Boosting economic ties between Pakistan and Saudi Arabia
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Any robust bilateral relationship has to be well rounded, inclusive of co-operation in multiple fields. Pakistan and the Kingdom of Saudi Arabia have similar views on various international issues and co-operate closely in world forums. Similarly, defence and security co-operation has been a glorious chapter of this exemplary relationship. However, the commercial and investment interaction has yet to achieve its full potential. Pakistan imports much of its oil from Saudi Arabia but its exports to the Kingdom are far below their true potential. On the other hand, Pakistan offers a vast attractive field for Saudi investors.
It was with a view to strengthening economic ties that a Supreme Pak-Saudi Co-ordination Council was set last year. The idea was to boost co-operation in all fields including trade and identify avenues for Saudi investments in Pakistan. A bilateral business council was also set up for this purpose. The two brotherly countries have had a Joint Economic Commission at the ministerial level since long. But public sector led co-operation is often slow as it has to pass through various bureaucratic channels.
A fifteen-member high level delegation of the business council paid a weeklong visit to Pakistan recently. The delegation was led by Fahad bin Mohammad Al Basha, the Business Council Chairman and its members represented 30 prominent business companies. The delegation visited Islamabad, Lahore, Sialkot, Faisalabad and Karachi.
”The outcome of this visit is unexpectedly good. The entire team saw great opportunities in various sectors. Hopefully, there will be collaborations by business houses in Saudi Arabia and Pakistani companies,” the delegation head said.
The areas of interest, as identified by the delegation, were IT, agriculture, surgical equipment, sportswear, textiles and construction. Pakistan has an expanding IT sector which is now contributing handsomely to exports. Pakistan is an agricultural country with fertile soil, adequate water resources and vast tracts of virgin land. With the construction of new dams and barrages, those lands can be brought under the plough and more food can be produced not only for domestic needs but also for exports to GCC countries.
The areas of interest, as identified by the delegation from Saudi Arabia, were IT, agriculture, surgical equipment, sportswear, textiles and construction.
Javed Hafeez
International trade is based on the principle of comparative advantage. Pakistan has an edge in production of quality textiles, has experienced textile engineers and workers. As good quality leather is locally available, Pakistan exports large quantities of leather jackets and soccer balls. Related to textiles are sports-related garments which were also identified by the delegation as a potential area of collaboration.
There is no dearth of construction materials in Pakistan. But many items of construction have now become expensive and therefore, unaffordable for the common man. Companies in the Kingdom have vast experience in the construction of cheap and prefabricated housing units. With a population 230 million people, the demand for housing is growing in Pakistan. Construction would, therefore, be an ideal field for investment by companies from the Kingdom.
Soccer is the most popular sport in Saudi Arabia and Pakistan has had the distinction of exporting soccer balls for three consecutive world cup tournaments. Hockey and cricket are like national sports of Pakistan. Saudi investments in sports related goods in Pakistan will find a ready market in Pakistan, Africa and GCC countries. Sports goods now include a vast array of product training kits, protection gear, leather gloves, special shoes and helmets. Pakistan has the raw material and trained manpower to produce these items.
Though outside the scope of the private sector, oil refineries and the petro-chemical industry also have vast potential for investments in Pakistan. There is a large local market and in the coming years, Pakistan would become conduit to the transportation of large amounts of energy resources to China. The Chinese province of Xinjiang is developing at a fast speed and its requirements of energy resources are bound to increase. By providing north south connectivity, Pakistan will become an important transit route for trade between Africa, Middle East and China.
Last year, Pakistan imported oil worth $3.45 billion from the Kingdom. Its exports to Saudi Arabia stood at $437 million. Thus the balance of trade is tilted in favour of the Kingdom. Hopefully, the visit of this important delegation will contribute to the correction of this imbalance. Trade and investments create new jobs, bring prosperity and promote people-to-people contacts. Vision 2030 would also promote employment opportunities for foreigners, including Pakistanis.
Pakistan and the Kingdom have a common interest in regional peace and maritime security. Peace and security are basic ingredients for economic development and prosperity. These common goals provide fertile ground for flourishing economic ties.
• Javed Hafeez is a former Pakistani diplomat with much experience of the Middle East. He writes weekly columns in Pakistani and Gulf newspapers and appears regularly on satellite TV channels as a defense and political analyst. Twitter: @JavedHafiz8
