Why Invest in Pakistan
Pakistan sits on one of the most important trade routes of the world. This area has traditionally been a centre for exchange of cultures and commerce of South, South East, West and Central Asia. The country shares borders with China to the North, Iran and Afghanistan to the West, and India to the East, while the Arabian Sea to the South offers a vast coastline for maritime trade. Itself a country with a population of approximately 140 million, Pakistan also has easy access to the markets of Iran, Afghanistan, the Central Asian Republics and the Middle East. With the fast developing communication infrastructure in the country, Pakistan is well placed as a transit route for East-West trade in this era of increasing globalization.
Highlights of the Current Investment Policy
The main objective of the present Investment Policy of Pakistan is to enhance the level of foreign investment, concentrating specifically on the fields of infrastructure, software development, electronics, engineering, agro-food, value-added textile, tourism and construction industries. The main features of this policy are listed as follows:
The Investment Policy deals with investment in all sectors of the economy and not merely in the industrial/manufacturing sector;
The Investment Policy is business friendly and provides equal investment opportunities for domestic and foreign investors as well as Overseas Pakistanis;
The essence of the Policy is to keep Pakistan competitive in the International Investment Market by:
- liberalizing the policy regime;
- offering fiscal and tariff incentives; and
- providing procedural and social facilitation.
- Pakistan’s Investment Policy regime is the most liberal in the region;
- Foreign investors can hold 100% foreign equity in industrial projects;
- No Government sanction is required for setting-up an industry except in the following sectors:
– Arms & Ammunitions.
– High Explosives.
– Security Printing, Currency or Mint.
- Foreign investment on reparable basis is now allowed in Service, Infrastructure, Social and Agriculture Sectors;
- In the Service Sector, foreign investors are allowed to hold 100% foreign equity subject to the condition that the repatriation of profits will be restricted to a maximum of 60% of total equity or profits, and it will be mandatory to meet the condition that minimum 40% of the equity is held by Pakistani investors (including sales of shares in stock exchange) within two years time;
- Foreign investors can hold 100% foreign equity in Social and Infrastructure projects;
- Foreign investors can come in Agriculture projects on joint-venture basis by associating minimum local equity of 40%;
- An amount of foreign equity shall be at least US$0.5 million.
- The new Investment Policy has shifted priority for investment in industry from traditional sectors towards high value added, export based, hi-tech, engineering, chemicals, petro-chemicals, oil refining, mining and agro-based industries. Foreign investors should now consider these priorities while investing in industrial sector;
- Customs Tariff on import of plant, machinery & equipment (PME) for hi-tech, value added and export industries is zero rated. In addition, tax relief in the shape of First Year Allowance (FYA) is admissable @90% of cost of PME;
- Customs Tariff on import of PME for agro-based, engineering, petro-chemicals and chemical industry is 10%. Tax relief is available in shape of FYA @75% of cost of PME;
- FYA @50% of cost of PME is available to all other new industries.
- Attractive incentives have been provided to promote investment in Service, Infrastructure, Social and Agriculture Sectors;
- Import of machinery for agriculture projects is fully exempted from the levy of customs duty;
- For Service, Infrastructure and Social Sector projects, rate of customs duty has been reduced to 10%;
- Tax relief on investments in these sectors has been provided in the shape of First Year Allowance @50% of PME Cost.
To provide support services and utilities under one umbrella and to remove procedural & operational bottlenecks, the following measures have been taken:
- Encouragement of technology transfer;
- Simplification of immigration and work visa procedures;
- Simplification and consolidation of labour laws;
- Protection to investment and domestic manufacturing;
- Duty free import of food items
($ 1000 per person per year);
- Airport entry pass for protocol purpose;
To get a deeper insight on the investment opportunities in Pakistan, the business climate and the current business projects, do not hesitate to contact us.