1. Service Sector of Pakistan
Presentation by :Open Academy

2. The Service Sector in Perspective
• The Service sector
accounts for 60% of
global GDP and 30% of
global employment
(World Development
Indicators).
• Service sector accounted
for 53.3% of GDP in FY
2010-11 (Economic
Survey of Pakistan).
Source: Pakistan Economic Survey 2008-
09

3. Measuring International Trade in
Services
• For the purpose of GATS negotiations Service trade is divided according to
4 modes of supply using CPC nomenclature for Service sectors and
subsectors
• International service trade transactions are measured by countries’
respective Central banks using the standard Balance of Payment
Methodology 5 (BPM 5) developed by the IMF.
• Service trade is NOT measured according to the 4 modes of supply but we
can use indicators:
– Mode 1:Cross Border Supply – BPM 5
– Mode 2: Consumption abroad – BPM 5
– Mode 3: Commercial presence – FDI Statistics
– Mode 4: Movement of natural person– Remittance Statistics

4. Cont…
• Many gaps exist regarding the availability of Service trade data.
Unlike HS codes for trade in goods there is no harmonized system
internationally for the identification of Service sectors with
countries applying different definitions for Service sectors.
• UN is developing a manual which standardizes the record of Service
trade.
• UN has also developed a Service Statistics Database based on data
gathered from country Central Banks.(This data is also available on
Trade Map)
• Even then there are serious gaps in the data: It only covers Mode1
and Mode 2 (tourism, foreign students, foreign patients).

5. Pakistan’s Trade in Services--Snapshot
Summary
Pakistan Services exports (FY 11) $5.47 billion
Major Service export categories (FY 11)
• Transportation $1.4 billion
•Travel $350 million
•Communication $225 million
Share of Pakistan in world Service exports 0.08%
(WTO,2009)
Pakistan Service Imports (FY 11) $7.6 billion
Major Services imports (FY 11)
•Transportation $4.03 billion
•Travel $971 million
•Communication $17.6 million
Share of Pakistan in world Service imports 0.18%
(WTO, 2009)
Source: State Bank of Pakistan & WTO Statistics database

6. Pakistan Service Trade– Major Partners
• Major Service Export Destinations: USA (29.69%),
UK (8.82%), UAE (7.23%), Saudi Arabia (5.56%)
• Major Service Import destinations: USA (11.56%),
UAE (10.40%), China (10.15%), UK (7.57%).
• Source: Calculations based on UN Service Trade
Database

7. Pakistan Services Exports—Mode1-2
• Since 2002 the major Service
Pakistan Service Exports (US $ million) export category for Pakistan is
July-May
FY 11
July-May
FY 10
Government Services
Total Service Exports 5016 4828
accounting for 42% of total
Service Exports.
Transportation 1297 1175
• In this category the majority
Travel 318 263 share is for Military Units &
Communication Services 207 219 agencies which can be
Construction Services 16 15
ascribed to disbursements
related to the War on Terror.
Insurance Services 48 38
• Transportation Accounts for
Financial Services 67 87 28.7% of Total Service Exports.
Computer and Information
Services
197 172 • Other Business Services
Royalties and licensing fees 2 6
Account for 12% of total
Service Exports.
Other business Services 646 482
Personal & cultural
3 5
&recreational Services Source: State Bank of Pakistan
Government Services 2215 2366

8. Pakistan Service Imports– Mode1-2
Pakistan Service Imports (US $ million) • Transportation accounts
July-May
FY 11
July-May FY
10
for 42.3% of Pakistan’s
Total Imports of Services 6744 6259
Service Imports. Sea
Transportation 3577 3210
freight imports account
for 51% of all Transport
Travel 875 818
Imports.
• This comprises of the
Communication Services 160 139
Construction Services 25 28
payment to international
Insurance Services 137 135
shipping lines
• Other Business Services
Financial Services 100 86
Computer & Information
Services
151 148
account for 29% of all
Royalties & License Fee 106 103 Service Imports
Other Business Services 1047 1001
• Travel accounts for 15.9%
Personal, Cultural &
Recreational Services
10 19 of Total Service Exports.
Government Services 555 573
Source: State Bank of Pakistan

9. Mode 3- FDI
US$ Million
FY07 5139
FY08 5410
FY09 3719
FY10 2150
FY11 1573
Source: State Bank of Pakistan

10. FDI—Mode 3: Sector wise leading companies investing in Pakistan
Industry Number of foreign Affiliates Sales (US$ Million)Employees Leading parent company Leading home country
All Sector 206 25475.6 92118 ROYAL DUTCH SHELL PLC , GBR United States
Wholesale and retail trade 53 10253.1 31827 MITSUI & CO., LTD. , JPN United States
Transport, storage and communications 26 840 6138 Deutsche Post AG , DEU Germany
Business activities 26 33926 BP P.L.C. , GBR United States
Chemicals and chemical products 26 746.9 18606 Akzo Nobel N.V. , NLD United States
Finance 23 7319.6 42767 STANDARD CHARTERED PLC , GBR United States
Other services 15 27220 Weatherford International Ltd. , CHE United States
Food,beverages and tobacco 9 6122 BRITISH AMERICAN TOBACCO P.L.C. , GBR United Kingdom
Non-metallic mineral products 7 666.1 2005 Beltexco Limited , HKG Romania
Electricity, gas and water 7 115 RANHILL BERHAD , MYS United Kingdom
Machinery and equipment 6 2814.1 712 Cedar I Holding Company, Inc. , USA Sweden
Other manufacturing 5 666.1 612 Cedar I Holding Company, Inc. , USA Switzerland
Metal and metal products 5 413 General Motors Company , USA United States
Hotels and restaurants 5 1295 Marriott International, Inc. , USA United States
Construction 4 3501.8 General Motors Company , USA United States
Motor vehicles and other transport equipment 4 2814.1 700 HONDA MOTOR CO., LTD. , JPN Japan
Textiles, clothing and leather 4 224 YKK CORPORATION , JPN United States
Petroleum 4 1300 Azzurra Holding Corporation , USA United States
Electrical and electronic equipment 3 382 Imation Corp. , USA United States
Community, social and personal service activities 3 27200 United Nations Population Fund , USA United States
Precision instruments 2 12 Cedar I Holding Company, Inc. , USA United States
Rubber and plastic products 2 12 Beltexco Limited , HKG United States
Publishing, printing and reproduction of recorded media 2 14 Georg von Holtzbrinck GmbH & Co.KG , DEU States
United
Coke, petroleum products and nuclear fuel 2 631 SAVOLA GROUP COMPANY , SAU Saudi Arabia
Health and social services 1 United Nations Population Fund , USA United States
Mining and quarrying 1 Chevron Corporation , USA United States
Wood and wood products 1 TEHNO INDUSTRIAL S A , ROM Romania
Public administration and defence 1 Government of The United States , USA United States
Education 1 11 Oracle Corporation , USA United States
Source: Investment Map

11. Mode 4-- Remittances
• Workers remittances in FY08-09 were US$ 7.8
billion and rose to US$8.9 billion in FY09-10.
• This rise in remittances can be attributed
mainly to the efforts of the Government in
reining in practices like hundi and hawala,
which has resulted in these transactions
carried out through banking channels.

12. MoC and promotion of Service exports
• The Ministry of Commerce has set up a National Steering Committee to
devise a long term Strategy for significantly improving Pakistan’s export of
Services. Recently established Services Export Development Cell (SEDC) is
working with all the stakeholders to address core issues and devise
comprehensive strategies for each sector.
• To help services sector grow and expand, a Services Export Development
Fund is being established to provide assistance in the form of
reimbursable grants to Pakistan services exporters for tendering or
negotiating for international projects and for conducting pre-feasibility or
feasibility studies for international projects. [STPF 2009-12]
• The Service Export Development Cell (SEDC) of TDAP would be the lead
department, having the primary responsibility, for promotion of trade in
services.

13. Priority Service subsectors
• SEDC has identified 5 priority sectors for
Service exports:
– Financial Services
– Construction & Architectural Services
– Professional Services
– Health & Medical Services
– Information Technology

14. Pakistan GATS Commitments
• In the Uruguay Round, Pakistan made commitments in six sectors, namely business
services, financial services, communication services, health and related services,
construction and related engineering services, and tourism and travel related
services. A total of 42 sub-sectors were scheduled with limitations.
• New commitments have been proposed in business services, distribution services,
educational services, and environmental services sectors.
• In business services, commitments are proposed in the legal services and
accounting, auditing and bookkeeping services, architectural services, veterinary
services and services provided by midwives, nurses, physiotherapists and para
medics sub-sectors.
• Furthermore, computer related services, research and development services,
rental and leasing services, printing and publishing, agriculture storage facilities
and rangeland services have been proposed for commitments. In communications,
commitments are proposed in courier services while in distribution services,
retailing and wholesaling services are proposed for commitments.

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