1. Pakistan – The Preferred Investment Destination Pakistan The Preferred Investment Destination

2. Czech Asia Forum, 2010 Nadia Rehman Commercial Counsellor, Pakistan

3. Executive Summary Overview of the Investment Policy Infrastructure Transport IT & Communication Energy Bilateral Trade

4. Pakistan- Key Facts Area 796,096 square km Population ~ 170 million Land Boundaries Total 7,266 km Afghanistan 2,430 km, China 580 km, India 2,240 km, Iran 909 km. Coastline 1,046 km Climatic Zones Arid Desert, Sub-Tropical and Temperate Mountain Lands Terrain Flat Indus plain in east, mountains in north and northwest, Balochistan plateau in west and desert in south. Elevation Extremes Lowest point: Arabian Sea 0 m Highest point: K2 (8,611 meters ), 1000 peaks above 5,000 meters Length Karachi – Khyber (1,057 kilometers), which can be traveled by Motorway and Railway.

5. Pakistan Topography

6. Pakistan is well located to become one of Asias premier trade, energy and transport corridors Proximity to Middle-East, Africa, China and Europe Recent developments to realize this vision include: Gawadar port- Linking Afghanistan, Iran and China and onwards to Central Asia, Middle East & Europe Geographical location suits transit trade At The Center of Asian Growth Land locked energy rich Central Asia Booming China High Energy Demand Booming South Asia High Energy Demand Capital & Energy surplus Middle East

7. Demographic Dividend Population growing at 1.9% - representing 2.5% of worlds population Per capita incomes rising despite significant population size Demographic dividend with (54% of population below 19 years of age) will be in play for some time to come Population & Labor Force (million) Pakistan Population Demographic Source: Pakistan Economic Survey

8. Doing Business 2010

9. Home to over 700 Companies

10. Poverty Reduction Strategy 2009-10 has defined a 9-point agenda to increase productivity, efficiency & growth rates Macroeconomic Stabilization Social Development and Protection Agriculture Industrial Competitiveness Human Capital Development Energy Capital Markets Public-Private Partnerships for Infrastructure Institutional /Governance Reform Reform Process – 9 Point Plan

11. Liberal Investment Policy National treatment to foreign investors All economic sectors open to foreign investors Bilateral Agreements Investment Protection47 Countries Avoidance of Double Taxation52 Countries Protection of foreign investors Foreign Private Investment (Promotion & Protection) Act 1976 Protection of Economic Reforms Act 1992

12. Investment Policy Package POLICY PARAMETERS Manufacturing Sector Non-Manufacturing Sectors AgricultureInfrastructur e & Social Services including IT & Telecom Services Govt. PermissionNone (Exceptions - Arms and ammunitions, High Explosives, Radioactive substances, Security Printing, Currency and Mint Not required except specific licenses from concerned agencies. Remittance of capital, profits, dividends, etc. Allowed Upper Limit of foreign equity allowed 100% Minimum Investment Amount (M $) No0.30 0.15 Customs duty on import of PME 5%0%5%0-5% Tax relief (IDA, % of PME cost) 50% Royalty & Technical Fee No restriction for payment of royalty & technical fee. Allowed as per guidelines - Initial lump-sum up to $100,000 - Max Rate 5% of net sales - Initial period 5 years

13. Sector-wise FDI in Pakistan US$ Millions Sector2003-042004-052005-062006-072007-082008-09 Oil & Gas202.4193.8312.7545.1634.8775.1 Financial Business242.1269.4329.2930.31,607.6707.4 Textiles35.439.347.059.430.136.6 Trade35.652.1118.0172.1175.5165.7 Construction32.042.789.5157.188.592.5 Power14.273.4320.6193.470.3119.8 Chemical15.351.062.946.178.074.3 Transport8.810.618.430.273.093.1 Communications (IT & Telecom) 221.9517.61,937.71,898.71,625.3879.1 Agriculture3.9319.360.43134.2450.4493.6 Others170.1274.0285.01,107.2769.7778.2 Total949.41,523.93,521.05,139.65,152.83,721.8 Source: State Bank of Pakistan

14. Offshore & Onshore Exploration Refining Pipelines Storages Hydel Thermal Coal Solar Wind Biogas Coal Granite Marble Copper Semi-Precious Stones Priority Sectors Call centers Cell phone E-Commerce Software IT Parks Investment Opportunities Oil & Gas Mining Power IT & Telecom

15. Ports & Roads Urban Mass Transport Water supply & Sanitation Housing Desalination Textiles Leather Electronics Furniture Gemstones Food Processing Sports & Surgical goods Value added textiles Hotels Resorts Theme Parks Cultural tourism Entertainment Centers Priority Sectors - Agri-Business - Livestock & Dairy - Corporate Farming - Fisheries - Fruits & Vegetables - Seed Production Infrastructure Tourism SMEs Agriculture Investment Opportunities

16. Oil & Gas Infrastructure Power Industry/ Real Estate Banking Pesticides Dyes Agro Based Mineral Based Synthetic Fiber Pharmaceuticals Petrochemical Complex/ Naphtha Cracker Golf City Water City Sports City Media City Residential Complexes Office apartments Priority Sectors Light & Heavy Engineering Automobiles Auto parts Agriculture Machinery Steel Production Textile Machinery Privatization Housing Chemicals Engineering Investment Opportunities

17. Infrastructure Transport & Communication

18. Railways Sector Overview Total Track (Km) 11,246 Locomotives 540 Freight Wagons 20,724 Passengers Carried ~80M/yr Freight (000s tonnes) 7,234/yr Source: Pakistan Statistical Year Book 2009

19. Railways Investment Proposals ProjectTrack Length Doubling of tracks300 km Replacement of tracks700 km Rehabilitation of tracks500 km New tracks800 km High-speed train (Karachi-Peshawar) 1650 km Regional linkages~10,000 km

20. Railways Investment Proposals Procurement / manufacturing of HD wagons (3,500) Procurement / manufacturing of DE locomotives (150) Overhauling of locomotives (27) Replacement of obsolete signaling system Procurement of DE multi-train sets Procurement of mechanized track maintenance machinery Privatisation of train operations Cargo handling & development Privatisation of PR manufacturing facilities Outsourcing of repair / maintenance of tracks, rolling stock and services

21. M-4, FAISALABAD - KHANEWAL (184 Km / ADB/GOP) M-5,KHANEWAL – SUKKUR (524 Km / WB) M-6, RATODERO – DADU (150 Km / GOJ/GOP) M-7, DADU – DUREJI – KARACHI (250 Km / ADB / GOP) M-3, P/BHATTIAN -FAISALABAD (54 Km) Completed M-6, SHIKARPUR – RATODERO (50 Km / ADB) M-6, SUKKUR - SHIKARPUR (37 Km / ADB) PESHAWAR – TORKHAM (51 Km / ADB ) PESHAWAR NORTHERN BYPASS (34 Km / ADB) M-2, PINDI BHATTIAN - ISLAMABAD (243 Km) Completed WAZIRABAD – P/BHATTIAN (100 Km / WB) M-1, ISLAMABAD – PESHAWAR (154 Km / GOP) Ongoing UPGRADATION OF KKH (806 Km / GOP/China/ADB) National Highway Corridor

22. Khunjerab Pass N-35 N-70 N-50 N-40 N-25 KARACHI CHAMAN TAFTAN N-65 N-5 GWADAR QUETTA PESHAWAR N-5 N-55 Indus River Jhelum River Ravi River M-3 Hu b M-5 M-6 M-9 N-15 Gilgit S- 1 N-75 M-1 M-2 GABD N-45 N-80 S-2 N-10 M-8 M-7 LAHORE M-4 N-85 Description Km Total Network 260,000 NHA Network 11,485 Provincial Roads 101,000 District Roads 94,150 Urban Roads 54,000 NHA NETWORK Only 4 % of total network Carries 80% of commercial traffic N-5 carries 65% of this load National Highway Network

23. NHA - PPP Program & Modalities Public Private Partnership for improved technology / skills and management practices operational efficiencies Motorways, highways, tunnels and road structures Modes of PPP participation include Build, Operate & Transfer (BOT) Finance, Manage, Operate & Transfer (FMOT) Operating Concessions (OC)

24. Airport Infrastructure Major airports: Karachi, Lahore & Islamabad Secondary airports: Peshawar, Quetta, Multan, Faisalabad, Sialkot & Sukkur Investment Opportunities: New airports / upgrading of existing airports Cargo terminals / villages Outsourced operations, facilities and services Air craft movements at airports 197,486,000 Passengers handled 141.2 M Cargo 31.6 M tonnes Mail 5.3 M tonnes

25. Ports & Shipping Main ports: Karachi, Qasim and Gawadar Port entries: 3372 vessels with registered tonnage of 50 million tonnes Cargo handled 64.8 million tonnes Cargo in containers 5.9 million tonnes Investment opportunities Cargo villages & industrial parks Container terminals Outsourced operations, facilities and services KPT enclave Miscellaneous supporting infrastructure

26. Information Technology and Telecommunication Sector

27. Overview Overall Tele-density growth of over 60% in Pakistan telecom sector Investment of more than US$ 8 billion in the last four years Largest pool of educated and talented workforce in the country Transparent and streamlined government regulatory policies.

28. Teledensity Growth in Pakistan

29. Cellular Subscribers

30. Cellular Operators in Pakistan

31. Broadband Subscribers 592%

32. Foreign Direct Investment Attracted by Telecom Sector

33. Opportunities Available Development of IT Parks Electronic Media and Content Development Hardware Manufacturing Software Designing E-Business Call Centers

34. Incentives Offered 100% foreign equity allowed in software houses Tax holiday on software exports Duty free imports of hardware and software 90% first year allowance of equipment cost Tax holiday of 7 years for Venture Capitalist funds 30% depreciation allowed on all computer related equipment

35. Power Sector

36. Overview 65-70 % of the population has access to electricity Increasing electricity demand Government of Pakistans policy commitment to increase private sector participation. Discovery of Thar Coal fields Renewable Energy

37. Main Key Players Ministry of Water and Power Water and Power Development Authority (WAPDA) Karachi Electric Supply Corp (KESC) Pakistan Electric Power Company (PEPCO) Private Power and Infrastructure Board (PPIB) National Electric Power Regulatory Authority (NEPRA) Alternative Energy Development Board (AEDB)

38. Pakistan Power Sector IPPs5,80830 KESC1,7569 Sub Total7,56439 Grand Total19,400100 Private Sector Thermal 7564 MW (38.99%) Public Sector Thermal 4885 MW (25.18%) Public Sector Hydel 6489 MW (33.45%) Nuclear 462 MW (2.38%) MW % Private Sector WAPDA- PEPCO 11,3745959 NUCLEAR4622 Sub Total11,8366161 MW % Public Sector

39. Historical Peak Load Demand Growth

40. Sales by Customer Category (2008)

41. Peak Demand Projection (2007-2030)

42. Incentives Offered Fiscal Incentives: Fiscal Incentives: Customs duty at the rate of 5% on import of plant and machinery not manufactured locally. No sales tax on plant, machinery and equipment. Exemption from Income Tax. Initial depreciation allowance at the rate of 50%. Amortization of pre-commencement expenses allowed at the rate of 20% annually.

43. Incentives Offered… Financial Incentives: Financial Incentives: Permission to issue corporate registered bonds. Permission to issue shares at discounted rate. Raising of local/foreign finance allowed. Abolition of the 5% limit on investment of equity. Full repatriation of capital, capital gains, dividends and profits are allowed. Double taxation treaties

44. Incentives Offered… Long-term agreements available on: Build, Own, Operate and Transfer (BOOT) Build, Own and Operate (BOO) Protection against changes in taxes and duties. Indexation of foreign operating and maintenance cost (variable and fixed) with US CPI.

45. New Amendments to Power Policy 2002 Hedging against currency exchange risk. Broadening access to debt financing. Acceptance of Performance Guarantees and Letters of Credit in Euro, Pound Sterling, US Dollar and Yen ROE allowed in single currency

46. HYDROPOWER SECTOR

48. Hydropower Potential

49. Operational Hydropower Stations Project Installed Capacity (MW) Energy Generation (GWh) 1Tarbela347815801 2Mangla10005443 3Warsak2431009 4Ghazi Barotha14507037 5Chashma Low Head184959 6Rasul2263 7Dargai20162 8 Jabban * 20155 9Nandipur1432 10Chichoki Mallian13.223 11Shadiwal13.538 12Others629 TOTAL646430751

50. Investment Opportunities Projects with feasibility studies available Sammar Gah Hydropower Project Location – District Kohistan Capacity – 28 MW Construction Cost – US $ 42 million Batal Khwar Hydropower Project Location – Utror Capacity – 8.1 MW Construction Cost – US $ 14 million

51. Investment Opportunities Medium Size Hydropower Projects (Raw Sites) Arkari Gol Hydro Power Project Location – Momi Village, District Chitral Design Capacity – 26.4 MW Estimated Cost – US $ 28.58 million Bhimbal Hydropower Project Location – Naran, District Mansehra Design Capacity – 8.1 MW Estimated Cost – US $ 12 million

52. Investment Opportunities Medium Size Hydropower Projects (Raw Sites) Mastuj River Hydropower Project Location – Miragram, District Chitral Design Capacity – 8.9 MW Estimated Cost – US $ 14.5 million Lutkho River Hydropower Project Location – Shoghore, District Chitral Design Capacity – 6.4 MW Estimated Cost – US $ 9.93 million

53. Investment Opportunities Large Hydropower Projects Dassu Hydropower Project Capacity – 4320 MW Estimated Project Cost – US $ 7.8 billion Thakot Hydropower Project Capacity – 2800 MW Estimated Project Cost – US $ 6.0 billion Patan Hydropower Project Capacity – 2800 MW Estimated Project Cost – US $ 6.0 billion

54. Investment Opportunities Feasibility studies of projects in process: Lower Spat Gah Hydropower Project Capacity – 567 MW Tentative Project Cost – US $ 614 million Lower Palas Valley Hydropower Project Capacity – 621 MW Tentative Project Cost – US $ 667 million

55. Who Can Help? Embassy of Pakistan Board of Investment (BOI) Private Power and Infrastructure Board (PPIB) Sarhad Hydel Development Organization (SHYDO) National Electric Power Regulatory Authority (NEPRA) Ministry of Petroleum & Natural Resources Ministry of Water and Power Provincial Agencies

56. Bilateral Trade Total Bilateral Trade: 217,924,000 USD Exports to Czech Republic have grown at a rate of 43% since 2006 Trade balance is in the favour of Czech Republic Pak-Czech Forum 12 th May,2010 BIT and Avoidance of Double Taxation Treaty

57. Contact Information Nadia Rehman Commercial Counsellor Office: +420-233-312-868 Website:

58. Thank you