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Pakistan: Business environment at a glance

September 25, 2006
Pakistan: Business environment at a glance. Check it out:
(EIU Viewswire Via Thomson Dialog NewsEdge) COUNTRY VIEW

FROM THE ECONOMIST INTELLIGENCE UNIT

Policy towards private enterprise and competition

2006-07: The restructuring of banks continues. The government pushes ahead with the privatisation programme and encourages growth in small and medium-sized enterprises.

2008-10: Liberalisation of the economy will continue, and the government will improve the regulatory framework.

Policy towards foreign investment

2006-07: Foreign investment remains concentrated in the telecommunications, oil, gas and banking industries, although the government tries to attract investment into other sectors.

2008-10: Privatisation will attract additional foreign capital, and foreign investor sentiment will improve.

Foreign trade and exchange controls

2006-07: Foreign-exchange controls are eased further. Import tariffs are reduced, but distortions favouring certain domestic producers persist. Progress is made towards free-trade agreements with a number of Pakistan's major trade partners.



2008-10: Full currency convertibility is unlikely to be introduced, but the State Bank of Pakistan (SBP, the central bank) will become more independent and assertive.

Taxes

2006-07: Attempts to widen the tax base have some success. The government tries to boost revenue through indirect taxes. The gap between the rates of tax paid by public and private companies is reduced.

2008-10: Most Pakistanis will remain outside the tax net, but efforts will be made to close tax loopholes for business andindustry. Corporate tax rates will be unified.

Financing

2006-07: Private banks dominate financing. Privatisation of the major state banks continues.

2008-10: As competition in the banking sector rises, smaller private banks will merge or shut.

The labour market

2006-07: Child labour and bonded labour remain problems. The low literacy rate curbs the growth of skilled labour.

2008-10: Productivity will remain low. Lay-offs of public-sector employees may cause civil unrest.

Infrastructure

2006-07: Efficiency at ports improves. Some previously planned projects are revised, and private development of infrastructure is encouraged.

2008-10: Power costs and rail charges will continue to rise. The urban transport infrastructure will not keep pace with demand.

Copyright 2006 Economist Intelligence Unit


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