Pakistan: The risks and rewards for UK businesses

 

A developing market with a young and growing population, Pakistan represents an exciting business opportunity for UK companies. Yet the rewards can come with risks. Julian Hamilton Barns, Chairman of the Pakistan Britain Business Council (PBBC), explores the pros and cons of doing business in one of the world’s most populous countries.

 EF3863_Gameplan_PBBC_AtAGlance_lloydsV2

What opportunities can Pakistan offer UK businesses?

An economy that grew 5.28% last year, a large population (c.200m) and a growing middle class actively seeking Western goods make the market hard to ignore. A post-Brexit focus on developing global trade relationships also means that exploring opportunities in Pakistan makes sense for UK businesses. Both the Pakistan and British Governments are actively looking to increase their bilateral trade from £3.5bn a year to £5bn by 2019, providing an even greater incentive.

Recent years have also seen $54bn of investment from China into key Pakistani infrastructure as part of the China Pakistan Economic Corridor (CPEC). With the UK poised to be a key partner of CPEC, there are big opportunities for British businesses to benefit from this investment.

How do I decide if it’s the right market for me?

A common language and legal system makes the opening and settlement of business in Pakistan relatively straightforward. There's also strong familiarity with and preference for British brands, based on our shared history and the local feeling that Britain is a friend to Pakistan.

However, any British business considering investing in Pakistan should seek professional advice, undertake thorough research, talk to local chambers of commerce and get boots on the ground. Knowing your clients, your partners and your customers and carrying out due diligence is absolutely critical.

Is there demand in particular sectors?

The simple answer is that Pakistan wants investment and trade across the board. High on its import list are machinery, automotive, consumer goods and raw materials. With around half of its population under the age of 25 and highly educated, Pakistan has strong IT skills. Its media sector is also growing hand in hand with demand for access to international media channels.

UK businesses might do well to look at e-commerce opportunities. Computer literacy in the country is high, so there’s a strong propensity to buy and sell goods online. The Pakistani Government also has a dedicated e-commerce minister tasked with developing and promoting the country as a leading digital hub.

For UK businesses wanting to sell online – and mitigate some of the risks of having a more physical presence in the country – Pakistan has the digital infrastructure, payment systems and a growing consumer market to make e-commerce a real opportunity.

What risks should UK businesses be aware of?

Although there have been well-reported issues in the past, the last three to four years have been much more peaceful and orderly following a major crackdown on extremism by the Pakistan Government. International cricket returned to Pakistan in September 2017, marking an important milestone for a nation that’s worked hard to tackle security concerns and signalling that Pakistan is very much open for business.

The World Bank has also praised the Government’s substantial steps to crackdown on corruption. However, British businesses need to understand that corruption is a fact of life in many emerging economies, and so should consider the risks and rewards appropriately. Carefully managing the trade process and maintaining a correct regulatory approach to business can mitigate risks.

Many of the barriers to entry in Pakistan are perceived rather than actual, but culturally, big differences remain.

In what key ways does the Pakistani market differ from the West?

Many of the barriers to entry in Pakistan are perceived rather than actual, but culturally, big differences remain. Gender inequality continues to pose difficulties for women travelling commercially, despite an increasing number of Pakistani women in government and business.

Although the growing middle class wants access to global consumer opportunities, the sale of alcohol or short-sleeved dresses remains culturally unacceptable, and so knowing the market inside out – and tailoring your products to fit the local culture – is vital.

Where can I access more information about doing business in Pakistan?

The PBBC can introduce you to individuals or groups seeking to build and develop trade and investment relationships. There’s a wealth of information available on the PBBC website, as well as from the DiT and chambers of commerce. In addition, we’re running a series of events across the UK where we’ll be talking about the practicalities of doing business in Pakistan.

That said, the best way to understand Pakistan as a business destination is to visit the country. Spend time with the local chambers of commerce, within the business community, and most importantly, get to know the end-consumer.

EF3863_Gameplan_PBBC_Author_lloyds

While all reasonable care has been taken to ensure that the information provided is correct, no liability is accepted by Lloyds Bank for any loss or damage caused to any person relying on any statement or omission. This is for information only and should not be relied upon as offering advice for any set of circumstances. Specific advice should always be sought in each instance. The views and opinions set out in this article are those of the author, and do not reflect the views of Lloyds Bank plc nor are they endorsed by Lloyds Bank plc.

Share this article

There are a number of ways you can share this article.

Back to top

Calls may be monitored or recorded in case we need to check we have carried out your instructions correctly and to help improve our quality of service.

Lloyds Bank plc Registered Office: 25 Gresham Street, London EC2V 7HN. Registered in England and Wales no. 2065. Telephone: 0207 626 1500.

Authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority under Registration Number 119278.

We subscribe to The Lending Code; copies of the Code can be obtained from www.lendingstandardsboard.org.uk

Eligible deposits with us are protected by the Financial Services Compensation Scheme (FSCS). We are covered by the Financial Ombudsman Service (FOS). Please note that due to FSCS and FOS eligibility criteria not all Business customers will be covered.

Lloyds Banking Group includes companies using brands including Lloyds Bank, Halifax and Bank of Scotland and their associated companies. More information on Lloyds Banking Group can be found at www.lloydsbankinggroup.com