1 March 2017
Major Economic Indicators
- Pakistan is part of the southern region of the Asian continent that is known as South Asia – it is located on the crossroads of Asia and the Middle East, bordering China in its north-most area, India in the east and Iran and Afghanistan in the west.
- With a population of nearly 190 million people, Pakistan is the world’s sixth most populous country. However, its per capita income of around US$1,400 is only slightly higher than that of Myanmar or Bangladesh (both are least developed country or LDCs).
- In 2015, Pakistan recorded a GDP growth of 4.2% on the back of an expansion in the construction sector and manufacturing activities, yet falling short of the official target of 5%. With double-digit growth in construction, the industry sector expanded by 3.6%. Services, which account for more than 50% of GDP, expanded by 5% in the same period, thanks to the recovery in the finance and insurance industry.
- As the second largest economy in South Asia after India, Pakistan is expected to continue its uptrend growth, with real GDP growth projected at 4.5% in 2016 amid lower oil prices and the implementation of structural and economic reforms, which are expected to further improve the investment climate.
- Main Pakistani exports include textiles and garments, rice, leather and sports goods, with a total export value of more than US$20 billion in 2015. Key imports include crude oils, petroleum products, machinery, plastics and transportation equipment.
- The US was the top export market of Pakistan in 2015, followed by China, which in turn was the largest source of imports for Pakistan, followed by the UAE. However, China is the largest trading partner of Pakistan due to the latter’s huge Chinese imports. Regarding export markets, both the EU and US provide GSP benefits to Pakistan.
- Pakistan entered into a free trade agreement (FTA) with China in 2006, the first FTA it had ever signed. China has recently announced that it intends to strengthen its FTA with Pakistan. Pakistan is a member of the South Asian Association for Regional Cooperation (SAARC), which was established in 1985 and comprises eight countries (i.e. Bangladesh, Bhutan, India, the Maldives, Nepal, Pakistan, and Sri Lanka, with Afghanistan joining SAARC only in 2006). The negotiation between Pakistan and Hong Kong on a comprehensive double taxation agreement (CDTA) is in progress.
- Pakistan is one of the most liberal foreign investment regimes in South Asia with 100% foreign equity permitted in the manufacture and infrastructure sectors.
- Energy shortages have long been a hurdle to quickening Pakistani output and economic growth. President Hussain has attempted to reform the country’s gas and electricity sectors since he took office in 2013. The power policy includes an ambitious agenda to increase electricity generation, raise tariffs, and improve efficiency.
- In his visit to Pakistan in April 2015, President Xi Jinping pledged that China would invest more than US$45 billion over a period of 15 years in the China-Pakistan economic corridor(CPEC), including construction of roads, rails and power plants. Construction of one of CPEC’s flagship projects, a 392-km Multan-Sukkur section of the Lahore-Karachi motorway, was inaugurated in May 2016, with the Gwadar Port of Pakistan, operated by the China Overseas Port Holding Co., set to be at full operation by the end of 2016.
- According to UNCTAD, FDI stock in Pakistan reached US$30.9 billion in 2014, a 23% increase from the previous year. China’s investment in the country has been growing fast, with cumulative FDI doubling between 2010 and 2014 from US$1.83 billion to US$3.74 billion, based on statistics of China’s Ministry of Commerce.
- The Pakistani government offers a number of tax incentives to FDI projects in many sectors spanning infrastructure, electronics and software. More information on Pakistan’s investment climate and regulations can be found on the website of Board of Investment, the primary agency responsible for investment promotion.
Hong Kong's Trade with Pakistan
In 2015, Hong Kong's total exports to Pakistan dropped by 3% to US$483 million. Major export items included telecom equipment and parts (US$289 million, 59.7% of total), musical instruments & parts/accessories; sound recordings (US$33 million, 6.7% of total) and printed matter (US$20 million, 4.2% of total).
Hong Kong's imports from Pakistan fell by 24.7% to US$242 million in the same period. Major import items included textile yarns (US$91 million, 37.6% of total), leather (US$75 million, 30.8% of total) and cotton fabrics, woven (US$ 19 million, 7.7% of total).
More information on the Belt and Road countries’ economic and investment environment, tax and other subjects that are important in considering investment and doing business are available in The Belt and Road Initiative: Country Business Guides.