Punjab Board of Investment & Trade

[
Punjab Board of Investment and Trade
Untapped Investment Opportunities in Punjab ]
1

TODAY’S AGENDA
• Snapshot of Pakistan

• Snapshot of Punjab

• Overview of Potential Sectors

• Overview of PBIT

Potential & Opportunities in Punjab 2

SALIENT FEATURES OF PAKISTAN

• Pakistan GDP is USD 162
Billion (current USD)

• Ranked as the 46th economy
in the world.

• Population of 169 Million

Source: Data @ World Bank

PAKISTAN: INVESTMENT DESTINATION OF CHOICE
1: Geo-strategic Location
The gateway to the energy rich Central Asian States, the financially liquid Gulf States and the economically
advanced Far Eastern Economies

2: Trained Workforce
Proficient in English, hardworking and skilled mostly in engineering and medicine

3: Positive Economic Outlook
One of the fastest growing economies of the world having touched a GDP growth rate of 8.4% in 2005.
Over 170 million consumers. Foreign Direct Investment has risen sharply from an average of $300 million in
the 1990s to over $3.7 billion in 2008-09

4: Investment Policies
Tailor made to suit investor needs. No investment in Pakistan has ever been nationalized

5: Financial Markets
Development of improved infrastructure in the stock exchanges of the country


POLICY INCENTIVES
• 100% Foreign Equity is allowed
• Remittance of capital, profits, dividends, etc is allowed
• Advanced tax ruling
• International arbitration enforcement guide
• All economic sectors in Punjab open to FDI
• Equal Treatment of local and foreign Investors
• No government sanction is required
• Only 5% customs duty on import of parts not available in
Pakistan


PUNJAB – REGION OF UNTAPPED OPPORTUNITIES

• Punjab GPP 95 billion (Current USD)

• 58.5% of Pakistan’s National Economy

• Population of 93 Million

• Most industrialized province of Pakistan

• Fertile and well irrigated agricultural land
PUNJAB

• Business conducive policy regime

• Political commitment to Private Sector
Development

7
Potential & Opportunities in Punjab

MARKET SIZE COMPARISON
93
82
75
68
63
49
40
34
29 27
22

Population in million

PUNJAB LEADS MANY COUNTRIES IN GDP
95
88
GDP in USD billion

63
52
49
42
35
25
21
12
8 6


WORLD BANK: EASE OF DOING BUSINESS 2011

167
127 134
116 123
102 107
79 83

1

Source: World Bank Ease of Doing Business Index 2011

1
Fresh Buffalo milk

2
Wheat

3
Cotton lint

4
Fresh Cow Milk

5
Rice, paddy

6
*Cattle Meat 7
Sugar cane
8

*Buffalo Meat

Potential
9

*Chicken Meat
10

Cottonseed
11

Mangoes, guavas
12

Hen eggs, in shell

Source: FAOSTAT – United Nations, 2008 & Opportunities in Punjab
13

Indigenous Goat Meat
14

Dry Chillies & peppers
15

Onions, dry
16

Potatoes
17

Maize
GLOBAL RANKING IN AGRICULTURE & LIVESTOCK

* Sheep Meat
12
18 19

Oranges
* Indigenous

EDGE IN AGRICULTURE
• Abundant Workforce;
– 46% of total workforce in Pakistan employed in
agriculture.
• Four distinct seasons;
– Summers, winters, spring and monsoon, all essential for
the rich quality and flavor; characteristic of crops in
Pakistan
• Fertile Soil;
– Alluvial soil of five rivers
• Largest Contiguous Irrigation Network;
– Largest system in the world covering 14 Million hectares.

– Total length of the canals is about 61,000 km with
communal watercourses, farm channels, and field ditches
covering another 1.6 million km.


POTENTIAL INVESTMENT OPPORTUNITIES
Fruit Concentrate/ Cost; US$ 1.5 Million
Location; Multan/RY Khan/Khanewl/Bahawalpur
Pulp Plant facility Capacity: 3 Tons/ Hour
IRR: 23 %

Integrated cold Export Pack houses:
Cost/Pack house: USD 1.5 Million
chain facility Locations; All over Punjab
14 Key strategic locations have been identified
IRR: 36%

Cold Storage Cost/Cold store: USD 2.1 Million
Locations; 8 strategic locations including Rawalpindi/Islamabad
IRR: 30.81%

Refrigerated Cost of One Container Terminal: USD 8.5 Million
Location; Lahore
Containers: 200 Refers and 50 CA Reefers
IRR:32%

Fresh Fruit Cost: USD 1.0 Million
IRR: 75%
Processing (kinnow) Location; Bhalwal Industrial Estate


UAE Pakistan Investment and Trade
Opportunities

EDGE IN LIVESTOCK
• World's 3rd largest livestock
70
population Million Heads
60 58
• 5th largest milk producer
50
• 43 breeds of livestock
40
• Livestock growing @ 4.2%
30
20 18
20 14
10 6

0 Source: Punjab Development Statistics 2010
Total Goats baffalos Cows Sheep


POULTRY
• 25,000 Poultry Farms in the The per capita consumption of meat in Pakistan is

Country. only 7 KG and 60-65 eggs annually.

Whereas developed world consumes 41 KG meat
• 400 Hatcheries
and over 300 Eggs per capita per year
• 150 Feed Mills

• 5.51 M.M.T Feed
Consumption

• $ 4 Billion Turnover

• 10-12% annual growth rate


HALAL MARKET POTENTIAL; THE SLEEPING GIANT

 Global Halal Product Market worth USD 3 Trillion

 Halal Food Market worth USD 67 Billion

 Growing demand for certified and hygienic Livestock produce
locally and internationally

 Production of processed meat & dairy unable to keep pace with
growing demand

 Shortage valued at USD 240 million including Meat, Dairy,
Poultry & Eggs

(Source: Livestock Department

PAKISTAN: DOOR TO REGIONAL HALAL MARKET

• Regional Halal market of more then
360 million consumers

• Direct neighbors (Iran, Afghanistan,
China, India)

• Allows sea access to China,
Afghanistan

• Land Routes to Central Asian States

• Sea Routes to Middle East.


OPPORTUNITY
MEAT DAIRY
• Establishment of Integrated meat processing
•Dairy processing & value addition units
facility
including Yogurt , Cheese, white cola/mint
• Estimated cost US$ 5.7 Million,
cola, Goat milk products ,etc.
• Location: Metropolitan Area
• Payback Period: 1.2Years
• Capacity:
• (small)6000 animals/ day
• (large) 500 animals/day
• Bone Chips & Gelatin plant
(Estimated cost US$ 3.4 Million, Pay back in
1.6 years
• Halal Tallow, Soap & Cosmetics units


HALAL PARK IN LAHORE
• Availability of 40 hectares in the premises of Lahore Meat
Processing Complex in the vicinity of Lahore

• Availability of raw material for by-products manufacturing
industries from LMPC and slaughterhouses in the surrounding
cities

• Excellent opportunity for by-products industries i.e. Soap,
Gelatin, Cosmetics, Casing etc. as huge market for the by-
products is available in Pakistan besides global halal market.

• Lahore Meat Company can enter into Joint Venture or any
mode of Public-Private Partnership for provision of safeguard

• The interested parties are at liberty to offer their own
proposals for Partnership or Joint Venture ship


PROJECTED ENERGY DEMAND

Source: Private Power & Infrastructure Board – Supply & Demand Position 2020


ATTRACTIVE POLICY REGIME
Fast – track project development at highest priority

Guaranteed purchase of electricity backed by Government of Pakistan

State Support - Modes of ownership
Various Public Private Partnership models available
Independent power producer (IPP) – Govt. of Punjab as a facilitator

Price setting model employed- “Cost plus tariff”-
Minimum 15% ROE guaranteed net of taxes (US$ based)
Many of the variable operating cost are passed-on in the tariff model

Special incentives
Tax benefits (capital-gains tax, income tax and turnover tax exemption)

Hydrological risk taken by the power purchaser for hydropower projects. Up to 50
years of concession available


PUNJAB’S ENERGY SECTOR POTENTIAL
• HYDEL PROJECTS:
• 317 Hydel Sites with a potential of 600MW

• CO-GENERATION AT SUGAR MILLS:
• 46 Sugar Mills with a potential of 1100MW

• COAL BASED POWER PLANT:
• 245 million MT of Coal with a potential of
86,100MW

• SOLAR POWER:
• 2.9 million Hectares of unused desert land
with a potential of 6,105,263MW


OPPORTUNITY TO DEVELOP 1 BILLION MT OF IRON ORE IN
PUNJAB Deposits Status
Estimated value is over USD 170 billion Chiniot 123 MMT Proven
• Flexible investment option for mining of Chiniot, Rajoa and Rajoa 500 MMT Assessed
Kalabagh Iron Ore deposits Kalabagh 300 MMT Estimated

• Setting up Steel mills utilizing the domestic Iron Ore
Policy highlights
• RFP already issued
• Public Private Partnership (PPP) model
Background offered to facilitate the private investor

• Large untapped deposits of Iron Ore in Punjab • Punjab Mineral Company (PMC) is
established to work with the private
• Authetication of deposits and techno-economic sector
studies of Iron Ore deposits are in progress

• Iron Ore development is one of the top priorities
of the government

• Fast-track development of Iron Ore projects

28
Image Source: Mines & Mineral’s Dept.; Information Source(s): Mines and Mineral Department Punjab

COMMERCIAL & MODERN HOUSING

• Opportunity for rapid construction of housing available
for private investment in Gujranwala and Sialkot.

• Land is being purchased in Gujranwala (500 acres) and
whereas that in Sialkot (200 acres) has been purchased.

• Registration and operation of Real Estate Investment
Trusts (REITs)
• Allows pooling of capital of a large number of
investors to purchase, develop and manage real
estate assets
• Legal framework exists.
• Government offers various tax incentives Market highlights

• Shortage of 7 Million houses
Project Highlights • Need to construct 330,000 every year
• Existing housing stock is 12.07 million
• Gujranwala – 500 acres units of which 30% is aging
• Sialkot - 200 acres • Pakistan has 2% population growth rate
• Investment required – US$ 40 Million and 33% of population resides in urban
• Payback Period – 5 years centers
• IRR - 45% • Punjab is urbanizing at a rate of 5-6%
• Can be executed independently/ through JV or Public- every year.
Private Partnership
30
Image(s) Source(s): PBIT; Information Source(s): Housing Dept.,

Background Market highlights
• Total length of the ring • Automobile growth
road is 89 km or which over 12% per annum
40km is completed since 2002
(Northern Loop)
• Urbanization has
• 3 + 3 (with future created the demand for
provision of 4th lane, quality road
Metro and Service infrastructure
Roads)
• Over 300k commuters
• Project includes 5 transpire the existing
interchanges and 17 roads of the southern
underpasses loop daily
Available opportunities
• Total construction
costs at PKR 26 billion • Opportunity for the construction of the Southern Loop
of the Lahore Ring Road for Private Investors

• To be executed under PPP Mode
• The government shall provide land free of all
encumbrances
• Concessions to be decided mutually upon
completion of detailed financial model

31
Image(s) Source(s): Transport Dept.; Information Source(s): Transport Dept.

PUNJAB: INDUSTRIAL ESTATES

the biggest
industrial
estate of
Pakistan:
3500 acres


COMPANIES OPERATING CURRENTLY

Prime land for urban retail trade is also available

Chairman/ Chief Minister

BOD Advisory
Board
Vice Chairman

CEO

COO

DG
DG Finance & DG
DG Projects Marketing/
Admn facilitation
IBD

Director Agriculture Director Legal

Director Textile Director One
window

Director
Director Foreign
Infrastructure
Interface &
chambers

Director energy &
Mines
36

PBIT Structural Integration
Alignment with Federal BOI goals

Provide a one Monitor progress of Promote local and
Formulate and review Initiate Sectoral
window facility and investment , appoint international
national investment investment proposals
coordinate with commissions and negotiate investment
policy and maintain
concerned ministries agreements opportunities
investment database

Coordinate &
Innovate and implement trade &
re-think investment policies of Promote
investment in Federal & Provincial private/public
Punjab govt. partnership
models Consider individual
investment proposals Provide referral
Facilitate and categories of (matchmaking)
investment investment. services for
Promote Punjab as Develop PBIT prospective
through one into a
the destination of window investors &
choice for local Knowledge businesses
arrangement Center of
and foreign
investors excellence
Liaise with private
sector, trade bodies &
associations to
promote
trade/investment

37

PBIT’s Sphere of Influence
Federal Board of
Investment

Chief Minister Punjab

Secretariat

Provincial
PBIT Administration
Ministries

Inspector General
Punjab 36 Districts

38

PBIT’s Role and Focus as an IPA

39

PBIT’s Private Sector Focus
SUPPORT STAFF SUPPORT STAFF

GOVERNMENT OFFICERS

OVER 70% GOVT.
OFFICERS

OVER 80% PROFESSIONALS

PROFESSIONALS

TYPICAL PBIT
DEPTS.

40

Services PBIT provides to Investors
POTENTIAL
INVESTORS
1. One-to-One Relationship

2. Reduced Time to Market
PBIT’s
3. Link Relevant Government ONE WINDOW
OPERATION
Departments

4. Matchmaking between
International businesses and 42 RELEVANT GOVERNMENT AGENCIES
local businesses FOR ACQUIRING PERMISSIONS AND
AUTHORIZATIONS

41

PBIT’S STRATEGIC FOCUS AREA
1. Build Punjab’s image and perception

2. Identify opportunity and develop concrete sellable
projects

3. Match-make investors, generate MOU/EOI/Agreements
and follow-up on these with related departments till
execution

4. Undertake trade promotion to boost exports

5. Carry out Business Facilitation and undertake policy
advocacy


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