Why Set Up Your Business in Pakistan?

Pakistan – A Fast Emerging Market With Numerous Opportunities

Pakistan is strategically located to become Asia’s premier trade, energy and transport corridor. It is also the gateway to the energy rich Central Asian States, the financially liquid Gulf States and the economically advanced Far Eastern tigers. This strategic advantage alone makes Pakistan a marketplace teeming with possibilities. Pakistan has a population of more than 180 million people, making it the sixth most populous nation on earth, and that number is expected to grow to over 210 million by the year 2020. Pakistan is blessed with an incredibly youthful population, with 68 percent under 30 years old. In the nation’s urban centers, like Karachi and Lahore, a growing number of those young people are college graduates, with all the education and skills needed to contribute in the IT sector and elsewhere.

A large part of the workforce is proficient in English, hardworking and intelligent. Pakistan possesses a large pool of trained and experienced engineers, bankers, lawyers and other professionals with many having substantial international experience.The consumer market in Pakistan is growing at a very fast pace as reflected by tele-density which has now reached more than 150 million. However, when it comes to doing business in Pakistan, there are some setbacks, such as poor infrastructure, power outages, internet censorship, lack of intellectual property and investment security, cultural differences, etc. These challenges have discouraged many businesses and foreign investors, resulting in a market with little competition compared to markets in the West, or even in other developing nations like India.

Major Market & Policy Issues

Fortunately, now the the economic climate is changing and the government taking a more liberal stance on economy and industry, setting policies friendly to both foreign investment and local development. The Policy has been designed to provide a comprehensive framework for creating a conducive business environment for the attraction of FDI. Pakistan’s policy trends have been consistent, with liberalization, de-regulation, privatisation, and facilitation being its foremost cornerstones. Legislation is also in the works to prevent cyber-crime and protect digital and intellectual property rights. Significant investments are being made in the nation’s education and infrastructure. Many of the most serious risks and challenges facing investors are being addressed, and the stage is set for a technological and economic boom in the country.

The Pakistan Stock Exchange performed well last year and is also emerging as a strong contender among the global markets. Since stock markets are one of the major instruments linked with mutual funds, this means that investments are likely to give impressive returns. To add to Pakistan’s growth story, the market for sovereign and debt securities, too, provides ample opportunity for fixed income investment. Interest rates in Pakistan remain amongst the highest in the world. The Central Bank has announced the discount rate at 12%, keeping it between 12-14% over the last several years. There are, of course, several other major policy issues which the government must address in order to unlock Pakistan’s economic and investment potential. First to finance development programmes, tax revenues need to be doubled and second, the endemic corruption in officialdom must be ruthlessly eliminated. Ending crony capitalism has to be part of this campaign.