Employing in Pakistan

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Expanding into
Pakistan

Pakistan’s domestic market is huge. The population of over 235 million makes it the fifth most populous in the world, on a landmass that equates in size to the United Kingdom and France combined. Gross Domestic Product was US$376.49 billion in 2022, an increase of 8.13% over 2021, ranking Pakistan just inside the world’s top 50.

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Global Expansion is a step to make for any business, regardless of your goal. But the opportunities that can come with an expansion can be stimulating as well as intimidating and confusing, especially when you consider all of the registration procedures that need to be done and the documentation required.

Going at it without the proper support can increase the costs, time and risks involved.

The legwork and potential red tape can be worked through more efficiently and cost-effectively with the support of a Professional Employer Organisation (PEO) such as Bradford Jacobs, primarily through our Employer of Record (EOR) framework.

It can be best utilised when businesses are just beginning their expansion process and require more information before incorporating an entity and fully establishing themselves in that market.

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Country EOR Guide - Bradford Jacobs

Download our Guide to Pakistan

Learn all about expanding into Pakistan and see what we can do to make your expansion easier.

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Download our Guide to Pakistan

Learn all about expanding into Pakistan and see what we can do to make your expansion easier.

Country EOR Guide - Bradford Jacobs
DOWNLOAD GUIDE

Hiring Staff
in Pakistan

Pakistan is just inside the world’s top 50 economies, based on Gross Domestic Product (GDP) of US$376.49 billion in 2022. The economy is driven by domestic demand from its predominantly young population of over 235 million, exports and investment. Agricultural and textile products, light engineering and surgical equipment feature strongly in the exports profile, and earned around 31 billion US dollars in 2021.

Pakistan’s economic role in the region is supported by free trade agreements with Sri Lanka, China, Indonesia and Malaysia, plus preferential agreements with Iran, Turkey and Mauritius. Pakistan is a member of the South Asian Association for Regional Cooperation (SAARC) and the Central Asia Regional Economic Cooperation (CAREC). In 2015, Pakistan signed the China-Pakistan Economic Corridor agreement (CPEC).

The agricultural sector was badly affected by the catastrophic floods of 2022, however, and the World Bank predicts the sector will shrink in 2023 for the first time in 20 years after contributing over 22% to the economy in 2022. The services sector accounted for close to 60% of GDP in 2022, with industry at slightly under 20%.

The World Bank expects the economy to grow in 2024 and 2025, dependent on various factors. GDP per capita averaged annual growth of barely 2% in the 20 years from 2020 and reactivating domestic consumption is a priority, alongside improving productivity and creating a uniformly competitive market for investment.

Country:
The Islamic Republic of Pakistan
Local Currency:
Pakistan Rupee
Time Zone:
GMT+5
Country Dial Code:
+92
Tax Year:
July 1 – June 30
VAT:
17%
National Minimum Wage:
PKR 25,000 (€82, US$89)
Taxpayer Identification Number (TIN):
Individuals – Computerised National Identity Card (CNIC) issued by the National Database and Registration Authority – 13 digits.
Entities – National Tax Number (NTN) – 8 digits.
Main trading partners:
US, China, UK, Germany, Netherlands, UAE, Spain and Italy.

Hiring Staff
in Pakistan

Pakistan is just inside the world’s top 50 economies, based on Gross Domestic Product (GDP) of US$376.49 billion in 2022. The economy is driven by domestic demand from its predominantly young population of over 235 million, exports and investment. Agricultural and textile products, light engineering and surgical equipment feature strongly in the exports profile, and earned around 31 billion US dollars in 2021.

Pakistan’s economic role in the region is supported by free trade agreements with Sri Lanka, China, Indonesia and Malaysia, plus preferential agreements with Iran, Turkey and Mauritius. Pakistan is a member of the South Asian Association for Regional Cooperation (SAARC) and the Central Asia Regional Economic Cooperation (CAREC). In 2015, Pakistan signed the China-Pakistan Economic Corridor agreement (CPEC).

The agricultural sector was badly affected by the catastrophic floods of 2022, however, and the World Bank predicts the sector will shrink in 2023 for the first time in 20 years after contributing over 22% to the economy in 2022. The services sector accounted for close to 60% of GDP in 2022, with industry at slightly under 20%.

The World Bank expects the economy to grow in 2024 and 2025, dependent on various factors. GDP per capita averaged annual growth of barely 2% in the 20 years from 2020 and reactivating domestic consumption is a priority, alongside improving productivity and creating a uniformly competitive market for investment.

Country:
The Islamic Republic of Pakistan
Local Currency:
Pakistan Rupee
Time Zone:
GMT+5
Country Dial Code:
+92
Tax Year:
July 1 – June 30
VAT:
17%
National Minimum Wage:
PKR 25,000 (€82, US$89)
Taxpayer Identification Number (TIN):
Individuals – Computerised National Identity Card (CNIC) issued by the National Database and Registration Authority – 13 digits.
Entities – National Tax Number (NTN) – 8 digits.
Main trading partners:
US, China, UK, Germany, Netherlands, UAE, Spain and Italy.

The Main Sectors of the Pakistani Economy

The country focuses on the following key sectors, which all have a significant impact on the country’s economy:

Services

This has been the fastest-growing sector of the economy and has outstripped commodity production. Growth has been spearheaded by transport, storage and logistics; wholesale and retail trade; finance and insurance; housing services and real estate; general government and other social services. The existing multinational and foreign financial and insurance institutions provide further growth for investment. Much-needed improvement to the country’s logistics infrastructure, also attracts investment into mass-transit systems and commercial transport.

Textiles are a key component of the sector and provide inroads for investment as well as employment for 40% of the workforce. Apart from general apparel, Pakistan is one of the world’s leading producers of cotton. Increased domestic demand and preferential agreements to supply EU markets emphasise the need for upgraded facilities to increase production.

The manufacturing sector generally includes large and small scale operations, along with industrial processing. Large scale manufacturing contributes half of the sector’s GDP, with processing accounting for around 7%. Manufacturing includes iron and steel, automobiles, leather products, electronics, pharmaceuticals, chemicals, non-metallic minerals, petroleum products, fertilisers and textiles. Construction is a growth area in the sector due to the demand for low-cost housing. Inadequate power supply creates another area for investment, with the government offering incentives for power generation companies.

The Pakistan Tourism Department Corporation (PTDC) expects tourism revenue to grow from two billion US dollars in 2022 to double by 2026 and increase employment in the sector from 300,000 to half a million with the emphasis on attracting young people into the industry. The PTDC believes that international investment into public-private partnerships is essential to identify potential tourist destinations, upgrade road and rail links, build and improve hotels and facilitate bringing private tour and holiday operators into the market.

Finance

The State Bank of Pakistan (SBP) oversees state-run and commercial banks, foreign banks, Development Finance Institutions (DFIs), Microfinance Banks (MFBs), Non-Banking Financial Companies (NBFCs), insurance companies, financial intermediaries and Modarabas of the Islamic financial system.

The SBP’s Financial Stability Executive Committee monitors financial stability issues, removes risks and facilitates cooperation to protect the banking system. There are three main stock exchanges, based in Islamabad, Karachi and Lahore.

The State Bank of Pakistan (SBP) oversees state-run and commercial banks, foreign banks, Development Finance Institutions (DFIs), Microfinance Banks (MFBs), Non-Banking Financial Companies (NBFCs), insurance companies, financial intermediaries and Modarabas of the Islamic financial system. The SBP’s Financial Stability Executive Committee monitors financial stability issues, removes risks and facilitates cooperation to protect the banking system. There are three main stock exchanges, based in Islamabad, Karachi and Lahore.

The sector suffered in the floods of 2022, but already needed investment in the processing of livestock and poultry, including meat, eggs and leather products. Milk production in particular needs the introduction of advanced farming technology and scientifically-managed breeding, plus processing and chiller units … an attractive option for international investors. Other areas for investment include husbandry, veterinary medicines and genetic research. Crop production majors on cotton, plus fruit, vegetables, onions, grains, lentils, chilies and potatoes.

The Main Sectors of the Pakistani Economy

The country focuses on the following key sectors, which all have a significant impact on the country’s economy:

Services

This has been the fastest-growing sector of the economy and has outstripped commodity production. Growth has been spearheaded by transport, storage and logistics; wholesale and retail trade; finance and insurance; housing services and real estate; general government and other social services. The existing multinational and foreign financial and insurance institutions provide further growth for investment. Much-needed improvement to the country’s logistics infrastructure, also attracts investment into mass-transit systems and commercial transport.

Textiles are a key component of the sector and provide inroads for investment as well as employment for 40% of the workforce. Apart from general apparel, Pakistan is one of the world’s leading producers of cotton. Increased domestic demand and preferential agreements to supply EU markets emphasise the need for upgraded facilities to increase production.

The manufacturing sector generally includes large and small scale operations, along with industrial processing. Large scale manufacturing contributes half of the sector’s GDP, with processing accounting for around 7%. Manufacturing includes iron and steel, automobiles, leather products, electronics, pharmaceuticals, chemicals, non-metallic minerals, petroleum products, fertilisers and textiles. Construction is a growth area in the sector due to the demand for low-cost housing. Inadequate power supply creates another area for investment, with the government offering incentives for power generation companies.

The Pakistan Tourism Department Corporation (PTDC) expects tourism revenue to grow from two billion US dollars in 2022 to double by 2026 and increase employment in the sector from 300,000 to half a million with the emphasis on attracting young people into the industry. The PTDC believes that international investment into public-private partnerships is essential to identify potential tourist destinations, upgrade road and rail links, build and improve hotels and facilitate bringing private tour and holiday operators into the market.

Finance

The State Bank of Pakistan (SBP) oversees state-run and commercial banks, foreign banks, Development Finance Institutions (DFIs), Microfinance Banks (MFBs), Non-Banking Financial Companies (NBFCs), insurance companies, financial intermediaries and Modarabas of the Islamic financial system.

The SBP’s Financial Stability Executive Committee monitors financial stability issues, removes risks and facilitates cooperation to protect the banking system. There are three main stock exchanges, based in Islamabad, Karachi and Lahore.

The State Bank of Pakistan (SBP) oversees state-run and commercial banks, foreign banks, Development Finance Institutions (DFIs), Microfinance Banks (MFBs), Non-Banking Financial Companies (NBFCs), insurance companies, financial intermediaries and Modarabas of the Islamic financial system. The SBP’s Financial Stability Executive Committee monitors financial stability issues, removes risks and facilitates cooperation to protect the banking system. There are three main stock exchanges, based in Islamabad, Karachi and Lahore.

The sector suffered in the floods of 2022, but already needed investment in the processing of livestock and poultry, including meat, eggs and leather products. Milk production in particular needs the introduction of advanced farming technology and scientifically-managed breeding, plus processing and chiller units … an attractive option for international investors. Other areas for investment include husbandry, veterinary medicines and genetic research. Crop production majors on cotton, plus fruit, vegetables, onions, grains, lentils, chilies and potatoes.

Commercial Laws in
Pakistan

The Federal Bureau of Revenue (FBR):  The central tax collection authority, also responsible for investigating and acting on tax evasion and avoidance and implementing government legislation.

Regional Revenue Authorities:  Provincial semi-autonomous revenue authorities include the Punjab Revenue Authority (PRA); Khyber Pakhtunkhwa Revenue Authority (KPRA); Sindh Revenue Board (SRB); Balochistan Revenue Authority (BRA).

The Ministry of Labour:  Responsible for labour relations at federal level. Provincial labour authorities include the Punjab Labour and Welfare Department; the Sindh Labour Department; the Khyber Pakhtunkhwa Labour Department; the Balochistan Labour and Manpower Department.

Trade Unions:  These are regulated under provincial employment industrial relations acts. The major body is the Pakistan Workers Confederation, among a host of trade union organisations.

Open-ended, permanent employment contracts:  The normal type of contract with a start date, but no specified end date.

Fixed-term or temporary employment contracts:  These cannot be used for work that the employer knows to be of a permanent nature. For workers and non-managers if the fixed term exceeds nine months they become permanently employed, with entitlement to certain rights and benefits. Federal and provincial laws set no limits on fixed-term contracts for managers or administrative staff.

Probation periods:  These are included in the contact and cannot exceed three months for workers. Probation periods for managers are covered by their contact and there are no regulations to their length or if they can be extended.

Collective Bargaining Agreements (CBAs):  Article 17 of the Pakistan Constitution gives workers the right to form associations or trade unions, as do employers have the right to join organisations and federations. The Industrial Relations Ordinance provides for the appointment of Collective Bargaining Agents, entitled to negotiate with employers and employers’ federations on all aspects of employment.

Commercial Laws in
Pakistan

The Federal Bureau of Revenue (FBR):  The central tax collection authority, also responsible for investigating and acting on tax evasion and avoidance and implementing government legislation.

Regional Revenue Authorities:  Provincial semi-autonomous revenue authorities include the Punjab Revenue Authority (PRA); Khyber Pakhtunkhwa Revenue Authority (KPRA); Sindh Revenue Board (SRB); Balochistan Revenue Authority (BRA).

The Ministry of Labour:  Responsible for labour relations at federal level. Provincial labour authorities include the Punjab Labour and Welfare Department; the Sindh Labour Department; the Khyber Pakhtunkhwa Labour Department; the Balochistan Labour and Manpower Department.

Trade Unions:  These are regulated under provincial employment industrial relations acts. The major body is the Pakistan Workers Confederation, among a host of trade union organisations.

Open-ended, permanent employment contracts:  The normal type of contract with a start date, but no specified end date.

Fixed-term or temporary employment contracts:  These cannot be used for work that the employer knows to be of a permanent nature. For workers and non-managers if the fixed term exceeds nine months they become permanently employed, with entitlement to certain rights and benefits. Federal and provincial laws set no limits on fixed-term contracts for managers or administrative staff.

Probation periods:  These are included in the contact and cannot exceed three months for workers. Probation periods for managers are covered by their contact and there are no regulations to their length or if they can be extended.

Collective Bargaining Agreements (CBAs):  Article 17 of the Pakistan Constitution gives workers the right to form associations or trade unions, as do employers have the right to join organisations and federations. The Industrial Relations Ordinance provides for the appointment of Collective Bargaining Agents, entitled to negotiate with employers and employers’ federations on all aspects of employment.

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