Seminar report Services Seminar - TRTA i

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estrictions on repatriation of profits, as well as high capital requirements as constraints to operations abroad. A construction conglomerate emphasized their interest in Middle East markets. The firm identified burdensome registration and licensing procedures, high capital asset requirements, excessive indemnities, and significant performance guarantees as constraints. A design firm operating in Lahore, Karachi, Dubai, Manila, and London discussed their joint venture experience in an unnamed Middle East market. They paid excessive capital requirements to establish the joint venture. They found the local partner had preferential standing under domestic law. Once the joint venture became profitable, the local partner pushed out the Pakistani firm. An information technology, outsourcing firm explained that "image" was a primary concern. This resonated with many of the panellists as well as a Pakistani consultant firm interested in the United Arab Emirates (UAE), Qatar, Saudi Arabia (acceding to the World Trade Organization (WTO), Malaysia, Zimbabwe, and France. To work around the problem, the firms sought to establish offices abroad to portray themselves as global entities. A panellist explained how from an operational standpoint they use all modes of supply from marketing, service delivery, to after sales service. For example, their associated offices and offshore business partners outsource design development work to them via cross-border supply. They serve numerous foreign clients in Pakistan via consumption abroad. Their representative office in Dubai exemplifies their use of commercial presence. Their staff travel to find, market, and serve clients abroad via temporary movement. The firms identified burdensome visa requirements and non-recognition of professional credentials as constraints to trade. They believed they would gain from efficient, timely provision of visas in export markets of interest. The firms highlighted recognition of professional credentials as a necessity for export expansion. Energy Reliable access to sources of electricity is a concern of each service firm. Some companies build generators themselves due to an absence of reliable, quality electricity. This significantly increases their cost of doing business and makes them less competitive in the international market. Discussants emphasized this constraint across service and manufacturing firms. 1 As electricity provision is an obstacle to the growth of Pakistani services firms and in light of current WTO GATS negotiations on energy services, considered exploration of energy services proposals is warranted from a private-sector perspective. Education When service firms higher new staff they have to invest time and money in increasing the skill level of the new employees. An IT company adopted a rigorous testing process to ensure new 1 A useful source on the issue is "Energy and Environmental <strong>Services</strong>: Negotiating Objectives and Development Priorities" published by the UN Council for Trade and Development (UNCTAD) published in 2003 and edited by Simonetta Zarrilli, Economic Affairs Officer, Division on International Trade in Goods and <strong>Services</strong>, and Commodities, e-mail: HSimonetta.Zarrilli@unctad.orgH. Page 4 International Trade Centre
hires have the quality of skills needed for their responsibilities. The firm found, for example, in a pool of 150 applicants, they might only identify 5% that are adequately qualified. It may take the firm six months to train new hires. This increases the firm's cost of doing business and represents a drag on their competitiveness. Telecommunications: Access to broadband Firms identified the need for greater broadband connectivity domestically and with major foreign international business centres. A second submarine cable is scheduled to open in October, however domestic connectivity is still an issue. Given Pakistan's relatively recent telecommunications liberalization, managing the transition to a competitive telecom market that ensures adequate broadband build out is a high priority. Careful consideration should be given to post telecom liberalization issues associated with the efficacy of the independent regulator in overseeing and disciplining new entrants and the incumbent. Access to financing Discussants bemoaned the lack of appropriate financing vehicles for service firms. Discussants noted the difficulty in sourcing venture-capital funds. Participants highlighted the banking sector's non-recognition of electronic assets such as databases and user information as a basis for loans. According to a Pakistani transnational, their growth is constrained because commercial banks do not accept contracts as a lien or collateral. A firm did point out that they successfully received loans on the basis of projected cash flows. An associated anecdote explained how a service firm's purchase of electronic assets from abroad was not recognized by the public agency overseeing international financial transfers. Because goods did not change hands, the financial payment for the electronic assets was not released. Consequently the firm had to create a "dummy" package to move through customs for the release of the funds. Priority service markets Service firms emphasized their interest in Middle East markets, including the UAE, Saudi Arabia (acceding to the WTO), Qatar, as well as Bangladesh, Sri Lanka, India, China, Afghanistan, Malaysia, the Philippines, Zimbabwe, the EU, and the US. Additional issues Firms emphasized their desire for: • Ensuring government is a facilitator in services market rather than a competitor in certain sectors. For example, NADRA Technologies, a public entity, competes with private technology companies. • Concerted public-sector effort to build Pakistan's image globally. • Public sector understanding of the nature of services products and the value of electronic assets. • Attention to tax burden and its impact on international competitiveness. International Trade Centre Page 5
Page 1 and 2: Services Seminar Seminar report Kar
Page 3: Table of contents Introduction 1 EC
Page 7: Services seminar report The Pakista
Page 11 and 12: Seminar agenda EC Trade Related Tec
Page 13 and 14: Presentation Challenges for busines
Page 15 and 16: Identification of trade in services
Page 17 and 18: List of participants No. Name Organ
Page 20: Page 16 International Trade Centre

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