Industries

Agriculture

Salient features for Corporate Agricultural Farming (CAF):

• Only such companies (foreign and local) will be entitled to CAF that are incorporated in Pakistan under the companies ordinance, 1984.

• State land can be purchased or leased for 50 years through open auction, extendable for another 49 years.

• All banks and financial institutions will earmark separate credit share for CAF.

• Exemption of duty for transfer of land for CAF.

• Dividends from CAF are not subject to tax.

• Raw material for manufacture of agricultural pesticides can be generally imported at zero-per cent rate of customs duty.

• Plant & machinery, equipment and vehicles meant for agriculture, harvesting, dairy, livestock, poultry, agro-based industries, horticulture and floriculture, etc. under SRO 575(1)/2006 can be imported at zero-per cent rate of customs duty.

Textiles

Textile Policy 2009-14

• Textiles Investment Support Fund (TISF) will be established under the ambit of the policy.

• Measures proposed for financing from the TISF include;

- Export refinance available at 5%

- Long term loans will be converted on the pricing applicable to LTTF scheme, together with a grace period of one year on both existing and converted facilities, without the facility of refinancing.

- To settle the past claims under R&D scheme of 2007-08, allocation of PKR5.4 Billion for the purpose by Government of Pakistan.

• Government of Pakistan will contribute part of the investment financing or part of the investment cost through the technology up-gradation fund.

• The policy offer duty drawbacks of between 1% and 3% for a two-year period for value-added textile exports.

• All textile machinery imports will be zero-rated to encourage new investments. Import duty on raw material, sub components and components used in local manufacturing of textile plants and machinery, has been reduced to zero per cent.

Construction & Housing

National Housing Policy – 2001

• Housing and construction companies shall be charged via Presumptive Tax Regime which shall not exceed 1% on yearly receipts.

• Stamp duty/registration fee, for the housing mortgage has been rationalized.

• All new construction of houses on plots measuring up to 150 sq. yards and flats having an area of 1,000 sq. feet, have been exempted from all types of taxes for a period of 5 years.

• Banks and DFI’s shall extend credit facilities for balancing, modernization and replacement (BMR) of machinery used for housing and construction industry.

• Import of plant and machinery and spares by the housing and construction companies, not manufactured locally, shall be exempted from custom and import duties in excess of 10%.

Financial Services

• SBP allows complete freedom of investment and repatriation of profits/dividends/disinvestment proceeds to the foreign investors in line with the overall investment policy.

• As per the foreign exchange regulations, any foreign investor investor can invest in shares/securities listed on stock exchanges in Pakistan and can repatriate profits/dividends or disinvestment proceeds. The investor has to open a special convertible rupee account with any bank in Pakistan, in order to make such portfolio investments.

IT & Telecom Sector

• Specific licenses are required from respective authorities e.g. in order to start a cellular operation network, a license needs to be obtained from Pakistan Telecommunication Authority.

Energy (Power, Oil & Gas)

• The energy industry is regulated by the Policy for Power Generation Projects 2002, Policy for Development of Renewable Energy for Power Generation 2006 and Petroleum Exploration & Production Policy 2009.

• Customs duty at the rate of 5% applicable on import of plant, machinery & equipment not manufactured locally for power generation projects whilst zero-per cent customs duty applies on plant, machinery and spares imported by power generation projects under nuclear and renewable energy sources like solar, wind, micro-hydel, bio-energy, ocean, waste-to-energy, hydrogen cell etc.

• For power projects above 50MW one-window support to be provided at the federal level. For projects below or up to 50MW support to be provided at the respective provincial level.

• Royalty will be payable at the rate of 12.5% of the value of petroleum at the field gate.

• Local petroleum companies are encourage to establish joint ventures with foreign concerns.

• Import of equipment related to the petroleum & refining sectors allowed on concessionary rates.

• The lube industry has been deregulated.

Banking

The State of Pakistan (SBP), the Central Bank of the country was established in 1948. In addition to monitoring the implementation of Banking Companies Ordinance 1962, it specifies regulations relation to the monetary system, credit and banking policy and supervises their implementation. The main law governing banking in Pakistan is the Banking Companies Ordinance, 1962 that regulates and governs the establishment and running of banking companies in Pakistan, in addition to business of commercial banking.

Some important regulations governing the banking sector in Pakistan

The Banking Companies Ordinance, 1962 and State Bank of Pakistan Act, 1956 specify various regulations, some of which are specified below:

• Capital and reserve requirement

• Cash reserve

• Liquid assets

• Assets outside Pakistan

• Annual accounts and audit

• Remittance of profits

• Number of branches