The Saudi-Pakistan relationship should take next steps from assistance to investment
Pakistan-Saudi relations are multi-dimensional and have evolved over time. In the past, security and defence cooperation was their hallmark. However, two leaderships were cognizant of the fact that while political relations were excellent, their economic side clearly had potential for further development. A tumultuous situation in the region obliged the two countries not to lower their guards and work together for the promotion of peace and security. An open Hormuz Strait and secure sea lanes up to the Red Sea were crucial to keep the wheels of the international economy moving through uninterrupted energy supplies.
Religious affinity, geographical proximity and a shared aim of preserving territorial integrity in the face of external threats were the factors that promoted this model bilateral relationship. From the Palestinian issue to Afghanistan to Kashmir, their views were similar. Two million Pakistani workers are gainfully engaged in the Kingdom which is the single largest source of remittances. Saudi Arabia was in the forefront of nations that provided humanitarian assistance to flood-stricken Pakistanis in the province of Sindh last year. And these strong bilateral relations are between the two governments and the people. According to reliable surveys, the Kingdom of Saudi Arabia enjoys high popularity ratings among the people of Pakistan.
From the supply of oil on deferred payments to balance of payment support, the example of Saudi financial support in Pakistan’s history are many. The time has now come to graduate from assistance to investments. This is a more productive and mutually beneficial mode of economic co-operation. Crown Prince Mohammad bin Salman has directed the Saudi Development Fund to study fresh projects with a view to increasing investments in Pakistan to $10 billion instead of $1 billion, as envisaged earlier. This task assigned to the Saudi Development Fund is not arduous, in my opinion. Pakistan, a nation of 250 million people and varied topography and seasons, offers multiple avenues of investment.
One can foresee Pakistan fully exploiting the potential of its geography in the not-too-distant future.
Pakistan itself is a big market but will also be at the center of east-west and north-south connectivity in the foreseeable future. It has a massive, educated and skilled youth. The road and telecommunications infrastructure is of international standard. It has a port in Karachi and deep sea port at Gwadar. So it suits international investors to establish industries, hotels and hospitals in Pakistan. The country has vast potential for agricultural growth in the shape of virgin lands. It has unbounded pastures to raise additional livestock for meat supplies and dairy products.
Talking of modern industries, energy, defense equipment and information technology have great promise. Setting up a large oil refinery in Pakistan has been discussed by the two sides. Pakistan itself is a large market for refined oil, lubricants and residual products like bitumen. It has produced tanks and even aircraft in joint ventures with other countries. It has the experience of producing good quality light arms. Pakistan’s educated youth is ideal for developing IT software. Laptop computers and smart phones can be produced for a large local market. During a recent visit to Pakistan, Prince Fahd bin Mansoor Al Saud announced setting up a large technology house in Islamabad that would provide employment to 1,000 people.
The hospitality industry has great promise in Pakistan too. The northern areas, close to China, have temperate climate in summer, high mountain peaks and blue water lakes. This area needs an international airport and quality hotels for tourists. Hotels can also be established on the Makran coast which has pristine beaches and plenty of sunshine. Ancient cites at Takht Bhai, Taxila and Mohenjo Daro provide lots of insight to those interested in human history. Located on the ancient Silk Route, this land once witnessed the busy interaction between various civilizations. The exchange of goods was accompanied by the exchange of ideas as well.
One can foresee Pakistan fully exploiting the potential of its geography in the not-too-distant future. When China Pakistan Economic Corridor (CPEC) becomes functional, Gulf energy resources will flow to Xinjiang province of China through Pakistan. Conversely, China will send its exports to GCC countries and Iran by the same route. This will cut transportation costs for both parties considerably. In addition to this, imagine the possibility of trade between India, Central Asia and Russia via Pakistan. Setting up industrial units in Pakistan would, therefore, be a win-win situation for both parties as the extent of the market would be much wider.
The Crown Prince’s Vision 2030 revolves around the diversification of the Saudi economy. Investments abroad, including the ones in Pakistan, fit into the scheme of things envisaged by the Crown Prince. It will further strengthen the mutually beneficial symbiotic ties already in place. As the Kingdom’s stakes in Pakistan’s economy grow, the two countries will learn new technologies benefitting both economies and the two people as private sector interaction grows alongside.
- 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