ATLAS GROUP

ATLAS GROUP
Investment Climate in Pakistan
From A Private Sector Point of View
10 May 2006

SAQUIB H. SHIRAZI

ATLAS GROUP

2

Population & GDP of each province In PAKISTAN
Provinces Punjab Sindh NWFP Balochistan PAKISTAN TOTAL

About Pakistan
Population 90,080,000 35,520,000 26,240,000 8,160,000 160,000,000

ATLAS GROUP PAKISTAN BALANCE SHEET +++ Manpower pool Plenty Trainable Entrepreneurial spirit Cost competitive --Population Debt burden Social sectors Developed low tech. vendor industry Small and medium enterprise Investor friendly policies Stable Government .

994 98.922 870.000.167 475.000 272.000 876 181 86 2 40 60 28 11 5 1.685 505 59 Per capita Income $ GDP Growth Rate Industry Growth Road Length CARS M/Cycles PERSON PER CARS PERSON PER M/Cycles % % KM Units 197.103 2 72 28 29 10 4 605 6 7 3.000 500.383 5.269 101 159 2 66 34 33 8 5 652 6 13 254.190 6 12 64.000 591 108 .600.300 1 59 41 5 10 5 1.650 214 Indonesia Thailand Vietnam Philpines Pakistan Malaysia 212 1 57 43 16 9 6 710 5 4 342.780 6 9 65.841 324 32 Units 12.418 1.877 415.000 1.000 India 1.600 88 1 74 26 29 6 3 483 7 16 93.050 5 5 201.200.148.000 58 88 64 1 68 32 13 2 3 2.319.000 3.300 26.644 668.698 2.402.026.090 10 11 1.800 2.615 398 24 2 36 64 16 4 2 3.410 150.700 420.000 3.ATLAS GROUP Economic Profile of Asian Countries Description Population (M) Population Growth % Rural Urban Poverty Un-employment Inflation % % % % % China 1.

ATLAS GROUP Pakistan Vs Asian Countries Description Population GDP Growth Poverty Ratio Industrial Growth Motorcycle Annual sales Car Sales Pakistan Standing 4th 3rd 8th 1st 7th 6th Per Person Sale of New vehicle: Motorcycle Cars 8th 7th .

ATLAS GROUP Risk Ratings Pakistan Vietnam Thailand India Indonesia Malaysia Philippine China Rating Score Rating Score Rating Score Rating Score Rating Score Rating Score Rating Score Rating Score Overall assessment Security Risk Political Stability Risk Govt effectiveness risk Legal & Regulatory Risk Macroeconomic Risk Foreign Trade & Payment Risk Tax Policy Risk Labor Market Risk Financial Risk Infrastructure Risk D E E D C C C C C C 66 82 85 75 59 55 55 50 50 54 81 C A C 57 18 60 79 53 40 54 50 71 71 78 C C C 49 50 60 71 58 25 39 31 50 42 69 C C B 54 54 40 71 60 25 54 56 61 42 75 D D C 61 75 45 79 78 45 43 50 64 50 84 B B C C B A B B C B B 35 25 50 54 40 15 32 25 50 29 31 C 52 82 55 61 55 50 32 31 36 54 63 C B D 50 29 65 75 70 25 36 31 64 38 69 E C D C B C C D C B B B C C D D C B C C D D C C C D C C B B B C D D D B B B D D D D C D D C D B D E E .

in Billion) Devaluation Nationalization / Devaluation Tension on Indo-Pak Borders 3500 3000 2500 2000 1500 1000 500 0 1951 1955 3.5% 1970 4. GROWTH Dynamics Decade of Development 8 Govt.2005 .6% 1990 4. Iraq War Martial Law War Election 2002 Afghan Crisis Zia Air Crash Afghan War Martial Law 2005 Average Growth 3. Changes Real GDP (Rs.8% 1995 4.8% 2001 3.0% Average Growth 1951 .1% 1960 6.4% Soaring Oil Prices / Rising Inflation Gen.0% 1975 5.4% 2004 8.95% Source: State Bank of Pakistan .0% 2000 1.4.3% 1980 6.7% 1965 6.1% 2002 4.D. Musharaf take over Nuclear Test / Sanctions US (Allied) vs.6% 1985 5.8% 2003 6.ATLAS GROUP 5000 4500 4000 Pakistan's Political & Economic RATE PAKISTAN’S G.P.

3 Slow modernization Textile / leather industry is fast modernizing Vision in place & is now beginning to produce world competitive goods. RECOMMENDATIONS On the right path. Attracting Investors is a difficult job but retaining them is even more difficult. some over capacity was left unutilized. This prompted an investment slow-down. Promotion & Protection. Fair regulation. 4 Pakistanis are not investing. Should always be the 1 agenda. Stick to the course. To be adhered by both Investors & Government. Threat even to US. 5 Investment. . 6 Culture of Rules & Regulations. Situation is changing. From the 1990s. Urgent need for an elite bureaucracy.ATLAS GROUP Investor Concerns Sr # 1 2 INVESTOR CONCERNS Low image of country Infrastructual support.

ATLAS GROUP NECESSARY FOR SUCCESS Good Combination Of Pakistan Side Local Know-Who Multinationals + = Technical Know-How Prosperous Joint Ventures .

. 20 collaborations with Japanese suppliers established. Bank of Tokyo participation & management support Collaboration with Honda Motor. Atlas Asset Management. TC with ING of Holland.A. Collaboration with JSB. Bank of Tokyo participation & management support. Introduction of automotive suppliers. 2000s Total Atlas. 1990s Atlas Bank. Canon).ATLAS GROUP Atlas Group’s Collaborations ATLAS 1960s Atlas Autos Atlas Epak / Atlas Honda Atlas Battery 1970s Shirazi Trading Company. Canon / Pitney Bowes / HP Distributorship. Collaboration with Honda Motor. Distribution of MNC products (M. Atlas Lease. . Honda Atlas Cars. Joint Venture with ING of Holland. MNCs Collaboration with Italian Scooter maker. 1980s Atlas Office Equipment.N. Atlas Commercial Bank. Collaboration with TOTAL of France.

Software & Agro-based. Defence. Import substitution: Pharmaceuticals. Leather industry. . Automotive. Oil & gas. Strategic industries: infrastructure & construction.ATLAS GROUP Need for a Balanced Growth Strategy Export industries: Textile modernization & up-gradation. engineering & electronics. chemicals growth.

ATLAS GROUP Market Potential .

3 23.880.00 25.0 810.0 4.0 Malaysia 4.0 1.5 7.000 pop) Lowest 3.3 30.0 22.0 12.0 212.0 4.4 4. beverages & tobacco (% of household spending) 55.2 ENERGY Electricity consumption (KWH per head) Lowest Petroleum consumption ( 000 B/D) 2nd 467.80 53.223.0 7.30 10.40 34.0 180.0 239.0 293.0 1.0 340 Thailand 2.284.60 14.0 331.0 2.192.0 88.0 3rd Lowest Lowest Household Consumption per head (US $) 3rd CONSUMER GOODS Television (stock per 1000 of population) 3rd Television sets.059.0 33.0 533.0 480.0 2.823.149.2 43.0 Indonesia 1.691.580.0 24.4 58.8 1000.0 Lowest FOOD & DRINKS Food.5 6.6 39.0 410. sales volume (.6 31.523.181.0 Lowest TELECOMMUNICATION Telephone main lines (per 100 pop) Lowest Mobile subscribers (per 100 pop) 2nd Lowest Personal computers stock (per 1.563.0 Philippine 975.0 China 1.131.0 6.0 454.0 2.0 539.0 555.0 Vietnam 540.0 1.0 1.0 2.000) 3RD Lowest 174.4 12.9 29.0 395.0 520.0 36.ATLAS GROUP Current Scenario (2005) MARKET OPPORTUNITIES GDP per head (US $ at market rates) Pakistan 736.0 India 615.508.0 386.0 8.0 17.0 911.489.9 24.30 54.4 13.848.0 166.00 36.0 1.0 1.420.0 .0 680.4 45.0 568.0 329.0 256.

0 Physicians (per 1.946.0 28.0 13.8 53.0 8.2 593.0 61.0 11.946.3 129.0 32.8 TRAVEL & TOURISM International tourism.8 1.0 35.957.0 1.0 - 20. arrivals ('000) Lowest International tourism.3 1.0 63.0 8.7 178.0 136.128.310.163.6 161.0 1.0 .0 5.2 3.256.0 69.5 Health Care is personal expense.2 0.0 340. so left over income to buy Consumer Goods is on lower side.314.359.685.0 380.0 37.0 3.0 4. FINANCIAL SECTOR Total lending per head US $) Lowest Total lending % of GDP Lowest 230.000 pop) 4th Lowest 0.0 - 157.584.5 0.8 7.ATLAS GROUP Current Scenario(2005) HEALTH Health spending (US $ per head) Lowest Pakistan Vietnam Thailand India Indonesia Malaysia Philippine China 25.219.0 3.4 0.6 61.0 1.0 145.0 600.584. receipts (US $ M) Lowest 581.0 45.7 - 0.322.851.

ATLAS GROUP Opportunities Based on Pakistan Fundamentals Agriculture Textile (High Value End) Oil & Gas Power Information Technology Automobile Sector Infrastructure .

42 2. In Billion 73.400.83 97. 197.00 47.25 Foreign exchange savings US$ in Billion 1.00 292.80 69.74 Im port substitution US$ in Billion 3.06 368.27 5.in Billion 124.ATLAS GROUP Auto Sector.01 232.03 121.99 Investm ent Rs.00 65.150.12 Revenue to GDP Rs. In Billion 218.58 71.68 Direct Em ploym ent in No.18 .75 87.Key Financial Figures Growth Trend Auto Industry Description Unit 2005 2010 % increase Contribution to GDP Rs.

auto financing has gone up from Rs. 737m in 97-98 to Rs. 36bn by June 05 . in M illt ion) 40000 35000 30000 25000 20000 1 5000 1 0000 5000 0 98-99 99-00 00-01 01 -02 02-03 03-04 04-05 0% 1 0% 8% 1 0% 9.ATLAS GROUP Auto Financing in Pakistan Financing(Rs.5% 5% 23% 22% 1 9% 1 7% 1 5% 20% Rat es % 25% With decreasing interests rates.

000 300.000.000 400.000 700.000 900.000 100.000 0 Motorcycles .000 500.000 800.ATLAS GROUP Pakistan Auto Sector Production Targets Cars 1.000 200.000 600.

Infrastructure Doing Business Costs: Starting a Business Hiring/Firing Enforcing Contracts Getting Credit Closing Business . Policies-Behavior Business Cost Business Risks Business Potential Geographic Locations Market Size Consumer Preference Regulation and Taxation Finance and Infrastructure HR Development Mega Projects .ATLAS GROUP Basics for Business Stability and Security Consistency in Policies and Predictability Investment Climate Govt.

ATLAS GROUP Role in Economic Development of Pakistan Foreign Aid State Enterprise Multi National Company Local Private Sector .

ATLAS GROUP Need for a Balanced Growth Strategy Export industries: Textile modernization & up-gradation. Leather industry. engineering & electronics. chemicals growth. . Strategic industries: infrastructure & construction. Oil & gas. Software & Agro-based. Defence. Automotive. Import substitution: Pharmaceuticals.

Reputation / Image are important.ATLAS GROUP LESSONS Managing uncertainty requires professional management. Volatility is part of business. Collaborate with people better than yourself. . Avoid Hubris.

ATLAS GROUP THANK YOU! .