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Country Report
Islamic Republic of Pakistan
By
Myat Soe
Executive Summary:
This report gives useful insight to help executives and their employees live and
work successfully in Pakistan. Americans will find the Pakistani people to be very
respectful because they value traditional customs and beliefs. Business protocol is
different in Pakistan, compared business protocol in the United States. The executives
must establish a trust between them and their business counterparts before making any
business deals.
Pakistan has significantly improved the lives of many of its people and has
entrenched in poverty. According to World Bank report in 2006, women are at a particular
disadvantage, with lower literacy and school enrollment rates than men, and less access
to health care. It should also be noted that most of Pakistanis are Muslims, and Pakistan is
a male-dominated society.
has found a new target: western countries. The extremists in Pakistan and their leaders are
targeting the U.S government, its citizens as well as members of minority indigenous and
religious groups. This information allows companies’ executives and their employees to
first program should inform employees on how to conduct business transactions and how
to interact with people in Pakistan. A second training program should be set up for
executives, managers, employees and their families to help them adjust to living in
Pakistan. Executives and all employees should be briefed about the religious sensitivity
Islamic Republic of Pakistan 2
of the people in Pakistan. It is evident that additional research must be done to set up the
Finally, they will learn how to do business in Pakistan and how to develop
relationships with their business partners. They will also find out what is the appropriate
protocol and business customs in Pakistan, how to negotiate, what are the proper business
Overview of Pakistan:
Pakistan is located in South Asia. It shares an eastern border with India and a
north-eastern border with China. Iran makes up the country's south-west border, and
Afghanistan runs along its western and northern edge. The Arabian Sea is Pakistan’s
regard to the U.S Department of State Background Notes on Pakistan, the majority of
the population is made up of Punjabis, Sindhis, Pashtuns, Baloch, and Muhajir. The
ninety seven percent of population are Muslim (Sunni 77%, Shi'a 20%), and three
percent are Christian, Hindu, and others. Pakistan is an Islamic federal republic with a
population of approximately 165 million. The national language is Urdu, but English is
widely spoken and is one of the two official languages. The name Pakistan is derived
from the Urdu words Pak (meaning pure) and stan (meaning country). Pakistan is
In 1947, as British rule came to an end in India, Pakistan was created when the
Muslim-dominated parts of India (to the west and east) of Hindu India, were given
autonomy. Those two partitions were called East and West Pakistan and they were
The city of Islamabad, with its mix of traditional Islamic architecture styles and
modern features, became the capital city when it was officially moved here from
Karachi in 1959. Then, in 1971, East Pakistan demanded independence, and after a
bloody civil war it was transformed into what is now called the country of Bangladesh.
West Pakistan, now present-day Pakistan has been in constant dispute with India
over the Kashmir Region, and after many wars and border disputes, the status of the
conducted its own tests in 1998. Today, the long-term goal of both nations is military
Government:
Military rule was instituted in October. 1999, and a nominal democracy was
declared in June 2001 by the ruling military leader, Pervez Musharraf. The Prime
Minister heads the cabinet, but the president chairs the powerful National Security
Council, which comprises military chiefs and cabinet members. The president can also
dismiss the prime minister, the cabinet and the parliament. The lower house of
parliament, the National Assembly, was elected in October 2002 for a five-year term, but
has been frequently adjourned as a result of protests by the opposition over the legality of
General Musharraf's changes to the political system. An election to the Senate (the upper
house), where all four provinces have equal representation, was held in February 2003.
Provinces are represented in the National Assembly according to the size of their
population.
massive refugee flows; creation of single state comprising two wings, West and East
Pakistan, separated by 1000 miles of Indian territory; and 1948 war with India. East
Pakistan (Bangladesh) seceded 1971 leading to civil war and further clashes with India
governments, frequently allied with religious right at expense of secular and mainstream
political parties. Pakistan’s 1973-77 democratic interlude under Zulfiqar Ali Bhutto's
Islamic Republic of Pakistan 5
premiership ended with installation of General Zia as military ruler 1978-1988. President
Pervez Musharraf came to power in 1999 coup against elected Prime Minister Nawaz
military, through National Intelligence Service (ISI), supported the Taliban regime in
overlooked nuclear proliferation. Pakistan joined U.S.-led “war on terror” follows the
September 11, 2001 attacks, promoting Musharraf’s image abroad as secular reformer
Throughout the past years, political stability proved elusive for Pakistan.
Although election was held, stability was threatened by the terrorist tactics resorted by
opposition groups from both political and religious extremes. Coups and countercoups,
devices in 1998 after the Indian test. Head of Pakistan’s uranium enrichment facility, Dr.
Abdul Qadeer Khan, revealed in 2004 to have proliferated nuclear technology to North
Korea, Libya and Iran. Khan released after public apology (Country Profile: Pakistan,
2006).
Economy:
Pakistan. About 42 percent of the population is involved in farming, forestry and fishing
that together contribute to 21 percent of the GDP. Barring the regions of north and the
west, which are covered by mountains, the rest of the country has fertile plains where
Islamic Republic of Pakistan 6
crops like wheat, cotton, maize, sugar cane and rice are grown. Pakistan is self-sufficient
percent of occupation. Main items exported by Pakistan include cotton cloth, tapestries,
leather, carpets and rice. In 2006 Pakistan's gross domestic product (GDP) was $ 384.9
billion.
Pakistan
Key Economic Indicators
Sources: CIA - The World Factbook
1
Pakistan, an impoverished and underdeveloped country, has suffered from
decades of internal political disputes, low levels of foreign investment, and a costly,
policies, bolstered by generous foreign assistance and renewed access to global markets
since 2001, have generated solid macroeconomic recovery the last four years (From
government has made substantial macroeconomic reforms since 2000. For example, in
the budget for fiscal year 2006, 2Islamabad did not impose taxes on the agriculture or real
estate sectors, despite Pakistan's chronically low tax-to-GDP ratio. While long-term
prospects for job creation and poverty reduction are the best in more than a decade.
GDP growth, spurred by double-digit gains in industrial production over the past
year, has become less dependent on agriculture, and remained above 7% in 2004 and
2005. Inflation remains the biggest threat to the economy, jumping to more than 9% in
2005. 3The World Bank and Asian Development Bank announced that they would each
provide the US $1 billion in aid to help Pakistan rebuild areas hit by the October 2005
1
The U.S. Agency for International Development: “Helping Pakistan builds modern
prosperous and democratic State.”
2
Pakistan: “U.S. Department of State Background Note.”
Islamic Republic of Pakistan 8
earthquake in Kashmir. Foreign exchange reserves continued to reach new levels in 2005,
supported by steady worker remittances. In the near term, growth probably cannot be
spending, lower taxes, and pay increases for government workers will help Pakistan
Cultural Customs:
Family, friends, and connections are very important on all levels in Pakistan.
Most people are Muslim and practice the Islam religion. Like any other countries’
Muslims, they are warm, emotional, and quick to explode (Deresky, 2003). Muslims
follow the doctrines of the Koran, which forbids alcohol and the flesh of scavenger
animals (i.e. pork), birds and fish (i.e. shellfish). It also discourages use of caffeine and
nicotine, although neither are forbidden; in fact, they tend to be consumed in great
sensitivities when they develop the relationship with Pakistanis (International Gift Giving
Avoid pork and pork products like ham, bacon, pate, hot dogs or sausage. Avoid
food prepared with pork products like lard, which can include even pastries. It is a
good idea to avoid any pork dishes at a banquet when Muslims are in attendance
3
Pakistan 2005 Earthquake: “Preliminary Damage and Needs Assessment, Prepared
By Asian Development Bank and World Bank.”
Islamic Republic of Pakistan 9
Don't serve shellfish like crab or lobster. Fish is an acceptable alternative to meat
and shellfish. Some Muslims prefer Zabihah meat which has been slaughtered
according to special rules. Zabihah meat is similar to, but not the same as, kosher
meat.
officials; even if you know that the individual may drink in private. Many
for instance, are more liberal and frequently consume alcoholic beverages. But,
it's best to err on the side of caution, especially in public. The hosts serve fruit
juices for toasts when alcoholic beverages cannot be consumed. Avoid food
cooked in alcohol, even if all the alcohol has burned off in cooking. Muslims fast
Kissing on the cheeks is common among men. However, any public display of
intimacy between men and women is strictly forbidden by the religious code.
4
Pakistanis are a very fashion conscious nation. Fifty percent of men and ninety-five
percent of the Pakistani women wear their national dress (Pakistan, 2006). The men wear
baggy pants that get narrow at the ankles. They are called salwar. They also wear long
shirts that hang down to their knees, called kameez. Woman wears scarves on their heads
called dupattas. When dressing casual, short-sleeved shirts and long pants are preferred
for men; shorts are acceptable only when exercising. Women must keep their upper arms,
chest, back, and legs covered at all times. Women should wear long pants when
exercising.
4
Modern Muslima and Saraji Umm Zaid: “How to Hijab: Different Styles of Over
(Outer) Garments.”
Islamic Republic of Pakistan 10
In the big cities, they wear western style clothes. Men are generally expected to
wear a suit and tie for business, although the jacket may be removed in the summer.
should know how to establish social ties in Pakistan. Hosting a meal at a nice restaurant
is always a good business practice. A fine dinner is a wonderful way to give a gift to
Pakistanis hosts, to show your guests you appreciate the business relationship you have
Initial meetings are only for the purpose of getting acquainted. The
greeting is “Asalam Aleikum” (Peace be with you), followed by a firm handshake and
then, for courtesy and to pay homage to the host (you don’t necessarily have to), briefly
place your right hand over your heart. It is best to take a few minutes initially to engage
in pleasantries about each other's country, rather than going straight to business. Also,
people can say “Haai!” when they meet with Punjabis. That is Punjabi for, "Hi!
material to be distributed, and perhaps a gift. The gift is a social gesture that may be
expected in Pakistan. It could not be considered a bribe in their business culture. It is very
important in Pakistan to only use your right hand, or both hands, to offer or accept a gift
negotiation is slower in Pakistan compared to the US. Pakistanis are hard workers, but
they have a relaxed attitude towards time. Most businesses are family-owned and the key
decision maker is almost always the head of the family. Personal life revolves around
before any formal negotiations can take place. There is a definite social hierarchy. The
privileged elite control the country, with conspicuous consumption and education being
Pakistanis do business with the person, not the company. Therefore mutual trust
must be established. A successful negotiator uses references to people who are highly
respected by the opponents to persuade them to change their minds on some issues. They
have a casual approach to deadlines and frequently lack the authority to finalize a deal.
supported by the religious beliefs. However, such consultation occurs more on a person-
transacted in a highly personalized manner, the final decisions are made by the top
leaders who feel that they must impose their will for the company to be successful.
Perceptions Index, Pakistan was ranked in seventy one and scored two point three
(Deresky, 2003). The score relates to perceptions of the degree of corruption as seen by
businesspeople, academics, and risk analysts, and ranges between ten (highly clean) and
Islamic Republic of Pakistan 12
zero( highly corrupt). These index numbers suggests that Pakistan scored high level of
adequate medical care is available in major cities in Pakistan, but is limited in rural
areas. Facilities in the major cities vary in level and range of services, resources, and
cleanliness, and Americans may find them below U.S. standards; facilities in rural areas
are consistently below U.S. standards. Medical facilities require prepayment and do not
accept credit cards. Many American-brand medications are not widely available, but
generic brands from well-known pharmaceuticals are widely available. The quality of the
Special Circumstances:
transactions. Pakistan is largely a cash economy. Personal checks are not commonly
accepted. Most Pakistanis do not use checking accounts for routine transactions. Outside
of major cities and tourist destinations, credit cards and travelers' checks are generally not
accepted, and there have been numerous reports of credit card fraud (Travel Warning for
Pakistan, 2006). There are bank branches as well as registered money-changers in all
international airports. ATMs can be found in major airports. English is widely spoken by
Conclusions:
By exploring the country of Pakistan, I have drawn five conclusions that are
especially relevant to the company’s executives, managers, employees and their families
Islamic Republic of Pakistan 13
who will be relocating from the United States to Pakistan. The conclusions I have reached
extensive agricultural land crop production, mineral reserves (coal, crude oil, natural gas,
copper, iron ore, gypsum, etc.), fisheries and livestock production. English is an official
language, and is widely used in government, the officer ranks of the military, and in many
Pakistan has 165 million consumers with growing incomes and a growing
grow to over 325 million by 2050 making it the third most populous country in the world.
Therefore, it is a good opportunity to introduce new products and expand the market
shares. Pakistan also has well-established legal systems and infrastructure. That will
Pakistan is a principal gateway to the Central Asia Republics and has strong and
long-standing links with the Middle East and South Asia. Pakistan has on average been
among the faster growing economies in the developing world, and has great potential for
different from the business protocol practiced in the United States. Appointment making,
negotiating, business entertaining, and giving gifts are just four of the areas where doing
business in Pakistan is not the same as doing business in the United States.
Reducing minimum foreign equity from US$ 0.5 million to US$ 0.3 million,
Zero import duties on capital goods, plant and machinery and equipment not mad
locally.
Recommendations:
Based on the conclusions of my research, I recommend that companies take four specific
actions to insure that their executives, managers, employees and their families are happy
1. Do more research.
culture and business protocol used in Pakistan, for it is merely a brief overview of the
Therefore to help insure the success of business operations in Pakistan, companies should
5
Board of Investment: Government of Pakistan: “Pakistan's Business Strengths.”
Islamic Republic of Pakistan 15
continue to gather and analyze relevant information regarding living and doing business
of the differences between Pakistan and the United States in the area of business protocol,
companies should set up a training program for executives, managers and employees who
will be doing business in Pakistan. The training program for executives and managers
should devote time to the discussion of appointment making, negotiating, and business
a cultural training program for executives, all employees and their families. To
make sure that executives, employees and their families are knowledgeable about the
cultural norms of Pakistan, companies should develop a training program to educate them
about the Pakistan culture. The training program for executives, employees, and their
families should focus on cultural customs in Pakistan with regard to greetings, gestures,
executives, managers, employees and their families about the religious sensitivity of
sending executives, managers, employees and their families to Pakistan, companies must
spend adequate time educating them about the past experiences of violence against
References:
/pakistan_s_business_strengths.html
CIA - The World Factbook – Pakistan: “Country Profile.” Retrieved May 10, 2006,
from http://www.odci.gov/cia/publications/factbook/geos/pk.html
International Crisis Group: “Conflict History: Pakistan.” Retrieved May 10, 2006,
from http://www.crisisgroup.org/home/index.cfm?action=conflict_search
&l=1&t=1&c_country=86
from http://www.cyborlink.com/besite/international_gift_giving.htm
Modern Muslima and Saraji Umm Zaid: “How to Hijab: Different Styles of Over (Outer)
http://www.modernmuslima.com/jilbabhow.htm.
Pakistan: “U.S. Department of State Background Note.” Retrieved May 10, 2006, from
http://www.infoplease.com/country/profiles/pakistan.html
By Asian Development Bank and World Bank.” Retrieved May 10, 2006, from
www.worldbank.org.pk
Islamic Republic of Pakistan 17
Supporting Human Rights and Democracy: “The U.S. Record 2005 – 2006 Released by
the Bureau of Democracy, Human Rights and Labor.” Retrieved May 10, 2006, from
http://www.state.gov/g/drl/rls/shrd/2005/63948.htm
The U.S. Agency for International Development: “Helping Pakistan builds a modern
http://www.usaid.gov/pk/
The World Bank: “From Crisis to Growth- Pakistan’s Poverty Reduction Strategy.”
Resources/CAS/Summary.pdf
The World Bank: “A Plan to Get Girls in School in Pakistan” Retrieved May 10, 2006,
from www.worldbank.org.pk
The US embassy in Islamabad: “Consular Information Sheet.” Retrieved May 10, 2006,
from http://usembassy.state.gov/islamabad/
The US embassy in Islamabad: “Travel Warning for Pakistan.” Retrieved May 10, 2006,
from http://travel.state.gov/travel/cis_pa_tw/cis/cis_992.html
Islamic Republic of Pakistan 18