The increasing proportion of Pakistan’s working-age population provides the country with a potential demographic dividend. It is a diverse country with a large number of different languages and ethnic groups, the largest of which is Punjabi (44 percent).
In 2014, Pakistan’s GDP growth was 4.1 percent. It has an emerging export sector contributing 13 percent of GDP, with exports remaining positive throughout the global financial crisis.
Pakistan is an importing country. Imports account for 39.8 percent of GDP, while exports account for only 24.8 percent of GDP. Pakistan’s low costs of importing and exporting goods reduce overall trading costs, and it boasts good international trade connections via air and sea.
Agriculture is the key sector of Pakistan's economy and the country is a significant exporter of cereals, linen and cotton. Textile manufacturing, especially linen products and floor coverings, is an important industry in many parts of Pakistan.
Pakistan's major export trade partners are the United States, United Arab Emirates, Afghanistan, and the United Kingdom.
Bilateral trade between Pakistan and New Zealand was NZ$132.7 million in 2014, and has exhibited only moderate growth over the last decade. New Zealand's exports to Pakistan in 2014 totalled NZ$74.6 million, of which 45 percent were dairy products. Aircraft, fats and oils, iron and steel, cocoa, hides and yarns, wool and machinery were other contributors.
Imports from Pakistan in 2014 were mostly textile products such as linen, cotton, yarn and apparel, while cereals formed roughly 10 percent of the NZ$58.1 million dollar inwards trade.
Facts about Pakistan's economy
- Pakistan is one of the world's largest producers of cotton, which accounts for more than half of total exports. Wheat and rice are other substantial exports, while dairy and poultry are major domestic sectors. Major imports are petroleum, paper and paperboard, iron and steel, petroleum products, plastics, machinery, transportation equipment, edible oils and tea.
- Pakistan is one of the largest producers of dairy products by volume, with growth coming from increasing herd sizes rather than technology-driven gains.
- The country's economy is heavily dependent on the agricultural sector, with agricultural production accounting for 25 percent of domestic production. Economic performance is strongly influenced by the impact of weather and natural disasters on agricultural production, and has been further impeded at times by poor infrastructure, issues with governance and terrorism. The economy has preserved some growth however, ranging between 2 and 5 percent over the past few years.
- Pakistan is relatively open to foreign investment, and as a result foreign direct investment (FDI) in the country has increased in recent decades.
- The sectors attracting higher levels of investment include construction, automotive and real estate. However, infrastructure constraints have hindered investment growth in these areas. Inwards investment fell from $US5.4 billion in 2008 to $US1.3 billion in 2011, according to the World Bank. On the upside, the government's investment policy enables 100 percent repatriation of capital, capital gains, dividends, and profits with official approval.
Opportunities for New Zealand businesses
There are some basics to note:
- Pakistan's Government (which includes state-run corporations and the armed forces) is Pakistan's largest importer. Procurement decisions are not always made on the basis of price and technical quality; success can often depend on the ability of the agent and the company representing the tender locally.
- Pakistan has no uniform or universal system of labelling and marking requirements. Individual industries or sectors are subject to the regulations of specific bodies. In the case of meat, products must have a Halal slaughter certificate.
- A challenge facing New Zealand exporters to Pakistan is a lack of transparency in decision making. (Pakistan ranked 126th on 2014 Transparency International's Corruption Perceptions Index.)
- A visa and a valid passport are needed to visit Pakistan. Business visitors can obtain a 30-day business visa on arrival as long as a letter of recommendation or invitation is held from a local company or New Zealand Trade and Enterprise.
- The national language is Urdu, but English is commonly spoken in business, government offices and trade. The dominant religion is Islam.
- Business dress for men is usually a cotton shirt and tie. Suits are worn to meetings with high-ranking officials and senior business people. Businesswomen may wear a conservative two-piece suit (skirt and jacket).
- Because of the security situation in the country, some business meetings are held outside of the country, eg in Dubai.
The sectors described below outline broad opportunities in Pakistan.
Dairy and agriculture
Pakistan is one of the largest milk producers in the world, and dairy products form part of the traditional Pakistani diet. Demand for milk and butter continues to grow, but much of Pakistan's dairy production does not reach beyond the farm gate and herd sizes are very small.
Due to agriculture's large contribution to the economy, significant opportunities exist for assisting on-farm production, post-harvest handling, processing and packaging of agricultural produce. Population demographics indicate demand for food and protein will continue to rise.
New Zealanders have been involved in the development of Pakistan's dairy industry, which the Pakistan government has identified as an area requiring more investment. Success in the market demands adaptability and persistence; careful planning and patience are prerequisites.
Opportunities exist for software solutions in financial, health, education, public sector administration, armed forces and media sectors. Technology for retail solutions encompassing electronic payments and security for banks and financial institutions also offer potential.
The telecommunications sector has particular growth potential; mobile phone users in Pakistan reached a teledensity of 72 percent with over 120 million users recorded by the Pakistan Telecommunication Authority (PTA) in September 2012. The leading companies are Mobilink, Telenor, Ufone, Warid and Zong. The sector exhibits year-on-year growth of over 9 percent.
Pakistanis have a good standard of English (the country is the British Council's largest overseas market for exams services) and there are good (if small) pools of technical expertise. The youthful population means that demand for education will continue to grow.
Teacher training programmes, technical education, curriculum development and international school linkages offer various levels of opportunity. A foundation for growing the market in both secondary and tertiary education is participation in the leading education fairs in Pakistan. There is a substantial population seeking safe, quality education, and demand is expected to grow.
Mining, energy and resources
Pakistan has good reserves of salt, copper, coal and gold and as yet these are relatively undeveloped. Technologies to help make mining more effective and efficient offer some potential. Micro-hydro power, alternative energy platforms, biogas and energy efficiency building products are some of the areas where opportunities may exist for New Zealand companies with the right partners.
Data sources: World Bank, Business Monitor International, Asian Development Bank, Euromonitor, International Trade Centre, Statistics New Zealand