Foreign Agricultural Investment Country Profile
Foreign Agricultural InvestmentCountry ProfilePakistanREGIONSouth AsiaINCOME GROUPLower middle incomePOPULATION184 millionT O TA L A R E A796 095 km2CAPITALIslamabadLARGEST CITYKarachiGNI PER CAPITAUS 1 000OFFICIAL LANGUAGEEnglish, UrduM A J O R E XP O R TStextiles, rice, leather goods, sports goods,M A J O R I M P O R TSpetroleum, petroleum products, machinery, plastics,transportation equipment, edible oils, paper andpaperboard, iron and steel, tea.
FAO Investment Policy Support F O R E I G NAGRICULTURAL INVESTMENT PROFILEPakistanPAGEThe information and data in this information product are based solely upon information and data publicly available frominternational organizations, regional organizations, national governments and other sources. The Food and AgricultureOrganization of the United Nations (FAO) declines all responsibility for errors and deficiencies in the information product.The designations employed and the presentation of material in this information product do not imply the expression of anyopinion whatsoever on the part of FAO concerning the legal or development status of any country, territory, city or area or of itsauthorities, or concerning the delimitation of its frontiers or boundaries. The mention of specific companies or products ofmanufacturers, whether or not these have been patented, does not imply that these have been endorsed or recommended byFAO in preference to others of a similar nature that are not mentioned.All rights reserved. FAO encourages the reproduction and dissemination of material in this information product. Noncommercial uses will be authorized free of charge, upon request. Reproduction for resale or other commercial purposes,including educational purposes, may incur fees. Applications for permission to reproduce or disseminate FAO copyrightmaterials, and all queries concerning rights and licences, should be addressed by e-mail to copyright@fao.org or to the Chief,Publishing Policy and Support Branch, Office of Knowledge Exchange, Research and Extension, FAO, Viale delle Terme diCaracalla, 00153 Rome, Italy. FAO t-policy/databases-and-country-profilesii
FAO Investment Policy Support F O R E I G NAGRICULTURAL INVESTMENT PROFILEPakistanPAGEiiiContentsAcronyms . iv12General Information . 11.1Foreign Direct Investment (FDI) in Pakistan . 11.2Agriculture Sector and FDI . 3Information on specific areas . 72.1Legal and regulatory framework. 72.2Registration and approval procedures . 122.3Tax schemes . 132.4Land procedures . 152.5Investment benefits and incentives . 162.6Restrictions and requirements . 182.7Investment opportunities . 192.8Investment / trade agreements . 202.9Authorities and contact points . 21Appendices . policy/databases-and-country-profiles
FAO Investment Policy Support F O R E I G NAGRICULTURAL INVESTMENT PROFILEPakistanAcronymsBITbilateral investment treatiesBOIBoard of InvestmentCAFCorporate Agriculture FarmingCROCompany Registration OfficesDTTdouble taxation treatiesECOEconomic Cooperation OrganizationEDBEngineering Development BoardEPZExport Processing ZonesEPZAExport Processing Zone AuthorityFBRFederal Board of RevenueFDIForeign Direct InvestmentFEDFederal Excise DutiesGDPgross domestic productGIEWSGlobal Information and Early Warning SystemGNIgross national incomeHDIHuman Development IndexhghectogramIBISIndus Basin Irrigation SystemICSIDInternational Center for Settlement of Investment DisputesIFADInternational Fund for Agricultural DevelopmentKPKprovince of Khyber PakhtunkhwaLPGliquefied petroleum gasMATAMajor Agricultural Thrust AreasMIGAMultilateral Investment Guarantee AgencyMINFAMinistry of Food and AgricultureMWmegawattNMTPFNational Medium-Term Priority FrameworkNTNNational Tax NumberPARCPakistan Agricultural Research ment-policy/databases-and-country-profilesPAGEiv
FAO Investment Policy Support F O R E I G NAGRICULTURAL INVESTMENT PROFILEPEPAEnvironmental Protection ActPFLPakistan Pure Food LawsPOLPetroleum, Oil and LubricantsPRPakistan RailwaysRsPakistani rupee, monetary unitSAARCSouth Asian Association for Regional CooperationSECPSecurities and Exchange Commission of PakistanSEDSpecial Excise DutiesSEZSpecial Economic ZonesSIZSpecial Investment ZonesSPAStrategic Priority AreasSTNSales Tax NumberUNCITRALUnited Nations Commission on International Trade LawUNCTADUnited Nations Conference on Trade and DevelopmentUNDPUnited Nations Development ProgrammeUSAIDUnited States Agency for International DevelopmentWIPOWorld Intellectual Property OrganizationWTOWorld Trade filesPAGEv
FAO Investment Policy Support F O R E I G NAGRICULTURAL INVESTMENT PROFILEPakistanPAGE11 General Information1.1 Foreign Direct Investment (FDI) in PakistanDuring the 1990s, Foreign Direct Investment (FDI) inflow in Pakistan peaked at US 789 million in1994 following foreign exchange guarantees and import liberalizations. Subsequently, inflowsdropped in response to decreased investment in the power sector, the East Asian financial crisis,sanctions resulting from nuclear bomb tests in 1998, foreign-exchange crisis, and a military coup in1999 that led to an even lower level of FDI in 2000. From 2004, the annual rate began increasingvastly following Pakistan’s increased privatizations, reaching US 5 438 million in 2008. In the wake ofthe global financial crisis, inflows fell to US 2 387 million in 2009.FDI inflows and stock annual data (Total US millions)FDI inflowsFDI 787897115323092 2014 2735 5905 4382 3871 8923 8609 2107 1866 91910 20913 68225 62116 47317 789Source: UNCTAD statThe United States, United Kingdom, and United Arab Emirates are the three principle sources of FDIinto Pakistan.1 The Pakistan Board of Investment (BOI) compiles sectoral distribution data. For 2009–2010, the BOI displays that the oil and gas sector attracted US 740.6 million, telecommunicationsUS 291 million, financial business US 163 million, transport US 132 million, trade US 117 million,chemicals US 112.1 million, construction US 101.6 million, and textiles US 27.8 million while othersectors added an additional US 586.3 million.2 FDI fell 15 percent in the first six months of 2010–2011 as a result of political instability and the devastating floods that hit Pakistan in July–August of2010.Pakistan’s investment framework has been increasingly adapted and liberalized to meet investorneeds. The Government has made concrete efforts to promote a more effective enabling frameworkwhile offering tax and other incentives. Liberalization, deregulation, privatization and facilitation arethe leading cornerstones of the current investment policy. Most economic sectors now allow 100percent foreign ownership, and foreign companies may invest in all key sectors of the economy,namely agriculture, industry and services. Pakistan’s Investment Act of 1976 also provides equaltreatment and opportunities for both domestic and foreign investors. Furthermore, the creation of1India Pakistan Trade Unit, Investing in Pakistan: http://www.iptu.co.uk/content/pakistan investment.asp#aboutPakistan Board of Investment (BOI), Pakistan Economy, Foreign Investment Data: atabases-and-country-profiles
FAO Investment Policy Support F O R E I G NAGRICULTURAL INVESTMENT PROFILEPakistanPAGEPakistan’s BOI in 1992 aimed at further promoting and facilitating investment in all sectors of theeconomy, thus helping to streamline investment procedures.3The sectors currently attracting most FDI are not labour-intensive and thus do not contributesignificantly to job creation efforts of the Pakistani government. Furthermore, the 2010 floods disastercaused nearly US 5 billion in damages, while Pakistan’s recurring internal political turmoil continuesto weigh on efforts to attract foreign investment. In the World Bank’s Doing Business 2011 summaryrddata for Pakistan, the overall Ease of Doing Business status ranks the country 83 out of 183economies. The table below lists the rankings by each topic and the following displays the enterprisesurveys results for perceived constraints to firm investment in Pakistan.Doing business (DB) rankings by topicsTopic rankingsDB 2010 rankDB 2011 rankChange inrankStarting a business6985Dealing with construction permits102984Registering propertyGetting credit1186112665-8-4Protecting investors2728-1Paying taxesTrading across borders1397814581-6-3Enforcing contractsClosing a business15656155671-11-16Source: World Bank, Doing Business: /pakistanTop 10 business environment constraints for firmsBusiness environment constraintsPercentage of firmsElectricity66.69Corruption11.65Crime, theft and disorder5.52Access to finance3.93Tax rates3.70Access to land3.57Political instability1.19Customs and trade regulations0.94Inadequately educated workforce0.71Tax administration0.70Source: Enterprise Surveys: ?economyid 147&year 20073Board of Investment: -and-country-profiles2
FAO Investment Policy Support F O R E I G NAGRICULTURAL INVESTMENT PROFILEPakistanPAGE31.2 Agriculture Sector and FDIThe agriculture sector – consisting of crops, livestock, fishing and forestry – plays a major role inPakistan's economy. It contributes over 21 percent of the gross domestic product (GDP), employsaround 45 percent of the labour force, and provides 12.9 percent of the country’s export earnings.4Approximately 63 percent of the population resides in rural areas5 and is directly or indirectly linked toagriculture for their livelihood, and much of Pakistan’s industry (textiles, sugar, etc.) is linked toagriculture through production chains. Thus, agricultural productivity is a key factor in thegovernment’s economic development and poverty alleviation objectives.Despite steady economic growth over the past decade, food insecurity remains a major issue, andpoverty is widespread and particularly predominant in rural parts of Pakistan. Recent increases infood prices and natural disasters have also resulted in 35 million Pakistanis suffering from foodinsecurity and one-third of the population living on less than US 2 per day.6According to IFAD, more than 4 million family farms have an average plot of less than 5 ha, and 25percent of all farms consist of less than 1 ha. Landless farmers either lease or sharecrop land.7 Waterresources are scarce and it is difficult to provide remote rural communities with reliable watersupplies. As such, lack of access to resources, markets and services has contributed to chronicpoverty in these areas.8The incidence of poverty also varies from one province to the next because of differing productivecapacities based on physical and climatic features. Pakistan is divided into four provinces(Balochistan, Khyber Pakhtunkhwa [KPK], Punjab and Sindh) and two tribal areas each providingdistinctly different productive opportunities. The landscape is highly diverse: it varies from theHimalayan and Hindu Kush mountains and intermountain valleys to the west and north (wherecommunities are small, scattered and isolated); the flat, irrigated, fertile plains in the easternprovinces of Sindh and Punjab; the dry western plateaus of Balochistan; and the sandy desert ineastern Sindh and Punjab provinces.9Of Pakistan’s total land area of 770 880 sq. km, about 35 percent is agricultural land, of whichapproximately 90 percent is located in the Indus River Valley of Punjab and Sindh provinces, wheremost of the population lives. The remaining 65 percent of Pakistan’s total area consists of desert,mountains, forest (2.5 percent located in KPK and the northern areas), and urban areas. This includesrangeland where most of Pakistan’s livestock population of around 110 million cattle, buffalo, sheep,goats, camels and other animals are located. The livestock and dairy sector accounts for 53 percentof agriculture, 11 percent of GDP and affects the lives of more than 30 million people in rural areas asproduction is dominated by small producers (only about 2 percent of total output goes to commercialprocessors).104FAO, Country Brief Pakistan: http://www.fao.org/countries/55528/en/pak/World Bank: http://data.worldbank.org/country/pakistan6FAO, Country Brief Pakistan: http://www.fao.org/countries/55528/en/pak/7IFAD, Rural Poverty Portal – Pakistan: y/home/tags/pakistan8USAID, Land Tenure and Property Rights Portal, Country Profile cts/country-profiles/pakistan-19USAID, Land Tenure and Property Rights Portal, Country Profile cts/country-profiles/pakistan-110USAID, Land Tenure and Property Rights Portal, Country Profile -country-profiles
FAO Investment Policy Support F O R E I G NAGRICULTURAL INVESTMENT PROFILEPakistanPAGE4About 20.9 million ha of land is cultivated and approximately 80 percent – corresponding to 26percent of the total area – of this is under irrigation. Pakistan’s irrigation system is one of the largest inthe world and irrigated land produces 90 percent of total farm output.11The densely populated Indus Basin Irrigation System (IBIS) is the breadbasket of Pakistan andproduces the commodities that drive industry (cotton, wheat, rice, sugar cane, etc.). Farmerscultivating rainfed land (barani) depend on smaller irrigation systems to support crop and livestockproduction.Agriculture value added in 2009 was US 33 110 million, an increase from the 2006 value ofUS 24.372 million. The average growth rate for 2006–2009 was 3.8 percent.The value of agricultural exports in 2008 was US 2 628 million, thus increasing from the US 1 698million value of 2005. The average growth rate of exports from 2005 to 2008 was 16 percent. Themain agricultural exports in terms of value are milled rice, hydrogenated oil, refined sugar, brokensugar and cotton lint.The value of agricultural imports in 2008 was US 5 280 million, an increase from the 2005 value ofUS 2 894 million. The average growth rate of imports from 2005 to 2008 was 18.7 percent. The mainagricultural imports in terms of value are palm oil, cotton lint, wheat, rapeseed and tea.Pakistan’s agricultural policy is aimed at maintaining a growth rate higher than its population growth.The Ministry of Food and Agriculture (MINFA) is currently running the National Medium-Term PriorityFramework (NMTPF).12 As a strategic planning and programming tool, the main purpose of theNMTPF is to facilitate foreign technical assistance resource mobilization in agriculture based onStrategic Priority Areas (SPAs) determined through technical assistance from eight Major AgriculturalThrust Areas (MATAs): crops and horticulture, livestock and fisheries, forestry, water, food security,agribusiness, trade and emergencies, and disaster management. Concurrently, Pakistan’s Vision2030 was drafted to guide efforts towards increased economic growth and decreased poverty.13The Pakistani Government has also introduced a Corporate Agriculture Farming (CAF) strategy withobjectives to achieve efficiency of production and increased incomes/revenues by bringing togetheragricultural production, processing and marketing activities under the management of one corporateentity, and to improve agricultural productivity and profitability through the use of the latest productiontechnology and adequate expertise, particularly for exports.14Lastly, the government has also introduced an Investment Promotion Strategy for 2010–2015 thataims to maintain a high annual level of inflow by offering fresh incentives to investors and providingfinancial security to both foreign and local investors without requiring any prior approval from thegovernment. Agriculture, manufacturing, textiles, dairy, oil and gas, infrastructure, construction,automotive, cement and IT sectors are the primary target sectors.1511FAO, Gender and Land Rights Database, Country Profile Pakistan: http://www.fao.org/gender/landrights/report/FAO, NMTPF: istan/Status/NMTPF.pdf13Planning Commission, Vision 2030: k21stcentury/Chapter%20Wise/05Preface.pdf14BOI, Corporate Agriculture Farming (CAF): /CAF%20%20Policy%20Package.pdf15Govt. of Pakistan, Press Information Department, Press Release No. 202 (May 18, 2010): abases-and-country-profiles
FAO Investment Policy Support F O R E I G NAGRICULTURAL INVESTMENT stan has an electricity capacity of 19 754 MW (2009). The existing power deficit isa major challenge for industrial and commercial activities. To meet current and futureenergy demands, the government is working on a number of power generation projectsthat are expected to contribute an additional power supply of 9 817 MW by 2012.Roads:Pakistan has a total road network of 259 197 km, of which about half are paved. Ninetypercent of Pakistan's freight and passenger traffic travel by road. Pakistan intends todouble its current road density of 0.31-km/sq. km to 0.64-km/sq. km gradually over thenext 10 years.Sea:Pakistan’s present ports, Karachi Port, Port Qasim and Gwadar Port, are easilyaccessible and have all port facilities for handling international cargo. Tankers up to 12metres draft and other vessels between 10.5 to 11.5 metres can be berthed at otherberths. Port Bin Qasim can berth ships with drafts between 11 to 11.5 metres.Additional facilities in the form of shipyard, dry-docking repairs and others areextensively available. In order to encourage private sector investment in shipping, 48ship owning licences have been issued to parties interested in owning and
Foreign Agricultural Investment Country Profile Pakistan REGION South Asia INCOME GROUP Lower middle income POPULATION 184 million TOTAL AREA 796 095 km 2 CAPITAL Islamabad LARGEST CITY Karachi GNI PER CAPITA US 1 000 OFFICIAL LANGUAGE English, Urdu MAJOR EXPORTS textiles, rice, leather goods, sports goods, MAJOR IMPORTS petroleum, petroleum products, machinery, plastics,
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