Doing business in Pakistan

Doing business in Pakistan

Whitney - January 10, 2018

Pakistan is a developing market with a young and growing population of around 186 million. About 55 million live in urban areas. It’s estimated that Pakistan’s cities generate up to 78% of national Gross Domestic Product (GDP), with Karachi alone contributing about 20%. The growing / aspirational middle class has an appetite for creative, innovative and

high quality goods and services

.


Contact a Department for International Trade (DIT) Pakistan export adviser for a free consultation if you are interested in exporting to Pakistan.


Over 100 British businesses are currently

doing business in Pakistan

, including well-known companies such as Standard Chartered, GlaxoSmithkline, Shell, Toni and Guy, Debenhams and Unilever.


Pakistan is ranked 128th by the World Bank in its Ease of Doing Business Index, higher than India and Bangladesh.
 

Benefits for UK businesses exporting to Pakistan include:

?    common business language
?    location in the middle of Asia making Pakistan a gateway to northern India, Afghanistan, Tajikistan, Kyrgyzstan, Uzbekistan, Kazakhstan and western China
?    similar legal practices
?    familiarity with UK companies and brands
?    growing middle class

 

Strengths of the Pakistan market include:
?    sixth most populous country with over 50% population under the age of 25
?    strong business and consumer base
?    ninth largest English speaking nation
?    investor friendly
?    home to over 600 foreign companies
?    links with Pakistani migrant communities in the UK
?    educated workforce
?    low production and labour costs

 

Challenges you may face when doing business in or with Pakistan include:
?    widespread sectarian violence and terrorism threats brings security risks to foreign nationals
?    bureaucracy with government officials can be costly and time consuming
?    ranks 126th out of 177 countries in Transparency International’s Corruption Index with corruption widespread and deeply entrenched in the system
?    weak infrastructure and power shortage problems may escalate the cost of doing business
?    weak labour law enforcement and lack of enforced IntelIectual Property Rights (IPR) standards might compromise your products or service quality

 

Economic Growth:
Despite its potential, Pakistan’s economy has not yet experienced the rapid expansion seen in Asia’s emerging markets. To revive growth, the government has implemented reforms supported by an International Monetary Fund (IMF) programme agreed in 2013.

 

Pakistan benefits from:
?    one of the world’s youngest populations
?    stable and growing domestic demand
?    proximity to fast growing Asia
?    wealth in natural resources - particularly coal

 

The IMF has revised upwards its growth estimate for this year to 4.3%, and expects it to rise to 5% in 3 years.

More than 50% of Pakistan’s economy is services based, with trade-related and communication services among the largest. Industry accounts for nearly a quarter of GDP, and includes an export-oriented textile sector, as well as chemicals and food processing.

Manufacturing activity has recently received a boost from the government’s moves to improve energy availability.

The European Union award of the Generalised System of Preferences Plus (GSP+) status came into effect on 1st January 2014. Increasing trade and foreign investment with the EU is expected to boost growth going forward.
 

Trade between UK and Pakistan:
The UK is amongst the largest exporters to Pakistan with over 100 British companies physically operating in Pakistan.

In 2014, UK goods exported to Pakistan were worth £618 million. Bilateral trade in goods and services increased from £1.9 billion in 2009 to 2.2 billion in 2013.

To achieve the Prime Minister’s agreed target of £3 billion by 2015, growth needs to achieve 17.6% year on year.

Major exports from the UK to Pakistan are:
?    specialised industrial machinery
?    power generation machinery
?    telecom and broadcasting equipment
?    chemicals, pharmaceutical and medical products
?    metal ores and scrap metal

Customs Duties
Tariffs change annually.
The maximum import tariff rate is currently 35%. This applies to a few products that the government is actively discouraging the importation of.
You are currently expected to pay:
16% sales tax
1% excise duty
Port charges, clearance charges, transportation and the additional duties charged for certain products are extra on top of the customs tariff.

Import controls:
There is a list of banned items that cannot be exported to Pakistan. You can find the list on in the Import Policy Order 2012-15
Visitors are not permitted to import alcoholic beverages, except for non-Muslims, who can import enough for their own consumption.
Exports and imports to and from Israel are prohibited.

Documentation:
Two copies of the commercial invoice should be included. The invoice should provide exact details of the shipment including:
?    number of packages
?    marks, prices and description of goods
?    quantity
?    place of origin
?    freight and insurance
?    any other information to facilitate customs clearance
You need to get insurance certificates and Letters of Credit (LoC). A Bill of Lading is required to allow cargo clearance.
Certificates of Origin are only required if the imports require additional processing in Pakistan.
Facsimile signatures are not acceptable and will be rejected by Pakistan Customs.
Permit applications under the Dutiable Commodities Ordinance require one additional copy of invoice and Bill of Lading.

 

 

 

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