they want. Pakistan, he said, is open to foreign investment in all fields. "I want to tell you the untold story of Pakistan - Pakistan is a great destination for investment," he said, referring to Islamabad's hopeful economic performance in the face of odds including high oil prices, Afghan war unrest, care for millions of Afghan refugees forgotten by the international community in the past, global contraction and the high economic cost the country has paid since joining the

fight against terror. In this context, the finance minister recounted a host of measures that the democratic government introduced to stem the economic slump it had inherited. He said despite epic floods of 2010, rocketing oil prices and global contraction, Pakistan has been able to withstand pressures and improve on its performance in some key areas with check on inflation, rise in exports, revenue generation, a strict austerity drive, adherence to reforms in the face of difficulties and maintenance of comfortable foreign exchange reserve levels. He said rise in exports, 30 percent last year and expected 6 percent this year, and an unprecedented inflow of remittances by overseas Pakistanis have eased pressures on the economy and strengthened reserves. The finance minister expected remittances to cross $13 billion mark this year. "Our GDP growth is expected to be 4 percent this fiscal year. Pakistan has the potential to grow at 6 to 7 percent in the next couple of years. The demographic dividend with young workforce and central location of the country in the region will be helpful." Miles Young, Chairman US-Pakistan Business Council, earlier, welcomed the finance minister and Ambassador Sherry Rehman, who is honorary member of the Council. The American business leader expressed members' support for strong trade and economic relations between the United States and Pakistan. He said despite challenges, the Council is "optimistic about (business) opportunities" in Pakistan. Young, who is world-wide chief executive officer of Ogilvy and Mathar, expressed the Council's backing for TIFA dialogue as well as efforts towards conclusion of a bilateral investment treaty between the two countries.

He also appreciated Islamabad's efforts to expand trade with regional neighbours, particularly with India. BUILD PAKISTAN 2013: Build Pakistan 2013 is showcasing the most superior exhibition in Pakistan, at the most needed time of the year, by bringing together more than 20 countries under one platform to exhibit and exchange great business opportunities at the LAHORE EXPO CENTRE Pakistan on of April 2013 . The Event prime objective is to highlight immense potential of the Building and Construction Industry in Pakistan. The event is expected to be attended by over 30,000 visitors and trade buyers from across the region to get updated on the latest in Property, Building Materials & Equipment, Stone, Furniture & Interiors and Technology. We invite you to be a part of Build Pakistan 2013, which promises greater opportunities to interact with local entrepreneurs for joint ventures, transfer of technologies and appointing Agents / Distributors / Partners. INVESTMENT OPPORTUNITIES IN LIVESTOCK SECTOR IN PAKISTAN Livestock sector The national herd consists of 24.2 million cattle, 26.3 million buffaloes, 24.9 million sheep, 56.7 million goats and 0.8 million camel. In addition to these there is a vibrant poultry sector in the country with more than 530 million birds produced annually. These animals produce 29.472 million tons of milk, making Pakistan 5th largest producer of milk in the world, 1.115 million tons of beef, 0.740 million tons of mutton, 0.416 million tons of poultry meat, 8.528 billion eggs, 40.2 thousand tons of wool, 21.5 thousand tons of hair and 51.2 million skins and hides. The distribution of livestock is not even among different provinces (table 1). Buffaloes are main dairy animal and are mainly raised in Punjab (60.8 per cent) and Sindh (31.8 per cent). Buffaloes are now making inroads in other provinces, Azad Jammu & Kashmir and even Northern Areas. Cattle have traditionally been raised for draught and are distributed in approximately according to areas in different provinces except Balochistan where

only 6.4 per cent cattle are present. Balochistan harbours majority of sheep as this province alone has 44.2 per cent of the sheep population of the country. Table-1: Distribution of livestock in different provinces of Pakistan Cattle 24.2 43.2 28.9 21.5 6.4 Buffalo 26.3 60.8 31.8 6.3 1.1 Sheep 24.9 24.3 18.2 13.3 44.2 Goat 56.7 37.1 23.8 17.5 21.6 Camel 0.8 18.6 29.7 8.3 43.4

Pakistan Province Punjab Sindh NWFP Balochistan

Source: Economic Survey (2004-05) Investment opportunities A number of favourable factors favour investment in livestock sector. The demands are increasing for livestock products due to urbanisation and economic development. The current growth rate for milk is 2.9 per cent and for meat 3.2 per cent. The growth rate is expected at 3.2 and 4.3 per cent for milk and meat respectively in next five years with modest public sector investment. The demand for milk and meat is projected at least at a growth rate of 5.0 per cent for milk and 6.5 per cent for meat. Profitability Private sector investment is driven by profit motive. An important factor for profit is lower cost of production. The cost of production for livestock products is generally low in the country. For milk production cost, Pakistan is ranked among the countries with lowest cost of production in the world. The cost of labour is also low as compared to all the developed and many developing countries. Export markets Pakistan is geographically located close to the Middle East and South-East Asia. Both of these regions are deficient in livestock products and depend upon import from other countries. The livestock industry in most of the developed world is highly subsidised. With reduction of subsidies in the wake of WTO, the local livestock sector should have better opportunities to compete.

Government initiatives The government has taken a large number of initiatives for the development of livestock sector in the country. The important initiatives in this regard are: (1) Approximately 11-15 per cent of credit given to agriculture is used for livestock activities. Collateral issue has been major impediment in availability of credit for the land-less and small farmers. Some banks are bringing new products for these clients and government is building capacity of 5 banks for lending to horticulture and livestock under a project on agribusiness development and diversification project. (2) Two government-guaranteed private sector companies have been made for increasing facilitation of development of livestock sector. These are Livestock and Dairy Development Board and Pakistan Dairy Development Company. (3) Important public sector development projects in this regard include strengthening of livestock services (EU-PAK funded Rs1.92 billion), Prime Minister's Livestock Initiative (Rs1.7 billion for working with rural support programmes), Pakistan Dairy Development Company (Rs347 million for model dairy farms, milk marketing and research), milk collection/processing and improvement programme (Rs1.97 billion) and meat development programme (Rs1.8 billion). (4) Artificial insemination in public sector for the last 30 years has resulted in only 10 per cent coverage of breedable animals. With acute shortage of bulls for natural breeding, the scope of artificial insemination is going to increase. This clearly shows that artificial insemination service in private sector has great scope. (5) Specialised dairy farms in rural set-ups offer much better profitability as the fodder availability is adequate and crop by-products are cheaper and easily available. Thus setting dairy farms of at least medium size offers good investment opportunity. (6) Currently most of bacterial vaccines are being produced in both public and private sectors. However, viral vaccines like sheep and goat pox vaccines for livestock diseases are only produced in the public sector.

(7) Seed production and sale of high yielding multi-cut fodder varieties: Availability of good quality seed of fodder crop particularly high-yielding multi-cut varieties is a major problem. In fact there are two lean seasons for fodder in the country. Fodder varieties, which ensure round the year fodder availability, are in high demand. These varieties may initially be imported but later on local seed production of such fodder varieties makes a good investment sense. (8) Pakistan has well-developed poultry feed industry. However, the cattle feed industry is now emerging. Although there are now about 22 cattle feed production units in the country, these still cater for less than 5 per cent of the required concentrate needs. (9) Dairy industry is mainly dependent on production of UHT milk. While the market for UHT milk is expected to expand, there is need to diversify the products. (10) The only way to meet the demand of mutton and beef in the country locally is conversion to feed lot fattening. Previously the price of meat was low and fattening did not result in improved profit. (11) The future growth of the poultry industry will depend upon vertical integration of different components. At broiler and layer level, the integrated poultry production units will need to go into contract farming. (12) With improved education and income of the people, the demand for hygienically slaughtered poultry is expected to improve. With increased refrigeration facilities at the retail outlets, the storage of chilled and frozen poultry products is becoming easier. The trend of processed poultry products (chilled/frozen poultry, various cuts of meat, etc) is increasing and there are already 2 processing units of poultry. Keeping in the view the recent trend, the investment in processing units of poultry make a good investment sense. (13) With a very large livestock population and progressing poultry industry, the demand for veterinary pharmaceuticals is very much there. In fact the total veterinary pharmaceutical market in the country exceeds 500 million rupees annually. Import bill per annum exceeds 200 million rupees.

(14) Business advisory services for livestock are completely lacking in the country. In fact this is one of the major reasons for investors shying away from this sector. Setting up livestock business advisory service centres will be a good investment for professionals. (15) Milk is traditionally collected by "Gowallas" in the villages and brought to the collection centres of dairy plants, establishment of milk collection centres in the milk pockets with chillers offer a good investment as the quality and quantity of milk procured will be improved. All said, Pakistan is the 5th largest producer of milk in the world. However, only 2.5 to 3.0 per cent of this milk is being processed. The obstacles in this regard are the collection of good quality milk as well as storage and delivery. If attention is paid to this sector and effort is made, the country will hopefully be able to tap into the export potential of this commodity and go a long way in improving rural poverty.