Appendix B - Data on Best Prospects for U.S. Exports BEST PROSPECT SECTORS FOR U.S. EXPORTERS TO PAKISTAN (US $ MILLIONS, UNLESS OTHERWISE NOTED) This Appendix lists six sub-sectors in the agricultural sector, and 14 in the industrial sector. The agricultural sub-sectors are listed in descending order of importance. The industrial sub-sectors are grouped into three ranks, beginning with the most promising (Rank I). Data are in millions of U.S. dollars, unless otherwise noted. I. Agricultural Export Prospects A. Rank: Agriculture (1) B. Name of Sector: Wheat C. ITA or PS&D Code: 0410000 1992/93 1993/94 1994/95 D. Total market size 2280 2215 2423 E. Total local production 2054 1912 1889 F. Total exports 0 0 0 G. Total imports 465 239 338 H. Total imports from U.S. 288 186 212 I. Exchange rate (rupees/$) 25.96 30.0 32.0 Comments: Pakistan is a large and expanding market for imported wheat, the bulk of which is supplied by the United States. During the period from 1988/89 to 1993/94, annual wheat imports averaged two million tons. Other suppliers are Australia, Canada and, to a lesser extent, the European Union. U.S. wheat exports to Pakistan are currently eligible for the USDA's Export Enhancement Program (EEP) and GSM-102. Wheat is the staple food and its supply is politically sensitive. Wheat imports are free of all duties and customs. The GOP is the major buyer of imported wheat. Private traders may import wheat, but are not currently doing so due to various price and financial factors. Imported wheat is bagged at Port Qasim upon arrival. A. Rank: Agriculture (2) B. Name of Sector: Hides & Skins, Bovine C. ITA or PS&D Code: 2111102 1992/93 1993/94 1994/95 D. Total market size 342.0 327.0 348.0 E. Total local production 340.0 322.0 342.0 F. Total exports 0.8 0.7 0.7 G. Total imports 6.5 4.7 6.0 H. Total imports from U.S. 1.7 2.4 2.0 I. Exchange rate (rupees/$) 25.96 30.0 32.0 Comments: Pakistan is a large market for imported inedible tallow (animal fats) because it has an extensive soapmaking industry and has a shortage of animal by-products rendering from domestic slaughtering. Domestic tallow production is virtually nil, and animal fats are almost all consumed with cooked meat. The compound-feed industry presently uses very little animal fat, foregoing an excellent energy source for poultry feed. The shortage of animal fats and dependence on imports are expected to continue. In July-June 1993/94, Pakistan's tallow imports were valued at an estimated $23.7 million. Australia supplied 75 to 80 percent of the market; New Zealand and Canada were also significant sellers. U.S. tallow sales dropped in 1992-93 from the 20 percent market share enjoyed in 1991/92. During the 1993-94 fiscal year, imported tallow was subject to duties of approximately 80 percent ad valorem, and additional customs fees totaling about 27 percent of value. A. Rank: Agriculture (3) B. Name of Sector: Livestock By-Products: Tallow & Grease C. ITA or PS&D Code: 4113200 1992/93 1993/94 1994/95 D. Total market size (mt) 185,000 199,539 215,000 E. Total local production (mt)133,626 141,354 150,000 F. Total exports - - 0 G. Total imports 20.289 23.7 26.0 H. Total imports from U.S. $226,000 $65,867 $100,000 I. Exchange rate (rupees/$) 25.96 30.0 32.0 Comments: Pakistan is a large market for imported inedible tallow (animal fats) because it has an extensive soapmaking industry and has a shortage of animal by-products rendering from domestic slaughtering. Domestic tallow production is virtually nil, and animal fats are almost all consumed with cooked meat. The compound-feed industry presently uses very little animal fat, foregoing an excellent energy source for poultry feed. The shortage of animal fats and dependence on imports are expected to continue. In July-June 1993/94, Pakistan's tallow imports were valued at an estimated $23.7 million. Australia supplied 75 to 80 percent of the market; New Zealand and Canada were also significant sellers. U.S. tallow sales dropped in 1992-93 from the 20 percent market share enjoyed in 1991/92. During the 1993-94 fiscal year, imported tallow was subject to duties of approximately 80 percent ad valorem, and additional customs fees totaling about 27 percent of value. A. Rank: Agriculture (4) B. Name of Sector: Cotton C. ITA or PS&D Code: 2631000 1992/93 1993/94 1994/95 D. Total market size 1962 1740 1969 E. Total local production 2061 1650 2187 F. Total exports 342 92 69 G. Total imports 7 96 38 H. Total imports from U.S. 3 25 15 I. Exchange rate (rupees/$) 25.96 30.0 32.0 Comments: In 1993-94 Pakistan suffered a second consecutive disappointing cotton crop and imported record quantities of lint cotton from Uzbekistan and the United States. Imports of U.S. cotton in 1993- 94 were a record 70,000 bales, or roughly 20 percent of the import market. During the period of imports, all import duties and customs fees were waived. In the 1994-95 budget year, lint cotton imports will remain duty free. All cotton imported must be fumigated at export locations. Pakistan's large textile industry and the country's economic dependence upon that industry require that cotton supplies be assured through imports if domestic production is insufficient. Significant imports are expected only if domestic cotton production falls short of local requirements. A. Rank: Agriculture (5) B. Name of Sector: Feed Grains C. ITA or PS&D Code: 0440000 1992/93 1993/94 1994/95 D. Total market size 222 212 210 E. Total local production 222 212 210 F. Total exports 0 0 0 G. Total imports 0 0 0 H. Total imports from U.S. 0 0 0 I. Exchange rate (rupees/$) 25.96 30.0 32.0 Comments: Independent studies of the livestock sector and Pakistan's future animal feed needs have predicted that, as poultry and beef consumption increase, Pakistan will face a critical feed supply deficit and will need to import feed grains. In the next several years, Pakistan may be forced to begin feed grain imports to maintain its current level of per capita meat consumption. Until now, no feed grains have been imported; nutritional requirements are met with domestically produced grains, fodder and protein meals. Under the 1993-94 budget, feed corn imports would have been subject to a 10 percent ad valorem duty, and to additional customs duties totalling about 27 percent of the C&F value. A. Rank: Agriculture (6) B. Name of Sector: Pulses C. ITA or PS&D Code: 0542400 1992/93 1993/94 1994/95 D. Total market size 436 357 548 E. Total local production 356 307 488 F. Total exports 0 0 0 G. Total imports 80 50 60 H. Total imports from U.S. 0 0 0 I. Exchange rate (rupees/$) 25.96 30.0 32.0 Comments: Pulses are one of Pakistan's top five agricultural imports. Domestic production of pulses, lentils, and peas was an estimated 548,000 metric tons in 1993-94. Imports of all pulses increased 122 percent in 1992-93, to 322,241 metric tons. Production has been fairly static and Pakistan has occasionally suffered crop shortfalls. Australia, Burma, Iran, and China have been the major suppliers. U.S. dry peas have not been competitive in this market because of higher freight costs and FOB prices, fluctuations in the availability of TYSON chickpeas, and the foreign exchange risk involved with GSM-102 sales. Pulses are one of the basic foods in the Pakistani diet, and the government takes measures to assure their supply at fair prices. II. Industrial Export Prospects A. Rank: Industrial (I) B. Name of Sector: Agricultural Chemicals C. ITA or PS&D Code: AGC 1992/93 1993/94 1994/95 D. Total market size 859 839 898.5 E. Total local production 545 555 605 F. Total exports 1 1 1.5 G. Total imports 315 285 295 H. Total imports from U.S. 126 130 132 I. Exchange rate (rupees/$) 25.96 30.0 32.0 Comments: Improved government policies and support have spurred agricultural production during the past ten years. Cotton, rice, wheat, and tobacco are the major crops. The U.S. is a leading supplier of Di- Ammonium Phosphate (DAP) and also has a major share of the market for Malathion. Other major suppliers of insecticides are Germany, Switzerland, France, and the Netherlands. The most promising subsectors and estimated market size for 1995 are: Di-Ammonium Phosphate ($120 million); Pesticides, Herbicides, and Fungicides (70 million). A. Rank: Industrial (I) B. Name of Sector: Industrial Chemicals C. ITA or PS&D Code: ICH 1992/93 1993/94 1994/95 D. Total market size 1,161 1,156 1,207 E. Total local production 177 167 172 F. Total exports 31 33 36 G. Total imports 1,015 1,022 1,071 H. Total imports from U.S. 75 77 82 I. Exchange rate (rupees/$) 25.96 30.0 32.0 Comments: Demand for industrial chemicals continues to expand. Although imports account for most of the market, local production is expected to increase as new plants come on stream in the next two to three years. U.S. share of imports has averaged between 8 and 10 percent during the last several years. Major competitors are Switzerland, the UK, Germany, China, and Japan. Most promising sub-sectors and estimated market size for 1995 are: Organic Chemicals ($380 million); Inorganic Chemicals ($65 million); Dyeing, Tanning, and Coloring Chemicals ($124 million); Oils, Perfumes, and Flavors ($30 million); Resins and Plastic Materials ($264 million). A. Rank: Industrial (I) B. Name of Sector: Telecommunications Equipment C. ITA or PS&D Code: TEL 1992/93 1993/94 1994/95 D. Total market size 360.5 839 898.5 E. Total local production 66 555 605 F. Total exports 0.5 1 1.5 G. Total imports 295 285 295 H. Total imports from U.S. 5.0 130 132 I. Exchange rate (rupees/$) 25.96 30.0 32.0 Comments: The telecommunications sector has significant potential for growth. The private sector now actively participates in its expansion and development, supplying cellular telephones, paging services, and card-operated telephones. Despite strong competition from foreign suppliers (Siemens of Germany, Alcatel of France, and Ericsson of Sweden), all of whom have had a strong presence in Pakistan for several years, U.S. firms can increase their market share as Pakistan invests in fiber optics, digital switching systems, and data- communications networks. The anticipated privatization of the Pakistan Telecommunications Corporation (PTC) will offer additional opportunities. Most promising sub-sectors and estimated market size for 1995 are: Telephone Sets ($12 million); Telephone Switching Apparatus ($35 million); Parts for Telecommunications Equipment ($165 million); Electric Telephone Cables ($70 million). A. Rank: Industrial (I) B. Name of Sector: Electrical Power Systems C. ITA or PS&D Code: ELP 1992/93 1993/94 1994/95 D. Total market size 766 742 780 E. Total local production 482 465 485 F. Total exports 1.5 2.0 1.5 G. Total imports 286 280 297 H. Total imports from U.S. 26 130 26.5 I. Exchange rate (rupees/$) 25.96 30.0 32.0 Comments: The government has accorded this sector the highest priority. Demand has far outstripped total installed generating capacity and the gap between supply and demand has been widening. The government-owned Water & Power Development Authority (WAPDA) plans to construct several large hydro-electric generating facilities. The GOP has ceded the construction of new thermal power plants to the private sector and a number of private sector power projects are in various stages of negotiation. The government-owned utilities will purchase private sector-generated power for distribution through their grids. In the longer term, both WAPDA and the Karachi Electric Supply Corporation (KESC) are slated for privatization in phases. Major competitors in this market are Germany, Japan, the U.K., China, Italy, and France. Most promising subsectors, with estimated market size for 1995: Electric Generating Sets ($39 million); Parts for Gas Turbines ($20 million); Steam and Other Vapor-Generating Boilers and Parts ($8 million); Steam Turbines ($5 million); and Electricity Distribution Equipment ($72 million). A. Rank: Industrial (I) B. Name of Sector: Plastic Materials and Resins C. ITA or PS&D Code: PMR 1992/93 1993/94 1994/95 D. Total market size 266.5 250.5 258.4 E. Total local production 7.0 6.5 6.9 F. Total exports - - 0.5 G. Total imports 259.5 244.0 251.5 H. Total imports from U.S. 26.9 25.3 26.1 I. Exchange rate (rupees/$) 25.96 30.0 32.0 Comments: With little domestic production, Pakistan depends largely on imported raw materials to produce a wide variety of plastic products for consumer and industrial uses. The import of plastic materials and resins in both primary and non-primary forms has grown by more than 10 percent annually during the last several years. Some domestic manufacturing facilities are in the planning stages, but until these plants come on stream Pakistan will continue to depend largely on imported raw materials. Most promising sub-sector and estimated market size for 1995 are: Polyethylene, gravity less than 0.94 ($21 million); Polyethylene, gravity above 0.94 ($26 million); Polypropylene ($41 million); Polystyrene ($9.5 million); Polyvinyl Chloride (PVC) ($33 million); Polyesters in primary form ($12 million); Silicones in primary forms ($5.5 million). A. Rank: Industrial (I) B. Name of Sector: Agricultural Chemicals C. ITA or PS&D Code: AGC 1992/93 1993/94 1994/95 D. Total market size 859 839 898.5 E. Total local production 545 555 605 F. Total exports 1 1 1.5 G. Total imports 315 285 295 H. Total imports from U.S. 126 130 132 I. Exchange rate (rupees/$) 25.96 30.0 32.0 Comments: Improved government policies and support have spurred agricultural production during the past ten years. Cotton, rice, wheat, and tobacco are the major crops. The U.S. is a leading supplier of Di- Ammonium Phosphate (DAP) and also has a major share of the market for Malathion. Other major suppliers of insecticides are Germany, Switzerland, France, and the Netherlands. The most promising subsectors and estimated market size for 1995 are: Di-Ammonium Phosphate ($120 million); Pesticides, Herbicides, and Fungicides (70 million). A. Rank: Industrial (II) B. Name of Sector: Textile Machinery C. ITA or PS&D Code: TXM 1992/93 1993/94 1994/95 D. Total market size 826 785.5 868 E. Total local production 14 15.5 18 F. Total exports - - - G. Total imports 315 770 850 H. Total imports from U.S. 6.5 4.8 8.0 I. Exchange rate (rupees/$) 25.96 30.0 32.0 Comments: Although the U.S. share of Pakistan's total textile machinery imports (about $812 million in 1992-93) has been small (less than two percent), aggressive marketing, advertising in local trade journals, participation in trade fairs, and contacts with relevant trade and industry associations could provide additional opportunities for U.S. suppliers. Pakistan is one of the world's largest exporters of textile and apparel products and needs high-technology equipment to improve quality to compete in the international market. U.S. firms have recently sold CAD/CAM equipment and circular knitting machines to Pakistani firms. In addition, demand for textile equipment, including sophisticated garment-making machines, is expected to increase as Pakistan seeks to become competitive in higher value- added garments as the global textile trade becomes increasingly open. Most promising sub-sectors and estimated market size for 1995 are: Sewing Machines ($22 million); Textile Machinery ($540 million); Weaving and Knitting Machinery ($196 million); Machinery for Washing/Dyeing ($80 million). A. Rank: Industrial (II) B. Name of Sector: Iron and Steel C. ITA or PS&D Code: IRN 1992/93 1993/94 1994/95 D. Total market size 1,259 1,302 1,385 E. Total local production 942 906 1,020 F. Total exports - - - G. Total imports 317 342 365 H. Total imports from U.S. 31.6 32.5 36 I. Exchange rate (rupees/$) 25.96 30.0 32.0 Comments: Pakistan both produces and imports iron and steel products. A large state-owned steel manufacturing facility, Pakistan Steel Mills Limited, and other manufacturers produce pig-iron, hot and cold-rolled products, ingots, and galvanized items. Although domestic production will rise with the expansion of capacity at Pakistan Steel, imports are also projected to increase due to growth in infrastructural and industrial development. Major foreign suppliers are the United States, Japan, Germany, U.K., France, China, Belgium, and Brazil. Most promising sub-sectors and estimated market size for 1995 are: Pig Iron and Ferro-alloys ($60 million), Ingots, etc. ($120 million); Flat- rolled Products ($80 million); Coated Flat-rolled Products ($120 million); Flat-rolled Products of Alloy Steel ($45 million); Iron and Steel Tubes and Pipes ($60 million); Stainless Steel sheets ($6 million); Iron and Steel Bars, Rods, and Angles ($20 million); Iron and Steel Wire ($12 million). A. Rank: Industrial (II) B. Name of Sector: Computers and Peripherals C. ITA or PS&D Code: CPT 1992/93 1993/94 1994/95 D. Total market size 66 862 E. Total local production - - - F. Total exports - - - G. Total imports 66 72 86 H. Total imports from U.S. 14 15.5 18 I. Exchange rate (rupees/$) 25.96 30.0 32.0 Comments: With virtually no domestic production, Pakistan offers a highly promising and rapidly expanding market for computers and related equipment. Growth in the personal computer (PC) market is expected to continue very strongly. Several U.S. brands are already in the market and others are being introduced despite strong competition from Japan, South Korea, Taiwan, and Hong Kong brands. The GOP encourages use of computer technology in both public and private institutions and organizations. Most promising sub-sectors and estimated market size for 1995 are: Analog-hybrid Data Processing Machines ($3 million); Digital Data Processing Machines ($18 million); Printers ($7.5 million); Off-line Data Processing Equipment ($12 million); Parts ($8 million); Input/output Units ($10 million). A. Rank: Industrial (II) B. Name of Sector: Drugs and Pharmaceuticals C. ITA or PS&D Code: DRG 1992/93 1993/94 1994/95 D. Total market size 621.0 638.3 662.5 E. Total local production 410 437 445 F. Total exports 19.5 19.5 20.5 G. Total imports 230.5 220.8 238 H. Total imports from U.S. 24.4 23.2 24.0 I. Exchange rate (rupees/$) 25.96 30.0 32.0 Comments: Pakistan has over 200 licensed pharmaceutical manufacturing companies; approximately 30 multinational firms account for about 80 percent of the market. Imports are about one-half as large as local production. The Government recently lifted some price controls, an action which may increase demand for imported raw materials for local production. Most promising sub-sectors and estimated market size for 1995 are: Antibiotics, not medicaments ($28 million); Antibiotics, NS ($64 million); Medicines Containing Antibiotic Derivatives ($24 million); Anti-cera Vaccines ($12 million); Medicines Containing Hormones ($25 million); Hormones and Derivatives ($8 million); Medicines for retail sale ($80 million); Vegetable Alkaloids, Natural and Synthetic ($6.5 million); Medicaments, NS ($54 million). A. Rank: Industrial (II) B. Name of Sector: Oil and Gasfield Machinery and Suppliers C. ITA or PS&D Code: OGMS 1992/93 1993/94 1994/95 D. Total market size 106.5 110.0 124.3 E. Total local production 14.0 16.0 18.3 F. Total exports - - - G. Total imports 92.5 94.0 106.0 H. Total imports from U.S. 129 25 26.5 I. Exchange rate (rupees/$) 25.96 30.0 32.0 Comments: The GOP has recently announced a new hydrocarbon policy to attract foreign investors and is encouraging additional oil and gas exploration activities. Several U.S. companies are actively involved in oil and gas exploration in Pakistan. Although itemized statistics for sub-sectors are not available, good prospects exist for drilling machinery, casing, line pipes, and coating and tubing materials. A. Rank: Industrial (II) B. Name of Sector: Transportation Equipment and Parts C. ITA or PS&D Code: TRN 1992/93 1993/94 1994/95 D. Total market size 2,387.8 2,411.4 2,637.3 E. Total local production 1,106 1,179 1,350 F. Total exports 7.6 7.6 7.7 G. Total imports 1,291.4 1,240 1,295 H. Total imports from U.S. 126.5 139.5 160 I. Exchange rate (rupees/$) 25.96 30.0 32.0 Comments: With growing Pakistani interest in U.S.-made vehicles, engines, and components, the U.S. is expected to increase market share considerably. Good prospects exist for increased sales of aircraft and parts, as the national flag carrier, Pakistan International Airlines (PIA) plans to upgrade its fleet and several private sector carriers plan to expand their operations. The Karachi Mass Transit Project, the Indus River Navigation project, and other projects to improve and expand port facilities offer additional export opportunities for U.S. suppliers of transportation equipment. Most promising sub-sectors and estimated market size for 1995 are: Aircraft and Parts ($325 million); Buses and their Chassis with Engines ($260 million); Trucks, Trailers, and Engines ($320 million); Ships and Boats ($75 million); Railway Vehicles ($30 million). A. Rank: Industrial (III) B. Name of Sector: Pumps, Valves, and Compressors C. ITA or PS&D Code: PVC 1992/93 1993/94 1994/95 D. Total market size 121.5 119.5 123.5 E. Total local production 46.0 47.5 49.0 F. Total exports - - 0.5 G. Total imports 75.5 72.0 74.0 H. Total imports from U.S. 14.0 13.4 14.5 I. Exchange rate (rupees/$) 25.96 30.0 32.0 Comments: The U.S. is one leading supplier of imported pumps, valves, and compressors. Others are Japan, China, Germany, France, the U.K., and Italy. Increases in industrial activity and investment should continue to result in a growing demand for pumps, valves, and compressors. Most promising sub-sectors and estimated market size got 1995 are: Centrifugal Pumps ($9 million); Rotary Positive Displacement Pumps ($4 million); Vacuum Pumps ($5 million); Parts for Pumps ($6 million); Compressors for Refrigeration Equipment ($16 million); Air Pumps, Other Compressors ($7 million); Parts for Compressors ($3 million); Pressure-reducing Valves ($1.5 million); Check Valves ($5 million); Taps, Cocks, Other Valves ($7 million). A. Rank: Industrial (III) B. Name of Sector: Paper and Paperboard C. ITA or PS&D Code: PAP 1992/93 1993/94 1994/95 D. Total market size 256.5 249.5 263 E. Total local production 91.5 88.5 92.5 F. Total exports 0.5 0.5 0.5 G. Total imports 165.5 161.5 171 H. Total imports from U.S. 18.5 17.5 18.5 I. Exchange rate (rupees/$) 25.96 30.0 32.0 Comments: A major share of Pakistan's imports of paper and paperboard ($104 million) in 1993 consisted of coated and specialty papers, kraft paper, and paperboard. The U.S. is particularly strong in pulp, and also has developed a solid market for waste paper, newsprint, and kraft paper. Major competitors include Brazil, Sweden, Austria, and Singapore. Most promising subsectors and estimated market size for 1995 are: Pulp and Waste Paper ($75 million); Newsprint ($40 million); Kraft Paper ($95 million); Coated and Specialty Paper and Paperboard ($114 million). A. Rank: Industrial (III) B. Name of Sector: Food Processing and Packaging Machinery C. ITA or PS&D Code: FPP 1992/93 1993/94 1994/95 D. Total market size 50.5 52 E. Total local production 11 10.5 11 F. Total exports - - - G. Total imports 42 40 41 H. Total imports from U.S. 4 3.5 3.5 I. Exchange rate (rupees/$) 25.96 30.0 32.0 Comments: Pakistan produces a wide variety of fruits and vegetables, but much of its production is damaged before it reaches the marketplace due to inadequate storage and transportation facilities. Pakistan's meat and dairy industries remain largely undeveloped. Rapid urbanization and rising real incomes have spurred demand for processed foods. There is, therefore, considerable potential for imports of food processing and packaging machinery. Good prospects exist also for machinery to improve product packaging. Major suppliers of food processing and packaging machinery are Germany, Italy, the U.K., France, and the U.S. Most promising sub-sectors and their estimated market size for 1995 are: Cereal and Grain Milling Machinery ($12 million); Oil Processing Machinery ($12 million); Beverage Industry Machinery ($5 million); Bakery, Confectionery, and Other Food Preparation Machinery ($4 million); Parts for Food Processing Machinery ($7 million); Filling, Sealing, and Closing Machinery ($9 million); Packing and Wrapping Machinery ($4 million).