Exporting to Pakistan
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Pakistan is a major, and growing, export market and offers great possibilities for UK businesses looking for a new export market. Britain and Pakistan have always enjoyed good trade relations; the UK is the fourth largest OECD exporting country to Pakistan. United Kingdom is a second largest investor in Pakistan after USA. Pakistan has vast investment opportunities for the UK investors.
This guide highlights some of the key features of the Pakistan market, and explains how you can start to win export business there. It also identifies sources of support to help you.
Assess the opportunity to trade with Pakistan
With a rapidly growing population of about 187 million, Pakistan is a major country, recognised by the international community. Provided the positive trend is maintained, Pakistan presents numerous and significant opportunities for investments aiming both at using Pakistan as an export base and at tapping an emerging market with a rapidly growing middle class. Key sector include specialised industrial machinery, chemicals, pharmaceuticals and medical products.
Language, Culture and Business Etiquette
Urdu is the official language of the Islamic Republic of Pakistan. Although Urdu is the official language, Punjabi is widely regarded as the most spoken language within Pakistan, especially within the Punjab region. English is the key language for commerce in Pakistan, and is widely used by government departments and business traders.
Pakistanís culture is very diverse, which stems from the fact that Pakistan has been influenced from a variety of different people, leaders and ethnic groups long before it gained independence. As Islam is practised by the majority of the population, this tends to have influence in governing their personal, political, economic and legal lives.
Clothing should be kept conservative and sensible business wear should be worn
It is acceptable for Pakistani men to wear western business clothing, while Pakistani women are expected to wear traditional dress and headscarves
Foreign women are generally exempt from many of the social customs, however being conservative in the way you dress is advised. Wearing a headscarf is essential for visiting holy places within all Islamic states
Greeting and addressing individuals are often between members of the same sex. However it is now becoming generally acceptable for members of the opposite sex to formally greet one another
Sourced: Kwitessential, UK Trade and Investment
Decision-making power tends to be concentrated at the top. Companies are hierarchical; the highest-ranking person makes decisions. Decisions are reached slowly. If you try to rush things, you will give offence and jeopardize your business relationship. The society is extremely bureaucratic. Most decisions require several layers of approval.
Winning new business can take longer than you would like. You should be prepared to invest time and effort in building a long-term relationship.
Trade visits to Pakistan
Successfully exporting to Pakistan customers depends on building relationships, and often requires several face-to-face meetings. Trade visits can help you identify potential customers and key contacts, and find out what they think of your product. You can also use them to build relationships with local advisers and other key contacts.
Find out about trade visits and business opportunities on the events section of the website.
To make the most of trade visits, plan well in advance. Make sure you have a clear objective and organise all the support material you need. Try to make appointments with target contacts in advance, and reconfirm them shortly before you travel. Make sure you're speaking to people who make exporting decisions. If you have local agents, use their expertise. In an organised trade visit, the organisers should help you find contacts.
Marketing and selling in Pakistan
To succeed in the Pakistan market, you need to compete with local, national and multinational businesses. As an exporter based in the UK, your costs are likely to be higher than those of many competitors. You therefore need to clearly demonstrate the value of what you offer. Superior technology and quality may give you an edge.
There are several ways to reach customers:
- Exporting directly can suit high value products or services. However winning new customers is likely to require significant investment in building relationships, and several visits.
- You may find it more cost-effective to work with a local agent or distributor.
- A joint venture with a local partner can be a way of accessing the Pakistan market, particularly in highly regulated sectors.
- Larger businesses, and increasing numbers of middle-market consumers, have Internet access.
You must be prepared to adapt your offering to suit the Pakistan market. Any advertising or other promotion should be adapted to suit Pakistan culture. You also need to take into account local product regulations.
Financing exports in Pakistan
Pakistan companies purchasing imports generally need approval. If you are selling to an experienced importer, they should be able to advise you of the documentation they require.
Imports are generally financed using import letters of credit or import bills. These are promises from your customer's bank to make payment to you once the goods or services you export are received and the documentation covering the transaction is properly and correctly presented.
For more information regarding Financing for exports, Read about letters of credit on the SITPRO and Business Link website.
Business Link/Letters of Credit
SITPRO/Letters of Credit
Taxes, duty and legal considerations for export to Pakistan
In the UK, you must declare all exports to HM Revenue & Customs (HMRC). You also need to keep documentary evidence of exports, and record the value of exports on your VAT return. Exports of most products to Pakistan are zero-rated for VAT. There are no additional export taxes.
Most goods can be freely exported to Pakistan, though there are restrictions in areas such as goods with potential military use.
Pakistan taxes and regulations
There are some restrictions on imports - often to protect local businesses in particular sectors. Imports must comply with local regulations.
Pakistan's customs tariffs are based on the Customs Co - operation Council's nomenclature system. Duties may be levied ad valorem or specific to the goods concerned. Customs duty can be made up of several elements, and the level of duty depends on the specific product. Typically duty totals up to 35 per cent, though rates can be higher on certain products.
In general, it is your customer who will be liable for import duty and any additional taxes. If you have a local presence in Pakistan, such as an office, the tax position can be much more complex.
When you export goods to Pakistan, they will attract import duty. You or your local representative will have to pay this before the goods will be released by customs. The level of duty will depend on the type of product.
To find out the duties paid on goods exported to Pakistan, you will need a 4 or 6 figure HS or Commodity Code number for your product, obtainable from the HM Revenue & Customs Tariff Classification Service Enquiry Line on Tel 01702 366 077.
Market Access Database
The European Commission's Market Access Database is a free tool designed to assist exporters:
it provides information on trade barriers which may affect you in the individual countries;
the Applied Tariff Database section allows users to enter a HS code or product description to obtain a tariff rate and details of taxes applicable to a, enabling you to calculate a landed cost;
the Exporters Guide to Import Formalities database (searchable by HS code or by product), gives an overview of import procedures and documents, as well as any general and specific requirements for a product;
The SPS Database facilitates the identification of Sanitary and Phytosanitary export problems with any non-EU country
The Market Access Database can only be accessed with an ISP that is based in the EU.
Click here for more Information
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