Pakistan seeks $6bn for corporate farming from Saudi Arabia, other Gulf nations by 2028

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Updated 22 September 2023
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Pakistan seeks $6bn for corporate farming from Saudi Arabia, other Gulf nations by 2028

  • Arab News speaks exclusively to CEO of FonGrow, spearheading agriculture projects under new investment body
  • Pakistan in talks with Saudi companies like Al-Dahara, Saleh and Al-Khorayef for investment in corporate farming

ISLAMABAD: Pakistan is seeking up to $6 billion investment from Saudi Arabia, the United Arab Emirates (UAE), Qatar and Bahrain over the next three to five years for corporate farming, with the aim of cultivating 1.5 million acres of previously unfarmed land and mechanizing existing 50 million acres of agricultural lands across the country, the CEO of the company spearheading the initiative has said.

The development comes months after Pakistan set up a Special Investment Facilitation Council (SIFC) — a civil-military hybrid forum — to attract foreign funding in agriculture, mining, information technology, defense production and energy as the South Asian country deals with a balance of payments crisis and requires billions of dollars in foreign exchange to finance its trade deficit and repay its international debts in the current financial year.

Earlier this month, caretaker Prime Minister Anwaar-ul-Haq Kakar said Saudi Arabia and the UAE would invest up to $25 billion each in Pakistan over the next five years in the mining, agriculture and information technology sectors.

Initiatives in the agriculture sector under SIFC are being administered by FonGrow, which is part of the Fauji Foundation investment group run by former Pakistani military officers.

“We have estimated about $5-6 billion [investment from Gulf nations] for initial three to five years,” Major General (retired) Tahir Aslam, FonGrow’s managing-director and chief executive officer, told Arab News in an interview. 

He declined to share details about the breakdown of the investment from each individual country.

The CEO said the company was engaging with several Saudi companies like Al-Dahara, Saleh and Al-Khorayef to attract investment in the corporate farming sector. He did on elaborate on progress made so far in the discussions. 

Aslam said his company was also working on different investment models with the Saudi and UAE companies for corporate farming, including joint ventures.

“If they want to make direct investment, it is a corporate model. So, they will take an equal number of stakes in the company, and they get an equal number of positions in the governance [of the company]. So, it is going to be a joint company.”

About strategy and targets to mechanize farming, Aslam said FonGrow was working on a two-pronged approach to bring up to 1.5 million acres of new arable land under cultivation and modernize 50 plus million acres of land already being farmed.

This, he said, would require about “$25 million per each thousand acres and other for machinery, and setting up of infrastructure for value addition.”

FonGrow is aiming to set up corporate farms on over 100,000 acres in the next 5-7 years. The first such farm had already been established on over 5,000 acres of land in Khanewal, he said. 

“Next year, we will be starting our second farm on over 10,000 acres and we hope to develop the capacity to be able to develop 20 to 25 thousand acres every year,” Aslam said. “Mainly, we are starting in Punjab and then we are looking for lands. Wherever we get suitable lands, we will go to all the provinces.”

To a question about the source of capital to develop the land, the official said: “We have no issue of rupee capital availability for our project because ultimately it will bring returns to Fauji Foundation.”

“There is a small challenge that we are facing basically, which is of foreign exchange because the irrigation systems and the tractors and harvesters that we have to import, they need foreign exchange.”

Aslam said Pakistan’s corporate farming model envisioned that sixty percent of the crops would contribute to the country’s food security, and the remaining 40 percent would be exported mainly to Gulf countries to earn foreign exchange. 

He said Pakistan had received a first export order of Fauji cereal products from a Gulf nation, though he declined to name the country:

“It is a starting quantum [that] is about $25 million worth of products in one year. But I think as we break more grounds this will continue to increase in the coming years.” 

Responding to concerns about the army’s involvement in economic projects in Pakistan, he said the military was only contributing where requested by the civilian government.

“They [foreign countries] wanted an organization which provides continuity or security of their investment, that was the reason the army joined in and then the army also said we have such a large [investment] potential available,” the FonGrow CEO said.

“In the past also, the army has very willingly contributed to projects of nation-building and national importance … Army is playing its part, but no soldiers are involved.”


Saudi Aramco completes the acquisition of 100% equity stake in Chile's Esmax

Updated 15 sec ago
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Saudi Aramco completes the acquisition of 100% equity stake in Chile's Esmax

LONDON: Saudi Aramco completed on Friday the acquisition of a 100 percent equity stake in Chile’s Esmax Distribucion, a statement said.

More to follow...


Germany’s WIKA opens new plant in Dammam

Updated 01 March 2024
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Germany’s WIKA opens new plant in Dammam

DAMMAM: The vast industrial city, known as MODON, situated in the industrial patch of land lined by warehouses and factories in Dammam has a new factory in town. 

The well-established German WIKA group inaugurated their newest plant on Feb. 29, with the local state-of-the-art production facilities meant to streamline every step of their journey forward.

“This is a symbol of our bilateral relationship which consists of a myriad of business, economic, cultural and political relations,” German Ambassador to the Kingdom Michael Kindsgrab said to the crowd.

Kindsgrab, who flew in for the occasion, pointed out how this new plant served as an example of the ample opportunities recently made available to German companies in the Kingdom and would help to further deepen the close relationship between Germany and Saudi Arabia. 

He cited this as his first visit to the Eastern Province and seemed to immensely delight in the cultural offerings on stage when local performers welcomed him — and WIKA — in traditional folk song and dance in between the various speeches.

The launch also brought together Germans and Saudis, as well as the diverse staff at WIKA.

“On behalf of Saudi Aramco, I would like to extend my warm thanks, appreciation and congratulations to WIKA for inaugurating WIKA Saudi Arabia,”  Fawaz Al-Sahan, manager of process automation system division at Saudi Aramco said, adding: “Today I’m honored to celebrate this success with you because we believe that localization has great benefits to both of our companies.

“In terms of scope, I believe that this is the largest instrumentation facility in the Kingdom. I trust this facility will serve as a WIKA hub for the Middle East.”

Alexander Wiegand, chairman and CEO of WIKA, also spoke to the crowd and offered his heartfelt gratitude to those who helped his family-owned company excel over the decades. He lovingly recalled the days when his mother was in charge and how this new facility in Dammam would be an extension of the WIKA family that is celebrating 78 years of operation in 2024.

“WIKA’s expansion in Saudi Arabia will create more than 100 new jobs over the next few years, it thus makes an important contribution to the local job market. In the new plant, German top technology is implemented by a qualified team with in-depth knowledge of the local market. This ensures that customers are supplied with high-quality instrumentation solutions tailored to their specific needs,” Wiegand said.

The factory covers a total area of 3,000 sq. m. Supplied

The new factory, with the logo colors of orange and blue, aims to enable WIKA to serve customers in Saudi Arabia, and the region at large, even more extensively. 

In the future, products for measuring pressure, temperature, level and flow will be manufactured locally on a total area of 3,000 sq. m. This would include diaphragm seals, instrumentation valves and thermometer thermowells for connecting measuring instruments to critical processes. The range of these services will be further expanded.

WIKA, as it was noted at the ceremony, sees itself as a partner in Saudi Arabia’s economic development, especially in the area of expanding economic sectors alongside oil and gas and diversifying beyond it. The group of companies has been present with sales subsidiaries in the Kingdom for over 20 years with about 12,000 employees worldwide, and counting.

In keeping with the Saudi Vision 2030 and the Saudi Made initiative, the launch also had its eye to the future.

“We are not thinking in quarters, we are thinking in decades,” Wiegand concluded.


Arab finance ministers discuss multilateralism, economic development at G20 meeting in Brazil

Updated 01 March 2024
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Arab finance ministers discuss multilateralism, economic development at G20 meeting in Brazil

  • Egypt, UAE attended as guests alongside Saudi Arabia, the only Arab G20 member
  • Saudi minister: Fair trade practices must be promoted ‘to enhance economic opportunities for developing countries’

SAO PAULO: The meeting of G20 finance ministers and central bank governors that took place in Brazil on Feb. 28-29 could not be concluded with a joint statement as there was no consensus over the conflicts in Ukraine and Gaza.

But many of the leaders who attended shared similar concerns regarding the topics suggested as priorities by Brazil, which is the current president of the forum, especially reducing inequality and building multilateral cooperation to address the most pressing global issues such as sustainable development and financial stability.

Three Arab nations took part in the meeting. Besides Saudi Arabia, which is the only Arab member of the G20, Egypt and the UAE attended as guests. They manifested concurrent views regarding the central themes of the forum.

Finance Minister Mohammed Al-Jadaan, who headed the Saudi delegation along with Saudi Central Bank Gov. Ayman Al-Sayari, affirmed during one of the event’s sessions that “addressing debt vulnerabilities in low-income countries cannot happen without multilateral cooperation from all stakeholders, including creditors, debtors, international financial institutions, and the private sector,” the ministry’s media center reported.

Al-Jadaan added that fair trade practices must be promoted “in order to enhance economic opportunities for developing countries.”

Regarding low-income nations’ debt, he said implementation of the G20 Common Framework, an initiative launched a few years ago to support poor countries with unsustainable debt, must go on.

Mohamed Hadi Al-Hussaini, the UAE’s minister for financial affairs, expressed his country’s commitment to reducing inequalities through financial inclusion, Emirates News Agency reported.

He cited the Financial Infrastructure Transformation Programme, launched in 2023 with the goal of speeding up the digital transition in the financial sector.

The initiative shares the same principles as the G20-supported Global Partnership for Financial Inclusion.

Al-Hussaini said innovative instruments may have a relevant role in promoting development, mentioning green bonds and sukuk, a Shariah-compliant bond used in Islamic finance.

He also addressed the UAE’s efforts regarding energy transition and combating climate change.

The Emirati government has been helping vulnerable nations enhance their climate resilience. The UAE pledged $200 million to the Resilience Sustainability Trust in December 2023.

Al-Hussaini said the UAE decided to prioritize multilateral cooperation during the 13th World Trade Organization Ministerial Conference, which was held in Abu Dhabi on Feb. 26-29 and discussed new models for global trade.

Egyptian Finance Minister Mohamed Maait emphasized in his speech that developing nations have been impacted by challenging situations in recent months, something that affects their budgets and their ability to meet their citizens’ needs amid growing inflation crises, Ahram Online reported.

He said international cooperation is fundamental to support countries that are struggling to maintain their efforts for social protection.

He added that Egypt gained great experience in relief programs in recent years. During the COVID-19 pandemic, the country increased its support programs in order to assist vulnerable social segments at a time of economic hardship and high inflation. Any reform needs social programs if the goal is to obtain success, he stressed.

Al-Jadaan had bilateral meetings with Maait, Ilan Goldfajn, who heads the Inter American Development Bank, the French delegation and US Treasury Secretary Janet Yellen. Al-Sayari met with his Turkish counterpart.

According to a statement released by the US Treasury Department, Al-Jadaan and Yellen discussed the Saudi economy, “the progress of its reform program” and the need to “work together effectively in both bilateral and multilateral settings.”

Al-Hussaini met with the finance ministers of South Africa and Germany, as well as the executive president of the Development Bank of Latin America and the Caribbean.


Oil Updates – crude rises, markets await OPEC+ decision amid mixed demand drivers

Updated 01 March 2024
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Oil Updates – crude rises, markets await OPEC+ decision amid mixed demand drivers

SINGAPORE: Oil prices edged up on Friday and were set to end the week modestly higher as markets awaited an OPEC+ decision on supply agreements for the second quarter amid differing demand indicators for key consumers US and China, according to Reuters.

Brent futures for May climbed 31 cents, or 0.38 percent, to $82.22 a barrel by 9:45 a.m. Saudi time, while US West Texas Intermediate for April rose 24 cents, or 0.31 percent, to $78.50.

WTI is on track for at least a 2.5 percent increase this week, while Brent is holding near last week’s settlement price. Brent has hovered comfortably above the $80 mark for three weeks.

“Brent crude prices continued to trade sideways this week ... Brent at $83/bbl has shown recent strength although fundamentals remain tilted to oversupply,” said BMI analysts in a client note.

“Expectations of a continuation of OPEC+ production cuts into Q224 is also weighing on sentiment as soft demand is expected to persist ... However, timespreads for Brent futures contracts have widened. The move to stronger backwardation (market structure) will be supportive of a more bullish stance for prices as markets are pricing in tightening in the months ahead,” the analysts added.

A Reuters survey showed the Organization of the Petroleum Exporting Countries pumped 26.42 million barrels per day this month, up 90,000 bpd from January. Libyan output rose month-on-month by 150,000 bpd.

A decision on extending the cuts is expected in the first week of March, sources have said, with individual countries expected to announce their decisions.

Increasing possibilities of OPEC+ continuing with the supply cuts beyond the first quarter, potentially till the end of 2024, will likely keep oil prices above $80 a barrel, said DBS Bank energy sector team lead Suvro Sarkar.

Strong expectations of Saudi Arabia keeping term prices of crude it sells to Asian customers little changed in April from March levels also underpinned the market.

Supporting prices, the Federal Reserve’s preferred inflation gauge, the US personal consumption expenditures index, showed January inflation in line with economists’ expectations, reinforcing market bets for a June interest rate cut. This in turn could lower consumer costs and spur fuel buying activity.

However, a mixed bag of February purchasing managers’ index data from China, the world’s top oil consumer, capped price gains.

China’s manufacturing activity in February contracted for a fifth straight month, an official factory survey showed on Friday, raising pressure on Beijing policymakers to roll out further stimulus measures as factory owners struggle for orders.

“Demand side we concur that 2Q will have hiccups and we are projecting Brent to average lower in 2Q24 compared to 1Q24, before rebounding in 2H24 on the back of the potential rate cut scenario, which should boost fund flows toward riskier assets,” said DBS Bank’s Sarkar. 


Inter-Arab trade at $700bn: Union of Arab Chambers

Updated 29 February 2024
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Inter-Arab trade at $700bn: Union of Arab Chambers

  • Secretary-general attends World Trade Organization Ministerial Conference in Abu Dhabi
  • ‘The Arab region’s presence in such events aids in shaping policies for freer global trade’

SAO PAULO: Inter-Arab trade stands at $700 billion, constituting 10-11 percent of global trade, the secretary-general of the Union of Arab Chambers said on Thursday during the 13th World Trade Organization Ministerial Conference in Abu Dhabi.

In an interview with Emirates News Agency on the sidelines of the event, Khaled Hanafy highlighted the potential for increased trade, expanded business opportunities, job creation and economic growth across the Arab world through standardization, improved logistics and private sector engagement.

The UAE’s strategic positioning and robust infrastructure make it a preferred hub for international businesses seeking access to international markets, Hanafy said.

Its hosting of prestigious events such as COP28 and the WTO Ministerial Conference underscores its global leadership, communication prowess and influence in international forums, he added.

“The Arab region’s presence in such events aids in shaping policies for freer global trade,” Hanafy said, adding that the conference strengthens the UAC’s position as a representative of the Arab private sector within the WTO, potentially leading to observer status in key technical committees.

This, he said, would empower the UAC to exert greater influence on decisions shaping international trade flows.

The Arab world’s private sector contributes over 75 percent of the region’s gross domestic product, roughly equivalent to $3 trillion. This sector also plays a vital role in employment generation.

Hanafy emphasized the need for even greater private sector involvement in trade to foster business growth and achieve sustainable development across Arab nations.

He championed the UAC’s role in fostering trade cooperation within the Arab world, encompassing both commercial and investment activities.

Hanafy also advocated for the establishment of the Arab Common Market, outlining essential principles for achieving economic unity across the region.

This was the official debut of the Arab private sector at a WTO Ministerial Conference.

With unprecedented access granted to businesses at the event, representatives from regional chambers of commerce seized the opportunity to voice their concerns and aspirations.

Hanafy emphasized the significance of this inclusion at a roundtable event on the sidelines, saying: “This is the first time the Arab private sector is welcomed. The Arab private sector must be here.

“This is a great opportunity. There’s an objective: We want to see the Arab private sector have a larger role.”

Promoting economic cooperation and integration across the Arab world, the UAC unites chambers of commerce, industry and agriculture from the 22 Arab League member states.

It supports governmental and civil society initiatives to strengthen regional economic ties in commerce, industry, agriculture, finance, investment and services.