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Conference Report – Financing to Support Make-in-Pakistan

Proceedings to the Financing to Make-in-Pakistan

The “Make-in-Pakistan” thrust of the Pakistan Business Council (PBC) recognizes the role of capital in the revival and growth of industry. The objectives of Make-in-Pakistan are to create jobs, generate value-added exports and encourage import substitution. The desired outcome will be a balanced current account enabling Pakistan to regain its financial sovereignty.

Cash in circulation in Pakistan is the amongst the highest in South Asia, so are the unbanked and under-banked segments of the population. Of what is available in the banking sector, the government crowds out the private sector. The SME sector suffers the most from being deprived of bank credit. The capital market lacks depth. Fiscal policy has neither encouraged capital accumulation, nor for that matter consolidation, investment of stock exchange listing. In addition, equity funding for start-ups is not available, nor is long term debt for capital investments.

It is in the background of the above that the PBC organized a conference on financing industrial revival in Karachi on March 9th, 2019. The major issues identified and the solutions proposed are as under:

Issue 1:

Issue 1A high percentage of currency outside the banking system limits the amount available to be lent.


  • Reconsider withholding tax on bank withdrawals to encourage bank deposits
  • Leverage the smart phone penetration and other data networks for digital banking

Issue 2:

Issue 2

Pakistan has one of the lowest savings rates in the formal sector in the world


  • Accelerate the formalization of real estate to unlock capital in the sector
  • Ensure real rates of return to depositors to attract deposits

Issue 3:

Issue 3Of the amount available in the banking sector, the government crowds out the private sector


  • Reduce the fiscal deficit by broadening the tax base
  • Tap Islamic modes and set minimum credit ratios for private sector lending

Issue 4:

Issue 4The SME sector receives a tiny share of bank credit as banks have limited appetite or ability to lend to the SME sector


  • Set minimum exposure level for SMEs
  • Incentivize corporates to fund and empower SMEs within their value chains

Issue 5:

Issue 5Long term project finance is difficult to come by, as is mortgage and infrastructure funding – government footprint is largely absent from the sector


  • Reinvigorate HBFC and other long-term government funding institutions
  • Establish an infrastructure bank

Issue 6:

Issue 6The corporate bond market is under-developed


  • Empower PSX members to act as primary dealers
  • Create a sovereign yield curve to provide rate benchmark

Issue 7:

Start-ups have limited options for local venture capital funding


  • Larger groups should be incentivized to establish venture capital funds
  • Prudential regulations limiting private equity exposure by banks needs to be revisited

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The PBC is a private sector not-for- profit advocacy platform set up in 2005 by 14 (now 78) of Pakistan’s largest businesses. PBC’s research based advocacy supports measures which improve Pakistani industry’s regional and global competitiveness. More information about PBC, its members, objectives and activities can be found on its website: www.pbc.org.pk