Arthur BayhanChief Executive Officer

Competitiveness Support Fund (CSF)

INITIATIVE TO UPGRADE COMPETITIVENESS OF PAKISTAN’S

ECONOMY

Competitiveness Support Fund – Pakistan 2

World Economic Forum - Global Competitiveness Report (GCR)Improving Pakistan’s Competitiveness

Globalization is a reality that countries can no longer escape

Competitiveness is the only way to benefit from globalization and not become a victim

Sustained Economic

Growth

Poverty Reduction

Improved Competitiveness

Competitiveness Support Fund – Pakistan 3

World Economic Forum - Global Competitiveness Report (GCR)

Improving Pakistan’s Competitiveness

The World Economic Forum’s Global Competitiveness Report Is the Most Influential Ranking of Country Competitiveness and Effects Pakistan’s Image in the World Among Business, Government and Financial Leaders

Understanding and Monitoring the Rankings is Important

Improved Competitiveness Leads to Sustained Economic Growth Which Has Proven to Be Effective in Poverty Reduction

Sustained Economic

Growth

Poverty Reduction

Improved Competitiveness

Competitiveness Support Fund – Pakistan 4

FINLAND - 2

PAKISTAN - 91

China - 54

TURKEY - 59

S. KOREA 24THAILAND - 35

S. Africa - 45S. Africa - 45JORDAN - 52JORDAN - 52India - 43 KAZAKHSTAN - 56KAZAKHSTAN - 56

USA - 6

World Competitiveness Ranking 2006(Total 125 Countries)

Competitiveness Support Fund – Pakistan 5

• Institutions= 79• Infrastructure = 67• Macro economy = 86• Market efficiency = 54 • Technological readiness = 89• Innovation = 60• Business sophistication = 66• Education = 104

Global Competitiveness IndexComponents for 2006: Pakistan

Competitiveness Support Fund – Pakistan 6

Global Competitiveness IndexComponents for 2006: Pakistan, India, Thailand

• Institutions= 79 34 40• Infrastructure = 67 62 38• Macro economy = 86 31

88• Market efficiency = 54 21 31 • Technological readiness = 89 55 48• Innovation = 60 26 33• Business sophistication = 66 25 40• Education = 104 49 42

Competitiveness Support Fund – Pakistan 7

Global Competitiveness Index (GCI)

Global Competitiveness Report Has Two Indices

Pakistan ranked 67th on the Business Competitiveness Index of Michael Porter Pakistan ranked 91st on the Global Competitiveness Index up from 94th place in 2005Lower rankings on the GCI reflect inclusion of low health and education indicators

Rank

2006

2005

Business Competitiveness Index (BCI)

Rank

Source: World Economic Forum, Global Competitiveness Report, 2006-2007

0

20

40

60

80

100

120

India China Sri Lanka Pakistan Bangladesh

3127

6457

6572

67 67

0

20

40

60

80

100

120

India China Sri Lanka Pakistan Bangladesh

108100

4345

5448

79 80

91 9499 98

Competitiveness Support Fund – Pakistan 8

CSF Action Plan to Improve Pakistan Ranking on Global Competitiveness Index

Pakistan Can Improve by 6-8 Rankings Per Year

Rankings Can Improve to 60-65 by 2010

2006 2007 2008 2009 2010

YEARS

RA

NK

ING

91

8477

70

63

27%

33%38%

44%

50%

Competitiveness Support Fund – Pakistan 9

CSF Action Plan to Improve Global Competitiveness Index Rankings

Improving Pakistan’s Competitiveness

CSF Action Plan: Next Steps

1. Promote Broad Understanding and Support for Government’s Economic Reform Agenda• Provincial Government Leadership Workshops• Presentations on Competitiveness to Business Leaders• Orientations for Local and International Press

2. Communicate Priorities to Relevant Ministries and Institutions and Ensure Timely Provision of Data to International Sources

3. Ensure Accurate Implementation of Executive Opinion Survey for Next Global Competitiveness Report – March 2007

4. Focus CSF Activities on High Impact Areas

Competitiveness Support Fund – Pakistan 10

CompetitivenessSupport

Fund

Technical Assistance:

Sectoral and Regulatory

MatchingGrants: Cluster

Development

Business Incubators/Venture Capital

Operational Windows of the CSF

Competitiveness Support Fund – Pakistan 11

1. Prepare and publish First Annual State of Pakistan’s Competitiveness Report

2. Carry out Competitiveness Analyses to Recommend Specific Actions with High Potential Impact Beginning with:

– Motorcycle industry– Food processing sector– Fishery– Automotive industry– Gender contribution to economic growth

3. Increase Public Awareness of Innovation and Competitiveness by Better Preparing Journalists in Cooperation with Stanford University Innovation Journalism Fellowship Program

Technical Assistance Window

Competitiveness Support Fund – Pakistan 12

• HEC: Commercialize Research for Knowledge-based

Enterprise Development

• PARC: Agribusiness

• Government of Sindh: Cluster Development

• World Economic Forum

CSF Has Signed MOUs for Cooperation With:

CSF PARTNER ORGANISATIONSCSF PARTNER ORGANISATIONS

Competitiveness Support Fund – Pakistan 13

• Main Criteria: – High potential to generate jobs, income, exports

and investments

– High potential to improve quality of products and services

– Benefits a “cluster” of firms in an economic sector

• Amounts: US$20,000-US$125,000 (catalytic investments triggering large potential impacts)

• Co-Financing Requirement: 50%

• Participants: Private Sector, Government and Academia: “Triple Helix”

Matching Grant Window

Competitiveness Support Fund – Pakistan 14

CSF Uses the "Triple Helix” Approach

CSF Uses the “Triple Helix” Approach

Matching Grant Window

Competitiveness Support Fund – Pakistan 15

• Commercialize applied research and link private sector with university research– 20% private industry, 30% HEC and 50% CSF

• Promote knowledge-based enterprise sector by facilitating international patent registrations from Pakistanis and Pakistani institutions

• Organize for first time trade fairs highlighting science and technology-based projects developed at universities to attract private-sector investors looking for innovative products and systems to commercialize

CSF-HEC Joint Initiatives

Competitiveness Support Fund – Pakistan 16

Incubator Set-up

GOP (Min. of Ind.)

Funds for Business Incubation

IBA/ University/ Pub - Pvt . Consortia

Bilateral Agreement with TOR

50% contribution

50% contribution

Approval

Application

Business Incubator

Bilateral Agreement • Details of investment and

contribution by applicant institutions

• Industry Specialization based on local competitive advantage

• Annual Targets/ output • Commitment for outcome • etc

GOP (Min. of Fin)

Funds for Business Incubation

LUMS/ IBA/ University/ Pub - Pvt . Consortia

Bilateral Agreement with TOR

contribution

Approval

Application

Business Incubator

Bilateral Agreement • Details of investment and

contribution by applicant institutions

• Industry Specialization based on local competitive advantage

• Annual Targets/ output • Commitment for outcome • etc

Business Incubator Window Concept

Competitiveness Support Fund – Pakistan 17

Board of Directors

MANAGERS

Business Incubator

Potential Incubate

es

Detailed Joint 2 yr. Proposal with

Funding & Value Addn . Requirements

2 Year Incubation

Period

Approval

Create Commercial Entity With 85% B.I.

Board Ownership

Graduate after 2 yrs.

Reclaim company ownership after share buyback

Business Incubator Services • Links to industry, universities,

research institutes • Business support services to

enhance and develop business • Daily hands - on managerial

mentoring (general management, finance, accounting, marketing, production, R&D)

• Financial resources for R&D and initial marketing expenses

• Access to potential private investors and strategic partners

• Training and coaching on dealing with the potential foreign investors and strategic partners.

Funding $ 15,000 – 150,000

Board of Directors

MANAGERS

Business Incubator

Potential Incubatees

Detailed Joint 2 yr. Proposal with

Funding & Value Addn . Requirements

2 Year Incubation

Period

Approval

Create Commercial Entity With 85% B.I.

Board Ownership

Graduate after 2 yrs.

Reclaim company ownership after share buyback

Business Incubator Services • Links to industry, universities,

research institutes • Business support services to

enhance and develop business • Daily hands - on managerial

mentoring (general management, finance, accounting, marketing, production, R&D)

• Financial resources for R&D and initial marketing expenses

• Access to potential private investors and strategic partners

• Training and coaching on dealing with the potential foreign investors and strategic partners.

Funding $ 15,000 –

Business Incubator Window: Operations