“All Weather Strategic Cooperative Partners”--- China and Pakistan 70 Years’ Friendship

AMBASSADOR: Pakistan and China are “All Weather Strategic Cooperative Partners”, iron brothers, most reliable partners and closest neighbours. Our two countries enjoy wide-ranging engagements in political, economic and cultural spheres. Our bilateral ties are not only based on convergence of interests but are also rooted in common experiences of past; cultural affinity; mutual trust and understanding. 

Friendship between Pakistan and China was forged in the crucible of time and has gone beyond the traditional parameters of bilateral relationship. We have had to face the vicissitudes of cold war; hostile neighbourhood; economic crises and political upheavals in last 70 years. But these challenges brought us closer and laid the foundation of a very strong relationship unprecedented in the modern history of interstate relations. Our relationship has now transformed into a broad-based and long-term strategic relationship setting a new model for inter-state relations in world politics. 

The China-Pakistan bilateral ties are also a factor of peace and stability in the region and beyond. Since the establishment of our diplomatic relations in 1951, the two countries as responsible members of the United Nations have been closely engaged in promoting global peace, stability and development based on the principles of respect for sovereignty, non-interference in the internal affairs, mutual trust and win-win cooperation. 

In recent years, a special focus has been placed on enhancing bilateral trade and economic ties. Pakistan’s multifaceted cooperation with China has been revitalized with the launch of China Pakistan Economic Corridor (CPEC) which is a pilot project of BRI. CPEC is a transformational project which has contributed to Pakistan’s national development by upgrading its transport and communication network, building new power plants and development of Gwadar Port thus ushering a new era of progress and prosperity in the country. Phase-II of CPEC is focused on industrial relocation, agriculture, science and technology and is basically aligned with government of Pakistan’s development agenda which is people-centric and aims to create jobs and improve the livelihood of the people in the country. 

In recent years, China has become the largest FDI investor in Pakistan. During the last five years, China’s accumulative FDI into Pakistan exceeded US$ 4 billion. Hundreds of China’s major state-owned and private enterprises are working in Pakistan on various projects. Under CPEC phase-II, nine Special Economic Zones (SEZs) are being set up along the route where Chinese and other foreign investors would have the opportunity to set-up their manufacturing units for which Pakistani government is offering attractive incentives and tax concessions. 

With a total trade of US$ 18 billion, China is also Pakistan’s largest trading partner. The second phase of China-Pakistan FTA which took effect from January 1, 2020 has increased products coverage for trade liberalization from 35% to 75%. Now nearly one thousand products enjoy zero tariff in the respective markets providing further impetus to the trade relations. 

Year 2021 is a special occasion as we are celebrating the 70th anniversary of establishment of our diplomatic. I look forward to a more robust, inclusive and all-encompassing relations between our two countries in future which would not only serve the best interest of our two countries but would also ensure peace, stability and prosperity in the entire region. 

AMBASSADOR: There are multiple opportunities for international investors to seriously consider Pakistan for long-term, profitable and safe investment.

Strategic Location

Pakistan is strategically located serving as a gateway to South Asia, Central Asia, Middle East and East Asia. The two ports in Karachi and the newly developed port in Gwadar provide connectivity for China and Central Asian states to reach to the markets in the Gulf, Africa and Europe. The newly built road network under CPEC has further enhanced Pakistan’s credentials as a major regional connectivity hub. There are plans to build rail-road links to China along the Karakoram highway and upgrade the existing track to Iran and Turkey. 

Human Resource Potential

Pakistan is world’s sixth largest country in terms of human resource with a population of 220 million. It is a burgeoning market enjoying abundant supply of young work force and an expanding middle class. A large segment 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 having substantial international experience.

Economic Outlook

Pakistan’s economic outlook has consistently remained positive. As per the “World in 2030 Report” published by HSBC Global Research, Pakistan is ranked among the top countries that would be the driving force behind global economic growth during the years leading up to 2030. The country has climbed a remarkable 28 notches in the last couple of years in the World Bank report on Ease of Doing Business (Ranking 108), owing to the economic liberalisation measures by the government aimed at attracting FDI, deregulation and privatisation. During the global financial crisis, Pakistan’s economy remained resilient to the shocks and has performed better than many neighboring countries. Besides, Pakistan Stock Exchange (PSE) has consistently grown as Asia’s best performing stock market demonstrating investor’s confidence in our economic vitality. 

Indigenous Natural Resources 

Pakistan has been endowed by the nature with abundant natural resources. Fertile land, abundant water resources and four seasons allow us to grow a variety of crops all around the year. In the fertile lands of Indus Valley Civilisation of Pakistan, agriculture is being practiced since 10,000 B.C. Pakistan is among the top producers of wheat, cotton, sugarcane, rice and variety of fruits. We have one of the world’s largest resources of livestock which offers great potential for future growth. Globally we rank 4th in milk production. 

The mineral resources are scattered all around the country with major clusters in southern Pakistan. There is rich potential of exploiting minerals including coal, salt, copper and gems in Pakistan.

Liberal Investment Policy

Our investment policy offers many incentives to international players for investing in several sectors of our economy. It has been designed to provide a comprehensive framework for creating a conducive business environment for attracting the FDI. We have passed a law for Special Economic Zones for establishment of industrial clusters with liberal incentives to enhance productivity and reduce cost of doing business for economic development and poverty reduction. 

The Government has also set up special Export-Processing zones (EPZs) to encourage foreign investment. Some of the incentives offered to EPZ investors include exemptions from all local and federal taxes for export-destined production and duties on equipment, machinery and materials. 

AMBASSADOR: Since the launch of the CPEC, the investment from China has witnessed constant uptick in Pakistan. Chinese companies both SOEs and private enterprises have demonstrated keen interest to invest in Pakistan. The FDI from China to Pakistan has witnessed an upward trajectory in recent years. In 2019-20, the FDI from China amounted to US$ 844 million, accounting for one-third of the total FDI. Reputed Chinese enterprises like Huawei, ZTE, Ali Baba, Shanghai International Automobile Corps (SAIC), Haier, Shanghai Electric have a strong market presence in Pakistan. 

The result of Chinese investment has been profound and productive. It has not only provided jobs but also helped elevate Pakistan’s profile as a preferred destination for investment from other countries too. 

Industrial Development is one of the major planks of next phase of CPEC for diversification of our manufacturing sector. Special Economic Zone in Rashakai will soon be ready for investors and we are in the process of finalizing similar SEZs in other provinces too. We welcome Chinese investors and entrepreneurs to benefit from these new opportunities in our automobile, telecommunication, livestock and labour intensive industries.              

AMBASSADOR: Pakistan has immense possibilities of growth due to its location and peculiar advantages.  It has a strong agriculture base, growing industrial sector, thriving service industry and also a fast emerging IT hub in the region. 

Textile and Garments: Pakistan is 4th largest producer and 3rd largest consumer of cotton. Textile is Pakistan’s largest industry with a complete value chain. The sector enjoys duty free access to China and the EU. It has served as a major supplier to leading textile global brands including H&M, Levis, Target, Nike, Adidas, Puma. Pakistan offers immense investment opportunities in Spinning & Weaving, Garments and Home textiles. Pakistan’s fashion industry is also thriving with many local designers and brands making mark at the international level. Many Chinese textile companies like Challenge Apparel have also set up their production units in Pakistan. 

Food processing: It is Pakistan’s 2nd largest industry with US$ 4.6 billion annual food exports. There are over 2,500 units catering to food processing in Pakistan. Areas to invest include: frozen food; value addition in fruits; dairy; potato powder & flakes manufacturing; olive oil extraction.

Logistics: Logistics sector has been identified as one of the potential sectors for investment. The transport and storage sector contributes 13% to GDP. Pakistan has three ports and 14 dry ports. Because of its geo-strategic and geo-economic location and the CPEC, Pakistan has high potential to become regional trade and transport hub. The potential areas to invest include: supply chain management; warehousing; cold chain logistics; air freight & transportation; trucking; urban transport.

Automobile: Pakistan has sizeable consumer market comprising 17 million middle class households and 102 million middle class individuals. The country witnessed 171% growth in auto production and 172% growth in auto sales between 2014 and 2018. The Automotive Development Policy (2016-21) provides a conducive environment to foreign firms to invest in the sector. 

The Areas to invest include: Jeeps (4x4); Trucks; Motorcycles; Pick-ups; Cars; Tractors and New Energy Vehicles (NEVs).

Information and Communication Technology: ICT is a large and rapidly growing market in Pakistan. The number of broad-band subscribers increased from 0.69 million in 2009-10 to 68.24 million in 2018-19 and the number of mobile phone users increased from 99.18 million in 2009-10 to 160 million in 2018-19. 

The Internet penetration has increased from 2% to 40% during last 04 years. There are 150,000 IT professionals available in the market. Pakistan has registered more than US$ 01 billion software exports in 2019. The ‘Digital Pakistan’, Government’s flagship initiative, aims at adoption of latest technology by both public and private sectors. Pakistan’s firs E-Commerce Policy approved in 2019 provides an effective framework for promotion and facilitation of E-business. 

Housing & Construction: Due to mounting housing needs of a rising population, Pakistan’s housing and construction sector offers new vista of growth. The country's annual demand of housing is estimated to be about 700,000 units, while only about half of this demand is currently being met. On the whole, the housing deficit is estimated at ten million units which is growing every year.

The Government of Pakistan has prioritized housing sector with a plan to construct 5 million Units in coming five years. On 4th April 2020, the Prime Minister unveiled an attractive package of incentives for construction industry including tax concessions, Government subsidies and simplification of regulatory framework. A special organization called ‘Naya Pakistan Housing and Development Authority (NPHDA)’ has been established to implement this plan. Therefore, this sector presents great potential for investment along with opportunities for lucrative returns.

Tourism and Hospitality sector: Pakistan is blessed with some of the spectacular tourist sites in the world. It has the largest concentration of highest mountain peaks besides having religious, historical and archeological sites dating back to millennia. The government is placing great focus on development of tourism industry in Pakistan. Attracting tourists from China is a priority. The development of modern tourism infrastructure and hospitability industry offer great opportunities for Chinese investors to invest in these sectors.

AMBASSADOR: The vision of Pakistan’s leadership for our country is transformational. The principal focus of ‘Naya Pakistan’ (New Pakistan) policy framework is ensuring economic security. Given Pakistan’s geo-economic location, we would like to make Pakistan an economic hub through promoting trade linkages, investments and regional connectivity. 

Pakistan is a responsible country making active contributions for global peace and security. Pakistan is consolidating its hard-won gains against forces of extremism and terrorism. This has now ensured an improved security environment in the country and near-zero violence in our major economic zones. It would be of interest to many investors that leading multinational companies have consistently made higher profits in Pakistan than their global average. 

Naya Pakistan does not seek economic assistance, but is looking for a genuine economic partnership based on mutual benefit. With this aim, we are building Pakistan as a hub of trade, investment, e-commerce and digital economy. In this process, CPEC is becoming the epicenter of regional connectivity and unleashing many new opportunities for economic development and growth in the region. I invite investors from China and other countries to come and invest in Pakistan and take advantage of one of the most liberal trade and investment policy regime in the region. 

Apart from the special investment incentives offered to investors in SEZs as mentioned above, Pakistan has put in place an overall package of investment incentives ranging from financial benefits, business services to basic infrastructure services, to attract FDI. Some of these are listed below: 

The financial benefits and incentive for investors include: Up to 100% foreign ownership allowed; No minimum requirement for the amount of foreign equity investment; No upper limit on the share of foreign equity; and option to repatriate profits, dividends, or any other funds in foreign investor's currency of origin.

Preferential Business Service Offers include: online registration procedure for foreign companies; opening of branch or liaison offices; 7-week duration for application processing; entitlement to sell shares, transfer ownership, and de-register; domestic borrowing allowed.

Basic Infrastructure Service includes: pioneer industries avail incentives at par with Special Economic Zones (SEZs) incentives; entitled to lease land without limitation; no limitation on the transfer of any land held by a foreign investor; no restrictions on foreign real estate developers. 

The SEZs would provide some of the most lucrative incentives including utilities and land connectivity ensured by law; one time duty exemption on import of plant and machinery; Income Tax Holidays for developers (5 years) and enterprises (10 years) and varied development modes (public sector, private sector and public-private partnership).

New Investment Exit Rules

Pakistan has introduced a new framework to ease investment exit rules for venture capital firms and foreign direct investors, who dither investing in the country with disinvestment constraints. The State Bank of Pakistan (SBP) introduced the new mechanism to enable companies in Pakistan to conveniently remit out disinvestment proceeds to their foreign shareholders. The goal of this initiative is to make Pakistan a more attractive place for investment by increasing investors’ confidence and support ease of doing business.