HOW TO DO BUSINESS IN PAKISTAN? Trade & Investment Guide TRADE DEVELOPMENT AUTHORITY OF PAKISTAN MINISTRY OF COMMERCE December, 2020 Disclaimer This booklet provides basic knowledge to potential investors and exporters. The aim of this guide is to highlight the striking features of Pakistan’s emerging economy, liberal investment regime, export potential, newly amended Companies law (2017), revised Corporate tax legislation and initiatives/incentives introduced by Government of Pakistan for entrepreneurs and exporters. Information and statistics used are correct as of November 2020 and may be subject to change. For detailed and updated information regarding doing business in Pakistan, readers are advised to visit the official site of the concerned authorities. For any query or feedback regarding this document please contact at: Ms. Mehrun-Nisa Research Associate Trade Development Authority of Pakistan [email protected] ~ ii ~ Table of Contents Pakistan: In General .................................................................................. 1 Geography and Connectivity ............................................................................................................................................. 2 Demography ........................................................................................................................................................................... 2 Language ................................................................................................................................................................................. 2 Currency .................................................................................................................................................................................. 3 Religion .................................................................................................................................................................................... 3 Constitution ............................................................................................................................................................................ 3 Government Structure ........................................................................................................................................................ 3 E-Government Initiative ..................................................................................................................................................... 3 Energy Prices ......................................................................................................................................................................... 3 Policy Rate .............................................................................................................................................................................. 3 Labour employed and Wage rate .................................................................................................................................... 4 Expanding Wholesale and Retail market ...................................................................................................................... 4 International Relations ....................................................................................................................................................... 4 Free Trade Agreements ................................................................................................................................................. 5 Major Economic Indicators ............................................................................................................................................... 6 Pakistan’s Investment Climate .............................................................. 7 Foreign Direct Investments’ Statistics ........................................................................................................................... 8 Promoting Agency: Board of Investment ...................................................................................................................... 9 Investment Incentives ......................................................................................................................................................... 9 1. Non-Discrimination for foreign investors ..................................................................................................... 9 2. No Minimum-Maximum capital requirement ............................................................................................... 9 3. Flexible financing requirements ..................................................................................................................... 10 4. Protection for property rights ......................................................................................................................... 10 5. Right to due process of Law ............................................................................................................................. 10 6. Allowed foreign exchange and remittances ................................................................................................ 10 Business Facilitation .......................................................................................................................................................... 11 Investor Friendly Visa Policy .......................................................................................................................................... 12 Corporate Tax Incentives ................................................................................................................................................. 12 ~ iii ~ Infrastructure Facilities Towards FDI ......................................................................................................................... 13 1. Export Processing Zone ..................................................................................................................................... 13 2. Special Economic Zones ..................................................................................................................................... 13 Incentives under Finance Bill 2020 .............................................................................................................................. 17 Public Private Partnerships (PPPs) .............................................................................................................................. 18 PPP at federal level ........................................................................................................................................................ 18 Scope and nature of PPP in Pakistan ....................................................................................................................... 18 Modes of PPPs allowed in Pakistan .......................................................................................................................... 19 Pakistan’s Trade Progress & Facilitation ........................................ 20 Pakistan’s Trade Performance ....................................................................................................................................... 21 Export Profile .................................................................................................................................................................. 22 Import Profile .................................................................................................................................................................. 22 Trade Promoting Agency: Trade Development Authority of Pakistan ............................................................. 23 Activities ........................................................................................................................................................................... 23 Recent Publications ....................................................................................................................................................... 23 Export Facilitation .............................................................................................................................................................. 23 A. Export Facilitation Schemes by Federal Board of Revenue (FBR) .............................................................. 23 i. Manufacturing Bonds Scheme ......................................................................................................................... 24 ii. Export Oriented Units(EOU) and SMEs ........................................................................................................ 24 iii. Duty and Tax Remission for Export (DTRE) Scheme ............................................................................... 25 iv. Temporary Importation Scheme .................................................................................................................... 25 v. Export Processing zone rules ........................................................................................................................... 25 B. Export Refinancing Schemes by State Bank of Pakistan (SBP) .................................................................... 26 i. Export Refinance Scheme .................................................................................................................................. 26 ii. Islamic Export Refinancing