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Huge potential in Pakistan’s investment market

Economic structures

Agriculture accounts for 25% of the country’s total economy. The main crops are cotton, rice, wheat, sugarcane and corn. Pakistan is also an exporter of fruits and aquatic products; industry accounts for 24% of the total economy, textiles and chemicals, Medicine, steel, building materials, cement, fertilizers, sports products, surgical medical equipment and leather products are the pillar industries and main export industries. Besides, energy, IT and light industry have developed rapidly.

Work hard to develop the economy

For two decades, Pakistan has suffered regional political turmoil, but now the regional environment has greatly improved. The road and oil and gas pipeline construction plans from Central Asia and Iran will connect Central Asia together. Pakistan is also a member of the Economic Cooperation Organization. Pakistan has also established close relations with Southeast Asian countries, and also is a member of the Asian Regional Forum.

Pakistan is located at the junction of Central Asia, South Asia and Southeast Asia. This strategic location makes Pakistan expected to become an economic center. On the basis of the current dense railway and road network, the government is vigorously building highways and Gwadar ports to connect with neighboring countries.

Create a free investment environment

Pakistan’s economy is currently showing a steady upward trend. Pakistan’s economic policy is transparent and predictable, which has given more confidence to the private investor, made stock market more dynamic and foreign debt repayment environment loose.

Besides, you can see many changes like a large increase in foreign exchange reserves, stable exchange rates, low inflation, lower interest rates, reduced debt burdens, low fiscal deficits, loan growth, and increases in exports and taxes. Pakistan’s international credit rating has improved and it issued euro bonds.

 

Pakistan’s business and investment environment, like its economic policies, tends to be loose, liberalized, and privatized. Manufacturing and non-manufacturing industries no longer require government approval and are completely open to foreign investors. Loose taxes and tariffs, abundant land and natural resources, a complete legal system and a huge domestic market make Pakistan extremely attractive to foreign investment. In addition, Pakistan is also the gateway to the market in Central Asia and the Gulf region.

The Pakistani government has established export processing zones in many regions, and the export of products in this zone is tax-free. Preferential industries for foreign investment include oil and gas, petrochemical, chemical, mining, building materials, high value-added agricultural products and food processing industries, etc. Supported industries include textiles, clothing, leather and products, jewelry and jade, automobile industry and electronics industry.

Pakistan is a traditional friendly country to China and an important country along the Belt and Road initiative. In order to make better use of Pakistan’s exemplary role in the Belt and Road initiative, the China-Pakistan Economic Corridor as a pioneering project of the Belt and Road initiative has been highly valued by both China and Pakistan, which will also bring major opportunities for Pakistan’s development. There are also things that need to be improved:

Shortage of electric power

The most difficult challenge for the Pakistani government is to solve the long-term power shortage, especially in setting a reasonable electricity price (the previous electricity price was too low to cover the cost) and increasing the income of electricity distributors.

Fiscal adjustments and energy sector reforms are still the key to economic recovery: low taxes and high subsidies have caused Pakistan to face huge fiscal deficits for a long time, and budget expenditures accounted for about 20% of GDP for many years.

Due to the long-standing power shortage in Pakistan, in order to maximize its growth potential, Pakistan’s infrastructure and alternative energy sectors are full of new commercial investment opportunities. Coal, wind and solar projects can be prioritized by investors.

Increase in the size of the elderly population causes more medical demands

In addition, the rapid growth of Pakistan’s per capita income will further increase the attractiveness of the domestic consumer market. According to EIU’s forecast, Pakistan’s housing and fuel expenditure ratio will rise slightly, and the increase in the size of the elderly population will lead to a rise in medical demand.

The proportion of Pakistani population aged 15-64 will increase significantly in the future. With the increase in the proportion of urban population, the process of urbanization has accelerated, and population growth has brought about an increase in the supply of labor, which will provide opportunities for economic growth.

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