2 / 3 objective as in the globalized world efficiency can improve only under a competitive environment. the breaking down of these artificial barriers has led to significant productivity gains and manufactured exports now account for 90 percent of the total exports. imports of all kinds of goods – capital, consumer, raw materials – are freely allowed into the country at negligible import duty rates. foreign investment regime in pakistan is also highly open and liberal. there are no restrictions or ceilings or prior approvals required for foreign investors to set up their business in pakistan for any sector of the economy – agriculture, real estate, retail trade, manufacturing, services, banking, insurance and other financial services. as long as they bring in their initial foreign investment and register it with the central bank, the foreign investors are free to repatriate their profits, dividends, royalties, technical fees, debt servicing, etc. through their bankers without any prior approval. foreign companies are allowed to raise funds from domestic sources, including bank loans, without any restrictions. they are treated equally with national firms in all respect and can bring in and out expatriate staff to run their businesses. deregulation of oil and gas telecommunication and civil aviation sectors have also brought about significant positive results. oil and gas exploration activity has stepped up in recent years and constant discovery and production from new gas fields operated by private sector companies have added new capacity to meet the growing energy needs of the country. independent power producers – both domestic and foreign private companies – have played a critical role in filling in electricity generation requirements of pakistan. telecommunication has witnessed a boom since the private sector companies were allowed licenses to operate cellular phones. one million new cellular phone connections are being added every month and the number of phones has already reached about 15 million. long distance international and local loop monopoly of pakistan telecommunications corporation has been broken and new licenses including for wireless local loop have been issued. the customers are reaping rich dividends as the prices of phone calls – local, long distance, international – are currently only a fraction of the previous rates. since the government recently announced the policy of allowing the private operators to fly on international routes, there has been a big uptake in the aviation business. domestic airfares have been cut by pia which had almost a monopoly and seat load factor has reached an all time high. pia and the private airlines are all scrambling for new planes to meet the pent up demand for air travel. despite these reforms, pakistan is facing many difficult

they are offered libor instruments. if you do consider these factors, then i believe you will see that it is in your interest to move away from libor. in convening the arrc, we have set a model of public - private sector cooperation to address a key financial stability risk. ultimately, the private sector must drive this transition — these are private contracts, and each of you must choose how you can best address this risk — but the public sector must help. at a recent roundtable on the libor transition held by the financial stability board, we heard calls from the private sector to provide greater clarity on regulatory and tax implications of the transition and also calls for a more “ muscular ” regulatory approach. it is incumbent on the official sector to take these requests seriously, and we are. for example, the federal reserve is working with the commodity futures trading commission and other u. s. prudential regulators to provide greater clarity on the treatment of margin requirements for legacy derivatives instruments. agency staff are developing proposed changes to the margin rules for non - cleared swaps to ensure that changes to legacy swaps to incorporate a move away from libor, including adherence to the isda protocol, would not affect the grandfathered status of those legacy swaps under the margin rules. this has been a key request of the arrc, and we will look forward to public comment on the proposal. the federal reserve ’ s supervisory teams have already included a number of detailed questions about plans for the transition away from libor in their monitoring discussions with large firms. the federal reserve will expect to see an appropriate level of preparedness at the banks we supervise, and that level must increase as the end of 2021 grows closer. our supervisory approach will continue to be tailored to the size of institution and the complexity of libor exposure, but the largest firms should be prepared to see our expectations for them increase. as we consider the answers we have received from these firms, we will assess how our supervisory expectations for them should evolve in the coming year. let me address one additional point relating to our supervisory stress tests, in an effort to provide further clarity. some have recently claimed that the federal reserve ’ s supervisory stress tests would penalize a bank that replaces libor with sofr in loan contracts by lowering projections of net interest income under stress. as can be seen in our recently published enhanced descriptions of the supervisory stress - test models, the interest rate variables that drive projections of net interest income under stress are