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Introduction

Pakistan is a paradox, it is one of the most beautiful places you could ever visit, but
you dont hear about that on the news. It is full of bright, educated, exciting people,
but you wont read about them in the newspaper. It has a storied history full of
kings, battles, and innovations that you wont learn in your normal class in school,
you need to dig and look up information to understand de whole history of
Pakistan. The history of its people is full of color, thrill and excitement; of gallant
deeds and sublime performance. It has, perhaps, witnessed more invasions than
any other part of the world, absorbed more racial strains than any other region and
more ideas have taken birth in the bosom of this land than elsewhere.
It came into being on August 14
th
in 1947. The Muslims of Indo-Pakistan had to
make great sacrifices to achieve Pakistan Karachi became the capital of Pakistan
after independence. Quaid-e-Azam Mohammad Ali Jinnah assumed the office of
the Governor General but he did not live long and died on September 11
th
in 1948.
The geographical position of Pakistan has given it an important position among the
countries of South East and South West Asia. In the West, their neighbors are
Afghanistan and Iran; in the north they have China and in the southern side of
Pakistan spreads the Arabian Sea.
This country has been facing serious issues that include terrorism. Terrorism has
led to a rising death toll and destruction of homes, markets, businesses, etc. the
constant blast of guns and bombs has instilled a fear in the hearts of the people.
One of the major problems that Pakistan is currently facing is the load shedding
issue of electricity and gas. It has resulted in absolute chaos. Industries are
collapsing, people are facing unemployment and there is general disorder in the
country.
It has resulted in inflation as production of products is low and therefore it has
increased demand rates where sufficient materials are not being provided.
It is very much possible that politicians and politics is the reason for this. In these
modern times, it is hard to find people who are sincere to their country, and mostly
politicians focus on gathering money for their means. As the sense of responsibility
diminishes, the economy is speedily racing towards a failure. The currency rate is
falling due to inflation and daily use products are running out of the reach of poor
and middle class Pakistani citizens. However, in light of all things, the media
remains independent and helps to portray the voice of the people and spread know
how and awareness about corruption amongst the masses.
POLITICAL, ECONOMICAL AND SOCIAL ENVIRIONMENT
a) Political Environment
The Constitution of the Islamic Republic of Pakistan is the supreme law of
Pakistan. The constitution provides for a parliamentary system of government with
the President of Pakistan as head of state and a popularly elected Prime Minister
as head of government. Pakistan has a bicameral legislature that consists of the
Senate (upper house) and the National Assembly (lower house). Together with the
President, the Senate and National Assembly make up a body called the Majlis-e-
Shoora (Council of Advisors) or Parliament.
The first document that served as a constitution for Pakistan was the Government
of India Act, 1935. The first Pakistani Constituent Assembly was elected in 1947
and after nine years adopted the first indigenous constitution, the short-lived
Constitution of 1956.
The Constitution of 1973 was drafted by the government of Zulikar Ali Bhutto and,
following additions by the opposition parties, was approved by the legislative
assembly on April 10, 1973. It was Pakistan's first ever constitution by consensus
unlike two earlier constitutions, the Constitution of 1956 and the Constitution of
1962.
There are tremendous shortfalls in the Pakistani governments capacity and
willingness to provide for its citizens in ways that discourage a rising tide of
violence and separatist movements. These failures interact with a growing wave of
Sunni-Deobandi radicalization that manifests in anti-state violence and sectarian
intolerance. A significant resulting uptick in terrorist violence has been
accompanied by a gradual perversion of the Pakistani social fabric, intimidating
secularism at the expense of militant Islam.
Despite these dangers, Pakistan is not a hopeless case. The country is not yet in
terminal decline, if only because of its vigorous civil society and its talented secular
elite. Nevertheless a wide gap exists between Pakistan official rhetoric and reality,
and between its goals and its real-world performance.
Entrenched organizational interests including those of political, and security elites,
as well as religious radicals, resist effective reform. Successful reform efforts
require a far better planned and managed stabilization strategy that addresses all
of the various causes of extremism and violence and actually executes such plans
in ways that implement real, large-scale reforms.
Pakistans focus on the challenge from India affects virtually every aspect of its
external relations. This plays out in Afghanistan in the form of a competition for
influence over the Afghan government where Pakistan attempts to use its ties to
the Afghan Taliban, Haqqani network, and other movements to ensure its influence
over the future of Afghanistan and to limit any threat of Pashtun independence
movements.
The end result is a fundamentally different perception of Pakistans national
interest from the US focus on Afghan security and stability. It is the reality behind
the rhetoric of ally and strategic partner that has led to constant tension with the
US. Cross-border violence into Afghanistan is a major irritant, and has resulted in
deteriorating US-Pakistani relations.
Similarly, the Indo-Pakistani border is one of the most tense on the planet, and
secured on both sides by nuclear weapons. Cross-border violence into India can
greatly escalate the prospects of large-scale war. Many Kashmiri militant groups
have splintered, as in south Punjab, and the growing risk of militant proxies
operating autonomously cannot be discounted, particularly to divert Pakistani
military attention away from the tribal areas.
The end result is that a concern with self-defense, and a threat from India, diverts
massive amounts of resources and security forces away from far more serious
internal problems and threats. Pakistans current policies not only feed a major
arms race with India, and tensions with Afghanistan and the US, they waste so
many critical resources in the name of security that they have become a threat to
the state and the future of the Pakistani people.
b) Economic Environment
Pakistans economic freedom score is 55.2, making its economy the 126th freest in
the 2014. Its score is essentially the same as last year, with modest improvements
in investment freedom and monetary freedom largely offset by deteriorations in
freedom from corruption, business freedom, and trade freedom. Pakistan is ranked
26th out of 42 countries in the AsiaPacific region, and its overall score is below
the world and regional averages.
Social and political instability undercuts meaningful progress toward a stable
macroeconomic environment. Corruption, endemic throughout the economy,
remains a serious drag on long-term economic development. The overall
regulatory environment continues to be affected by convoluted administrative
bureaucracy, and there is little commitment to opening markets.
The victory of the Pakistan Muslim League/Nawaz party led by two-time Prime
Minister Nawaz Sharif in the May 2013 elections represents a boost for civilian as
opposed to military control. Pakistan has privatized some state industries, but the
economy is still heavily regulated, and the security situation discourages foreign
investment. Other problems include increasing energy shortages and rising food
prices.
Pakistans government operates with limited transparency and accountability.
Corruption is pervasive at all levels of politics and the bureaucracy, and oversight
mechanisms to ensure transparency remain weak. Hundreds of politicians,
diplomats, and officials have been granted immunity in ongoing corruption cases.
In Pakistan the agriculture accounts for more than one-fifth of output and two-fifths
of employment meanwhile textiles account for most of Pakistan's export earnings,
and Pakistan's failure to expand a viable export base for other manufactures has
left the country vulnerable to shifts in world demand. Official unemployment was
6.6% in 2013, but this fails to capture the true picture, because much of the
economy is informal and underemployment remains high.
As a result of political and economic instability, the Pakistani rupee has
depreciated more than 40% since 2007. The government agreed to an
International Monetary Fund Standby Arrangement in November 2008 in response
to a balance of payments crisis. However, after a small current account surplus in
fiscal year 2011 (July 2010/June 2011), Pakistan's current account turned to deficit
in the following two years, spurred by higher prices for imported oil and lower
prices for exported cotton. Pakistan remains stuck in a low-income, low-growth
trap, with growth averaging about 3.5% per year from 2008 to 2013.
Some quick fact about the economy of Pakistan:
GDP - real growth rate:
3.6% (2013 est.)
GDP - per capita (PPP):
$3,100 (2013 est.)
GDP - composition, by sector of origin:
Agriculture: 25.3%
Industry: 21.6%
Services: 53.1% (2013 est.)
Agriculture - products:
Cotton, wheat, rice, sugarcane, fruits, vegetables; milk, beef, mutton, eggs
Industries:
Textiles and apparel, food processing, pharmaceuticals, construction
materials, paper products, fertilizer, shrimp
Labor force:
59.21 million
Labor force - by occupation:
Agriculture: 45.1%
Industry: 20.7%
Services: 34.2% (2010 est.)
Unemployment rate:
6.6% (2013 est.)
Budget:
Revenues: $29.71 billion
Expenditures: $47.97 billion (2013 est.)
Taxes and other revenues:
12.6% of GDP (2013 est.)
Budget surplus (+) or deficit (-):
-7.7% of GDP (2013 est.)
Public debt:
54.6% of GDP (2013 est.)
Inflation rate (consumer prices):
7.7% (2013 est.)
Exports:
$25.05 billion (2013 est.)
Exports - commodities:
Textiles (garments, bed linen, cotton cloth, yarn), rice, leather goods, sports
goods, chemicals, manufactures, carpets and rugs
Exports - partners:
US 13.6%, China 11.1%, UAE 8.5%, Afghanistan 7.8% (2012)
Imports:
$39.27 billion (2013 est.)
Imports - commodities:
Petroleum, petroleum products, machinery, plastics, transportation
equipment, edible oils, paper and paperboard, iron and steel, tea
Imports - partners:
China 19.7%, Saudi Arabia 12.3%, UAE 12.1%, Kuwait 6.3% (2012)
c) Social environment
Pakistan is the sixth most populated country in the world with 180.1 million
residents reported in 2012, behind Brazil and ahead of Bangladesh. The population
is projected to reach 210.13 million by 2020 and to double by 2045, by 2030, it is
expected to surpass Indonesia as the largest Muslim-majority country in the world.
Pakistan is a young nation, with a median age of 22 years and 104 million people
under 30 in 2010. Pakistan's fertility rate stands at 3.07, higher than its neighbors
India and Iran. Around 35% of the people are under 15.
Expenditure on health was 2.6% of GDP in 2009. Life expectancy at birth was 65.4
years for females and 63.6 years for males in 2010. Approximately 19% of the
population and 30% of children under five are malnourished. Mortality of the under-
fives was 87 per 1,000 live births in 2009. About 20% of the population live below
the international poverty line of US$1.25 a day.
More than sixty languages are spoken in Pakistan, including a number of provincial
languages. Urdu, the lingua franca and a symbol of Muslim identity and national
unity, is the national language and is understood by over 75% of Pakistanis.
English is the official language of Pakistan, used in official business, government,
and legal contract
Also Pakistan is the second most populous Muslim-majority country and has the
second largest Shia population in the world. About 97% of Pakistanis are Muslim.
After the Quetta blast in 2013, there were country-wide protests by Shia Muslims
supported by fellow Sunni Muslims calling an end to sectarian violence in the
country and urging for Shia-Sunni unity in the country.
Some quick facts about the people and society in Pakistan:
Religions:
Muslim (official) 96.4% (Sunni 85-90%, Shia 10-15%), other (includes Christian
and Hindu) 3.6% (2010 est.)
Population:
196,174,380 (July 2014 est.)
Age structure:
0-14 years: 33.3% (male 33,595,949/female 31,797,766)
15-24 years: 21.5% (male 21,803,617/female 20,463,184)
25-54 years: 35.7% (male 36,390,119/female 33,632,395)
55-64 years: 5.1% (male 5,008,681/female 5,041,434)
65 years and over: 4.3% (male 3,951,190/female 4,490,045) (2014 est.)

Median age:
total: 22.6 years
Population growth rate:
1.49% (2014 est.)
Birth rate:
23.19 births/1,000 population (2014 est.)
Death rate:
6.58 deaths/1,000 population (2014 est.)
Net migration rate:
-1.69 migrant(s)/1,000 population (2014 est.)
Urbanization:
urban population: 36.2% of total population (2011)
Infant mortality rate:
total: 57.48 deaths/1,000 live births
Life expectancy at birth:
total population: 67.05 years
Total fertility rate:
2.86 children born/woman (2014 est.)
Health expenditures:
2.5% of GDP (2011)
Literacy:
definition: age 15 and over can read and write
total population: 54.9%
male: 68.6%
female: 40.3% (2009 est.)
School life expectancy (primary to tertiary education):
total: 8 years

BUSINESS ENVIRONMENT
The domestic macroeconomic environment of Pakistan remained sluggish for yet
another year as GDP grew by a modest 3.7 percent well below the target of 4.3
percent. Severe energy shortages, challenging economic environment, and law
and order conditions hampered economic activities in the country. However,
decrease in inflation to 7.4 percent during H2FY131 was an achievement thanks
largely to stable international food and oil prices. Moreover, the twin deficits kept
on posing challenges to relatively constrained market liquidity and depleting
international reserves.
Though, current account deficit was still manageable, the fiscal deficit worsened to
8 percent of GDP against the target of 4.7 percent leading to crowding-out of
private sector lending and limiting economic recovery prospects.
In stark contrast, the financial sector of the country presented somewhat stable
outlook, though its risk appetite remained largely averse and consequently stayed
least affected from relatively restrained real sector. The asset base of the financial
sector increased by 4.2, which also enhanced its share in GDP from 57.5 percent
to 60 percent. Improvements in the asset base were broad based as all segments
of the financial sector increased in size. Assets of banks increased largely on
account of healthy build up in deposits that translated into further accumulation of
Government securities, with some increase coming from settlement of circular debt
in June-July, 2013. Further, with high fiscal needs and drying external inflows such
as loans and grants, the domestic debt in form of National Savings instruments
issued by the CDNS posted major increase as banks provided households and
businesses an alternate avenue for savings at reasonably higher returns. Similarly,
the insurance sector thrived as its asset base augmented due to improved life
insurance business during the period. The growth in assets of NBFIs came at the
back of healthy increase in the NAV of the mutual funds.
The banking sector, which is the backbone of the financial sector due to its
immense share and strong forward and backward linkages with the rest of the
sector, witnessed a 3.9 percent increase in its asset base. The modest growth was
contributed by an expansion in deposits by 6.2 percent which also helped banks to
retire loans in the interbank market and repo borrowings from the central bank.
With an increase in financing to public sector enterprises and growing fiscal needs
of the Government, the public sector exposure gained further weight on banks
balance sheetto reach 44.5 percent of the total credit extended.
TAXATION
Globally, Pakistan stands at 166 in the ranking of 189 economies on the ease of
paying taxes. The system is like most of the taxation systems in the world are
classified into two broad categories, direct and indirect taxes. The direct taxes
primarily comprise income tax, along with supplementary role of wealth tax. For the
purpose of the charge of tax and the computation of total income, all income is
classified under the following heads:
Salaries.
Interest on securities.
Income from property.
Income from business or professions.
Capital gains.
Income from other sources.

All public companies (other than banking companies) incorporated in Pakistan are
assessed for tax at corporate rate of 39%. However, the effective rate is likely to
differ on account of allowances and exemptions related to industry, location,
exports, etc. Also the goods imported and exported from Pakistan are liable to
rates of Customs duties as prescribed in Pakistan Customs Tariff. Customs duties
in the form of import duties and export duties constitute about 37% of the total tax
receipts. The rate structure of customs duty is determined by a large number of
socio-economic factors. However, the general scheme envisages higher rates on
luxury items as well as on less essential goods. The import tariff has been given an
industrial bias by keeping the duties on industrial plants and machinery and raw
material lower than those on consumer goods.
Sales Tax is levied at various stages of economic activity at the rate of 15 per cent
on: all goods imported into Pakistan, payable by the importers; all supplies made in
Pakistan by a registered person in the course of furtherance of any business
carried on by him; there an in-built system of input tax adjustment and a registered
person can make adjustment of tax paid at earlier stages against the tax payable
by him on his supplies. Thus the tax paid at any stage does not exceed 15% of the
total sales price of the supplies.

LEGAL ENVIRONMENT
In the developing world, the public tends to narrowly interpret the rule of law. In
Pakistan, evidence abounds of how the law is bent or broken, with society suffering
as a consequence. Misappropriation of public money, sale of spurious medicines,
issuance of fake degrees, non-payment of taxes and loans are but a few examples
of lawlessness in Pakistan.
Our tax laws provide exemptions to certain sectors, such as agriculture. According
to a media report only 0.81 million people filed tax returns during 2011-12, despite
the fact that some 3.39 million people possessed National Tax Numbers. Only
0.6% of the population pays taxes in Pakistan, as against 4.7% in India, 58% in
France and 80% in Canada
The easy availability of weapons and explosives is another grave issue badly
affecting peace in the country. According to an estimate 20 million illegal weapons
pose a serious threat to national security.
CRIME AND CORRUPTION

Below is a snapshot of key results at the national level.



INFRASTRUCTURE
Pakistan is one of the world's deadliest countries for journalists. Intelligence agents
and members of banned militant organizations are behind "serious threats" to
reporters, says Reporters Without Borders.
The government uses legal and constitutional powers to curb press freedom and
the law on blasphemy has been used against journalists. The broadcasting
regulator can halt the carriage of foreign TV channels via cable, particularly Indian
or Afghan ones.
Television is the dominant medium, and there are dozens of private channels. Most
viewers watch them via cable; there are no private, terrestrially-broadcast stations.
State-run Pakistan Television Corporation (PTV) is the sole national terrestrial
broadcaster.
More than 100 private FM radio stations are licensed. They are not allowed to
broadcast their own news. Scores of unlicensed FM stations are said to operate in
the tribal areas of North-West Frontier Province. Usually operated by clerics, some
of the outlets are accused of fanning sectarian tension.
Pakistan's press is among the most outspoken in South Asia, but its influence is
limited by a low level of literacy. Nearly 10% of Pakistani citizens use the internet
(ITU, 2012). The rapid growth in mobile phone use is boosting the delivery of
online content. Filtering targets content deemed blasphemous, secessionist, anti-
state, or anti-military, Open Net Initiative reports. The regulator has imposed
temporary blocks on Facebook, Twitter, YouTube and other sites over material it
says is "sacrilegious".Pakistani users active on Twitter include senior politicians
and sports and entertainment stars.



Broadcast media:
Media is government regulated; 1 dominant state-owned TV broadcaster, Pakistan
Television Corporation (PTV), operates a network consisting of 5 channels; private
TV broadcasters are permitted; to date 69 foreign satellite channels are
operational; the state-owned radio network operates more than 40 stations; nearly
100 commercially licensed privately owned radio stations provide programming
mostly limited to music and talk shows.
Transport
Airports: 151 (2013)
Heliports: 23 (2013)
Roadways: 262,256 km
Ports and terminals:
Major seaport(s): Karachi, Port Muhammad Bin Qasim
Container port(s) (TEUs): Karachi (1,545,434)
Water supply
With fewer than 1,000 cubic meters of water available per person, Pakistan is one
of the most water-stressed countries in the world according to a new report from
the Asian Development Bank (ADB).
Boosting agricultural productivity and strengthening food security will require
improving the management, storage, and pricing of water for irrigation. 80 percent
of Pakistans farms are currently irrigated, and the report estimates that the right
reforms could double their productivity.
Water demand exceeds supply, which has caused maximum withdrawal from
reservoirs. At present, Pakistans storage capacity is limited to a 30-day supply,
well below the recommended 1,000 days for countries with a similar climate.
Climate change is affecting snowmelt and reducing flows into the Indus River, the
main supply source.
FOREIGN COMMERCE ENVIRONMENT
Member of the WTO
Pakistan has been a WTO member since 1 January 1995 and a member of GATT
since 30 July 1948.
Member of a regional block or other free trade agreement
Pakistan's trade policy objectives are a key priority of the democratic Pakistan
Government, focused on reducing protection, achieving a more outward-oriented
trade regime, and increasing market access for Pakistan's core exports. Pakistan,
being one of the founding members of the WTO, supports a system of global
integration aimed at enhancing economic efficiency, competitiveness and export-
led growth. Pakistan has undertaken a number of trade diplomacy initiatives to
support the country's economic goals. International Trade Agreements:
Afghanistan-Pakistan Transit Trade Agreement
In October 2010, Pakistan and Afghanistan signed a new transit trade agreement
to boost economic activities and bring prosperity and stability in the region. The
landmark deal will allow the countries to use each other's land routes for exports,
upgrading a similar agreement from the 1960s.
China-Pakistan Free Trade Agreement (FTA)
China and Pakistan signed an agreement in July 2010 on economic and technical
cooperation. The Free Trade Agreement with China in Goods and Services
ensures full security to Chinese investments in Pakistan. Pakistan provides a low-
cost and hard-working labour force together with liberal incentives and access to
regional markets. Pakistan offers unique opportunity to Chinese investors to invest
in Pakistan.
South Asian Free Trade Areas (SAFTA)
This agreement was reached by India, Pakistan, Nepal, Bangladesh, Sri Lanka,
Maldives, and Bhutan on 6 January 2004 and entered into effect on 1 January
2006. It calls for tariff reductions for intraregional trade.
PTA with Indonesia
A PTA between Indonesia and Pakistan currently under negotiations would boost
strong bilateral trade ties and encourage business cooperation between the two
most populous Muslim countries in the world.
Pakistan-Morocco PTA
Pakistan and Morocco accelerated Preferential Trade Agreement and Free Trade
Agreement negotiations at the First Session of the Joint Ministerial Commission
(JMC) in 2008.
Bilateral agreement with Mexico
Pakistan maintains an embassy in Mexico City, and Mexico is accredited to
Pakistan through its embassy in Tehran. Both countries are also working on
Mechanism of Bilateral Consultations on Issues of Mutual Interest for Mexico and
Pakistan.



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