AMERICAN BUSINESS COUNCIL

Fiscal discipline & sustained policies improving investment climate in Pakistan

SADAF AURANGZAIB
Aug 13 - 19, 2007

The American Business Council of Pakistan (ABC) was formed in 1984. ABC is a chamber of US Businesses in Pakistan and it has the distinction of representing the largest group of single country overseas investors in Pakistan. ABC has completed 23 years of service to Pakistan and played a major role in being a bridge to investment from United States.

USA is on top of the list for Foreign Direct Investment, and has averaged 30% of total FDI during the last 17 years. ABC currently has 61 Members most of whom are Fortune 500 companies. They operate in various sectors i.e. healthcare, financial services, information technology, engineering, chemicals & fertilizers, energy, food & beverage, oil & gas and others.

ABC is an effective channel for dialogue with the Government of Pakistan. Regular suggestions and input for improvement are provided to the relevant bodies like ministries, regulatory and tax authorities, etc., throughout the year. The focus of the Executive Committee is to ensure that ABC's suggestions are incorporated in the annual Federal Budget and Trade Policy. The Council also facilitates direct interaction with the Federal, Provincial and City governments through its guest speakers' program, seminars and events all of which are aimed at sustaining an ongoing dialogue.

ABC is affiliated with the Federation of Pakistan Chambers of Commerce & Industry (FPCCI) and is a member of the U.S. Chamber of Commerce (USCC), Washington D.C., and Asia-Pacific Council of American Chambers of Commerce (APCAC). ABC also has a close working relationship with the U.S.-Pakistan Business Council, Washington which is a component of the USCC.

CURRENT ABC'S OBJECTIVES

1... Level Playing Field covering Combating Corruption & Smuggling as well as transparency in Government decision-making and Access to Information.

2... IPR Patents, Copyrights, Trade Marks, Data Exclusivity & Counterfeits and Effective Enforcement.

3... Law & Order and Security.

4... De-regulation specifically for Pharmaceutical and Oil Marketing companies.

5... Taxation Issues - Corporate and Personal Taxation including refunds.

During the last few years Pakistan sustained macro-economic growth and the government's fiscal discipline and structural reforms have significantly improved the economic and investment climate which is reflected in strong corporate earnings. ABC Financial Survey 2007 indicates that its member companies make a significant contribution to Pakistan's economy, as follows:

MEMBER COMPANIES' CONTRIBUTION TO PAKISTAN'S ECONOMY

INVESTMENT AND REVENUE UPDATE

ABC members have cumulative revenues of around US$ 3.3 billion with an investment of around US$ 1.1 billion.

CONTRIBUTION TO NATIONAL EXCHEQUER

ABC members contribute a sizable amount to the national exchequer every year as direct and indirect taxes last year the contribution was Rs. 43 billion.

EXPORTS

ABC members' exported goods worth Rs. 10 billion during 2006.

HUMAN RESOURCES

ABC member companies employed 41,000 persons directly who support over 750,000 dependents and indirectly employ well nearly one million people with their agents, distributors, suppliers, contractors, etc.

DEVELOPMENT OF SKILLS AND TRANSFER OF TECHNOLOGY

ABC member companies bring in world-class business practices and provide skill sets to develop talent of the younger upcoming generation, who are the future of Pakistan. Besides adherence to the highest quality standards, the U.S. investment has brought about transfer of sophisticated technology to Pakistan, which is updated on an ongoing basis.

ABC SUGGESTIONS FOR TRADE POLICY 2006-07

The Council has finalized several proposals for consideration in the upcoming Trade Policy by Ministry of Commerce. The proposals are designed to improve business environment and enable industries to be more competitive in local markets and to provide incentives to ABC members for bringing in more investment. Summary of the few suggestions are enclosed below.

GENERAL

1. CONSISTENCY OF POLICY

Trade Policy (Import/Export) should be formulated for a minimum period of 3 to 5 years

2. FREE TRADE AGREEMENTS/EXPORT ORIENTED INVESTMENT POLICIES

Accelerate efforts on FTAs and take initiative for creation or enhancing the already established groundwork (such as SAARC/SAFTA).

3. HIGH UTILITY COST OF LOCAL INDUSTRIES

Propose tariff reduction through: Organization Productivity / Minimizing theft losses / Recovery of dues

4. POWER GENERATION - DUTIES & TAXES ON CO-GENERATION EQUIPMENT

All types of co-generation equipment should be made duty free.

5. CUSTOM DUTIES ON RAW MATERIALS & MACHINERY NOT AVAILABLE LOCALLY

A new duty slab of zero percent should be created for all raw materials and machinery not manufactured locally.

6. RELEASE OF BANK GUARANTEES

Immediately release Bank Guarantees provided conditions for their release have been fully met.

INDUSTRY SPECIFIC - PHARMACEUTICAL

7. SHELF LIFE RESTRICTIONS

Pharmaceutical shelf life restriction should be removed

8. LOWER HEALTH CARE COSTS MEDICAL TESTING

Lower Customs Duty from 20% to 10% and with Sales Tax free

There are other industry specific suggestions on food, shaving products, lubricants and greases.

LIST OF MEMBER COMPANIES

ORDINARY MEMBERS

ABBOTT LABORATORIES ( PAKISTAN ) LTD.

ACE INSURANCE LIMITED

ACNIELSEN PAKISTAN (PVT.) LTD.

AES LAL PIR (PVT.) LIMITED

AMERICAN LIFE INSURANCE COMPANY ( PAKISTAN ) LIMITED

AVANZA SOLUTIONS (PVT.) LTD.

BECTON DICKINSON PAKISTAN (PVT.) LTD.

BP PAKISTAN EXPLORATION & PRODUCTION INC

BRISTOL-MYERS SQUIBB PAKISTAN (PVT.) LTD.

CHEVRON PAKISTAN LTD.

CAPTAIN-PQ CHEMICAL INDUSTRIES (PVT.) LTD.

CITIBANK, N.A.

THE COCA-COLA EXPORT CORPORATION

COLGATE-PALMOLIVE ( PAKISTAN ) LTD.

DUPONT PAKISTAN OPERATIONS (PVT.) LTD.

ELI LILLY PAKISTAN (PVT.) LTD.

EL PASO TECHNOLOGY PAKISTAN (PVT.) LTD.

FMC UNITED (PVT.) LTD.

GEOLOGISTICS PAKISTAN (PVT.) LTD.

GILLETTE PAKISTAN LIMITED

IBM

INTEL PAKISTAN CORPORATION

JOHNSON & JOHNSON PAKISTAN (PVT.) LTD

J.P. MORGAN PAKISTAN (PVT.) LIMITED

KARAM CERAMICS LIMITED

KODAK LIMITED

LEVI STRAUSS PAKISTAN (PVT.) LIMITED

MERCK SHARP & DOHME OF PAKISTAN LTD.

MICROSOFT CORPORATION PAKISTAN LIAISON OFFICE

MOBIL ASKARI LUBRICANTS LTD.

MONSANTO PAKISTAN AGRITECH (PVT.) LTD.

MULLER & PHIPPS PAKISTAN (PVT.) LTD.

NEW HAMPSHIRE INSURANCE COMPANY

NETSOL TECHNOLOGIES LTD.

ORACLE CORPORATION SINGAPORE PTE LTD.

PARKE, DAVIS & COMPANY LTD.

PEPSI-COLA INTERNATIONAL (PVT.) LTD.

PROCTER & GAMBLE PAKISTAN (PVT.) LTD.

RAFHAN MAIZE PRODUCTS CO. LTD.

SHERATON MIDDLE EAST MANAGEMENT CORPORATION

SINGER PAKISTAN LIMITED

SUNSOFT (PVT.) LTD.

UNISYS PAKISTAN (PVT.) LIMITED

WACKENHUT PAKISTAN (PVT.) LTD.

WYETH PAKISTAN LIMITED

3M PAKISTAN (PVT.) LTD.

LAKSON TOBACCO COMPANY LTD.

CISCO SYSTEMS PAKISTAN (PVT.) LTD

MOTOROLA LIMITED

RENFRO CRESCENT (PVT.) LTD

ASSOCIATE MEMBERS

CRESCENT BAHUMAN LIMITED

FRANCHISE MEMBERS

GERRY'S INTERNATIONAL (PVT.) LTD. (FedEx) .

MCR (PVT.) LTD. (Pizza Hut)

JOHAN (PVT.) LTD.

RIAZ BOTTLERS (PVT.) LTD. (Pepsi-Cola)

SIZA FOODS (PVT.) LTD. (McDonald's)

Listed below are ABC's main services to its members

1. Provide a platform for networking amongst member companies.

2. Improve Pakistan's business image in US and other countries and the image of American Business in Pakistan.

3. Work with the GoP to frame business friendly policies that attract investments.

4. Provide suggestions to the GoP for formulating the annual Federal Budget and Trade Policy.

5. Pursue resolution of specific sector/industry issues with the GOP on behalf of its members.

6. Obtain representation on various GoP bodies, task forces and business groups.

7. Facilitate an on-going guest speaker's program with top GoP, Provincial and City officials to share views on current issues.

8. Enhance the Council's profile and that of its member companies as well as address key industry issues either for resolution or to improve positive perception of target audience by continuously positively projecting at different forums and through media the role and contribution of ABC member companies.

9. Undertake an Annual Survey of US Business & Investment in Pakistan for members' consolidated contribution to the economy.

10. Undertake an Annual Perception Survey to identify members' perception of the country's economic & business climate and assesses the efficiency or otherwise of the GoP. This survey is publicized and circulated to relevant authorities.

11. Act as a liaison between potential US investors, US based dignitaries and delegations visiting the GoP and Pakistani business groups.

12. Coordinate with US Pakistani Business Council in Washington.

13. Assist on urgent US business visa facilitation.

14. Communicate US warden messages and travel advisories to members

15. Provide a daily news alert on relevant / informative headlines or news excerpts.