2015/223 kitap taslak.pdf · financial incentives and subsidies.....111 speaker : muhammad haroon...

2015/223

ISBN: 978-605-9310-17-8

Economic Research Foundationis the copyright holder of this book.

IMPROVING ECONOMICRELATIONS BETWEEN

TURKEY and PAKISTAN

SYMPOSIUM

Economic Research FoundationEconomic Enterprise Publication No: 34

Certificate No: 18066

February, 2016 Istanbul

Cover Design and Editing:Abdullah KIZILKAYA

Printing:Net Kırtasiye Tanıtım ve

Matbaa San. Tic. Ltd. Şti.Gümüşsuyu-TaksimCertifika No: 13723

ECONOMIC RESEARCH FOUNDATIONEconomic Enterprise

19 Mayıs Cad. No: 3 Golden Plaza Kat: 8 34360 Şişli / İSTANBULTel: (0212) 233 21 07 (pbx) Fax: (0212) 233 21 96

e-mail: [email protected] • www.iav.org.tr

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CONTENTS

OPENING SESSION

Prof. Dr. Ahmet İNCEKARA President Of Economic Research Foundation........................................ 7Amena CHEEMA CEO Punjab Board of Investment & Trade............................................. 11Doç. Dr. Mustafa K. YILMAZ Executive Vice President Borsa İstanbul................................................. 15Ali Fuat TAŞKESENLİOĞLU General Manager of Halkbank................................................................ 19Abdul BASİT Chairman PBIT........................................................................................ 23Sadık Babür GİRGİN Turkish Ambassador................................................................................ 43Hüsnü DİLEMRE Turkish Minister of Economy Undersecretary.......................................... 49

KEYNOTE SPEAKER SESSION

Moderator : Syed Turab HUSSAIN Acting Chair Department of Economics, LUMS............... 57

1. Session : Economic Profile of Turkey and Opportunities to Cooperate............................................................. 59 Prof. Dr. Metin TOPRAK THK University Rector

2. Session : Economic Profile of Pakistan................................. 97 Dr. Hafeez A. PASHA

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PANEL SESSION

Improving Economic Relations BetweenTurkey and Pakistan

Moderator : Prof. Dr. Mehmet Şükrü TEKBAŞ Istanbul UniversitySubject : The Present and Future of Economic Relations Between Turkey and Pakistan...................................... 107Speaker : Ferhat KAVAKLI Commercial CounsellorSubject : Opportunities for the Cooperation of all Important Industries in Turkey and Pakistan with General Idea How to Remove the Barriers and How to Find Financial Incentives and Subsidies............................. 111Speaker : Muhammad Haroon SHAUKAT Representative of PBITSubject : Role of Business Organizations in the Development of Economic Relations........................... 121Speaker : Ahmet YILDIRIM Albayrak GroupSubject : Preparation of Investment Projects Within Two Countries - Barriers and Possible Solutions............... 125Speaker : Syed Mumtaz HASSAN Zorlu Energy Group

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OPENING SESSION

• Prof. Dr. Ahmet İNCEKARA President Of Economic Research Foundation

• Amena CHEEMA CEO Punjab Board of Investment & Trade

• Doç. Dr. Mustafa K. YILMAZ Executive Vice President Borsa İstanbul

• Ali Fuat TAŞKESENLİOĞLU General Manager of Halkbank

• Abdul BASİT Chairman PBIT

• Sadik Babür GİRGİN Turkish Ambassador

• Hüsnü DİLEMRE Turkish Minister of Economy Undersecretary

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PROF. DR. AHMET İNCEKARAPRESIDENT OF ECONOMIC RESEARCH FOUNDATION

Dear honorable ministers,

Dear ambassador,

Dear chairmen,

Businessmen, academicians, ladies and gentlemen

Welcome to the scientific meeting of the Economic Research Foundation. Thank you for your attendance, I greet you with love, honour and respect.

Economic Research foundation was founded in 1962. It arranges seminars, symposiums, conferences about economic issues in Turkey and world wide, and produces scientific projects for more than 50 years. Our purpose is to create scientific knowledge in economics and to serve it to everybody who

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is in need of, especially for business and academic world, thus, increasing intercountry economic activities, developing economic relations, to universalise peace and prosperity.

Foundation has organized similar scientific meetings in many countries until now. These countries include Sudan in Africa, France, Bulgaria, Romania, Macedonia, Cyprus, Albania, Montenegro, Serbia, Bosnia Herzogevina in Europe, Azerbaijan in Asia, and we are now in Pakistan. In 2016, we are planning to organize symposiums in Hungary and Croatia in Europe, Kyrgyzstan and Mongolia in Asia. There are institutions and firms that support us both financially and emotionally at every symposium we organized. In this meeting, Turkish Cooperation and Development Agency (TİKA), Borsa Istanbul (BIST), Halkbank (People’s fund) and Zorlu Energy Group provided us their support.

We thank Economy, Industry and Development Ministries in Pakistan Lahor, and especially Puncap Board of Investment and Trade for their local partnership support.

We thank our ambassador dear Mr. Babür Girgin who came from Islamabad, and Trade counsellor, academicians and Borsa Istanbul executives who came from Istanbul, Turkish and Pakistani businessmen who came from other cities in Pakistan and last but not least, to honorary consul of Turkey, Mr. Rashid Mansur for his valuable, great support. Also, I thank to all people and institutions that I couldn’t mention their names one by one.

Dear valued participants,

As all you know, economic crisis has been continuing in the world since 2008. The effect of the crisis persists in European Countries and Japan, besides America. Economies contracted, markets shrank. Despite this trend, Turkey is one of the best growth performance in the world and its zone.

Turkey hosted G-20 countries’ presidents summit which was held in Antalya last month.Turkish economy is one of the rare economies which experience constant growth since 2003, except 2009 crisis year. Political stability and successful economic management ensure this result. Turkey has completed IMF stabilization program in 2008.

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Turkey and Pakistan people are connected to each other with love, respect and brotherhood. These sound connections pave for developing economic relations. Pakistan economy has important potential, but it couldn’t reach the desired level and sustainable economic growth yet. Turkey is ready to take charge in prompting the potential of the Pakistan economy with its political will and firms. Mine resources, agricultural products, infrastructure investment areas, energy, finance and in many fields, Turkish economy seems to have a complementary character to Pakistan economy. If Pakistan can meet its population which is about 200 million with qualified education, it can increase its entrepreneurship and Research-Development/innovation capacity. Nowadays, these elements are two basic components of the competitive economy and creating high value added.

In the world, investment and trade partnership meetings continue to grow between USA- European Union and Asia-Pacific regions. These meetings, on one hand, aims to hasten the way out of the financial crisis, on the other hand, it points out the process that is stipulating and rearranging investment and trade activity conditions. Turkey and Pakistan economies should take measures to cope with disadvantages of globalization while exploiting the advantages, and should tighten their relationship.

I wish this symposium to be successful, and it contributes to developing two countries’ economic relations, and I thank to all people and institutions again one by one, and greet my respect.

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AMENA CHEEMACEO PUNJAB BOARD OF INVESTMENT & TRADE

Distinguished Guests,

Excellency,

Honorable speakers,

Ladies and Gentlemen

AOA and a very good morning to you all

On behalf of the Punjab Board of Investment and Trade, it is an honor and privilege for me to have the opportunity to address this esteemed audience today.

I would first like to express my gratitude to all those in attendance today, particularly H.E Mr Sadik Babur Girgin, our guests from Turkey and the

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speakers for taking the time out to share their knowledge and expertise. I would also like to acknowledge and praise the Economic Research Foundation for their efforts in bringing about what we hope will be a comprehensive and productive forum today. Thank you all.

In recent years, Pakistan’s special relations with Turkey have grown into a strategic partnership characterized by deeper economic and commercial cooperation. Due to Punjab Government’s business friendly policies and proactive initiatives, Turkey has emerged as a key partner of Punjab in a number of projects in various fields. These also include, metro bus service, solid waste management, reconstruction in disaster hit areas especially in South Punjab including construction of thousands of housing units, schools, hospitals, assistance in skills development and education etc.

Turkey’s role in development projects especially in the fast expanding sectors of Energy, Transport, full range of infrastructure, Housing, Mining and others is significant. It was for this purpose, that the Government of Punjab held an international seminar on business opportunities in Lahore recently. We are proud to say that 68 representatives from 39 Turkish companies participated in a meaningful way, resulting in 24 MOU’s.


There is tremendous scope in a variety of other fields including Health, Higher Education institutions and Scientific Research centers. It is our belief that if think tanks and professors from reputable English medium universities in Turkey collaborate with the academia and private sector in Pakistan and provide input, it could result in significant development in the sector of Socio Economic Research.

As a step towards the realization of this goal, the government of Punjab has begun to establish a knowledge park in Lahore. This Knowledge Park will aim to promote the adoption of modern technology, linking knowledge and application in order to provide a high quality of economic and social life. It will support mid-career professionals, young entrepreneurs, and university graduates to successfully participate and adapt to the demands of the 21st century economy. We welcome the partnership of our Turkish brothers in this endeavor and hope that they will participate in a significant way.

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I’m confident when I tell you that in the country’s march towards growth and development, Punjab has emerged as a significant launching, leaving its substantial imprint on the economy of Pakistan. It has tremendous potential as an investment destination having necessary infrastructure and institutional base. Most importantly, it has a government committed and willing to creating a conducive environment by removing obstacles and improving law and order. Foreign investors are treated at par with locals by allowing them high liquidity and movement of capital.

We, at the Punjab Board of Investment and Trade strive to play a catalytic role in promoting mutually beneficial trade and economic ties between Pakistan and the world and in this regard offer you every kind of facilitation that you may require and also invite you to take the time to visit our office.

We hope that useful and result oriented suggestions will be brought forward from today’s event and you will all use this opportunity to contribute towards furthering development between Pakistan and Turkey and to discuss the different ways in which your expertise and technology can help Pakistan move forward on its way towards success.

Thank you all for your attention.

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DOÇ. DR. MUSTAFA K. YILMAZEXECUTIVE VICE PRESIDENT BORSA ISTANBUL

Distinguished Guests,

First of all, on behalf of Borsa İstanbul, I would like to thank the Economic Research Foundation for organizing this event in such a timely manner. It is truly a great pleasure to participate in this conference covering a very crucial topic for both countries.

In my remarks, I will discuss the current affair of economic relations between our countries as well as the Borsa Istanbul’s commitment, at the highest level, to consider how our role contributes to the further progress in Pakistani capital markets.

Needless to say, Pakistan and Turkey have very strong relationship

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established throughout the years.Even though the level of bilateral relations between Turkey and Pakistan are excellent, yet this does not translate into sufficient economic activity in the context of trade and investment volume. Thus, we have a long way to go to translate these outstanding political and cultural ties into a tangible and full-fledged economic relationship.

Just to give some figures, the trade volume between our countries is $700 million in 2014. This is neither sufficient nor acceptable. To increase that volume, Turkish and Pakistani Prime Ministers initiated a number of steps covering free trade agreement in February 2015. On this respect, Turkey and Pakistan have signed a Free Trade Agreement to intensify the bilateral trade to $10 billion in the future.

On the other hand, both countries are among the major economies of their regions,Turkey being the 6th major economy in Europeand 17th at the global level. Pakistan is the 24th largest economy in the world and the 2nd among eight countries in South Asia in terms of purchasing power parity and has a population of 190 million, showing the potential of becoming one of the world’s large economies in this century. Moreover, the total market capitalization to GDPis approximately 33% as of 2014 in Pakistan, which is similar to Turkey. This is also an indicator of growth potential of capital markets and future key role of capital market institutions.

As a large economy, Turkey has well-developed and well-structured capital markets with strong capital market institutions. One of our main strengths is the size of our markets, where technology and innovation meets experience. Borsa Istanbul has the world’s 3rd most liquid equity market in terms of turnover velocity, and 5th largest organized bond market.

At this point, I would like to highlight the recent developments at Borsa Istanbul, which I think isinsightful for our efforts to deepen the cooperation between two countries.Last week, Borsa Istanbul successfully transformed its equity trading technology in cooperation with NASDAQ. Starting from November 30rd 2015, our trading, settlement & clearing, and surveillance systems were completely renewed with one of the best market technologies in the industry.

I would like to emphasize that this substantial change is not limited to

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replacing the infrastructure with a new one, but we also own the source code. Moreover, Borsa İstanbul holds the re-sales rights for 25 countries of the products and solutions developed within the scope of the project, including Pakistan.

We also have significant experience on all aspects of exchange business. Particularly, we completed our demutualization and horizontal & vertical integration in 2013, by combining three exchanges in the country.

Also as Borsa Istanbul, I would like to emphasize our efforts to develop cooperation with Pakistani capital markets. The first outcome of our initiative dates back to two years ago. In December 2013, we signed an MoU with Karachi Stock Exchange. Within this MoU, a technical committee was established to seek alternative business fields to cooperate. Following the work of the Technical Committee, Terms of Reference was signed in November 2014.

As a next step, in April 2015, our delegation visited Pakistan and signed a data dissemination agreement with Karachi Stock Exchange.Moreover, a workshop was organized to meet Pakistani companies and brokerage houses. Last, to deepen the relationship between our exchanges further, we met delegates from Karachi, Lahore, and Islamabad Exchanges in August 2015.

Just by coincidence, at the same dates, we also had the opportunity to sign anMoU with Pakistan Mercantile Exchange to promote commercial and economic relationships between Turkey and Pakistan. These agreements allow both parties to develop business opportunities, exchange information and expertise pertaining to their activities, markets and operations in order to establish a long-term relationship and contribute to the improvement of their countries’ capital markets.

I should mention that the merger of Karachi, Islamabad and Lahore Exchanges is an extremely remarkable attempt for Pakistan and its capital market to show its potential. In this regard, Borsa İstanbul, with its current know-how and experience in all aspects of the business, is ready to give full support to this initiative with all possible means.

Considering our technological transformation and successful past experiences, we have multitude of opportunities and are ready to share. Borsa

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Istanbul aims to strengthen the regional ties. Our collaborative solutions with the Pakistani exchanges would provide the opportunity of being a hub of funding and trading between GMT+1 and GMT+5. Within this framework, our cooperation may include IT solutions, cross-listing opportunities, launching new products, offering primary market solutions as well as giving some advisory services.

To sum up, the potential of our economies plus our long-standing close ties deserve more than the existing trade volume and investment. In this connection, we think that there are plenty of business opportunities between our markets, and I would like to underline Borsa Istanbul’s commitment to supporting the economic cooperation and improvement of economic relations between Turkey and Pakistan.

Concluding my remarks, I am sure that this conference will contribute to advance our economic relations and will be a major step forward that initiates the conversion of friendly relations into reliable and long-term profitable ventures and stronger economic relations between Turkish and Pakistani societies. I hope you all have enjoyable and productive discussions.

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ALİ FUAT TAŞKESENLİOĞLUGENERAL MANAGER OF HALKBANK

Dear Minister,

Dear Undersecretary,

Dear Ambassador

Esteemed guests,

I salute each of you at such a significant event as this important step towards furthering the commercial relations between our two countries, Pakistan and Turkey, which share the deepest bonds of history and culture.

I take this opportunity to thank the Economic Research Foundation here for acting as a facilitator of this symposium, which we consider a guide for both Turkish and Pakistani businessmen wishing to invest in both countries.

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Pakistan’s economy has had an increasing investment and growth trend with the economic reforms being implemented since 2000. Making significant moves in strategic industries, Pakistan has gradually increased its active role within the region. Today, Pakistan continues to grow in many fields, playing a critical role in economic growth, particularly in industry. Accordingly, it offers noteworthy opportunities for Turkish investors in growing fields, mainly in construction, energy and infrastructure.

Turkey is preparing to hand over the presidency of G20, and it is also a vital player in the global economy. At every occasion when speaking about the geopolitical power of Eurasia region within the world economy, Turkey regards Pakistan as one of its strategic partners. So far, we have supported one another as two brother countries in all aspects. Our increasing economic cooperation in the business world adds strength to this partnership.

With its capital structure and total assets, the Turkish banking industry is leaving another successful year behind. The fact that the size of assets within our banking industry is bigger than the economies of many European companies proves our industry has been successful once again. Being the foremost driver of economic stability in the country, banking as an industry, with a strong financial structure, high-quality assets and audited risk management, played a leading role in the growth in 2015. The banking industry employs nearly 218,000 people, and positively affects the balance in money markets with an average 11 percent return on equity.

Established in 1938, with the objective of supporting artisans and craftsmen, Halkbank has also been a driving force behind the growth of the Turkish economy, through incentives for SMEs since its foundation. As Halkbank, we continue supporting SMEs in every field for the past 77 years, and bearing our founding principle in mind, we have been financing artisans, craftsmen and small businesses. In this framework, we attach great importance to the creation of new projects to create new economic opportunities between Pakistan and Turkey and to add dynamism into our economy.

As emerging economies, export is of great importance for Turkey and Pakistan. For this purpose, we launched the “SME Export Development Package” for exports in order to highlight and support export-based growth

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models. This package offers special loan solutions to our customers that are sensitive to interest and exchange rates with a different approach, compared to standard export loan packages. We want our SMEs to increase their export volumes with this package where we offer a Discounted Foreign Trade Transaction Kit, insurance services and free English Language Education Program under the same structure.

Esteemed guests,

We all observe that the focus of the global economy is moving toward Asia as we are undergoing a changing period in the global economy. This change is making Turkey’s geopolitical importance even more important and attracts foreign investors. Today, nearly 145 Pakistani companies are operating in Turkey, and the total rate of exports between these two countries exceeds $700 million. Through our operations, we are determined to drive this figure up. Halkbank with international experience, is willing to offer any kind of support for Turkish and Pakistani investors.

At the end of this symposium, we will provide more information about the investment environment in both countries, incentive regulations and prioritized industries in our two countries. I wholeheartedly believe that, we will accomplish great success in the coming period ensuring strong economic cooperation between our countries.

I hope the symposium will be useful and successful. Thank you very much.

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ABDUL BASİTCHAIRMAN PBIT

Excellency, ladies and gentlemen good morning.

It is a great honour for me to be here and this symposium on Improving Economic Relations between Turkey and Pakistan. I first thank the organisers for organising such a grand event.

As you know, Pakistan and Turkey have a unique relationship. It is more than the brotherhood, and it is more than the friendship. We are proud of having a friend and brother like Turkey. Pakistan, especially with this CPACK, is getting more and more attraction for the investors. Pakistan, as you know, has a direct border with almost 50% of the world population, and it has the largest agriculture base. It has, Punjab especially, has more than 55%

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of the population of Pakistan. It has a very good educatıonal system. 60% of population is under 30 years, and I think this is the time for investors to come and invest in Pakistan, especially in Punjab where we have very good infrastructure, and I have a presentation in this regard, Punjab _ an Emerging Investment Hub. If we compare Punjab with different countries, stil we are ahead in having 0.50 GDP in USD billion.

In infrastructure, we have 11 airports, we have a strong logistic network, we have strong railway network with us. We have more than 100,000 km. road network in Punjab, and we have broad band internet. We have abundant raw material for agricultural and industrial use. We export most of the time fresh form of the raw material . We are looking for companies who can invest over here, and can have raw materials and add value, and they can export. We have got 55% of the population below the age of 30, and most of the young generation, 500,000 highly skilled graduates produced annually. Irrigation system is the key of that one agriculture, the largest irrigation in the world with 2,700km. of canal network.

32% of population are living in urban cities, and 5 out of 7 major urban centres are located in Punjab. With the opportunity of China Pakistan Economic Corridor, as you know, we are located in the right place. We are linked with almost half of the world population, and due to CPEC we have got new opportunities with us in infrastructure, energy, steel and cement plants, industrial production, housing and corporate farming.

More opportunities for collaboration in agriculture sector. Pakistan ranks among the top ten producers in the world for at least 25 agricultural commodities. 72% of the irrigated land in Pakistan is in Punjab. Punjab is a dominant producer of major crops like wheat, cotton, sugarcane and rice.

In agriculture sector we have different projects like vertically integrated corporate farming, manufacturing of farm equipment, preservation of fruits and vegetables for exports, supply chain infrastructure, hybrid seed for cotton, rice, sunflower, maize and vegetables, modernization and development of irrigation facilities and water management solutions, and manufacturing of farm inputs especially micro nutrients.

In meat, there is global market which is over 600 billion US dollars as far

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as halal meat is concerned, so domestic demand of meat is growing at 6% per annum while supply is growing at 4% per annum, a very large opportunity for corporate farming.

In dairy, we are the 4th largest producer of milk in the world, but only 4% of the milk is actually processed and marketed through formal channels. This demand and supply gap is 6,8 million liters. Domestic demand of milk is going up 20% annually.

Large breeding farms of genetically superior animals, integrated meat production and processing, meat processing for domestic demand and export markets, slaughter houses for tapping Halal meat market, and frozen foods and dried meat market are all projects which are available with the department we can link with investors for further process.

Dairy projects include investment in dairy processing and value chain infrastructure, milk collection centres, chillers and storage in milk clusters, and production of diversified value added dairy products. Previously we had traditional farming over here in Pakistan, but right now the trend is towards commercial farming. If one wants to have commercially traded farm, they need to have equipments, animals and many things to be imported, so there is another opportunity for the investor to produce such equipment locally for them.

Poultry sector which is a very important sector with annual growth rate between 10-15% during last two decades has many different projects like vertical integration of industry, integrated poultry production and processingi export of live animals for nearby markets, environmentally controlled houses for broilers and layers, and processed and value added products like ready to cook and frozen foods.

In energy sector, we have a lot of opportunities, and we have favorable policies for investment, that is concessions in duties, Standard Power Purchase Agreement (PPA/IA/FSA), Public, Private, PPP development modes, and public land available on lease.

There are attractive returns as far as bank guarantee concerned, and customs duty exemption, only 5%on import of Plant and Equipment not manufactured locally, and there is exemption from income tax.

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Now the projects in energy sector:

Energy Efficiency and Conservation: Punjab Energy Efficiency and Conservation Strategy aiming to bring in place an institutional framework for energy efficiency and conservation, standardization and labelling of energy consuming appliances, gren buildings, and creation of ESCOs / energy audit

35 MW Taunsa Hydro Power Project at river Indus

Privatization of Quaid-e-Azam Solar Company ( PVT ) Ltd

Huge potential in Biomass/Waste to Energy Sector

Small Coal Power Projects (SCPP )in four districts of Punjab

In Road Infrastructure sector there ia abundant availability of construction material; quality testing facilities at Project sites; local contractors who are willing to have joint ventures, and projects available in public sector,PPP mode, and private investment.

We have different projects in the road infrastructure sector such as Khadim-e- Punjab rural roads programme, PPP road projects, and KLM highway projects.

In mines and mineral, we have abundant minerals available. Minerals of Punjab provide the resource base of its industrial sector. There are 35 minerals under excavation by 2,300 entrepreneurs which are coal, limestone, gypsum and rock salt. 56 industrial leases production of cement, soda ash, caustic soda, fertilizer, glass,ceramics and marble are avaible.

In transport sector, Punjab is the most urbanized province in Pakistan. 32% (32 mln ) of population in Punjab lives in urban areas. It is predicted that by 2040 the population will be 51 mln. There is a huge demand for mass transit and public transport systems.

There are some projects in transport sector like Three Multi-Model Bus Terminals, 312 New Diesel Busses and Bus Terminal- cum- Commercial Complex

Now in housing sector vision of the government of Punjab is to provide affordable and quality housing solutions for growing population, so there are

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investment opportunities in development of new city, residential buildings and low - cost housing

And facilitation by government of the Punjab: Punjab Board of Investment and Trade facilitates foreign businesses looking to harness opportunities presented by Punjab’s fast-growing domestic economy. It assists in obtaining all necessary national and provincial requirements for a fast-track market entry, and offering post-investment aftercare; provides information in industry and market research, entry strategy, financial and legal issues; creates business enabling environment.

Thank you.

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Punjab - An Emerging Investment HubPunjab Board of Investment and Trade

2

Pakistan – Asia’s Next Big Market

Multilateral Agencies And Leading International

Entities Have Expressed Their Faith In Pakistan’s Improving

Economic Position

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1

Punjab’s GDP is Greater than Many Regional Countries

Value Proposition of Punjab

1934 36

6175

107

132 137150

Nepal Bahrain Jordan Kenya Sri Lanka Morocco Ukraine Hungary Punjab

GDP in USD Billion

Source: World Bank

4

Infrastructure for Regional and Domestic Connectivity


75% Tele-density 11 Airports Strong Logistics Network

3,116 km Railway Network 107,973 km Road Network Broad Band Internet

Source: PTA, CAA, and MOF

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5

Abundant Raw Material for Agricultural and Industrial Use


Coal

Iron Ore Rock Salt

Limestone

Cotton

Sugar Cane Leather

Paper & Board

Fruits & Vegetable

Cereals

6

Favorable Demographics

55% of population is below the age of 30

500,000 highly skilled graduates produced annually


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7

Largest Irrigated Basin in the World with 2,700km Canal Network


Source: Pakistan Institute of Development Economics

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32% Population Living in Urban Cities

5 out of 7 Major Urban Centres Located in Punjab

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China Pakistan Economic Corridor USD 46 Billion Investment in Pakistan

Strategically located to become Asia’s premier trade, energy and transport corridor

Opportunities in

• Infrastructure

• Energy

• Steel and Cement Plants

• Industrial Production

• Housing

• Corporate Farming

CARsEU

CHINA

MENA

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Opportunities for Collaboration

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Agriculture Sector

Pakistan ranks among the top ten producers in theworld for at least 25 agricultural commodities

72% of the irrigated land in Pakistan is in Punjab

Punjab is a dominant producer of major crops likewheat (80%), cotton (75%), sugarcane (64%) and rice(58%)

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Agriculture Sector – Projects

Vertically integrated corporate farming Manufacturing of farm equipment Preservation of fruits and vegetables for export Supply chain infrastructure Hybrid seed for cotton, rice, sunflower, maize & vegetables Modernization and development of irrigation facilities and

water management solutions Manufacturing of farm inputs especially micro-nutrients

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Livestock and Dairy SectorMeat Domestic demand of meat is growing at 6% per annum while

supply is growing at 4% per annum Global Halal meat market is around US$ 600 billionDairy Pakistan is 4th largest producer of milk Only 4% of milk is being processed and marketed through

formal channels in Pakistan Supply demand gap in milk 6.8 million liters Domestic demand of milk is growing at 20% per annum

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Livestock and Dairy Sector – Projects Meat Large breeding farms of genetically superior animals Integrated meat production and processing Meat processing for domestic demand and export markets Slaughter houses for tapping Halal meat market Frozen foods and dried meat marketDairy Investment in dairy processing and value chain infrastructure Milk collection centers, chillers & storage in milk clusters Production of diversified value added dairy products

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15

Poultry Sector Annual growth rate for poultry industry has been between 10-

15% during last two decadesProjects Vertical integration of industry Integrated poultry production and processing Export of live animals for nearby markets Environmentally controlled houses for broilers and layers Processed and value added products like ready to cook and

frozen foods

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Energy Sector

Favorable Policies for Investment in Power Sector• Concessions in duties/tax regime• Standard Power Purchase Agreement (PPA/IA/FSA)• Public, Private, PPP development modes• Public land available on lease

Attractive Returns• 17% RoE on Renewable Energy projects• Sovereign guarantee

Customs Duty Exemption• Only 5% on import of Plant & Equipment not manufactured locally• Exemption from income tax

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17

Energy Sector – Projects Energy Efficiency & Conservation

• Punjab Energy Efficiency and ConservationStrategy aiming to bring in place an institutionalframework for energy efficiency & conservation

• Standardization and Labeling of energyconsuming appliances

• Green Buildings• Creation of ESCOs /Energy Audit

Taunsa Hydro Power Project 135MW• 135 MW Taunsa Hydro power project at River

Indus• Total investment cost estimated at USD 449.3

million

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Energy Sector – Projects Privatization of Quaid-e-Azam Solar

Company (Pvt).Ltd• 100 MWp DC Solar PV Plant in Bahawalpur• Actual Plant factor from COD is 19%• Power Generation is 153,300,000 kWh per

annum• IRR Guaranteed by NEPRA is 17 %

Huge Potential in Biomass/Waste toEnergy Sector

Small Coal Power Projects (SCPP) in fourdistricts of Punjab

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19

Road Infrastructure Sector

Type LengthNational 1,997kms

Provincial 10,426kmsDistrict 73,619kms

Abundant availability of construction material

Quality testing facilities at project sites

Local contractors willing to have Joint Ventures

Projects available in Public Sector, PPP Mode, and Private Investment

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Mines & Minerals Sector

Minerals of Punjab provide the resource base of its industrial sector

35 minerals under excavation by 2,300 entrepreneurs including; coal, limestone, gypsum and rock salt

56 industrial leases production of cement, soda ash, caustic soda, fertilizer, glass, ceramics and marble

38

22

Mines & Minerals Sector – Projects

150-300MW Local Coal

Power Plant on Mine-Mouth

Model

(USD 800 mln)

Mining of Iron Ore & Steel Mill

at Chiniot

(USD 663 mln)

Soda Ash Plant at Salt Range

(USD 200 mln)

Cement Plant at Salt Range

(USD 300 mln)

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Transport Sector

Punjab is the most urbanized province in Pakistan

32% (32 mln) of population in Punjab lives in urban areas; forecast of 51 mln by 2040

Huge demand for mass-transit and public transport systems

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Transport Sector – Projects

Three Multi-Model Bus Terminals

(USD 80 mln)

Bus Terminal-cum-Commercial Complex

(USD 141 mln)

312 New Diesel Busses(USD 30 mln)

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Housing Sector

Vision of Government of the Punjab is to provide affordable and quality housing solutions for growing population

Housing back-log of 2.7 million units in Punjab

McKinsey estimates required investment of USD 7 billion in housing sector of Pakistan

Investment opportunities in development of new city, residential buildings and low-cost housing

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Industrial Estates & Parks

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Facilitation by Government of the PunjabPunjab Board of Investment and Trade facilitates foreign businesses looking to harness opportunities presented by Punjab’s fast-growing domestic economy

One Window Facilitation

Information & Advisory Services

Policy Reform SupportEnsuring inclusive policy reform with feedback from private sector stakeholder and creating business enabling environment

Providing information to investors and businesses in relation to industry & market research, entry strategy, location selection, incentives structure, financing and legal issues

Assisting in obtaining all necessary national and provincial approvals/requirements to facilitate a fast-track market entry and also offering post-investment aftercare

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SADIK BABÜR GİRGİNTURKISH AMBASSADOR

Distinguished guests, organisers of the event, Türkiyeden gelen değerli misafirler…hoş geldiniz Pakistana; Pakistanın kalbi tabir edilen Penjap’a ve Lahora

First of all, I would like to thank to organisers for this event because, I think, at least in the recent years it will be the first academic discussion of this important issue of improving our bilateral economic relations. I shall try to provide you with a political viewpoint, political framework, and try to provide you also with the intentions of the Turkish government, and I think I can equally speak for the Pakistani government as well, and what the two governments have been implementing in this regard, and also at the end some food for thought for your deliberations and discussions today.

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I don’t need to go into the details of the special relationship that the two countries share, that is just suffice that we note that they are longstanding and they are people to people because both, I think, are important aspects when considering improvement of economic relations. They are longstanding and people to people meaning that there is an enormous accumulation of trust between two peoples, which we hope we’ll also translate for trust which is essential in building further our economic relations.

Because of this people to people relationship, the political relationship at the top is always very strong as well, and more so among the two governments today.

Just as we speak, in a very short while chief minister Penjap will be meeting Prime Minister of Pakistan in Turkey today this morning in İstanbul and later he will be meeting the President of Turkey. Just to show the closeness, the intensity of contacts at the highest levels, our prime ministers from both sides are visiting each other this year within the span of 7 months. We have two prime ministers and two presidential visits. This doesn’t happen with every country, neither for Turkey nor for Pakistan.

The uniqueness of our relationship as expressed by Professor Ahmet Davutoğlu, our prime minister, in his book, he is also an academician, also carries a deficit in that at the top it is very strong, but then there are sectors which need improvements, and we have identified two broad sectors which need improvement, an done is the economic relationship, and the other being the cultural and academic relationship, but I shall not go into detail of that. So it is the intention of both governments of Turkey and Pakistan to increase this economic relationship and the brotherly relations as a whole; because from the political perspective a strong Pakistan is important for a strong Turkey. When brothers are strong, the families are strong.

Mentioned the intensity that we establish the high level cooperation council which is like a joint cabinet, a joint council of ministers the first meeting of which took place in 2010. We have had four meetings so far. In 2013, this was upgraded to as it was renamed as upgraded strategic cooperation council with the declaration of strategic cooperation between the two countries.

The HLSCC, with its new name, was the first one concluded between

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Turkey and a non-neighbour country. It was the third one in general but it was the first one which we established, rather with a country which was not an immediate neighbour. This shows the prominence of Pakistan for us in our foreign policy.

I already mentioned the intensity of high level connectivity, and why it is relevant for the improving of economic relations because as this HLSCC steers the bilateral relationship as in every meeting you have relevant ministers of, but minister of economy on the Turkish side has always been there for thusfar means that any issue in the economic relationship can be taken up at the highest levels every year because this is an annual event, and in the way it works, there are working groups which meet before and then they report to ministers and then the ministers will report to prime minister in joint sessions. So it is an opportunity to take decisions especially in economic field. That is an important mechanism, and also, of course, the increase in economic relationship depends on the private sectors, and what the governments can do is to pay for the way to prepare the ground for them. This can be done in two broad areas; one is the legal area which means documents, agreements, treaties used among protocoles, and the other being infrastructure and connectivity.

In the legal area we have over 130 documents between the two countries, but the most prominent is the free trade agreement that we have started negotiating. The first round was held over a month ago; the next is intended towards the end of this month with the visit of our minister of economy . But I shall not go into detail because the chief negotiator of this free trade agreement on the Turkish side, undersecretary of minister of economy, Mr Hüsnü Dilemre is with us so I don’t want to steal any of his talking points.

Regarding connectivity, in the air connectivity, we have reached a very good point. Two years ago, there were only 7 flights per week between the two countries, from 2 cities, Karachi and İslamabad. Today from 3 cities in Pakistan, Karachi, İslamabad and Lahor, we have daily flights, which is very important to pave the way for the bussiness communities from both sides. We are also, Turkish Airlines also is connecting these 3 cities, Lahor, which we are in now, with 283 destinations in the world being the best connected airline in the world.

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The 2nd connectivity is rail connectivity. Many of you will know the acronym RCD, reginal cooperation for development, which has later become the economic cooperation organisation of which we are members. The ECO is working on regularising container frame betwee İstanbul and İslamabad based on the railway of the RCD. This will not only enable bilateral connectivity for cargo but also connectivity for Pakistan through Turkey into European markets.

Today if you want to send good from Karachi to İstanbul it takes from a month to 45 days. With this train it will go down to 15 days, which is quite an improvement.

The 3rd connectivity we are working on is the road connectivity.Again from the RCD days we have a road connection to Turkey and ECO is working on reviving this, and in the meantime Pakistan has joint, has become a party to a TIR convention which is to do with good traffic worldwide globally, and we held with Turkey and Pakistan the first ever joint land transport commitee meeting last month in Turkey, and Turkey has provided, to begin with, 1.000 passage documents for Pakistani trucks through Turkey. So this is the 3rd connectivity the governments are establishing.

Furthermore, of course for a strong Pakistan, it is not only bilateral trade for only investment that is necessary. Turkey is ready to share its knowledge having had a good vacate of economic progress, and having accumulated a lot of experience in international trade. Although today our trade volume is low and it is, if you look at it in statistical terms, in favour of Pakistan, there is a 2 to 2 ratio; we sell 1 to Pakistan and buy 2 from Pakistan. But this not an issue for us. In this hall, exactly 2 years ago, in December 2013, President Erdoğan addressed the business forum as Prime Minister and he said this imbalance in trade is not important for us as we are brothers.

Our international cooperation agency TİKA is working in this regard to strenghten Pakistan. We are establishing here in Lahor a technical vocational training centre for textile and also for tourism. We are also working, sharing our knowledge for the strong Pakistan that will be our benefit also investing in Pakistan.

Now having talked about the intention and implementation, if you let me I

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will put some food for thought for your discussions later today. The model I just mentioned, not only investing, not only trading between us but also sharing experience is something, I think, you should also bear in mind Pakistan is not an ordinary country for Turkey and vice versa. We know that Turkey is having high esteem in Pakistan so this kind of economic cooperation which involves also sharing knowledge and know-how could be an interesting model just as a Penjabian board of investment and trade has given very interesting figures and statistics. The opportunities, I think, the accumulating know-how of Turkish business people of the Turkish private sector can be very relevant with Pakistan’s natural resources and human resources and it can be used to approach third markets jointly. Just to give an example, the dairy sector in Pakistan has lots of potential. Turkey has got very good dairy companies, products and brands, and we have very close to Pakistan and the Gulf region which is a huge market so there , even as a non-businessman, as a bureacrat, I seem to see the opportunities.

Again an example was given by Borsa İstanbul, which is the stock Exchange of İstanbul, bringing the know- how to Pakistan to further strengthen the institutions of Pakistan. We welcome this, and I thank Borsa İstanbul for doing this.

And Halkbank, one of our major state banks, has mentioned how it supports the small and medium enterprises, and pleased to join hands with Pakistan in this and share the know-how.

And another contribution by Turkish Airlines is not only connecting Pakistan with Turkey but 2 flights out of İslamabad every week now connect Pakistan to Baku, Azerbeycan, another brotherly country with a lot of capital to invest. And Turkish Airlines is doing this at a loss because that line, although it is very new, is not the most profitable one because there aren’t so many passengers right now. From the Turkish perspective, I think it’s time for our investors and companies to come in greater numbers to Pakistan, and in this regard, as it has been mentioned already, the China- Pakistan economic corridor is an important incentive not only because of the projects that will be done in Pakistan, but because of the model bilateral cooperations between Turkish, Pakistani and Chineese businesses. I mentioned this a month ago during the business opportunities seminar here and it was applauded by Chineese

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businessmen as well which means they see it also feasible. And already Turkey, together with Pakistan and China, is the founding member of the Asian Infrastructure Investment Bank. We cooperated with Pakistan and formed the common group within the bank. And also Turkey, during the G20 summit last month signed agreement with China regarding the cooperation within the one road one belt Project, and of course the China- Pakistan economic corridor is a very important part of this Project, and the documents signed between the 2 countries also envisages bilateral cooperation regionally which means also with Pakistan. So with these bits of food thought I thank you very much for your attention, and once again thanks to organisers for this event which will bring fruit to improve our bilateral relationship.

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HÜSNÜ DİLEMRETURKISH MINISTER OF ECONOMY UNDERSECRETARY

Mr. Ambassador, Very Esteemed Participants, Ladies and Gentlemen,

First of all, I would like to thank especially to the Economic Research Foundation and all the stakeholders from Pakistan and Turkey who put their best efforts into the organization of this symposium.

I am very glad to be here in beautiful Lahore.

As we all know, Pakistan and Turkey are very special to each other. We have a history of brotherhood dates back to the 12th Century when Islam expanded from Middle East to South Asia.

We always attach utmost importance to the development of economic and commercial relations with Pakistan.

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With a similar sentiment, today we will identify other means and ways to deepen the existing level of trade and economic relations between our countries.

RECENT ECONOMIC DEVELOPMENTS/TURKEY

Ø Let me first touch upon very briefly the recent economic situation in Turkey.

Ø Turkey integrated more to the global economy as a result of macroeconomic policies followed since 2002.

Ø Through robust structural reforms we have been able to achieve high economic growth rates during this period.

Ø Although it contracted in 2009 with effects of the global economic crisis in 2008, the Turkish economy managed to recover afterwards.

Ø From 2004 to 2014, Turkey’s GDP increased from 392 billion USD to 800 billion USD. While, national income per capita rose by more than twofold increasing from 4,000 USD to 10,500 USD.

Ø We have exceeded 400 billion USD of trade volume and the net direct investment flow to Turkey between January 2003 and September 2015 reached to 162 billion USD.

RECENT ECONOMIC DEVELOPMENTS/PAKISTAN

Ø In Pakistan we are aware of the fact that the economy has proved to be resilientin a difficult environment.

Ø Despite the difficulties faced, such as tight security environment, bottlenecks in the infrastructure, and sustainability of the energy supply Pakistan’s economy has been able to grow.

Ø Real GDP growth averaged 4.2% annually between 2012/14 and is projected to be around 5% in 2015/16.

Ø We know that recent economic growth in Pakistan has been driven by contracting and services sectors. This trend will continue and industrial sectors will also achieve more efficient levels.

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Ø In this regard, I would like to highlight that we are very keen on developing existing collaboration between the two brotherly countries. We know that Turkey and Pakistan have a lot to contribute to their development levels. There are a lot of examples for that such as Coca Cola Turkey, Albayrak Group, Zorlu Energy, Anadolu Group and others interested in investing in Pakistan. Wide range of projects are undertaken by Turkish companies from metrobus project in Lahore to waste management projects, electricity production, construction, telecommunication etc.

Ø Soon, there will be another genuine opportunity for our entrepreneurs to utilize both countries resources bilaterally when we complete a comprehensive Free Trade Agreement.

BILATERAL TRADE RELATIONS

Ø The globalization process turned the world in a small village where borders become meaningless. In this manner, global trade rules are reformed by important global initiatives named TPP and TTIP. As Turkey and Pakistan, we need to catch up with such important game changer initiatives in the global trade.

Ø As the global trade patterns are turning into more inter-continental scale, the role of the Asia and Pacific region in the world economy is getting more important. Europe, the American continent and the Asia-Pacific region are all getting together today.

Ø We are aware that Pakistan has a great potential to connect the Southeast Asia to the Central Asia while Turkey is connecting Europe and Asia. Through those transitions Turkey has started to play greater roles in global trade and economic policies.

Ø Although Turkey and Pakistan have excellent political relationswe have yet to achieve the same level in trade and economic relations.

Ø In 2014, bilateral trade volume between Turkey and Pakistan reached at almost 700 million USD.

Ø The value of our imports from Pakistan was 435 million USD while our exports was 260 million USD, decreasing almost %10 compared

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to 2013. As of October, our trade volume has become 490 million USD.

Ø If we look at the trade flow more closely, in 2014 Turkey exported to Pakistan 972 items while Pakistan exported 322 items, showing an important concentration of Pakistani exports in a limited number of products (textiles and garments).

Ø Although Turkey is in a trade deficit position, Turkey’s exportsare diversified.

Ø At this point I am glad to say that it was agreed in Joint Declaration of High Level Strategic Cooperation Council meetings that Turkey and Pakistan will start negotiations on Free Trade Agreement (FTA).

Ø We held the Inaugural meeting of FTA negotiations in October in Ankara. Technical delegations of Turkey and Pakistan agreed on the principles, scope and coverage of the FTA. We signed the Terms of Reference for the FTA on 13th October 2015.

Ø Now, we are expecting to sign The Framework Agreement as soon as possible between the two Ministers in İslamabad. On that occasion, our Minister of Economy HE Mustafa Elitaş and a group of technical delegation will visit Pakistan.

Ø These developments show that our countries are on the verge of a new era. I believe that FTA will promote our bilateral trade liberalization to the highest extent possible. A comprehensive FTA between Turkey and Pakistan will provide greater market access opportunities not only in goods but in trade in services and investment as well. FTA will help us deepen our economic relations and liberalise trade.

Ø With its dynamic population and growing economy, logistically accessible strategic location and growing global role in international trade and investment, Turkey is in fact a very attractive market that can be easily targeted.

Ø On the other hand, Pakistan with its population of 185 million has many to offer to Turkish exporters. Competitive power in agricultural goods,

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capacity in food production, in textiles, mining and Pakistan’s existing FTA network (ASEAN, China, Malaysia, and Indonesia) could bring up new opportunities to the Turkish investors.

Ø The benefits expected to get from trade liberalization is obvious for both countries.

IMPROVING ECONOMIC RELATIONS WITH PAKISTAN

In the beginning, I want to start with a quotation of esteemed philosopher and poet of Pakistan, may Allah rest his soul, Sir Muhammad Iqbal, the poet of the East, who said :

“The thought of a limit to perceptual space and time staggers the mind.”

Ø Today, there are artificially created borders in the minds of common man.

Ø To take further action, whatever it is for, we should never think that there is limited time or restricted space.

Ø It is the same for the cooperation between our nations in many aspects.

Ø We have to best use all instruments in a creative way. We should plan course of our actions in this manner.

Ø I would like to state a few critical points to focus on in order to have a more desirable level of bilateral commercial and economic relations between Turkey and Pakistan.

Ø First and foremost, products subjected to bilateral trade between Turkey and Pakistan must be diversified and thus content of trade must be widened. To do this, both countries are now willing to constitute legal basis which will create necessary preferential treatment through the FTA. Our Prime Ministers showed this willingness at the highest level in 2015, we are realizing it now.

Ø I believe that concluding a comprehensive FTA will best serve to diversify the composition of bilateral trade. However, such inter-governmental efforts are not solely enough to achieve the target.

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Ø Here, let me touch on the importance of the effective use of trade promotion activities.Aiming to promote bilateral trade,we should encourage reciprocal activities and contacts of businessmen.

Ø The relevant private organizations of our countries should get into contact more often. Turkey-Pakistan Business Council which was founded by Foreign Economic Board of Turkey, DEİK, and the Federation of Pakistan Chambers of Commerce and Industry plays a critical role in terms of bridging business environments and most importantly providing support for achieving the FTA.

Ø Participation in fairs and exhibitions in both countries, finding ways to trade new goods or services would pave the way for enhancing bilateral trade.

Ø In addition to bilateral mechanisms, there are opportunities for cooperation at the plurilateral level. Our countries are members of the Organization of Islamic Cooperation (OIC), Economic Cooperation Organization (ECO) and Developing Eight (D-8). As we see, we have an on-going process for trade agreements offering many opportunities for expansion of regional trade.

Ø The second important point I would like to highlight is focusing on investments. Foreign direct investment, with its positive impacts on production, economic growth, employment and infrastructure plays vital role between our countries.

Ø Turkish foreign direct investments in Pakistan reached to 130 million dollars. In return, we see that as of 2015 October, Turkey received 88 million dollars of direct investment from Pakistan.

Ø We have more than 45 projects in Pakistan which are concentrated on mostly energy, infrastructure, construction and consultancy sectors.

Ø So far the total amount of Turkish contracting services projects undertook in Pakistan exceeded 2.7 billion USD. We are eager to increase the number of such projects. We have both intention and power to do this.

Ø Las but not least, improving the economic relations between Turkey

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and Pakistan also depends on seeking for alternative cooperation areas such as in industry, energy, banking and transportation in or with the third countries.

Ø We know that there exist genuine efforts in Pakistan in terms of industrial development. Being very supportive to this process, Turkey is very much willing to provide contribution to / support for this process.

Ø Through sharing information and experiences in the field of industry, two countries can evaluate the possibilities of enhancing existing economic cooperation.

Ø We can explore the opportunities of cooperation in the fields of energy and encourage public and private companies to jointly invest in energy sectors in each country.

Ø Cooperation on coal mining, efficient use of coal resources, development of reserves will deepen relations in this sense.

Ø Strengthening cross border banking relationship through opening of banks or bank branches can extend cooperation. It may help firms to conduct their trade activities confidently.

Ø In addition, transportation linkages between two countries can be increased. Effective use of current railways or sea routes might increase trade relations between two countries as well as countries in their vicinity.

Ø We are closely following the developments about China-Pakistan Economic Corridor (CPEC) and we believe that it will be very beneficial for the development of Pakistan. We can look for new cooperation areas under the framework of this project.

Before concluding my remarks, I would like to refer to Sir Muhammad Iqbal once again.

Sir Muhammad Iqbal said in his poem written to the founder of our Republic Mustafa Kemal Atatürk right after the Independence War of Turkey in 1921 that;

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“Let your horse run over whatever comes in its path”

Now it is time to take further steps to integrate our economies more. Let our horses run over.

Ø Thanks to all shareholders for having us over here and give a chance to state our thoughts on behalf of my government.

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KEYNOTE SPEAKER SESSION

Moderator : Syed Turab HUSSAIN Acting Chair Department of Economics, LUMS

1. Speaker : Economic Profile of Turkey and Opportunities to Cooperate Prof. Dr. Metin TOPRAK THK University Rector

2. Speaker : Economic Profile of Pakistan Dr. Hafeez A. PASHA

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ECONOMIC PROFILE OF TURKEY AND OPPORTUNITIES

TO COOPERATE

PROF. DR. METİN TOPRAKTHK University Rector

2015 • Pakistan

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I am a bit unlucky because of our morning session presenters. They have very deep intellectual wisdom. So, some of my ideas have already been presented. I will try to present a kind of renovated presentation in order to keep your eyes open. And of course it is not a very easy job.

Now in Turkey we have two benchmarks in terms of classifying countries: One is the EU the other is G20. As many of you may assume for G20, OECD is a kitchen. So this intellectual kitchen for OECD is also a kitchen for Turkey. Turkey is taking criteria of OECD and of IMF as benchmark.

All other international organisations develop criteria and references. Therefore, we are lucky to be a kind of free rider. We are in front of doors of the Europe for more than 50 years as a candidate for full member. We are not in difficulty to find some guides or coaches to follow. We are not in a position that to decide if European, Anglo Saxon or the Eastern world criteria are valid for us. We are determined that the only criteria set belongs to the so called the West Block which dominates the whole world.

As you know G20 is a newly emerged organisation, and Turkey belongs to that organisation also led it for six months as term president. We are lucky because G20 is, you know, directing the world country.

Now I will just shortly mention the dimension of Turkish economic performance and size of Turkish economy and the new classification for world economies. Later I will evaluate quality life in Turkey in terms of the comparison with the developed world and then later our benchmark i.e., the European Union 2020, and finally the Turkish agenda of 2023 and Turkish short term agenda for next couple of years. And as you see from the slides, G20 dominates the world and almost 85% of world economy belongs to this group, and as you see here also the USA, China, and other big countries have big impacts on the world economy. The share of Turkey’s economic magnitude is just 1% in this G20 countries but still Turkey is promising and emerging economy and society.

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When we follow a different calculation named purchasing power parity rather than nominal figures, then China and India go further in a positive manner and their ranks improve. That is to say, in nominal GDP China and India have relatively disadvantageous positions. When we take the real purchasing value of currencies of these countries, their positions turn to be better. However, relative position and place of Turkey remains same like the many of the most developed countries.

Human development in Turkey is pretty satisfactory and the position of Turkey is better when comparing to the order of GDP and other economic indicators. Especially social and physical infrastructure like education, health, culture and so on improved significantly. And the performance of Turkish government at municipality level for fifteen years is remarkable.

Inflation ratio, budget deficit, current account deficit and all other indicators related to the government’s performance including municipalities have been improving strikingly. So we can differentiate present day Turkish society in terms of government, society and economy from 20 years ago Turkey. The set of political criteria for Europe is called Copenhagen criteria and the set of economic criteria is called Maastricht criteria. Turkey accomplished all economic indicators setup in Maastricht and most of political criteria setup in Copenhagen.

We can say that the level of Turkish government’s gross debt is also satisfactory and the ratio of national debt to GDP is well below of Maastricht criterion. According the Maastricht criterion the maximum ratio should not exceeds 60% of GDP. It’s just around 37% in terms of government debt. And private sector of Turkey is very dynamic and is very capable to manage its debt burden. Turkey is a deficit country in terms of savings-investments balance. With the present government transferred the duty of finding finance to private sector. Dynamism of private sector manages external resources very efficiently. Otherwise alongside with the Europe and USA Turkey would go to the deeper crisis since 2008.

Unemployment rate is a structural problem for Turkey. We couldn’t diminish it to one digit figures. Still we have almost 10% of unemployment and this is much related to structural in balances of Turkish economic sectors.

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In Turkey economic development has positive relationship with just primary or elementary school education. It means Turkish economic structure mainly need low level of education. It is a big problem and it is called mediocre or average man trap. In the literature middle income or middle technology trap is used commonly. I developed a new concept for this and name it average man trap o mediocre man trap.

This jeopardy is a big problem not only for Turkey but also for Iran and other neighbouring countries. Average man trap is reflection of corruption in the mirror. Meritocracy is ignored in the administration of average man land. With the capacity of average or mediocre man, it is quite hard to go further in social, educational, cultural and high politics issues. Lack of coherence between needs of economic sectors and capacity of labour force may occur and unemployment rate could be 70% or 20% or 50%. We cannot argue that our economy just needs elementary school education so we must just intensify on it. If we did so it means our economic structure will have development level of today forever.

In terms of investable country grade, Turkey doesn’t have any superiority over developed countries. However, the position of Turkey is favourable to some extent when comparing with developing and emerging countries. We see here that gender gap is a big issue in Turkey as it is in Pakistan and other Islamic countries, but we are doing well in recent years especially our recent governments and political parties are insisting on developing this dimension and on participating women into economic sectors

Corruption is another issue that Turkey and other Islamic countries should take into account. Turkey has an average point and place among G20 countries. Therefore, Turkey still has some room to go forward. The most important factor for the Turkish economy is not economic stability but stable and powerful democratic government it is. So in recent almost two decades Turkish economy, Turkish culture, Turkish society satisfied with the stable and democratic Turkish government. We have witnessed in the last four months that without a stable, powerful political party and government, i.e., one party government, Turkey will be subjected to many disasters .Hopefully we still have a very strong and stable government in recent one month.

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Until recent couple of years economic regimes were classified on a traditional approach, i.e., capitalist, free market, socialist, and planned economies. However, today’s approach is emphasizing human resources. Now economies are classified in terms of development level of human resource. So without developed human resources it is meaningless to classify economies developed or developing. If a country’s human resources are developed, it means that country already is developed or will be developed eventually. So without a developed human resources, you can build sky towers, tunnels, big cities and you can buy space ships and go to even other planets; but all of these will be dependent of human resources of other countries and but it is not an indicator of well-being of your society.

Countries classified into three major groups: factor endowment-driven economies, factor efficiency-driven countries and innovation-driven countries. Economies can be classified also based on their innovation capabilities: innovation leaders, innovation followers, moderate in innovation and finally weak in innovation. Turkey belongs to the 3rd group, so Turkey is not an innovative country yet. These recent approaches have been developed by supranational official, semi-official and unofficial organizations. Therefore, credibility of these classifications is quite high. There are twelve factors that define economies in terms of their capabilities in terms of innovation-based approach.

According to 12 factors we can see the potential of Turkey. The frontier of the circle has big gaps to be filled. Turkey’s relative poor performance belongs to the field of innovation, labour market efficiency, institutions, financial market development and business sophistication. Turkey’s score is 4.4 over maximum of 7. We can see that Turkey is just having the rank of 51 in the world.

We compare our relatively poor dimensions with the Europe and other developed economies, of course. So among other developing economies, place of Turkey is not bad, but when it is compared to the developed economies there is still some room to be filled.

One important thing is comparing the performances of the various dimensions of the Turkish economy. Average level of the Turkish economic performance is above the level of financial market, labour market efficiency and institutions.

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Low level of efficiency of labour market is a big problem. When we say that labour market of an economy is inefficient, we mean coherence or compatibility between the qualifications of labour market and needs of economic sectors are not in line. The weakest dimension of Turkey is its insufficient business satisfaction and low level innovation. When we compare Turkey to emerging Europe which formerly was communist or socialist, Turkey is better. However, the benchmark for Turkey should not be emerging Europe. It is not very meaningful comparing a country that has an experience of 50 years for free market and democracy experience with newly released and liberated former communist and socialist countries.

We compare Turkey with these emerging European countries because all these countries are candidates for full membership to European Union. Turkey is equal or bigger than the sum of all Balkan countries in terms of population and economic size. Negative side of Turkish economy is mostly related to the dimension of human resources: the most problematic factors for doing business are tax rates, access to financing, inadequately educated workforce, inefficient government bureaucracy, inefficient capacity to innovate ,restrictive labour regulations and poor work ethic. As seen here, without developing human resources it is hard to go to the next improved step.

We have to take all ways of learning into account. Not just formal education, but nonformal education and informal learning also must be in our agenda. We must cover and promote all learning paths from cradle to the grave. All societal institutions including family environment must be considered for gaining skills.

Turkey is in transition still and is under the obligation of European 2020 agenda. All candidate countries and also full member countries are expected to comply with these criteria. The European Union as benchmark for Turkey and another candidate countries has a visionary agenda to be followed by members and candidates. The EU 2020 vision targets 3% of R&D, and the figure for Turkey is just 1%.

Not just economic well-being indicators used in international comparisons, but different dimensions of life are also compared. Heritage, Fraser, Transparency International, World Economic Forum, OECD, World Bank and UNDP are main international organizations that release indexes for

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comparison. The place of Turkey is between developed and developing economies. For a country like Turkey that has waited half a century in front of the Western Block, this performance seems insufficient. However, we can say that all these organizations may be affected or manipulated to some extent. However, there are no other criteria that setup by developing economies. So we use their methodologies, understanding and benchmarks.

They can measure sufficiently our positions, and all these institutions give very prudent findings for Turkey. Now, as we see here, economic and political freedoms, educational competition, and economic competition and PISA scores: all of these indicators show that Turkey is behind the West. For half a century and even if we take the Ottoman Empire, for two centuries 200, we are having very close relations with the West. However, we are still waiting in front of doors of the EU for more than 50 years and Turkey is still behind the Western economic and life standards.

Turkey is developing very slowly and did not see and path breaking or jumping experience in its history until the period of 2003-2011 despite the recent financial crisis in Europe and in the globe as a whole. However Turkey has a fatigue since 2012 and faced many internal and external difficulties due to its conflict resolution inside and foreign policy outside.

In fact, Turkey’s agenda is quite clear at the levels of government, society, economic policy and other fields of societal life. Turkey has no choice other than the European Union agenda, but the EU agenda necessitates patient and great efforts to be fulfilled. The EU agenda is intensifying on procedures and outcomes, so many countries out of the EU are also following that agenda very carefully. That agenda is valid and obligatory not just for member countries of the EU but also for candidates like Turkey.

The Europe 2020 strategy depicts growth as smart, sustainable and inclusive. Smart means more effective investments in education, research and innovation. Sustainable means a decisive move towards a low-carbon economy. And inclusive means a strong emphasis on job creation and poverty reduction. This strategy is focused on five ambitious targets in the areas of employment, innovation, education, poverty reduction and climate/energy. And now Europe is improving between 2014 and 2015 in the strategy determined

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and in seven flagship initiatives setup for the visionary growth approach in spite of the recent crisis which has not finished completely yet.

Today when we compare R&I (research and innovation) performance of economies the countries out of the EU are more assertive. Japan, Switzerland and USA are more successful than the EU. Turkey’s R&I performance is less than half of the performance of Japan and just equal to half of Switzerland’s. The most innovative regions in the world are the Far East and Anglo Saxon countries. Therefore, Anglo Saxon countries the Far Eastern countries show us how Europe is still struggling with bureaucracy, stationary and overwhelming regulations. Of course the Europe is very good at developing procedures and systems. However same performance is not seen in terms of the outcomes. Europe is not efficient as USA, UK and Japan. It can be said that while the European approach is more process-oriented, the Anglo-Saxon approach is more outcome-oriented.

And we can see here that the performance of patents and publications of the Europe and the USA. Patent performance of the EU is better than performance of scientific publications in aeronautics and space, transport technologies, energy, materials, new product technologies, automobiles, construction and construction technologies and security. In humanities health and socio-economic sciences, scientific publications performance is higher than performance of patents.

In the USA scientific publications in the fields of socio-economic sciences, aeronautics or space, humanities, environment, and construction and construction technologies have higher performance than patents in these fields. Patents performance in biotechnology, nanosciences & nanotechnologies, new production technologies, ICT and materials is higher than scientific publications in these fields.

Japan and China other two economies that can challenge the Western Block i.e., mainly the EU and the USA. You see the performances of both Far East economies. And this chart belongs to Turkey. As you see, the blue circle is the reference and the other ones are Turkish performance. The red dotted line shows the emerging Europe and black smooth-line represents performance of Turkey. Turkey is having a bigger performance in the fields

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of SME’s introducing product or process innovations as % of total SME’s, public expenditure on R&D financed by business enterprise as % of GDP and scientific publications within the 10% most cited scientific publications worldwide as % of total scientific publications of the country.

Especially in scientific publication of Chinese performance is remarkable. But there are also some tricky points in terms of scientific publications. Turkey and China support scientific publications financially, professors at universities and publishers develop some short cuts to increase impact factor of their journals and other publications to benefit from financial supports envisaged by governments. Professors from China and Turkey use this opportunity very well and it is still a bit earlier decide that support should be cancelled or allowed to continue.

Turkey’s science and technology specialities are not satisfactory, as you see here. And this is Turkish performance. It is almost half of Europe’s. And you can see the gap between Turkey and Europe for 2014. And now I’m going to finish. Turkey has 3 policies regulated recently related to human resources. And these 3 regulations come from the EU agenda.

The first one is Turkey qualifications framework directive, released on October 19, 2015 in Official Gazette. This regulation belongs to the Council of Ministers. The implementing and supervising public authority for this regulation is Vocational Qualifications Authority.

The second regulation belongs to the Council of Higher Education (CoHE) and released on July 23, 2015 in Official Gazette. All higher education institutions have to obey decisions and supervision of this new board that directly connected to the General Assembly of CoHE.

The last regulation is released by Ministry of Education (MoNE) on May 23, 2015 in Official Gazette.

All these regulations aim at improving and developing quality of qualifications in Turkey. And this is the second phase of economic and societal development for a country. Turkey is struggling to update and upgrade its learning paths to the EU and other Western countries, i.e., the USA, Canada, Australia, Japan and Korea. Formal, non-formal and informal education-training and learning

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are included in these regulations and valuation of uncertified skills needs to be processed and certified.

All these certifications will be subject to these criteria and these criteria are also totally in line with the European standards. And our mean agenda is quality. Turkey is not a country that has a plenty of underground natural resources or final-product rich country like Germany and Japan. The only promising potential resource for Turkey is its human resource, and because of this the quality of human resources is crucial. Japan and Germany are remarkable examples and each has a success story in human resources.

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Economic Profile of TurkeyDr. Metin TOPRAKIstanbul University

Department of Economics

D e c e m be r 0 7 , 2 0 1 5Outline

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Economic Size and Performance of Turkey P

New Classification Based On Human Resources: (Innovation Leaders, Innovation Followers, Moderate In Innovation, Weak In Innovation)

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Quality of Life: Competition, Freedoms and Performance of Education

P

EU 2020 Agenda P

Turkey`s Agenda and Main Dilemmas P

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Economic Size and Performance of Turkey

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TURKEY (IMF) Units Scale 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015Increase rate /

Average /2015 / 2003

Gross domestic product, constant prices

National currency

Billions 76,3 83,5 90,5 96,7 101,3 101,9 97 105,9 115,2 117,6 122,6 126,1 130 1,70

Gross domestic product, constant prices

Percent change

5,3 9,4 8,4 6,9 4,7 0,7 -4,8 9,2 8,8 2,1 4,2 2,9 3 4,68

Gross domestic product, current prices

U.S. dollars Billions 303 392 483 529 646 731 614 732 775 789 823 798 722 2,38

Gross domestic product based on purchasing-power-parity (PPP) valuation of country GDP

Current international dollar

Billions 732 822 920 1014 1089 1118 1072 1184 1315 1368 1448 1515 1576 2,15

Inflation, average consumer prices

Percent change

25,3 8,6 8,2 9,6 8,8 10,4 6,3 8,6 6,5 8,9 7,5 8,9 7,4 9,62

Unemployment rate Percent of total labor force

9,1 8,9 9,5 9 9,2 10 13,1 11,1 9,1 8,4 9 9,9 10,8 9,78

Population Persons Millions 66,8 67,6 68,4 69,3 70,2 71,1 72 73,1 74,2 75,2 76,1 76,9 77,7 1,16

General government net lending/borrowing

National currency

Billions -47,3 -24,1 -5,3 -5,4 -16,8 -25,8 -57,2 -37,7 -7,9 -23,7 -19,6 -17,2 -16,5 0,35

General government net debt

Percent of GDP

64 55 46 39 32,7 32,5 37,5 34,7 31,3 27,8 27,3 25,1 24,1 36,69

Current account balance Percent of GDP

-2,5 -3,6 -4,4 -6 -5,8 -5,5 -2 -6,2 -9,7 -6,2 -7,9 -5,8 -4,5 -5,39

Summary: Main Indicators; IMF database Outline

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New classification based on Human Resources:

Innovation leadersInnovation followersModerate in innovationWeak in innovation

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Turkey (2015)Average= 4.4

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Turkey (2015) Outline

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WEF: 2015 Outline

R&D indicators and Roadmap for Turkey`s Human Resources

Country Na me 20 0 2 20 0 3 20 0 4 20 0 5 20 0 6 20 0 7 20 0 8 20 0 9 20 10 20 11 20 12World 2,09 2,08 2,03 2,02 2,02 2,00 2,07 2,12 2,11 2,13United States 2,55 2,55 2,49 2,51 2,55 2,63 2,77 2,82 2,74 2,76 2,79Japan 3,12 3,14 3,13 3,31 3,41 3,46 3,47 3,36 3,25 3,39United Kingdom 1,78 1,73 1,67 1,70 1,72 1,75 1,75 1,82 1,77 1,78 1,72Canada 2,04 2,04 2,07 2,04 2,00 1,96 1,92 1,97 1,86 1,79 1,73Germany 2,50 2,54 2,50 2,51 2,54 2,53 2,69 2,82 2,80 2,89 2,92Switzerland 2,82 2,87Spain 0,99 1,05 1,06 1,12 1,20 1,27 1,35 1,39 1,40 1,36 1,30Italy 1,12 1,10 1,09 1,09 1,13 1,17 1,21 1,26 1,26 1,25 1,27Korea, Rep. 2,40 2,49 2,68 2,79 3,01 3,21 3,36 3,56 3,74 4,04Mexico 0,38 0,38 0,39 0,40 0,37 0,37 0,40 0,43 0,46 0,43Argentina 0,39 0,41 0,44 0,46 0,49 0,51 0,52 0,60 0,62 0,65Brazil 0,98 0,96 0,90 0,97 1,01 1,10 1,11 1,17 1,16 1,21China 1,07 1,13 1,23 1,32 1,39 1,40 1,47 1,70 1,76 1,84 1,98India 0,71 0,71 0,74 0,81 0,80 0,79 0,84 0,82 0,80 0,81Israel 4,43 4,17 4,15 4,31 4,22 4,52 4,40 4,17 3,97 3,97 3,93Pakistan 0,22 0,44 0,63 0,45 0,33Russian Federation 1,25 1,29 1,15 1,07 1,07 1,12 1,04 1,25 1,13 1,09 1,12Saudi Arabia 0,06 0,05 0,04 0,04 0,05 0,05 0,07Norway 1,66 1,71 1,57 1,51 1,48 1,59 1,58 1,76 1,68 1,65 1,65Sweden 3,80 3,58 3,56 3,68 3,43 3,70 3,62 3,39 3,39 3,41

Turkey 0,53 0,48 0,52 0,59 0,58 0,72 0,73 0,85 0,84 0,86Malaysia 0,65 0,60 0,61 0,79 1,01 1,07 1,07

European Union 1,84 1,86 1,82 1,82 1,84 1,84 1,94 2,04 2,03 2,04 2,06High income 2,32 2,29 2,24 2,25 2,26 2,26 2,35 2,43 2,41 2,42 2,32Latin America & Caribbean 0,53 0,55 0,55 0,61 0,62 0,65 0,69 0,76 0,79 0,84Least developed countries: UN classificationLower middle income 0,62 0,56Low & middle income 0,70 0,75 0,79 0,84 0,89 0,90 1,00 1,10 1,19 1,27High income: nonOECD 0,79 0,85 0,82 0,89High income: OECD 2,36 2,35 2,30 2,33 2,35 2,36 2,47 2,54 2,51 2,55 2,40OECD members 2,29 2,29 2,24 2,26 2,28 2,29 2,39 2,47 2,43 2,46 2,40Middle income 0,71 0,75 0,79 0,85 0,89 0,90 1,00 1,10 1,19 1,27

Research and Development Expenditure (% of GDP), World Development Indicators, 12.11.2015Outline

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Turkey, R&D Activities Research, 2014 OutlineR&D /GDP

Quality of Life:

Competition Freedoms

Performance of education

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INTERNATINOAL COMPARISONFREEDOM, WELFARE AND EFFICIENCY

Source: Heritage Foundation

Fraser Institute

Freedom House

Transparency International

UN Development Program

World Economic Forum

World Bank

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The Level of Economic, Political and Social Freedoms and Transparency in Turkey

Field of interest The highest value or reference value

Rank or place of Turkey Relative position

Freedom House (2015) Political rights and civil freedoms Fully free

Kısmen özgür(3.5)

In 195 countries

Fraser Institute (2013)(10: most free, 1: least free)

Economic freedom 10 6,92 82nd in157 countries

Heritage Foundation (2015)(100: most free , 0: least free)

Economic freedom 100 63,2 70th in 178 countries

Transparency International (2014)(100: no corruption, 0: highest corruption)

Perception of corruption 100 45 64th in 175

countries

BM Kalkınma Programı (2013)(1: most developed, 0: least developed)

Human development 1 0,759 69th in 187 countries

World Economic Forum (2015-2016)(7: most competitive, 1: least competitive) Global competition 7 4,37 45th in 144

countries

World Competition Yearbook (2012)Institute for Management Development (100: most competitive, 0=least competitive)

Global competition 100 40(60,50)

40th in 61 countries

World Competition Yearbook (2012)Institute for Management Development (100: most competitive, 0=least competitive)

Education competition 100 45,96 (2010: İzlanda 1’inci:

72,19)

51st in 59 countries

World Bank (June 2015)(1: doing business is easiest, 183: doing business is hardest)

Ease of doing businnes 1 55(69,16)


International Property Rights Index (IPRI, 2015)(1: least protected, 10: most protected)

Property rights (legal and political environment, physical

property rights, intellectual property rights)

5,26(Finlandiya 1’nci: 8,6)


OECD (2012) (Programme for International Student Assessment) PISA

(between 15 years 3 months-16 years 2 months) (OECD changes between 400-600)

Reading-Math.=ScienceKorea-R:539,M:546,S:538Finland-R:536,M:541,S:554

600OECD average:

R:493, M:496, S:501

R.475,M:448, S:463

In 34 OECD members 32nd

*: starting a business, permits and licensing procedures, the hassle of hiring and firing, working times, registration of ownership, export procedures, access to credit, contract security..

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EU 2020 Agenda

The Europe 2020 strategy delivering growth that is:

smart, through more effective investments in education, research and innovation;

sustainable, thanks to a decisive move towards a low-carbon economy;

inclusive, with a strong emphasis on job creation and poverty reduction.

The strategy is focused on five ambitious targets in the areas of

a. employment,

b. innovation,

c. education,

d. poverty reduction and

e. climate/energy

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Europe 2020 targetsThe 5 targets for the EU in 2020

1. Employment75% of the 20-64 year-olds to be employed

2. R&D3% of the EU's GDP to be invested in R&D

3. Climate change and energy sustainabilitygreenhouse gas emissions 20% (or even 30%, if the conditions are right) lower than 1990

20% of energy from renewables

20% increase in energy efficiency

4. EducationReducing the rates of early school leaving below 10%

at least 40% of 30-34–year-olds completing third level education

5. Fighting poverty and social exclusionat least 20 million fewer people in or at risk of poverty and social exclusion

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Flagship initiatives

Europe has identified new engines to boost growth and jobs. These areas are addressed by 7 flagship initiatives.

Within each initiative, both the EU and national authorities have to coordinate their efforts so they are mutually reinforcing.

Smart growth

1.Digital agenda for Europe

2.Innovation Union

3.Youth on the move

Sustainable growth

4.Resource efficient Europe

5.An industrial policy for the globalization era

Inclusive growth

6.An agenda for new skills and jobs

7.European platform against poverty

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The Digital Economy and Society Index (DESI), 2015Outline

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Research and Innovation performance Innovation Union progress at country level in the EU, 2014

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Average annual growth for Turkey, 2007–2012 Outline

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Turkey – S&T National Specialisation (1) in thematic priorities, 2000–2010in brackets: growth rate in number of publications (3) (S) and in number of patents (4) (T)

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Turkey’s Agenda and Main Dilemmas

• Turkey Qualifications Framework Directive, October 19, 2015 (OG)

• Higher Education Quality Board Directive, July 23, 2015 (OG)

• Ministry of National Education Quality Framework Directive, May 23, 2015 (OG)

Turkey’s Agenda: To overcome “mediocre or average man trap”Education, Quality Assurance, Internationalization

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Relationship of Education, Occupation and Economic Activity : International Reference

Bologna Process

ISCED-FOETISCO

ISIC (NACE)

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Relationship of Education, Occupation and Economic Activity : International Reference

Reference Function Institution

ISCED-FOETThe International Standard

Classification of Education International Standard Classification of Education

ISCOInternational Standard

Classification of OccupationsThe International Standard Classification of Occupations

ISIC International Standard Industrial

ClassificationInternational Standard Industrial Classification of All Economic Activities

Bologna ProcessEuropean Higher Education Area

&European Research Area

*Competitive and dynamic knowledge based European economy

* Outcomes based approach* Bologna’s content: ISCED, ISCO, ISIC

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ECONOMIC PROFILE OF

PAKISTAN

DR. HAFEEZ A. PASHA

2015 • Pakistan

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Exellency, distinguished guests, ladies and gentlemen. Let me say that I am extremely encouraged by what I see here today. This is really the classic example of two great Muslim countries coming together, and you know it is interesting my name is Pasha. I should actually be a Turk because I am told in Turkey Pasha is actually a title. It turns out that when I did research on the history of my ancestors, they are in fact from Turkey. We had come to India at the time of the campaign in the South India of the last great emperor, so my ancestors were clergy, Islamic clergy in what is now India. So here is somebody who epitomises internally Pakistan and Turkey. This is me.

It is about time that we came together ladies and gentlemen. We have long cultural, social, perhaps even political relationship for a long time and as going back even to pre-independence period. And we have had various multinational attempts at trying to arrive at level of collaboration among ourselves starting of course with the regional cooperation for development, the RCD and then we still have the ECO which is the economic cooperation and organisation of eight countries. This is a unique body. But let me say that as a former assistant general of the United Nations, I went to ECO and I said there is a blank check. If you want to do something I am willing to back you because I’ve spent millions of dollars in developing RCR. Here is a blank check. Unfortunately, for some reasons,ECO had not been able to evolve a very active programme of collaboration. To me that has been a great disappointment, and as we move from bilateral to multilateral relations, there is a natural, I mean complimentarity in this scope for energy trip. Among other things, these is huge between these eight countries, and I hope someday will get together.

The distinguished professor before me has in fact highlighted the various achivements of Turkey and let me say as the ambassador highlighted the three aspects of the Turkish experience that we can certainly learn from.The 1st is the successful transition from military to democratic government. It is remarkable how you have been able to sustain the presence of democracy. I

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tell you the reason for that is basicly Turkish success after 2000 in delivery of benefits to its people. Democracy has succeded because it delivered in Turkey. And I hope that this is the lesson that we learn in our country, Pakistan.

The second message, our secondly experience that I have learned from after studying Turkey excessively is that earlier on in Turkish history Turkey was known as the sick man of IMF. You set a record of going in and out of IMF programmes. But after 2000, again, you did a remarkable job of financial recovery. And one key factor I must emphasize, which is a key lesson for Pakistan, if we were to get out of this addiction with the IMF. Currently I am in a programme. The way to do so is export route. It is remarkable that in 2002 the exports of Turkey were just above what the Pakistan’s exports are today, roughly 30 million dollars. In less than 15 years Turkey has quadrupled its exports 5 times. Not many countries have been able to quadruple their exports. We certainly haven’t. Our exports have best doubled since the last 5 years, and remained flat. I am afraid, more recently they are actually falling. So where are the key lessons we can learn from a country which is similar to us in terms of culture, religion and social values, and how that country made a successful transmission to a sustainable democracy. This to be is the biggest achievement of the great Turkish nation.

Turning to Pakistan, ladies and gentlemen, it is very clear to me , after the professor’s presentation that Pakistan is somewhat, to use a mild word, behind Turkey in terms of the level development.

Our per capita income is four times less than that of Turkey. It is even higher in terms of the US dollars. Our exports are 6th of Turkey’s exports today. Of course we have a bigger population, and that is where this interaction really needs to take place. Today, in fact, ladies and gentlemen, Turkey is at the upper ring of Islamic countries in terms of level of development. We have to recognize that. While you may be worried about your comparisons with Europe, you certainly do well in the context of being in Islamic world, that is why you are in a position to play a leadership role. The tragedy is that Pakistan trades with Turkey and Turkey exports to Pakistan have not shown either they are big or they are growing. In fact, our exports to Turkey have fallen down to less than 400 million dollars, and that declined by 48% in the last five years. That is the reality we have to contend with. One of the reasons

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for this is that Turkey has developed a very sytematic system for a long term barriers. The other trend that we have observed is Turkey is exporting only about 260 million dollars of goods to Pakistan. This is very low and the reality, and this point was made very well this morning by the speakers. Actually the exports that we get from Turkey are more diversified ; almost a thousand items are being imported from Turkey by Pakistan, but the problem is the volumes are very small; 2 million, 3 million, 4 million. The largest export last year from Turkey to Pakistan was apparatus for telephone. The other exports to Pakistan include machinery, chemicals, and other relatively sophisticated products like plastics and rubber. We, with a narrow and somewhat limited export range are deligated to sending to you some items within the textile range. Textile has come from 58% of Pakistan’s exports to Turkey. When I look at the numbers and look at the patterns, I had a very strong sense that there is a natural trade complimentarity between Pakistan and Turkey. You are up in that level of development; we are trying to get there. It will take some time.

The two countries are very different. They are likely to trade more and you are certainly 4 times above us in terms of per capita income. So my suggestion is that we have to focus on developing this natural complimentarity between the two economies.

Why is the trade so limited despite this natural complimentarity? There are clearly some logistic reasons; there are clearly some marketing reasons. But fundamentally, I think, Turkey has been placed at the slight disadvantage in if I speak honestly, because I am half Turk. Turkey has not been able to enter the Pakistani market because of the FDA we have with China. I am sorry to say this. China is a great friend so is Turkey. To solve this problem, I speak frankly, Pakistan and Turkey must sign an FDA as soon as possible, but not modelled on the Turkey and South Korea FDA. That is an FDA between presumely between a developed country and a country even more developed. The FDA between Turkey and Pakistan must be modelled on the our FDA with China. Let’s give the Chinese a little bit competetion from our friend, Turkey.Ministery of Commerce said that whatever FDA signed with China replicated for Turkey. The projects that Turkey can send to us that are similar in character will be direct beneficiary if there is a greater competition between countries

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to find Pakistan’s market. So, to me, with all your respects, for Pakistani, the Turkey and South Korea model is not the right one.I would push for Turkey to get exactly the same preferancial treatment as we are giving our other great friend, China.

In my mind, Turkey is at least as good a friend as China.

To sum other points, ladies and gentlemen, I know that our shipment is sent to Penjap provinces from the great friend of Turkey, and we also know that we have someone going to municipal other projects of Turkey in Penjap, and there is a scope for developing them enormously. I hope that we can continiue our cooperation in open transit in energy area which is linked to the OPEC, the China-Pakistan economic corridor. My dream as a former UN official is that this corridor will then goes to Turkey, and links with China to Europe by a route. This is a dream which will probably happen after some time.

In conclusion, ladies and gentlemen, let me say that Pakistan has FDAs with many muslim countries; with Malasia,, with Indonesia, with other countries, also. But priority, almost immediately we must sign an FDA with Turkey and we must model it on the Pakistan-China Treaty Agreement.

Thank you.

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PANEL SESSION

Improving Economic Relations Between Turkey and Pakistan

Moderator : Prof. Dr. Mehmet Şükrü TEKBAŞ Istanbul UniversitySubject : The Present and Future of Economic Relations Between Turkey and PakistanSpeaker : Ferhat KAVAKLI Commercial CounsellorSubject : Opportunities for the Cooperation of all Important Industries in Turkey and Pakistan with General Idea How to Remove the Barriers and How to Find Financial Incentives and SubsidiesSpeaker : Muhammad Haroon SHAUKAT Representative of PBITSubject : Role of Business Organizations in the Development of Economic RelationsSpeaker : Ahmet YILDIRIM Albayrak GroupSubject : Preparation of Investment Projects Within Two Countries - Barriers and Possible SolutionsSpeaker : Syed Mumtaz HASSAN Zorlu Energy

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Moderator: Prof. Dr. Mehmet Şükrü TEKBAŞ İstanbul University

Distinguished Guest, Ladies and Gentlemen,

Now we have come to the second part of the symposium, the panel session. There are distinguished panelist with me. I know that we have a difficult task in front of us keeping you awake after the nice meal. But I assure you with the gentlemen sitting on my right and left we will manage it.

Let me start with my own experience about Turkish - Pakistani economic relations. I have been three times before in this country. As a board member of two different companies I visited Lahore, Karachi and Islamabad in late 1990’s. I attended several meetings and had a chance to explore the economic relations between both countries. Since then it has been more than 15 years. On one side I am happy to visit this friendly country once again. On the other hand I am quite unhappy with the figures concerning the economic relations between both countries. In 1990’s the trade volume between Turkey and Pakistan was around $130 Million, it reached $1 Billion level in 2000 and it is about $700 Million in recent years. We know, that the intension of both countries is to increase this figure, we hope with the new free trade agreement a level of $10 Billion can be achieved. I also hope that when we get together next time in Turkey or here in Pakistan we can talk about these figures.

Dear Guest,

Now we will be discussing with our panelists what to do and how to do to realize better economic relations between both countries. Our first panelist is Mr. Ferhat Kavaklı. He is the Commercial Counsellor of Turkey. He will be talking about ‘Positioning the Exchanges for a Competitive Future and Improving the Realations Between two Countries’

The floor is yours Mr. Kavaklı.

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Ferhat KAVAKLICommercial Counsellor

The Present and Future of Economic Relations Between Turkey and Pakistan

The present and future of economic relations between Turkey and Pakistan Pakistan and Turkey have close and unique relationship in terms of mutual trust, understanding and close cooperation. The relations between the two countries are rooted not only in history, but they are based on shared values and common national interest. The relations between two countries will go on growing to new heights in their mutual interest.

Both countries extended their support to each other during the most difficult times, while they cemented their friendly relations with frequent high level visits. The positive reflections of the excellent bilateral relations can also be seen between two countries.

Today, my speech will be related to present and future economic relations between Turkey and Pakistan. In my speech I will focus on three important subjects: bilateral trade between two countries, Turkish investments in Pakistan and FTA negotiations.

In first part, I want to give some statictical data related to bilateral trade between two countries.The two brother countries bilateral trade volume does not reflect the true potential of the countries.

In 2011, our foreign trade volume was more than 1 billion USD. However, our trade volume in 2014 was 694 million USD. This amount consists of 259 million USD exports from Turkey to Pakistan while 435 million USD imports from Pakistan.

On the other hand in 2014, Turkey’s share was only 1.6% in Pakistan’s exports while 0.4% in Pakistan’s imports. With respect to this ratios Turkey

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is the 14th country on export list of Pakistan and the 35th country in terms of imports of Pakistan.

Bilateral trade level in the first ten-month period of 2015 is almost same as first ten month period of previous year. In this period amount of export of Turkey to Pakistan is 225 million USD while the amount of import from Pakistan is 266 million USD. With respect to this realized numbers we can expect a trade volume at the end of this year same as 2014.

At this point, foreign trade composition of two countries should be also specified. Main exports of Turkey to Pakistan composed of telecommunication equipments, tv cameras radar apparatus, textile and machinery on the other hand main exports of Pakistan to Turkey includes textile yarn, cotton woven fabrics, apparel and clothing accessories plastics and organic chemicals.

In second part of my speech, I want to talk about the investments of Turkish companies in Pakistan. Completed and ongoing amount of Turkish investments has exceeded 516 million USD. Turkish capital investments were carried out by 22 companies operating in Pakistan. We have important projects in the sub-contracting and technical consultancy, production of goods and services, food and soft drinks production and power generation.

Some of the well known Turkish companies are Zorlu Energy with renewable energy project, Albayrak Group with solid waste management setup and public transportation busses in multiple cities of Punjab, Limak Construction with metro platform and highway constructions and Anadolu Group with CocaCola Beverages Company in Multan.

Additionally, Turkish investors are available also in manufacturing sector from seed production to chemicals while more Turkish companies are planning to expand and diversify their investments in Pakistan.

The third part of my speech will be related to Free Trade agreement which will shape our future economic relations.In February 2015, the 4th meeting of Turkey - Pakistan High Level Cooperation Council was held in İslamabad, under the chairmanships of Prime Minister of Turkey, Ahmet Davutoğlu and Prime Minister of Pakistan, Nawaz Shariff.

As a result of this meeting, it is decided to begin the negotiations of a

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comprehensive Free Trade Agreement between two countries which will be discussed, in the widest possible range by a decent manner of our bilateral relations. It is expected to include goods and services trade- as well as investment, -intellectual property rights- and many other areas related to trade.

The two countries technical delegations began FTA talks on 12th-13th of October in

2015. It is reached an agrement on the principles related to FTA in terms of scope and content.I believe that the technical delegations will finish their efficient works in a short time and FTA will be signed in 2016. As a result of FTA, we can expect a boost in bilateral trade between the two brother countries.

As a commercial counsellor, I believe that if we use the advantage of existing historical and cultural ties between two countries and the excellent level of political relations- to increase the volume of trade in a balanced manner, we can get a greater share from world trade.

We should work for increasing the number of common activities between Turkish and Pakistani businessmen. We need to vary our export compositions according to the needs of our countries markets.

By this way, if we use two nation’s complementary nature of economy in a good manner, we can realize our expectations about the two brother countries economic future

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Moderator: Prof. Dr. Mehmet Şükrü TEKBAŞ

Thank you Mr. Kavaklı. In his speech Mr. Kavaklı talked about foreign trade between both countries, then he highlighted the investment possibilities waiting for Turkish and Pakistani investors, later he talked about the future of free trade agreement.

Our second panelist is Mr. Muhammad HaroonShaukat. He is the representative of PBIT. Mr. Shaukat will be talking about ‘Role of Business Organizations in the Development of Economic Relations’. The floor is yours Mr. Shaukat.

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Muhammad Haroon SHAUKATRepresentative of PBIT

Opportunities for the Cooperation of all Important Industries in Turkey and Pakistan with General Idea How to Remove the Barriers and How to Find Financial Incentives and Subsidies

Opportunities for the cooperation of all important industries in Turkey and Pakistan with general idea how to remove the barriers and how to find financial incentives and subsidies

I have a short presentation for you. The sequence of the presentation is as follows.

As you all know Turkey and Pakistan have exemplary relations. I heard a very long comprehensive statement by the ambassador, by his excellency Mr Hüsnü Dilemre, the distinguished panelist of this morning. I did not dwell too much on that.

Turkey and Pakistani relationship has now graduated into a strategic partnership. There is very keen interest on both sides at the leadership level to enhance this partnership. As we have heard repeatedly, the bilateral trade stil remains far below expectations. We have had seven years of negotiations with the Turkish side on a provencial trade agreement. Unfortunately the negotiations were inconclusive. We are now moving towards on FTA, and I sincerely wish that we can cover the ground we missed in nearly a decade, that is a lost decade.

Today the environment between the two countries is very conclusive. In Pakistan, we have a stable government. We have a government which has already put the country on the economic recovery and development.

China - Pakistan economic corridor is again changing. It is a new factor which has brought new confidence in the whole nation. It has unprecedented

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opportunities, and we are happy that Punjab, within Pakistan, is leading the way.

At the same time, in Turkey also we have seen the decisivity of Ak Party, the ruling party which has ended almost a year of uncertainty, and this has restored business confidence, I would say. And we are delighted in Pakistan to see that the Ak Party, which is the party of Mr Ahmet Davutoğlu as the Prime Minister of Turkey, and President Erdoğan, I know that technically and constitutionally above party lines, but he has been the force behind Turkey’s dynamic and dramatic turn around.

Now let me pinpoint some of the constraints from the Pakistan’s point of view. We have been repeating this for a long time. As we all know, Pakistan has gone through a difiicult decade, a decade in which we faced the menace of terrorism, and a decade in which enough attention could not be paid on the economic side.

About 60% of Pakistani export come from textiles and and that is also reflective in trade with Turkey. But in Turkey we had imposition of very huge safeguard duties laid in 2011 or beginning of 2012, distinguished securities year . We very repeatedly pleaded this case with you sir. With the imposition of safeguard duties, the duty on textiles, basicly fabric and garments went up by 15-25%, so what was the duty limit was 60% went up to 26%. You know I am talking in global terms so the figures are not very accurate.

This brought sudden nosedive to Pakistan’s export to Turkey, and today, as was mentioned this morning by one speaker, this brought 14% decline in Pakistan’s export to Turkey, and this is one big reason. Then earlier this year, we have a second smaller bomb on hand knotted carpet industry. After United States Turkey was the 2nd largest destination of Pakistani hand knotted carpets. 50% duty was imposed. We know that these duties are not Pakistan’s specific, but yet this has very seriously damaged the export of Pakistani carpets to Turkey. Similarly products such as citrus, rice, and mangoes have not enjoyed a preferential treatment in Turkey. And in short, Turkish side has many of similar constraints, but I’ll only point some of them.

This, having said that there is huge potential in Pakistan’s exports to Turkey,

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and Turkey’s exports to Pakistan, we have always pleaded it has to be win-win situation for both sides. It is not we are seeking unilateral concessions. We want that Pakistan and Turkey agree on terms in which both countries drive maximum benefits basically through the private sectors.

What we must look at from Pakistan’s point of view are value added textiles, light engineering, auto parts, agricultural products ( mango, citrus, rice) which I just mentioned, gems, jewellery and marble, chemicals, leather products and footwear, surgical and sport goods, furniture, and as the industry grows, manufactured items.

Now the Turkish export mainly to Pakistan, forgive me if I am wrong, are industrial goods, boilers, steel, consumer goods and appliances, defence equipment, agriculture and livestock and IT items.

And let me now point out some of the issues for bilateral interaction. Public transport and transport terminals, waste management, beverages, energy, waste water treatment, water treatment, roads and motorways, agriculture and modern irrigation equipment, theme parks, engineering consultancy, commercial housing, apartment buildings, office buildings, shopping malls, hospitals, universities etc.

We had a very good seminar last month in which a lot of projects were placed for consideration, and a lot of Turkish companies were there to sign MOU’s.

I will now come to ways and means to improve the trade. I think the first and the most important one is bilateral agreements for waiving additional duties. Pakistan needs a breeding space, we need weaver from duties until we sign the FTA. Pakistan has been given a GSP+ by the European Union, Turkey enjoys customs union with European Union, but Turkey has not considered GSP+ status for Pakistan yet. Turkey has given GSP+ status to some other countries but Pakistan. We need legal trade facilitation frameworks, here the FTA is very important. We need an agreement which needs the comfort level of both sides. Only in that is it will work. Than we talked about improving communication links, it is important to improve air, rail road and sea communication links. I think Eximbank facilities are not fully utilized by either sides, I am very happy to learn that Pakistan is initiating its own Eximbank. We must vitalize Turkish

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Pakistani Business council. I think this is a very good forum with distinguished representatives. We want to see the private sector serving as the true engine of growth. There are ample opportunities waiting for us.

I think next two years will fundamentally transform landscape of economic and commercial activity between Pakistan and Turkey and we are also hopeful this will take up the shape of three way cooperation with the inclusion of China.

Thank You.

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PUNJAB BOARD OF INVESTMENT & TRADEROADMAP WITH A STRATEGIC VISION

PUNJAB BOARD OF INVESTMENT & TRADE

OPPORTUNITIES FOR COOPERATION BETWEEN TURKEY ANDPAKISTAN WITH FOCUS ON REMOVING BARRIERS

CONTENTS

INTRODUCTION

KEY ECONOMIC & COMMERCIAL INTERESTS

AREAS FOR INVESTMENTS & PARTNERSHIPS UNDER DIFFERENT MODES

TOOLS FOR IMPROVING ECONOMIC & COMMERCIAL TIES

2

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AREAS FOR COLLABORATION – ESPECIALLY IN PUNJABPublic Transport & Transport Terminals

Waste Management

Beverages & Consumer Industry

Energy

Water Treatment

Roads & Motorways

Agriculture & Modern Irrigation Equipment

Theme Park

Engineering Consultancy

Commercial Housing, Apartments, Offices, Shopping Malls Etc

Hospitals & Universities

Manufacturing of Commercial Appliances

Manufacturing of Rolling Stock Railways & Metro’s

Stable Government in Pakistan

Economic Recovery & Development

China Pakistan Economic Corridor

Unprecedented Opportunities – Punjab Leading the Way

AK Party’s Decisive Election Victory

Restoration of Confidence in Turkey

CONDUCIVE ENVIRONMENT

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BILATERAL TRADE: CONSTRAINTSTEXTILES• Export of Pakistani Textiles & Apparels• 60% of Pakistan’s Industry• Serious setback due to imposition of safeguard duties by Turkey in 2012• Despite having customs unions with EU, Turkey did not give GSP+ status to

Pakistan• Price Competitiveness

HAND KNOTTED CARPETS• Turkey was Pakistan’s 2nd Largest Market• Severe impact on exports due to 50% duty by Turkey

AGRICULTURE PRODUCTS• No duty concession available on agriculture products like Citrus, Mangoes &

Rice etc

CHEMICALS• Duty on Pet

PAKISTAN’S EXPORT INTERESTS IN TURKEY

Key Areas

Value Added Textiles

Auto Parts

Light Engineering

Agricultural Products (Mango, Citrus, Rice)

Gems, Jewellery & Marble

Chemicals

Leather Products & Footwear

Surgical & Sports Goods

Furniture

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TURKEY’S EXPORT INTERESTS IN PAKISTAN

Key Areas

Industrial Goods

Boilers

Steel

Consumer Goods & Appliances

Defence Equipment

Agriculture & Livestock

I.T

AREAS FOR COLLABORATION – ESPECIALLY IN PUNJABPublic Transport & Transport Terminals

Waste Management

Beverages & Consumer Industry

Energy

Water Treatment

Roads & Motorways

Agriculture & Modern Irrigation Equipment

Theme Park

Engineering Consultancy

Commercial Housing, Apartments, Offices, Shopping Malls Etc

Hospitals & Universities

Manufacturing of Commercial Appliances

Manufacturing of Rolling Stock Railways & Metro’s

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WAYS & MEANS TO IMPROVE TRADE & INVESTMENTS

Bilateral Agreement(s) for Waiving Additional Duties

Turkey may accord GSP+ Status

Legal Trade Facilitation Frameworks

Improving Communication Links (Air, Rail, Road & Sea)

Special Economic Zones

Facilitation from EXIM Banks

Currency Swap Agreement

Exchange of Business Delegations, Participation in Trade Fairs & People to People Contact

Dynamic Action by Pakistan Turkey Business Council

Private Sector – True Engine of Growth

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Thank you Mr. Shaukat. Mr. Shaukat talked about various points in Turkish - Pakistani economic relations and potential areas for its further growth, he also pointed outthe ways and means of improving the trade and investment between two countries.

Our next panelist is Mr. Ahmet Yıldırım. He is the Deputy Chairman of Albayrak Group. Mr. Yıldırım will be talking about ‘Preparation of Investment Projects within two Countries - Barriers and Possible Solutions’

The floor is yours Mr.Yıldırım,

Role of Business organizations in the development of Economic Relations

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Ahmet YILDIRIMAlbayrak Group

Role of Business Organizations in the Development of Economic Relations

Distinguished guests, I feel very glad to be here participating such a good symposium and being on the stage.

As you know, the globalisation has created a greater space for business organisations to cooperate in other countries. The set ups of these organisations in different countries are now playing a key role in development of economic relations. If we take the example of Turkey and Pakistan, the economic relations between the two countries based on long history and now we are witnessing a new era of Pakistani and Turkish economic cooperation and we as Albayrak can be proud of to be integral part of these changing times.

I would like to mention here that Turkish economy is one of the big economies in European Union and in first 20 in global level. In this connection, we believe that the Turkish private sector and investors can play avital role in transforming Pakitan’s economy. It should be pointed out that the only those business organisations compliment the development of economic relations which are focused on mutual prosperity of the countries involved.

What we, as business organisations, have done through our projects is to introduce an international system of public transportation in Pakistan, and pay special attention on sustainable development through our best management project.

Business organisations also help in creating market, awareness for new investors, and enabling a business friendly environment in host country. Albayrak was one of the first few companies to execute and run a transport project on such a massive scale in Pakistan. Our favourable experience has

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given incentive to many Turkish counterparts and other international investors to consider business opportunities in the country. Therefore, it has helped in expanding the horizons of investors in Pakistan. These organisations also encouraged trade between countries, and we can see that translating as Pakistan signed different MOUs on trade, economic cooperation, investment and in other industries also.

Business organisations play key role in strengthtening not only economic relations between countries but also political and cultural relations between the nations.

We sincerely hope that our commitment of investing in Pakistan and increasing this business between the two countries will bring a new era of development and prosperity in Pakistan, and especially in Punjab.

Thank you.

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Thank you, Mr. Yıldırım. Your speech was rather short, but very comprehensive.

Now last but not the least our panelist is Mr.Hassan.He is the country representative of Zorlu Energy Group. Mr. Hassan will be talking about energy projects and preparation of energy projects. The floor is yours, Mr. Hassan,

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Syed Mumtaz HASSANZorlu Energy

Preparation of Investment Projects Within two Countries - Barriers and Possible Solutions

Distinguished guests, ladies and gentlemen

I feel very glad to be here participating such a good symposium and being on the stage. I have a short presentation for you

Direct investors tend to look at a number of factors relating to how they will be able to operate in a foreign country:

• Core Business

• International Experience

• Host Country Experience

• Culture

• Competition level

• Market Economy

• Resources

• Government Support - Business facilitation measures, such as investment promotion, incentives, improvements in amenities and other measures to reduce the cost of doing business. For example, some countries set up special export processing zones, which may be free of customs or duties, or offer special tax breaks for new investors

• Politics

• Laws & regulations - the rules and regulations pertaining to the entry and operations of foreign investors Risk & Control standards of treatment of foreign affiliates, compared to “nationais” of the host country

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• the functioning and efficiency of local markets trade policy and privatization policy

• restrictions, if any, on bringing home (“re-patnatinq”) earnings or profits in the form of dividends, royalties, interest or other payments.

The determinants of FPI (Foreign Private İnvestment) are somevvhat more compiex, hovvever. Because portfolio investment earnings are more likely to be tied to the broader macroeconomic indicators of a country, such as overall market capitalization of an economy, they can be more sensitive to factors such as:

• high national economic growth rates

• exchange rate stability

• general macroeconomic stability

• levels of foreign exchange reserves held by the central bank

• general health of the foreing banking system

• liguidity of the stock and bond market

• interest rates

In addition to these general economic indicators, portfolio investors also look at the economic policy environment as well, and especially at factors such as:

• the ease of repatriating dividends and capital

• taxes on capital gains

• regulation of the stock and bond markets

• theguality of domestic accounting and disclosure systems

• the_speed and reliability of dispute settlement sy

• the degree of protection of investor’s rights

Certain policy decisions of potential target countries of investment receive close scrutiny from internationai investors. Consequently, a number of international agreements have been written to specifically address those concerns. They include the following issues:

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National treatment: This has been a core element of most agreements on trade in goods and services, and is also a critical issue pertaining to internationai investment. Typically, these provisions ensure that foreign investors and their subsidiary companies are “treated at least as well as their domestic counterparts,” or “no less favorably” than domestic industries. A law which taxed foreign-owned entities s higher rate than domestically ovvned entities vvould therefore violate these provisions. Hovvever, if a government vvishes to give foreign-owned companies incentive to invest, such as tax-free treatment of manufacturing in an export processing zone (EPZ), this vvould not generally constitute a violation of these agreements. Thus countries may treat foreign corporations and nationais with better or more favorable regulations, but not poorer ones.

Domestic Content: Another limitation sometimes imposed on foreign investors is “domestic content reauirements.” These require foreign investors to purchase a certain percentage of intermediate goods from the host country. Domestic conteı requirements are perhaps the most common form of interventions by governments on foreign investment, and many economists believe they are the most harmful to economic development. Rules on investment developed among ali 1 9 members of the World Trade Organization (WTO) have limited substantially the opportunity for imposition of such requirements.

Exoro Driation: The seizure of foreign assets by governments has historically been a major concern for internationai investors. Changes in governments in developing countries, or sometimes just changes in policies, have led to government takeovers of foreign assets. İn the past, these expropriations have nationalized key industries (e.g. oil, electric povver, mines, or telecommunications), often providing little or r compensation to the original ovvner. This has long been a slgnificant deterrent to foreign investment. Hence, provisions on expropriation both in U.S. Iaw and in bilateral and regional agreements, as well as in customary international law seek to ensure that any losses by investors must be fairly compensated vvithout delay.

But the “expropriation” issue has come to hold new meaning in legal disputes over property. Although the actual seizure of assets by governments is relatively uncommon today, the use of the term has been broadened to inciude other kir regulatory activities.

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Consider the follovving example: an investor purchases property overseas with the intention of building a manufacturing plant there. She may have even begun construction on the facility, spending millions of dollars. However, in the midst of this construction process, the host country government introduces new regulations, declaring the iocation of the facility unsuitable for industrial use, perhaps re-zoning it for exclusively residentia! purposes or declaring that it is an environmentally protected area that cannot be developed.

As a result of this ruling, the investor has not only lost the money that was spent on building a factory on the site, but the real estate probably cannot even be resoid for the purchase price because no other investor would want it given the new limitations on its use. İn economic terms, the government regulation has therefore reduced substantially the value of the property to the investor. The investor may seek to daim that this new regulation constitutes an expropriation of property i therefore is entitied to compensation by the government for the loss she has suffered.

Environmental activists have especially serious concerns about this interpretation. of the meaning of expropriation. If provisions seeking to give investors protection frorr such “takings” are not carefully and properly implemented, argues a report by the International Institute for Sustainable Development and the World Wildlife Fund, “any environmental law vvorth adopting will affect business operations and may often end the use of, or trade in, certain products, and therefore will have a significant impact on the business in question.”

Free transfer of funds: Another practice that has historicaliy been of serious concern to foreign investors is the limitations on the transfers of funds-especially out of a country. During periods of economic crisis, foreign investors may wish to withdraw their assets, and have often found that foreign governments have imposed rules blocking their ability to do so. The wisdom of government policies restricting capital outflowg, particularly of short-term portfolio investrnents, is stili a matter of widespread debate among economists and public officials as weII as individual investors, for the liguidity of funds and capital are important issues..

Dispute settlement: These provisions typicaily spell out clear procedures

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that must be followed in the event Of disputes between investors and governments, to ensure that rules are adhered to and that arbitration may be established by mutual consent.

Most Favored Nation treatment: To ensure that nations do not disadvantage foreign investment from certain nations in favor of investment from other ones, basic concept of internationai trade agreements-and now the key provision international agreements on investment-seeks to prevent discrimination among investors from different countries. The phrase “most favored nation” refers to the obligatipn of the country receiving the investment to give that investment the sar treatment as it gives to investments from its “most favored” trading partner.

The case for reducing these kinds of barriers to investment are well-grounded in economic facts. Obstacles to investment prevent countries from making optimal use of their own and other countries’ resources. Countless billions of dollars of potential wealth-for investors in the form of profits, for vvorkers in the form of vvages, and for consumers in the form of lovver prices-are lost every year due to barriers to 1 and investment.

Countries may impose these kinds of measures vvith the intention of protecting domestic industries from international competition and promoting their economic development, but this usually leads to misallocation of resources away from ti natural economic capabilities of nations.

Belovv points may also be addressed if needed

• Some Other measures that should be solution for barriers for FDI, especially for renevvable energy projects in Pakistan:

• There should be one window solution for all foreign investors to deal with all regulatory bodies in Pakistan

• Loan facility from local banks

• Loan /Advance against carbon credits for green projects

• The other factors stated as above.

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We thank you Mr. …… Hassan.He talked about Turkish - Pakistani economic relations from a Turkish investor’s perspective.

We have concluded our panel and symposium. Once again I thank the panelist for sharing their views regarding the current level ofTurkish - Pakistani trade and investments in respective countries as well as their suggestions how to improve them. I thank again Economic Research Foundation for organizing this symposium..I hope this symposium becomes a turning point in Turkish - Pakistani economic relations and this symposium to be remembered as a well organized event towards this aim.

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