Financing to Support MAKE IN PAKISTAN F I N A N C I N G T O S U P - PowerPoint PPT Presentation

Financing to Support MAKE IN PAKISTAN

F I N A N C I N G T O S U P P O R T M A K E I N PA K I S TA N 02 THE PBC’S MEMBER COMPANIES

F I N A N C I N G T O S U P P O R T M A K E I N PA K I S TA N 03 THE PBC’S MEMBER COMPANIES

F I N A N C I N G T O S U P P O R T M A K E I N PA K I S TA N 04 Pakistan’s three acute needs, one solution: “MAKE IN PAKISTAN” JOBS IN MANUFACTURING VALUE-ADDED EXPORTS HIGHER TAXES FROM A & SERVICES AND IMPORT SUBSTITUTION BROADER BASE Strong domestic industry with a consumer base of 207 mn

F I N A N C I N G T O S U P P O R T M A K E I N P A K I S T A N Since ’88, Pakistan has been to IMF 12 times. 05 RECURRENT EXTERNAL ACCOUNT CRISES 9 8.1 8 7 I m p o r t C o v e r i n M o n t h s t C o v e r i n M o n t h s 7 6 5.2 4.7 4.5 4.5 5 4.4 4.1 3.9 4.1 3.6 4 3.2 3.1 3 3.1 3.2 3 2 I m p o r 1.9 1.9 1.7 1.7 1.36 1.36 2 1.7 0.9 1 0 1993 1994 1993 1994 1995 1995 1996 1996 1997 1997 1998 1998 1999 1999 2000 2000 2001 2001 2002 2002 2003 2003 2004 2004 2005 2005 2006 2006 2007 2007 2008 2008 2009 2009 2010 2010 2011 2011 2012 2012 2013 2013 2014 2014 2015 2015 2016 2016 2017 2017

0.75 Growth >x7 Multiple Growth >x2 Multiple Growth Multiple F I N A N C I N G T O S U P P O R T M A K E I N PA K I S TA N 06 PAKISTAN LOSING SHARE OF WORLD EXPORTS Pakistan’s Share of World Exports Down, Bangladesh’s More than Doubled since 2003 & Vietnam’s grew 7 - fold Pakistan's Share in World Exports 1.4 1.21 1.2 1 0.8 % 0.6 0.4 0.2 0.17 0.16 0.2 0.12 0.09 0 Pakistan Pakistan Bangladesh angladesh Vietnam Vietnam 2003 2017

F I N A N C I N G T O S U P P O R T M A K E I N P A K I S T A N Manufacturing (% of GDP) Manufactured Goods as % of Exports 07 PAKISTAN IS DE-INDUSTRIALISING PREMATURELY AND MANUFACTURED GOODS ARE LOW IN EXPORTS 20 20 120 120 17.5 18 18 96 100 100 16 16 77 13.8 80 80 13.6 14 14 13.3 % % 12.7 12.8 12.1 12 60 60 12 12 40 40 10 10 20 20 8 6 0 2005 2005 2007 2007 2009 2009 2011 2011 2013 2013 2015 2015 2017 2017 2018 2018 Pakistan Pakistan Bangladesh Bangladesh

F I N A N C I N G T O S U P P O R T M A K E I N P A K I S T A N Growth of Manufacturing 08 MANUFACTURING GROWTH LAGS NEIGHBOURS 14 14 11.7 11.8 12 12 11 10.5 10 10 9 8 7.4 8 % 6.2 6 5.8 5.2 3.9 3.7 4 2 0 Pakistan Pakistan Bangladesh Bangladesh India India 2015 2015 2016 2016 2017 2017 2018 2018

F I N A N C I N G T O S U P P O R T M A K E I N P A K I S T A N 48.5 % of GDP % of Tax Burden Sector 40 1 <1 58 18.5 19.5 13.5 Disproportionate Tax on Manufacturing 09 MANUFACTURING IS OVERTAXED Manufacturing Agriculture Retail & Wholesale Rest

F I N A N C I N G T O S U P P O R T M A K E I N P A K I S T A N $268 Mn 2013 2008 2006 2005 (in 2017) Trade Balance ($16.4) Bn ($1.0) Bn ($2.2) Bn $2.2 Mn Year Signed (in year signed) Trade Balance Country $38.7 Mn ($1.1) Bn ($1.5) Bn ($3.2) Bn $94 Mn Poorly Negotiated FTA's 2007 10 FTA'S HAVE NOT HELPED T O BALANCE TRADE Sri Lanka China Malaysia Indonesia Mauritius

F I N A N C I N G T O S U P P O R T M A K E I N P A K I S T A N 2.9x 50 17 13 3.3x 3.6x 5.7x 3.4x 3.2x 47 % Import from China 89 64 85 65 97 87 13 34 Import Value Items Growth 112 170 74 169 49 42 2007 (US$ Mn) Multiple 2017 (US$ Mn) Import Value 11 GROWTH IN IMPORT RELIANCE - MAINLY FROM CHINA Footwear Pumps Glassware Tiles Blankets Fans

F I N A N C I N G T O S U P P O R T M A K E I N P A K I S T A N Number of Taxes 1 121 173 WB EDB* Paying Taxes Rank (out of 190) 3 13 47 12 COMPLEX FISCAL REGIME Pakistan India Hong Kong (Best in World) *World Bank Ease of Doing Business 2019 Ranking World Bank Ease of Doing Business 2019 Ranking

F I N A N C I N G T O S U P P O R T M A K E I N P A K I S T A N Country 22% 25% 15% 25% 38%* VAT/GST% Corp Tax % 10% 15% 12% 7% 17% 13 HIGH TAX RATES Pakistan India Bangladesh Srilanka Vietnam * Includes WWF/WPFF/Super Tax Includes WWF/WPFF/Super Tax

F I N A N C I N G T O S U P P O R T M A K E I N P A K I S T A N Private Consumption % of GDP 14 CONSUMPTION DRIVES THE ECONOMY …… .. AND FDI 100 100 81.2 80.1 80 80 76.2 64.4 68.2 61.8 59.4 60 60 55.9 40 40 20 20 0 1991 1991 2001 2001 2011 2011 2016 2016 Pakistan Pakistan India India

F I N A N C I N G T O S U P P O R T M A K E I N P A K I S T A N Investment to GDP Ratio 15 INVESTMENT IS HALF THAT OF OUR PEERS 40 40 37 35 35 31 31 30 30 25 25 % 20 20 16.4 15 15 10 10 5 0 Pakistan Pakistan Bangladesh Bangladesh India India Sri Lanka Sri Lanka

F I N A N C I N G T O S U P P O R T M A K E I N P A K I S T A N 16 GOVERNMENT CROWDING OUT THE PRIVATE SECTOR FROM BORROWING 19.4 20 20 18 18 16.3 16 16 13.6 14 14 12.5 12 12 10.4 % 9.6 9.4 10 10 8.2 7.7 8 6.6 6.0 5.7 5.4 5.0 6 3.9 3.8 3.3 3.6 4 3.1 2 0 FY98 FY99 FY98 FY99 FY00 FY00 FY01 FY01 FY02 FY02 FY03 FY03 FY04 FY04 FY05 FY05 FY06 FY06 FY07 FY07 FY08 FY08 FY09 FY09 FY10 FY10 FY11 FY11 FY12 FY12 FY13 FY13 FY14 FY14 FY15 FY15 FY16 FY16 Source: State bank of Pakistan and Pakistan Bureau of Statistics Source: State bank of Pakistan and Pakistan Bureau of Statistics

F I N A N C I N G T O S U P P O R T M A K E I N P A K I S T A N 17 LOW SHARE OF SME FINANCING IN TOTAL 20 20 17.69 17.01 16.18 16 16 11.75 12 12 10.28 9.34 % 8.11 8 6.73 6.59 6.30 6.07 5.97 4 0 Dec-05 Dec-05 Dec-06 Dec-06 Dec-07 Dec-07 Dec-08 Dec-08 Dec-09 Dec-09 Dec-10 Dec-10 Dec-11 Dec-11 Dec-12 Dec-12 Dec-13 Dec-13 Dec-14 Dec-14 Dec-15 Dec-15 Dec-16 Dec-16

F I N A N C I N G T O S U P P O R T M A K E I N P A K I S T A N Pakistan 18 PRIVATE SECTOR LENDING AS % OF GDP LOWEST Pakistan's Relative Standing in Credit - to - GDP Ratio (2010 - 17 Average) China 137 Malaysia 118 Thailand 110 Vietnam 101 Chile 76 S.Africa 68 Brazil 64 Turkey 63 Nepal 59 52 India 49 Russia 48 Oman 46 Cambodia 43 Bangladesh 42 S.Arabia 40 Colombia 36 Philippines 36 Sri Lanka 31 Indonesia 28 Egypt 22 Mexico 16 0 50 50 100 100 150 150

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