1. Liberalization in CRS – The Pakistani Experience Pakistan Software Export Board www.pseb.org.pk

2. Outline 1. Pakistans Economic Growth 2. The IT & Telecom Sector 3. Pakistans Commitment to GATS 4. Experience with Liberalization

3. Pakistans Economic Growth

4. Pakistan – Some Statistics Population = 150 million + Population = 150 million + GDP = $96.1bn (2004); Growth = 8.4% GDP = $96.1bn (2004); Growth = 8.4% Industrial Growth (2004-05) = 15.6% Industrial Growth (2004-05) = 15.6% Total Exports = $14.4bn; Growth = 17% Total Exports = $14.4bn; Growth = 17% Imports = $20.62bn; Growth = 32% Imports = $20.62bn; Growth = 32% FDI (2004-05) = $1.67bn+; Growth = 61% FDI (2004-05) = $1.67bn+; Growth = 61%

5. Leading Sectors for FDI- Last 2 Years (2003-05) SectorMillion $% age Telecom517.6 (2004-05) 221.9 (2003-04) 34.0 (2004-05) 23.4 (2003-04) Financial Services269.4 (2004-05) 242.1 (2003-04) 17.7 (2004-05) 25.5 (2003-04) Oil & Gas217.5 (2004-05) 273.3 (2003-04) 14.3 (2004-05) 28.8 (2003-04) ALL HEAVILY DEPENDENT ON IT

6. The IT & Telecom Sector

7. Pakistans IT and Telecom Sector Annual IT Market > $ 800 m with growth rate = 30% Annual IT Market > $ 800 m with growth rate = 30% Increase in Software Exports > 40% (year on year) for last three years. Increase in Software Exports > 40% (year on year) for last three years. By July 2005, total cellular subscribers reached 14.1 million showing a growth rate of 156% in one year. By July 2005, total cellular subscribers reached 14.1 million showing a growth rate of 156% in one year. Nearly 700 companies ICT Firms; about half are in CRS specifically Nearly 700 companies ICT Firms; about half are in CRS specifically Total employment = 95,000 Total employment = 95,000 Annual IT graduates = 5,500+ Annual IT graduates = 5,500+

8. Whom Do Pakistani Software Companies Sell To Exports vs. Domestic Export-Products22.56% Export-Services38.52% Domestic-Products23.37% Domestic-Services16.53% Public vs. Private Sectors Public Sector (Govt.) Domestic8.51% Public Sector (Govt.) Foreign5.90% Private Sector – Domestic30.79% Private Sector – Foreign54.77%

9. Main Incentives for IT & IT Enabled Services Industry (in place since 2000) Tax holiday on IT export earnings until 2016 Tax holiday on IT export earnings until 2016 100% Foreign Ownership allowed 100% Foreign Ownership allowed 100% repatriation of earnings allowed 100% repatriation of earnings allowed 5% percent customs duty on import of IT related machinery and equipment 5% percent customs duty on import of IT related machinery and equipment 33% annual depreciation of equipment allowed 33% annual depreciation of equipment allowed Availability of Export Refinance Availability of Export Refinance Presence of technology parks - a one-stop shop for all services Presence of technology parks - a one-stop shop for all services

10. Exports of IT & ITeS Fiscal Year from July to June

11. Major IT Companies In Pakistan IBM IBM Microsoft Microsoft Oracle Oracle NCR NCR Siemens Siemens Nortel Nortel Nokia Nokia ZTE Huawei Motorola Bearing Point Cisco Hyundai Ericsson HP

12. GATS & Pakistan

13. Pakistans GATS Offer 841842843844 1-3 1-3 4 4 4 4 Full commitment Horizontal commitment

14. Experience with Liberalization

15. Support for Rapid Industrial Growth Support for Rapid Industrial Growth Public Sector Automation Public Sector Automation Possibility to export services to other countries Possibility to export services to other countries e.g. ZTE, Bearing Point, NCR, Oracle, Halliburton Increase in software exports > 40% in the last 3 years Increase in software exports > 40% in the last 3 years Increase in no. of firms registered 1300 % since 1996 Increase in no. of firms registered 1300 % since 1996 Establishment of regional/international service centers Establishment of regional/international service centers