Pakistan – The Preferred Investment Destination

1. Pakistan The Preferred Investment Destination Pakistan – The Preferred Investment Destination

2. Czech Asia Forum, 2010 Nadia Rehman Commercial Counsellor, Pakistan

3. Executive Summary • Overview of the Investment Policy • Infrastructure • Transport • IT & Communication • Energy • Bilateral Trade

4. Pakistan- Key Facts

5. Pakistan Topography

6. At The Center of Asian Growth • Pakistan is well located to become one of Asia’s premier trade, energy and transport corridors • Proximity to Middle-East, Africa, China and Europe • Recent developments to realize this vision include: • Gawadar port- Linking Afghanistan, Iran and China and onwards to Central Asia, Middle East & Europe • Geographical location suits transit trade Booming China High Energy Demand Land locked energy rich Central Asia Capital & Energy surplus Middle East Booming South Asia High Energy Demand

7. Doing Business 2010

8. Home to over 700 Companies

9. Investment Policy Package

10. Sector-wise FDI in Pakistan Source: State Bank of Pakistan US$ Millions

11. Offshore & Onshore • Exploration • Refining • Pipelines • Storages • Coal • Granite • Marble • Copper • Semi-Precious Stones Priority Sectors • Hydel • Thermal • Coal • Solar • Wind • Biogas • Call centers • Cell phone • E-Commerce • Software • IT Parks Investment Opportunities Oil & Gas Mining Power IT & Telecom

12. Ports & Roads • Urban Mass Transport • Water supply & • Sanitation • Housing • Desalination • Textiles • Leather • Electronics • Furniture • Gemstones • Food Processing • Sports & Surgical goods • Value added textiles Infrastructure Priority Sectors • Hotels • Resorts • Theme Parks • Cultural tourism • Entertainment Centers Tourism SMEs Agriculture - Agri-Business • Livestock & Dairy • Corporate Farming • Fisheries • Fruits & Vegetables • - Seed Production Investment Opportunities

13. Oil & Gas • Infrastructure • Power • Industry/ Real Estate • Banking • Pesticides • Dyes • Agro Based • Mineral Based • Synthetic Fiber • Pharmaceuticals • Petrochemical • Complex/ Naphtha • Cracker Priority Sectors • Golf City • Water City • Sports City • Media City • Residential Complexes • Office apartments Privatization Housing Chemicals Engineering • Light & Heavy Engineering • Automobiles • Auto parts • Agriculture Machinery • Steel Production • Textile Machinery Investment Opportunities

14. InfrastructureTransport & Communication

15. Railways Sector Overview Source: Pakistan Statistical Year Book 2009

16. Railways Investment Proposals

17. Railways Investment Proposals • Procurement / manufacturing of HD wagons (3,500) • Procurement / manufacturing of DE locomotives (150) • Overhauling of locomotives (27) • Replacement of obsolete signaling system • Procurement of DE multi-train sets • Procurement of mechanized track maintenance machinery • Privatisation of train operations • Cargo handling & development • Privatisation of PR manufacturing facilities • Outsourcing of repair / maintenance of tracks, rolling stock and services

18. National Highway Network Khunjerab Pass • NHA NETWORK • Only 4 % of total network • Carries 80% of commercial traffic • N-5 carries 65% of this load Gilgit S-1 N-35 N-45 S-2 PESHAWAR N-15 N-75 M-1 N-80 M-2 Indus River CHAMAN Jhelum River N-55 N-50 M-3 LAHORE M-4 Ravi River QUETTA TAFTAN N-70 N-5 M-5 N-40 N-65 M-6 N-85 N-25 N-5 M-8 GABD M-7 N-10 GWADAR M-9 KARACHI Hub

19. NHA - PPP Program & Modalities • Public Private Partnership for • improved technology / skills and management practices • operational efficiencies • Motorways, highways, tunnels and road structures • Modes of PPP participation include • Build, Operate & Transfer (BOT) • Finance, Manage, Operate & Transfer (FMOT) • Operating Concessions (OC)

20. Airport Infrastructure • Major airports: • Karachi, Lahore & Islamabad • Secondary airports: • Peshawar, Quetta, Multan, Faisalabad, Sialkot & Sukkur • Investment Opportunities: • New airports / upgrading of existing airports • Cargo terminals / villages • Outsourced operations, facilities and services

21. Ports & Shipping • Main ports: Karachi, Qasim and Gawadar • Port entries: 3372 vessels with registered tonnage of 50 million tonnes • Cargo handled 64.8 million tonnes • Cargo in containers 5.9 million tonnes • Investment opportunities • Cargo villages & industrial parks • Container terminals • Outsourced operations, facilities and services • KPT enclave • Miscellaneous supporting infrastructure

22. Information Technology and Telecommunication Sector

23. Overview • Overall Tele-density growth of over 60% in Pakistan telecom sector • Investment of more than US$ 8 billion in the last four years • Largest pool of educated and talented workforce in the country • Transparent and streamlined government regulatory policies.

24. Cellular Subscribers

25. Broadband Subscribers 592%

26. Foreign Direct Investment Attracted by Telecom Sector

27. Opportunities Available • Development of IT Parks • Electronic Media and Content Development • Hardware Manufacturing • Software Designing • E-Business • Call Centers

28. Incentives Offered • 100% foreign equity allowed in software houses • Tax holiday on software exports • Duty free imports of hardware and software • 90% first year allowance of equipment cost • Tax holiday of 7 years for ‘Venture Capitalist’ funds • 30% depreciation allowed on all computer related equipment

29. Power Sector

30. Overview • 65-70 % of the population has access to electricity • Increasing electricity demand • Government of Pakistan’s policy commitment to increase private sector participation. • Discovery of Thar Coal fields • Renewable Energy

31. Main Key Players • Ministry of Water and Power • Water and Power Development Authority (WAPDA) • Karachi Electric Supply Corp (KESC) • Pakistan Electric Power Company (PEPCO) • Private Power and Infrastructure Board (PPIB) • National Electric Power Regulatory Authority (NEPRA) • Alternative Energy Development Board (AEDB)

32. Public Sector Thermal 4885 MW (25.18%) Private Sector Thermal 7564 MW (38.99%) Nuclear 462 MW (2.38%) Public Sector Hydel 6489 MW (33.45%) Pakistan Power Sector Public Sector MW % Private Sector MW %

33. Peak Demand Projection (2007-2030)

34. Incentives Offered • Fiscal Incentives: • Customs duty at the rate of 5% on import of plant and machinery not manufactured locally. • No sales tax on plant, machinery and equipment. • Exemption from Income Tax. • Initial depreciation allowance at the rate of 50%. • Amortization of pre-commencement expenses allowed at the rate of 20% annually.

35. Incentives Offered… • Financial Incentives: • Permission to issue corporate registered bonds. • Permission to issue shares at discounted rate. • Raising of local/foreign finance allowed. • Abolition of the 5% limit on investment of equity. • Full repatriation of capital, capital gains, dividends and profits are allowed. • Double taxation treaties

36. Incentives Offered… • Long-term agreements available on: • Build, Own, Operate and Transfer (BOOT) • Build, Own and Operate (BOO) • Protection against changes in taxes and duties. • Indexation of foreign operating and maintenance cost (variable and fixed) with US CPI.

37. New Amendments to Power Policy 2002 • Hedging against currency exchange risk. • Broadening access to debt financing. • Acceptance of Performance Guarantees and Letters of Credit in Euro, Pound Sterling, US Dollar and Yen • ROE allowed in single currency

38. HYDROPOWER SECTOR

40. Hydropower Potential

41. Investment Opportunities • Projects with feasibility studies available • Sammar Gah Hydropower Project • Location – District Kohistan • Capacity – 28 MW • Construction Cost – US $ 42 million • Batal Khwar Hydropower Project • Location – Utror • Capacity – 8.1 MW • Construction Cost – US $ 14 million

42. Investment Opportunities • Medium Size Hydropower Projects (Raw Sites) • Arkari Gol Hydro Power Project • Location – Momi Village, District Chitral • Design Capacity – 26.4 MW • Estimated Cost – US $ 28.58 million • Bhimbal Hydropower Project • Location – Naran, District Mansehra • Design Capacity – 8.1 MW • Estimated Cost – US $ 12 million

43. Investment Opportunities • Medium Size Hydropower Projects (Raw Sites) • Mastuj River Hydropower Project • Location – Miragram, District Chitral • Design Capacity – 8.9 MW • Estimated Cost – US $ 14.5 million • Lutkho River Hydropower Project • Location – Shoghore, District Chitral • Design Capacity – 6.4 MW • Estimated Cost – US $ 9.93 million

44. Investment Opportunities • Large Hydropower Projects • Dassu Hydropower Project • Capacity – 4320 MW • Estimated Project Cost – US $ 7.8 billion • Thakot Hydropower Project • Capacity – 2800 MW • Estimated Project Cost – US $ 6.0 billion • Patan Hydropower Project • Capacity – 2800 MW • Estimated Project Cost – US $ 6.0 billion

45. Investment Opportunities • Feasibility studies of projects in process: • Lower Spat Gah Hydropower Project • Capacity – 567 MW • Tentative Project Cost – US $ 614 million • Lower Palas Valley Hydropower Project • Capacity – 621 MW • Tentative Project Cost – US $ 667 million

46. Who Can Help? • Embassy of Pakistan • Board of Investment (BOI) • Private Power and Infrastructure Board (PPIB) • Sarhad Hydel Development Organization (SHYDO) • National Electric Power Regulatory Authority (NEPRA) • Ministry of Petroleum & Natural Resources • Ministry of Water and Power • Provincial Agencies

47. Bilateral Trade • Total Bilateral Trade: 217,924,000 USD • Exports to Czech Republic have grown at a rate of 43% since 2006 • Trade balance is in the favour of Czech Republic • Pak-Czech Forum 12th May,2010 • BIT and Avoidance of Double Taxation Treaty

48. Contact Information • Nadia Rehman • Commercial Counsellor • Office: +420-233-312-868 • Website:

49. Thank you