Saudi Arabia-Pakistan two-way trade hit $4.7 billion in 2013
Saudi crown prince Salman bin Abdul Aziz has brought to Pakistan big plans for Saudi investment and multiplying foreign trade, as relations between the two countries warm up after Riyadh's more than five years of cold shouldering.
The sectors discussed for investment and cooperation include defence and production of arms and equipment, energy, 'halal' food, infrastructure development, construction, manpower export, building big dams to produce hydel electricity and irrigation, agriculture, information technology (IT), oil and gas, mining, telecom, and small and medium enterprises.
The two sides decided to conclude Memorandum of Understandings (MoUs) and agreements on a fast track basis in these sectors which are likely to be taken up. Some of the other fields include labour, manpower, Islamic Affairs and endowments, sports and an agreement to encourage and protect mutual investment in the two countries, a senior minister said.
The possibilities of large Saudi investment, major trade turn-over, and oil supplies on a deferred payment basis, have remained on hold for five years. This was because Pakistan Peoples Party government headed by President Asif Ali Zardari, ruled Pakistan between March 2008 and May 2013. The reason, chiefly was Zardari's more enthusiastic relations with Saudi rival Iran, and his frequent visits to Tehran. Now with Prime Minister Nawaz Sharif back in the saddle, Saudi Crown Prince, Foreign Minister, Defence Minister, and top business Corporate heads, have resumed visits to Pakistan, particularly, in recent past.
Sharif is regarded highly in Riyadh as he had spent several years in Saudi Arabia, following a deal between the Saudi Royal family and the then President-General Pervez Musharraf who had overthrown Sharif, arrested him, and agreed to exile him to Jeddah. It had happened in the wake of October 12, 1999 overthrow of Sharif's civilian government. Sharif is also regarded highly as he had become the first and the only head of an Islamic sate which has experimented and exploded the Islamic world's only nuclear bomb on May 28,1998.
Crown Prince Salman's meetings with Sharif and Pakistani Defence Minister Khawaja Asif, are considered to be very significant in the context of enlarging and diversifying arms and defense equipment from Pakistan for supply to Saudi Arabia. This cooperation is an ongoing one, but the future scale is likely to be much larger.
The top leaderships and technical experts will finalise these plans. Crown Prince Salman, during the talks, discussed "ways to further promote bilateral cooperation in the defense sector.
He appreciated the capacity of Pakistan defence industry, and both sides showed keen interest in extending cooperation in the field of defence and defence training, top officials said.
The high-level Saudi corporate chiefs and business delegation, accompanying the Crown Prince, discussed investment opportunities and cooperation in various sectors, with Pakistan's Board of Investment (BoI), and the Pak-Saudi Business Chamber, and the corporate leaders. Special Assistant to Prime Minister Sharif on Investment and Chairman of BoI Miftah Ismail coordinated the interaction between the two sides.
The potential investments were identified and discussed in detail. The two sides signed agreements on export credits to Pakistan. These include $125 million credit for purchase of urea from Saudi company Sabic and $58 million by Saudi Fund for Development for Pakistan's Golen Gol Hydropower project in Chitral. Vice-chairman and managing director of Saudi Development Fund Yousaf Ibrahim Al-bassam, and Pakistani Secretary for Economic Affairs Nargis Sethi, signed the agreements.
Prime Minister Sharif said: "The large Pakistani community, consisting of more than 1.5 million, in Saudi Arabia, is serving as a bridge between the two brotherly countries and plays a positive role in the development of Saudi Arabia, as well as Pakistan's economy through its annual home remittances of over $4 billion."
Over the last five years, the Saudi foreign direct investment (FDI) in Pakistan totalled only $275 million, which does not reflect the real potential, the two sides agreed.
"It can be multiplied many times as several sectors of interest to Saudi government and private investors are now available in Pakistan," they said. Pakistani bourses are offering 37 per cent annual dividend on shares invested in this country — one of the highest in the world.
Miftah said: "Pakistan is keen to take our bilateral trade and investments to new heights. The mutual interaction of businessmen and entrepreneurs of the two countries will help explore new avenues for investment and trade."
"Pakistan is pursuing a very liberal and transparent investment policy. I invite Saudi companies to take advantage of these most attractive investment opportunities in various sectors including oil and gas, mining, energy, IT, telecoms, food and agriculture," Sharif said during his meetings with Saudi Crown Prince and the top business leadership, accompanying him.
Saudi Arabia and Pakistan have identified steps to be taken to boost their two-way trade. The volume of their two-way trade in 2013 was $4.7 billion which they said is not at par with the potential that exists in both countries. Pakistani exports to Saudi Arabia were only $488 million.
Shaukat Ahmed, president Federation of Pakistan Chambers of Commerce & Industry, asked investors from Saudi Arabia to focus on Pakistan's energy and food processing sectors. "Pakistan is a major producer of a variety of food items including milk, meat, dates and other items," he said.
He invited Saudi investment in these sectors, besides engineering services and manpower training and drew Saudi investors attention towards Pakistan's high quality medicines, cement and other industrial products. Pakistan's 57 million labour force, also, offers, what one official said, "matchless opportunities for Saudi Arabia."
Ali Abdullah Ali Al Munajem, head of the Saudi delegation and chairman of the Saudi-Pakistan Business Council, said: "Saudi investors want to make heavy investments in different sectors in Pakistan. They also remain ready to facilitate Pakistani investments in Saudi Arabia."
He advised Pakistani businessmen to explore the Saudi market to find out what Pakistani products are popular in Saudi Arabia. With lots of determination, and promising business in store for the two countries, opportunities are now inviting investors to come forward.
Views expressed here are his own and do not reflect newspaper's policy