Saudi Arabia’s multibillion-dollar investment plans: Comforting prospects for Pakistan
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Pakistan’s agriculture, information technology, mineral, and mining sectors have received great attention from international investors of late. On September 4, Caretaker Prime Minister Anwaar-ul-Haq Kakar claimed that Saudi Arabia will invest $25 billion in Pakistan’s various sectors, including the above-mentioned, following a two to five year timeframe. Indeed, Saudi billion-dollar investments will encourage other Gulf states and multinational companies to invest in Pakistan.
Pakistan’s mineral and mining sector is up-and-coming. The estimated worth of precious minerals is up to $6 trillion. Nonetheless, tapping deposits of minerals is an arduous task. Lack of funds, bureaucratic hurdles, lack of mineral investment-friendly policies, and weak state writ in minerally rich regions in provinces of Balochistan and KPK, thwart exploration and mining initiatives. To address these challenges, the Pakistan government has formed a hybrid civil-military Special Investment Facilitation Council (SIFC) this year.
The SIFC is designed for fast-track decision-making, i.e., a one-window, one-stop, and bureaucratic red tape-free operation. From the beginning, the Council has been working to attract foreign investors, particularly GCC and Chinese investors. Besides, it is also encouraging Pakistani financiers’ investments in the energy, IT, minerals, defense, and agriculture sectors.
Pakistan needs help to ensure $100 billion in investments from Arabian Gulf nations, especially Saudi Arabia, to alleviate its economic suffering. To achieve this, the government approved 20 projects, including Saudi Aramco Refinery, hydropower projects of 245 MW in Gilgit-Baltistan, the establishment of cloud infrastructure, and telecom infrastructure deployment to pitch for multibillion-dollar investments from the Gulf and other states under the SIFC umbrella.
Pakistan needs help to ensure $100 billion in investments from Gulf nations, especially Saudi Arabia, to alleviate its economic suffering.
Zafar Nawaz Jaspal
Besides contemplating investments in mineral and mining sectors, Saudi Arabia has supported Pakistan in improving its agricultural productivity. Pakistan’s agricultural productivity is far lower than the world’s best averages for major commodities due to the high cost of production, low average yield, and low-quality produce. Moreover, the absence of soil testing on farms, the unavailability and poor quality of fertilizers, loss during harvest, a lack of warehouses, machinery, and equipment, and deterioration in soil fertility have increased farmers’ woes.
The government is introducing structural reforms in the agriculture sector. In July, it established a Land Information and Management System, Center of Excellence ((LIMS-CoE), to modernize its agriculture. Significantly, Saudi Arabia agreed to provide an initial $500 million investment to set up the facility.
Another flagship investment project of the Saudis will be a greenfield oil refinery at Gwadar. On July 27, Saudi Arabia’s Aramco signed a memorandum of understanding with four Pakistani state-owned oil companies (OGDCL, PSO, PPL, and GHPL) to build a $12 billion refinery with a daily production capacity of 300,000 barrels.
Pakistan’s annual IT export potential is nearly $3.5 billion, which can be boosted to $10 billion in the short term by undertaking strategic interventions in the IT industry and online freelancing. The Pakistani IT industry employs about 150,000 people and has an export of approximately $2.6 billion. Islamabad has been working closely with Riyadh to explore IT investment opportunities. This is because Saudi Arabia is the fastest-growing international market in technology adoption, and its government ranks among the top five countries utilizing technology.
Last week, Saudi-based multinational Unifonic showcased its products at a three-day exhibition titled ‘Declaring Pakistan the Regional ICT Hub’ at the Expo Center, Karachi. Khurram Rahat, senior country director of Unifonic, said, “We have started our operations, and we see Pakistan as a big market because it’s a country with 225 million people, a very vibrant and upcoming e-commerce scenario from our perspective.”
Indeed, Saudi Arabia has shown incredible generosity to Pakistan, which is encountering a severe economic crisis and a $25 billion investment package could assist Islamabad in addressing its financial woes, such as spiralling inflation and exorbitant petroleum and electricity prices.
The SIFC’s unified approach attracts foreign investors, but alleviating the deteriorating law and order situation is equally significant. Without structural reforms in civil institutions, governance and sustainable growth is a fantasy.
Saudi Arabia’s willingness to invest billions in various sectors immensely contributes to stabilizing the country’s economy and deepens the multifaceted relationship between Islamabad and Riyadh.
- Dr. Zafar Nawaz Jaspal is an Islamabad-based analyst and professor at the School of Politics and International Relations, Quaid-i-Azam University. E-mail: [email protected] Twitter: @zafar_jaspal
