The Strategic Mutual Defence Pact (SMDP) between Pakistan and Kingdom of Saudi Arabia (KSA) demonstrates strength and dependability of their partnership. Despite all the propaganda and negativity, the relationship is progressing rather than thriving. However, economic ties remain limited to only a few specific areas, which is well below its potential. Neither country has fully exploited available opportunities and potential. There could be many reasons, but the most significant ones are lack of understanding of each other’s economies and market structures, as well as their needs. Pakistan has struggled to comprehend the Saudi market and its requirements, including business environment and diversification efforts outlined in Vision 2030. Meanwhile, KSA’s focus has also remained on the labour force, oil exports, and often on providing assistance during financial crises. The true potential of Pakistan has not been on the Saudi radar.
In this context, both countries need to thoroughly examine each other’s systems across all sectors to gain a better understanding of each other’s economy, market, policy choices and economic goals. Pakistan should strive to comprehend Saudi Arabia’s diversification drive under Vision 2030. Saudi Arabia should explore URAAN Pakistan, the Five Es framework, and the CPEC.
In their analysis, both should be realistic, follow economic logic and develop wise, practical, fact-based policies. These policies will ensure deeper cooperation and stronger linkages in diverse areas.
However, to fully capitalise on opportunities, Pakistan and Saudi Arabia need to establish a strategic cooperation framework. Sporadic efforts or scattered interventions will be ineffective. They should aim for a model similar to China-Pakistan Economic Corridor. It is recommended both countries create Saudi-Pakistan Economic Corridor (SPEC) and develop a long-term plan like CPEC. Under SPEC, they should focus on most productive sectors instead of pursuing an arbitrary list. An overview analysis of both economies and Visions suggests they should explore following areas under the SPEC.
The first area of cooperation should be labour force, where both countries have extensive experience and a long history of collaboration. The partnership can be further strengthened, as Saudi Arabia, under Vision 2030 and its diversification drive, will need workers in various fields. With a young population, it presents a good opportunity for Pakistan. It will be a win-win situation for both. It will help Pakistan engage its youth in productive activities and generate much-needed foreign income. Saudi Arabia will get a dependable labour force that understands cultural sensitivities of Saudi people.
However, Pakistan must be cognizant its old policy of exporting unskilled labour will no longer be effective. After Vision 2030, KSA needs a qualified and skilled workforce. For instance, in tourism industry, visitors from all over the world will arrive in KSA, and to serve them well, KSA needs a workforce with hotel management skills. The same goes for other sectors. Therefore, Pakistan should focus on building a pool of skilled workers.
Second, KSA aims to develop high-quality human capital, which is considered crucial for diversification and achieving goals of Vision 2030. Therefore, it invests in education and skill development. Pakistan can benefit from this by exporting doctors, educators, IT experts and skilled technicians to Saudi Arabia.
Third, Saudi Arabia is investing in technology sectors, such as AI, ICT and big data, and working to establish a reliable technology infrastructure and data centres for the region. Vision 2030 aims to make KSA a regional leader in technology. Pakistan can capitalise on opportunities presented by this initiative, as the country has a strong technology development market, a thriving IT sector, and a pool of qualified professionals.
The quality of Pakistani human resources is evident from recent conflict between India and Pakistan. Pakistan can provide IT products at affordable prices. It will also help protect Saudi Arabia from Western blackmail and back-end spying. Therefore, it is strongly recommended both countries build and strengthen their technological cooperation.
Saudi Arabia is expanding its entertainment and sports industries, creating new opportunities for Pakistan. Pakistan is a leader in various sports and entertainment sectors. For example, Pakistan has a strong reputation in cricket, squash and hockey, among other sports. The country has also produced major stars in entertainment. Therefore, a strategic and well-planned approach can enable Pakistan to benefit from this growing market. One option for KSA and Pakistan is to consider jointly developing PSL cricket brand. Additionally, they can explore co-producing sports goods and entertainment products.
Apart from these areas, there are several sectors where both countries can initiate work immediately, such as food, agriculture and defence sectors, which are considered low-hanging fruit.
With a population of 36 million and heavy dependence on imported food, the country imports over 80pc of its food to meet domestic demand. The food market and imports are expected to grow in coming years. Three key factors will drive a significant rise in demand.
First, the population is increasing. Second, living standards are rising, prompting people to seek a wider variety of food products and goods. Third, increasing tourism will also boost the demand for food.
These factors make Saudi Arabia an ideal market for Pakistani agricultural and food products, especially in Halal meat, dairy products, fruits and vegetable sectors. Additionally, Pakistan’s proximity makes it a preferred location for importing food, providing Saudi Arabia with affordable options and helping people access fresh fruits and vegetables. Despite its significant potential and availability of Halal food, unfortunately, share of Pakistani commodities and products in Saudi imports remains relatively small compared to other countries.
The KSA and Pakistan can also explore developing agricultural cooperation. Pakistan has a large amount of arable land, but it remains underutilised due to lack of investment. Saudi Arabia has enormous investment resources. Therefore, it presents an ideal opportunity for collaboration. Saudi investment will help improve agricultural sector’s performance and tackle poverty, as many farmers are impoverished. It will also create new sources of foreign income for Pakistan. In return, Saudi Arabia will receive high-quality food and a dependable partner that can ensure a stable food supply during crises, such as the Covid-19 pandemic.
Defence is another area where Pakistan and KSA can build a new era of cooperation and brotherhood under Vision 2030. Both countries already maintain strong, goal-oriented and reliable defence ties. Building on their previous efforts, they can explore new opportunities for collaboration. The goals of Vision 2030 for the defence sector can guide growth of their partnership.
According to Vision 2030, Saudi Arabia aims to reduce its dependence on imported defence products. In 2015, it imported 98pc of its defence needs, a concerning trend. In response, Saudi Arabia has committed to increasing its domestic production, aiming to meet 50 percent of its defence requirements locally by 2030.
The previous discussion suggests numerous opportunities exist for collaboration, and such cooperation will be mutually beneficial. However, to take advantage of these opportunities, they should establish permanent mechanisms to guide the partnership, such as SPEC. They can also declare CPEC and SPEC as sister initiatives.