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Country Commercial Guides for FY 2000: Pakistan Report prepared by U.S. Embassy Islamabad, released July 1999 Note*

CHAPTER I. EXECUTIVE SUMMARY

This Country Commercial Guide (CCG) presents a comprehensive look at Pakistan's commercial environment, using economic, political and market analysis. The CCGs were established by recommendation of the Trade Promotion Coordinating Committee (TPCC), a multi-agency task force, to consolidate various reporting documents prepared for the U.S. Business community. Country Commercial Guides are prepared annually at U.S. Embassies through the combined efforts of several U.S. Government agencies.

Pakistan, a country with a population of approximately 140 million, will continue to offer a challenging market for U.S. exporters and investors. Pakistan's economic performance has been handicapped in recent years largely because of ineffective governance and weak policy implementation. Although the economy grew by 5.4 percent in the 1998, it has the potential to achieve higher growth levels if the Government of Pakistan takes effective measures to achieve macro-economic stabilization and increase economic efficiency by restructuring its power sector and introducing financial sector reforms.

By some estimates, Pakistan has an immediate requirement for up to $20 billion in infrastructure development that could provide good opportunities for U.S. exports and investment. The most promising sectors for U.S. exports include oil and gas (exploration and transportation), agro-industry, information technology, textile machinery, gem mining, precious and semiprecious stones cutting, franchising, consumer goods, and environmental technologies. A major privatization effort in the telecommunications and financial sectors should offer additional markets for U.S. services, products and investors. In addition, Pakistan International Airlines also plans to replace its aging fleet of wide-bodied aircraft. Sales to Pakistan's government organizations, however, will be limited due to shrinking foreign exchange reserves and shortage of government funds.

Most potential investors in Pakistan are faced with many of the same challenges that exist in other developing economies. The biggest challenge facing American firms in Pakistan is lack of transparency in government decision-making, coupled with allegations of systemic corruption.

In general, principal competitors of U.S. businesses in Pakistan are European, Japanese, and South Korean firms. Financing of goods and services is sometime crucial for importers in Pakistan, and these countries often offer credit terms that could make it difficult for U.S. suppliers to compete. Also, Pakistanis sometimes note that U.S. goods are a bit pricey compared with those of some competitors, and that U.S. firms generally do not move as quickly as some competitors to meet demand.

Pakistan is a diverse and challenging market, requiring adaptability and persistence. Careful planning and patience are the prerequisites for success in this emerging market. U.S. firms that are willing to invest time to develop market presence should expect to be rewarded in the long-term.

Country Commercial Guides are available for U.S. exporters from the National Trade Data Bank's CD-ROM or via the Internet. Please contact STAT-USA at 1-800-STAT-USA for more information. Country Commercial Guides can be accessed via the World Wide Web at http://www.stat-usa.gov. They can also be ordered in hard copy or on diskette from the National Technical Information Service (NTIS) at 1-800-553-NTIS. U.S. exporters seeking general export information/assistance and country-specific commercial information should contact the U.S. department of Commerce, Trade Information Center by phone at 1-800-USA-TRAD(E) or by fax at (202) 482-4473.