Foreign Investment in Pakistan

March 2019
 Pakistan is an increasingly attractive investment destination

 Fifth most populous country : 207 million; Population forecast to

grow to 307 million by 2050 (UN forecast) China-Pakistan Economic Corridor

 Political stability: smooth transition of power in 2018 and a more

‘competitive’ system of three major parties (PTI, PML and PPP)

 Growing urbanisation / consumer culture (urban population share

is 39.7% and growing by 2.77% p.a.)

 Well developed digital infrastructure (mobile, broadband): 154

million mobile subscribers / 64 million broadband subscribers

 Widespread use of English among educated/urban groups

 Well established capital markets (Pakistan Stock Exchange with

560 listed companies)

 Substantial investment in infrastructure with projects such as the

USD 60 billion CPEC project and USD 21 billion Saudi Arabian
investment

 Active plan to launch Special Economic Zones by 2021 with

significant incentives to attract foreign companies

Source: Cornhill Analysis; Map is from The Economist

Note: Mobile subscriber data is for Dec 2018
 Pakistan has attracted growing FDI since 2015, primarily driven by
China’s CPEC project

 Pakistan has sustained GDP growth of approx. 5% for the previous five years; current forecasts
suggest that growth in the next 3-5 years may moderate to around 3%

 Since the launch of the CPEC project, FDI has risen strongly

 There is growing evidence that the improved infrastructure delivered by the CPEC project, will
help facilitate other investments

GDP growth in Pakistan (2008 – 2017) FDI (2009 – Jan 2019)

6.0% 5.7%
5.5% 3,500
3,092.0
5.0% 4.7% 4.7%
4.4% 3,000 2,746.8

4.0% 2,500 2,305.3

3.5% 2,150.8

USD millions
2.8% 2.7% 2,000 1,698.6
%

3.0% 1,634.8
1,456.5 1,451.3
1,500
2.0% 1.7% 1.6% 987.9
1,000 820.7

1.0%
500

0.0% 0
2008 2009 2010 2011 2012 2013 2014 2015 2016 2017

Source: EIU Data

Source: Cornhill Analysis, EIU data, State Bank of Pakistan
 Pakistan’s poor exports performance is a key area of policy focus

 The USA is Pakistan’s key export market with products such as cotton and agricultural goods

 China now dominates FDI with its CPEC projects

Cumulative Exports by Major Countries (USD mn) Cumulative Imports by Major Countries (USD mn)

Bangladesh 75.78 Thailand 135.54

Italy 76.75 Kuwait 148.21

Netherlands 85.41 India 188.01

UAE 95.47 Qatar 195.30
Spain 95.60 Japan 241.01
Germany 131.97 Indonesia 250.35
Afghanistan 155.26 USA 285.42
China 167.17 Saudi Arabia 317.88
UK 169.44 UAE 773.30
USA 362.48 China 1,573.45

- 50 100 150 200 250 300 350 400 - 500 1,000 1,500 2,000

Source: Cornhill Analysis, WTO, July 2017 - May 2018

 Currently, Pakistan’s exports are led by agricultural produce and
imports by petroleum and related products

 Cotton products and rice dominate exports

Non-Agricultural exports (USD mn) Agricultural imports (USD mn)

Leather goods (clothing) 587 Tea 550

Woven cotton 941 Soya beans 745

Cotton yarn 1217 Cotton(not

761
carded/combed)
Men's suits 1981 Dried vegetables 851

Household linen 3138

Palm oil & produtcs 2096

0 1000 2000 3000 4000

0 500 1000 1500 2000 2500

Agricultural exports (USD mn) Non-Agricultural imports (USD mn)

Citrus fruit 140 Motor cars 1397

Dates, figs, pineapples,

154 Iron waste and scrap 1455
avocados

Cane or beet sugar 345

Petroleum gases 1944

Alcohol (80%+) 381

Crude oil 3135
Rice 1744
Petroleum oils (ex. Crude) 7410
0 500 1000 1500 2000
0 2000 4000 6000 8000

Source: Cornhill Analysis, WTO, July 2017 - May 2018

 The country is both a large consumer market and is strategically
located to benefit from growing trade in Africa and Asia

 The CPEC project to develop a world class port at Gwadar with road and rail connections into
China should greatly facilitate trade

Turkey Russia
▪ By 2017, USD 900 ▪ Significant
million in investments investments in oil and
▪ Considering joining gas exploration and
CPEC projects infrastructure by
Gazprom

Japan
Saudi Arabia
▪ Fourth biggest source
▪ USD 21 billion of of investment
investments in sector ▪ Primarily in the
such as oil and gas, automotive sector
renewable energy and ▪ Plans to improve
infrastructure bilateral trade

China
UAE ▪ USD 60 billion CPEC
project as part of
▪ USD 6 billion aid China’s One Belt
package in the form of Road initiative
cash and deferred
payments for oil
▪ USD 1 billion into
hospitals

Source: Cornhill Analysis

Note: Mobile subscriber data is for Dec 2018
Pakistan’s digital infrastructure is growing rapidly and enabling new
services in retail, media and banking

 Pakistan has approx. 65 million broadband subscribers – penetration of 31% - primarily based in
urban areas

 Companies can capitalise on this substantial market by providing services that have been difficult
to access through traditional routes

Examples of digital service providers

Company Commentary

▪ Digital payments provider;

▪ Owned by Telenor and Ant Financial

▪ Online property sales website owned by Emerging Markets

Property Group;
▪ Raised over USD 100 million in 2019

▪ Online automotive sales

▪ Attracted USD 89 million in funding in 2018

▪ Online marketplace launched in 2012

▪ Acquired by Alibaba in 2018
 Examples of foreign investment
Company Country Sector Commentary

Norway Telecoms ▪ A leading mobile operator (second largest subscriber base)

▪ Awarded a GSM licence in 2004
▪ 43.5 million subscribers (29% market share)

USA Oil & Gas ▪ Re-entered country in 2018 to explore for new oil and gas resources
▪ Help develop Pakistan’s third LNG import terminal

Russia Oil & Gas ▪ Joint venture (with OGDCL) to develop and exploit natural gas resources
▪ Offshore pipeline agreement with Inter State Gas Systems Pakistan signed in February 2019;
estimated development of USD 10 billion

China Telecoms ▪ A leading mobile operator which entered the market in 2007 by acquiring an operator
▪ 32.3 million subscribers

Germany Automotive ▪ Vehicle assembly agreement signed with Pakistan Premier Motors Limited
▪ Phase 1 is for light commercial vehicle assembly in Karachi with a second phase expanding into
Skoda cars

UAE Energy ▪ Investment of approx. USD 2 billion in renewable energy projects in the coastal areas of Balochistan

Netherlands Food ▪ Joint venture with Matco Foods to sell Barentz food ingredients in Pakistan and to market Matco’s
glucose and rice products abroad

Turkey Food ▪ Turkish company, Hayat Kimya makes USD 330 million investment in hygienic FMCG manufacturing
facility in Faisalabad

USA Food ▪ Planning USD 1 billion investment in food and drinks sector in Pakistan

China Financial ▪ Alibaba affiliate, Ant Financial invested USD 184.5 million in Telenor’s digital payments platform, TMB
services in Pakistan

Source: Cornhill Analysis

Note: Mobile subscriber data is for Dec 2018
We provide a broad range of advisory services to assist our clients
in Pakistan
Entry strategy
We can assist companies with the development and execution
of a comprehensive market entry strategy for the Pakistan
market.
Typical assignments include:
▪ Analysing market attractiveness (market sizing, growth
prospects, competition, regulatory environment)
▪ Identifying and approaching potential partners
We can undertake expert interviews and confidential
intelligence.
Promotion and relationship building
We can assist companies with building relationships with key
individuals and organisations within Pakistan.
Our Pakistan network extends to senior levels of government
and business.
Competitive analysis
Assisting companies to develop a better understanding of their
competitive position in Pakistan.
Research methodologies include:
▪ Analysing the strategies and market positioning of peer
group companies
▪ Benchmarking analysis in areas such as product strategy
and pricing
Acquisitions
We can advise companies and investors on:
▪ acquisition search;
▪ commercial due diligence;
▪ and general transaction support.
We work with both companies and investors.
About Cornhill Strategy

Cornhill Strategy is a UK-based strategic advisory and corporate intelligence firm, with significant experience of undertaking
advisory and research assignments across the South Asia region. We work with clients in areas such as market entry strategy,
acquisition search, commercial due diligence and competitor intelligence.

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