In recent years, several sectors of Pakistan’s economy have been showing signs of growth and nourishment despite overall economic challenges. These sectors are contributing to economic development, job creation, and increased revenues.
Real Estate
New tax rates have been notified on real estate transactions. This along with an annual 1 percent tax will reduce the parking of black money in real estate. Next, we need to bring the FBR rate to market value and regularise the business of files.
Remittances
After many years, in FY23 Pakistan witnessed a decline in remittances. Now the government of Pakistan is trying to increase dollar inflow by incentivizing remittances as follows:
- 30 Saudi riyal/100 USD will be paid to the remitting company.
- Rs3/$ incentive if a 10%+ increase is achieved in remittance inflows.
Energy
20 solar and wind projects + CTBCM approved (a mechanism to sell electricity directly to consumers). The outgoing government has ratified these decisions however implementation will rest with the upcoming government.
Oil and gas
Local refineries will upgrade their machinery, reducing furnace oil production. $4-5 billion upgradation cost for all 5 refineries in Pakistan, the government of Pakistan will contribute $1 billion via duty protection.
Solar energy
First time ever, in 2023, more investments will be made in solar energy than in oil production. Pakistan, however, is still awaiting finalisation of the local solar panels manufacturing policy.
FDI
The best way forward for solving the current account deficit problem is FDI in export-oriented sectors. The Chinese company, Challenge Fashion, is planning to invest $150 million to construct a textile park in Lahore. Taxation & ease of doing business reforms are needed to attract FDI in export sectors.
Power generation
Shanghai Electric, the 1320MW plant is producing approx 8-10 billion units (kwh) annually at a variable cost of less than Rs6/kwh. Thar coal is Pakistan’s energy lifeline. Neelum Jhelum hydro project has resumed trial production. Full-scale production will be achieved in the coming days. 969MW of low-cost energy will be added to the grid replacing expensive furnace oil & imported coal.
Rice
After the ban on non-Basmati rice exports by India, Thailand is also facing water scarcity affecting rice production. Rice prices are touching a 15-year high level. Local farmers stand to gain as Pakistan expects 9 million tons of rice production this year. $3 billion in rice exports is expected next year as against $2.1 billion in FY23.
Communications
Pakistan has developed its own communication app ‘BEEP PAKISTAN’ for internal communication in government organisations. Premium YouTube services have been launched in Pakistan with decent pricing of Rs 479/- p.m.
Aviation
The Executive Committee of the National Economic Council (ECNEC) has approved the partial outsourcing of Islamabad international airport under a public-private partnership. Aviation-related operations will still remain with Civil Aviation Authority (CAA). The total concession period will be 15 years and the successful bidder will pay $100 million to CAA upfront.
Surgical goods
Pakistan’s surgical exports are increasing with volume reaching $306 million in FY23. For sustained growth and to be able to export to developed countries we need Food and Drug Administration (FDA) compliant and other internationally recognised production facilities. At present, we can only export to developing markets.
Minerals
Reko Diq is an opportunity for Pakistan to demonstrate that we are an investable country with long-term sanctity for contracts. Pakistan’s equity contribution is around $2 billion with 50% stakes held by the Balochistan government and three refineries.
Auto sector
Indus Motor Company Limited is the first Pakistani company in the four-wheel segment that has entered into an agreement with Toyota Egypt.