The Challenges and Benefits of Expanding to Pakistan

When it comes to international business expansion, choosing the market that is best suited to your business is a crucial factor – and one expanding market that is attracting attention from an increasing number of investors is Pakistan. There are many benefits to expanding your business to Pakistan, as well as a few obstacles to be overcome. If you’re considering it for your next international step, here’s what you need to know.

Maximising the Benefits

Pakistan is the second largest economy in South Asia, after India. It is also the sixth most populous country in the world, behind Brazil and ahead of Bangladesh. It has a young and growing population of around 200 million, with a burgeoning middle class. Together, these factors are a promising sign for global business, since it creates a large, diversified consumer base with disposable income.

An additional benefit is the country’s ongoing growth; it has the fastest growing retail market globally, according to Euromonitor, with predicted growth of 8.2 percent annually between 2016 and 2021. This has led to a boom in the growth of shops, shopping malls and restaurants in its cities. It is also competitive in industries including steel and textiles, and its energy market is seeing a dramatic rise in demand.

Pakistan also has a very good business relationship with the US, with two-way trade totalling around $5.6 billion in 2016. The US is Pakistan’s largest trading partner; and US firms have a strong presence in the country, with many big brands doing business there, including Procter & Gamble, McDonald’s, KFC, Pizza Hut, Domino’s Pizza, Microsoft and Dell, to name just a few.

The US and Pakistan have a Trade and Investment Framework Agreement that dates back to 2003, which deals with bilateral trade issues and serves as one of many incentives for trade between the two countries.

Pakistan is an attractive country for international business since it has few restrictions on the movement of capital for foreign companies, no shareholding restrictions, straightforward work permit regulations and a strong entrepreneurial culture. Its official language is English, which is widely used among the population, and which is also a major attraction for international businesses, since it reduces the risk of communications getting lost in translation.

Minimising Risk

Of course, expanding business to Pakistan also comes with a few challenges. Historically, the country has experienced problems with terrorism that have affected its international image. In the past few years, however, the country has worked hard to tackle security concerns and there has been a major crackdown on extremism by the government.

As is the case with many emerging economies, the country also has experienced issues with corruption. However, the government of Pakistan has also taken steps to crack down on this in recent years, and businesses can take steps to mitigate the risks associated with corrupt practices, such as carefully managing their trade process and ensuring they carry out in-depth due diligence.

If you’re considering expanding your business to Pakistan, or to any other market around the globe, and are looking for expert advice on how to start a business overseas, get in touch to learn how Galvin International can help you achieve your goals.

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