(MENAFN- AzerNews)
by DND
A popular Eastern European saying is,“If you have buyers, you
will be no more a beggar, even if you are a trash collector.”
Once a student asked Russian President Vladimir Putin during a
university lecture why did Soviet Union collapse. Putin said there
might be thousands of reasons but the foremost was that the USSR
had hundreds of friends but fewer buyers for its production line.
This is what Pakistan faces today. Having rich in countless
products, its expensive but redundant administrative structure
never tried to find buyers and if anyone fortunately came, it ran
away after smelling fusty environment.
There is a phrase that there is a light at the end of the tunnel
and Pakistan found this ray in the form of the Special Investment
Facilitation Council (SIFC) initiated by COAS Gen Asim Munir and
Prime Minister Shehbaz Sharif. This single decision has changed the
horizon within the last two years and now buyers are showing
confidence in investing in Pakistan. The biggest of such kind is
coming from the time-tested brotherly country of Saudi Arabia.
A Saudi investor delegation arrived in Pakistan on a three-day
visit on Wednesday and this delegation is headed by Saudi Minister
of Investment Mr. Khalid Abdulaziz Al-Falih. The delegation
includes officials and companies from various sectors including
energy, mining, minerals, agriculture, business, tourism, industry,
manpower. Business-to-business meetings of the Saudi delegation
with Pakistani companies are scheduled for signing various
agreements. The arrival of the delegation is an important milestone
in Pakistan-Saudi trade relations. Saudi Arabia has shown full
confidence in Pakistan's economy, geographical position, natural
resources, and capabilities and Pakistan is a preferred country for
investment by the Saudi government and companies. The companies
that come to Pakistan have a track record of success. A 50-member
delegation of investors from more than 30 Saudi companies in
information technology, marine, mining, oil and gas,
pharmaceuticals, and aviation is here in Islamabad.
The visit will have far-reaching benefits for the Pakistani
economy and two-billion-dollar investment agreements are expected
between Saudi Arabia and Pakistan, thirty investment agreements
will be signed in various fields, the framework of which has also
been prepared.
According to Pakistan's Ministry of Foreign Affairs, in mid-July
of the year, after the agreement of a three-billion-dollar standby
arrangement between Pakistan and the International Monetary Fund
(IMF), Saudi Arabia deposited three billion dollars in the Central
Bank of Pakistan and extended the repayable period of these
deposits and this after this development, the IMF board approved a
new loan program of seven billion dollars for Pakistan.
The Pakistani government expects that in the coming years, Saudi
Arabia will invest heavily in various sectors, especially
agriculture, minerals, and mining. In April of this year, Saudi
Arabia's Foreign visited Pakistan along with a high-level
delegation and on this occasion, he said that there are
opportunities to increase investment in Pakistan and important work
in this regard will be done in the future. Pakistan has also
recently formed SIFC to facilitate investment from Gulf countries
to promote foreign investment and provide facilities to investors.
According to official data, about 2.5 million Pakistanis are living
in Saudi Arabia for employment, who send billions of dollars every
year as foreign exchange to the country, which has a key position
in Pakistan's economy.
Regarding the delegation's visit to Pakistan, Prime Minister
Shehbaz Sharif said in his address to the cabinet meeting that
there is a possibility that investment agreements of 2 billion
dollars will be concluded. On the other hand, while addressing a
ceremony in Islamabad, Deputy Prime Minister Ishaq Dar said that
the Saudi Minister will finalize business-to-business investment
projects whose value may exceed 2 billion dollars. Sources in the
Foreign Office say that about 30 agreements will be signed for
investment from Saudi Arabia for agriculture, information
technology, construction material, petroleum, power sector, food
security, meat, and Pakistani rice export.
In recent months, Saudi Arabia and Pakistan have been working
rapidly on bilateral trade promotion and investment agreements. At
the beginning of this year, the Crown Prince of Saudi Arabia,
Muhammad bin Salman, had also announced an investment package of
five billion dollars for Pakistan. Pakistan is keen to partner with
its regional allies in trade, defense, energy, and other sectors to
overcome the prolonged economic crisis.
Charity to business relations
Instead of seeking aid from Saudi Arabia, Pakistan has made a
big decision to trade with it. Trade relations between Pakistan and
Saudi Arabia seem to be moving towards a new milestone, where a
stronger investment-based relationship will be deployed and sources
in the Ministry of Finance claim that by 2027, the total Saudi
investment is likely to be more than 5 billion dollars.
Finance Ministry confirms that frameworks have been prepared for
investment agreements with Saudi Arabia and the total investment
will be more than 5 billion dollars by 2027. Saudi private sector
will invest about 1 billion dollars in Pakistan and then the
private sector will increase the volume of investment by appointing
its local representatives in Pakistan.
MBS-A visionary Leader
Crown Prince Muhammad bin Salman (MBS) is changing the country
through his Vision 2030 reform strategy and Saudi Arabia announced
significant changes to investment law aimed at attracting
international investors. The amended law provides for investors'
rights and freedoms in a robust framework designed to facilitate
and improve transparency and business activities and this move has
created thousands of private investors with Saudi Arab and
thousands of foreign companies are moving fast to invest within
Saudi Arabia or abroad in collaboration with Saudi private
investors. The amended law promises to protect investors by
ensuring the rule of law, fair treatment, and protection of
intellectual property along with property rights and making the
transfer of funds even easier. The new law makes the registration
process easier and complex licensing requirements are replaced by a
simplified system. New service centers are being introduced to
speed up the process of government transactions and investment. The
new law includes several investment-friendly measures including
civil transaction law, private sector partnership law, companies
law, bankruptcy law, and the creation of special economic zones for
achieving a thriving economy; to diversify its economy and create
dynamic job opportunities for its citizens. This will happen
through commitments to education, entrepreneurship, and innovation,
including diversifying the nation's economy through the ongoing
privatization of state-owned assets, including establishing a
sovereign wealth fund that will be financed through the partial IPO
of Saudi Aramco; unlocking underdeveloped industries such as
manufacturing, renewable energy, and tourism; modernizing the
curriculum and standards of Saudi educational institutions from
childhood to higher learning. By 2030, Saudi Arabia will have at
least five universities among the top 200 universities in the
world; and refocusing on small and medium-sized enterprises (SMEs)
by encouraging financial assistance. Increasing the contribution of
SMEs to GDP from 20 to 35 percent by 2030.
MBS's special interest in Pakistan
Saudi Arabia has decided to start an investment package in
Pakistan with 5 billion dollars after a historic meeting of PM
Shahbaz Sharif with Saudi Crown Prince Muhammad bin Salman meetings
when Sharif visited him at Al-Safa Palace, Makkah after assuming
the charge of PM ship in 2022. Since the Sharif family has a long
history of personal relationships with the Royal family of Saudi
Arabia, the relationship between the MBS and Sharif brothers is
quite close. It must be remembered that the Sharif family lived in
Saudi Arabia after late General Musharraf sent former prime
minister Mian Nawaz Sharif into exile. Saudi Royal family gifted
Saroor Palace to the Sharif family who lived there for years.
Moreover, COAS Gen Asim Munir also served for a long tenure in
Saudi Arabia therefore Saudis know personally the military and
civil leadership, and having full confidence in both, MBS offered
Pakistan a new era of relation of being a seller instead of being a
charity receiver.
Involvement of the Public Investment Fund of Saudi
Arabia
The Public Investment Fund of Saudi Arabia considers mining to
be important and for them, investing in mining is a key initiative
among the 13 key investment sectors. Under the Fund, government
institutions and the private sector are offering business
opportunities to Pakistan that are not offered to any country in
the South Asian region. Both Saudi Arabia and Pakistan working
together will have mutual benefits while it can also boost
Pakistan's mining skills and capabilities. Saudi Fund will also
invest in Rico Dick, a coal and gold mining project located in the
mineral-rich region of Balochistan. After several sessions on
investment, the final phase now focuses on how to balance the
proportion of economic participation in the project.
MBS's plan represents a significant pivot towards
more diversified and sustainable relations with Pakistan, catering
demands of the future and benefiting the citizens of both
countries. However, this new outlook needs very responsible conduct
from Pakistan
Saudi Arabia's interest in investing in Pakistan can
significantly change the mineral landscape of Pakistan with its
public investment fund worth more than one trillion dollars, is now
ready to invest to support the development of Pakistan's mining
industry. Minerals such as copper are essential for lithium
batteries and play an important role in the energy transition and
the development of a renewable economy. However, many of these
minerals are found in geopolitically unstable places, which can
make mining difficult. Pakistan also has copper and gold reserves
which attracted the attention of Saudi Arabia. Pakistan's renewable
energy resources in the global context.
Pak-Saudi Trade indicators
During the first half of this fiscal year, bilateral trade
between Pakistan and Saudi Arabia was recorded at 2.4 billion
dollars. Pakistan's exports were $262.58 million and Saudi Arabia's
exports were $2.219 billion. Pakistan and Saudi Arabia have been
working together rapidly to expand mutual trade and investment
agreements. Crown Prince Mohammed bin Salman has also reiterated
Saudi Arabia's commitment to accelerating a five-billion-dollar
investment package. Both countries have strong trade, defense, and
cultural ties. More than 2.7 million Pakistani expatriates live in
Saudi Arabia, a major source of remittances to cash-strapped
Pakistan. Saudi Arabia has often helped Pakistan in the past
Shah Salman Relief Center and Pakistan
Shah Salman Relief Center signed four joint cooperation programs
with the National Disaster Management Authority, National Human
Development Commission, Pakistan Red Crescent Society, and Kashmir
Earthquake Reconstruction and Rehabilitation Program 'ERA'. The
objective of this agreement is to support the reconstruction of
communities affected by natural disasters in Pakistan. The projects
benefit approximately 360,000 people directly and 690,000 people
indirectly at a total cost of USD 14,223,762. Under these
agreements, 1,000 permanent housing units will be built for
flood-affected families, providing shelter to around 7,000 people
in Khyber Pakhtunkhwa and Punjab provinces. Each house is designed
with two bedrooms, a kitchen, and a kitchen. The center will also
establish 300 community schools equipped with solar energy for
clean drinking water across Pakistan. These schools will serve
around 15,000 children, while over 100,000 people will indirectly
benefit upon their completion. Four secondary schools will be
established in the Kashmir region and will provide a safe learning
environment for 3,400 students and contribute to the long-term
development of the region. Along with this, a national logistics
warehouse for the National Disaster Management Authority will be
established in the capital Islamabad, which will significantly
increase the capacity to store and distribute relief goods during
emergencies. 22 service facilities, including schools, health
centers, and water projects previously established by the state in
disaster-affected areas in Pakistan, to improve access to
education, health care, and clean water will be restored.
The Future with Responsibilities
Pak-Saudi relationship is entering into a bold and comprehensive
relationship, aimed at reducing Pakistan's dependence on loaning
from the Kingdom and diversifying economic relations through
developing private sector partnerships and also finding
opportunities in service sectors such as vocational education,
health, infrastructure, recreation, and tourism. Crown Prince
Mohammed bin Salman's plan represents a significant pivot towards
more diversified and sustainable relations with Pakistan, catering
demands of the future and benefiting the citizens of both
countries. However, this new outlook needs very responsible conduct
from Pakistan's private as well as public sectors because both
sectors have to enhance their capacity to align with the demands of
Saudi investors who deal at a global level. Any mishandling of
greater opportunities would be disastrous for Pakistan which would
harm the great trust MBS is showing in Pakistan.
The views and opinions expressed by guest columnists
in their op-eds may differ from and do not necessarily reflect the
views of the editorial staff.
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