Friday July 19, 2024

Huge investment deals likely as Saudi delegation arrives

He was received by his counterpart Mohammad Ishaq Dar and Ambassador of Saudi Arabia Nawaf bin Saeed Ahmad Al-Malkiy

By Khalid Mustafa & Mariana Baabar
April 16, 2024
Foreign Minister Ishaq Dar (centre) receives his Saudi Arabian counterpart Prince Faisal Bin Farhan Al Saud (left) at Nur Khan Airbase Rawalpindi on April 15, 2024. — PID
Foreign Minister Ishaq Dar (centre) receives his Saudi Arabian counterpart Prince Faisal Bin Farhan Al Saud (left) at Nur Khan Airbase Rawalpindi on April 15, 2024. — PID

ISLAMABAD: Foreign Minister of the Kingdom of Saudi Arabia Prince Faisal Bin Farhan Al Saud, heading a delegation, arrived on a two-day visit at Rawalpindi’s Nur Khan Airbase to a red-carpet welcome, and a static guard of honour.

He was received by his counterpart Mohammad Ishaq Dar and Ambassador of Saudi Arabia Nawaf bin Saeed Ahmad Al-Malkiy, as a military band played in the background.

“This visit is aimed at lending positive impetus to enhanced bilateral cooperation and mutually rewarding economic partnership,” said the Ministry of Foreign Affairs in a statement on Monday.

Coming on the heels of the recent visit by Prime Minister Shehbaz Sharif to Saudi Arabia, both countries have agreed to expedite the first wave of a planned $5 billion Saudi investment package for Pakistan. Prince Faisal is scheduled to call on PM Shehbaz Sharif, President Asif Ali Zardari and Chief of Army Staff (COAS) General Asim Munir during his visit. Foreign Minister Ishaq Dar and Prince Faisal will lead their respective delegations in the engagement at the Special Investment Facilitation Council (SIFC). Both will also have delegation-level talks at the Foreign Office.

The delegation accompanying the Saudi foreign minister consists of Saudi Minister of Water and Agriculture Engineer Abdul Rahman Abdul Mohsen Al-Fadley, Minister of Industry and Mineral Resources Bandar Ibrahim AlKhorayef, Deputy Minister of Investment Badr AlBadr, Head of Saudi Special Committee Mohammad Mazyed Al Towaijri, and senior officials from Ministry of Energy and Saudi Fund for General Investments.

Meanwhile, Pakistan Television, in a statement, said that the diplomatic isolation that Pakistan suffered in the last few years (2018-2022) had come to an end. “A new closeness, innovation and warmth is being seen in Pakistan’s relations with its always reliable and brotherly countries, especially Saudi Arabia,” the statement added.

While there has been no mention of Iran in the official statements, it is but given that the Iranian attack on Israel and the uncertainty that had arisen in the region would be an issue for discussion.

Both Pakistan and Saudi Arabia have called for restraint with Riyadh in a statement saying it was deeply concerned and called for the “highest levels of self-restraint”. The FO said it was watching the situation in the Middle East with “deep concern”.

“It is now critically urgent to stabilise the situation and restore peace,” it said. “We call on all parties to exercise utmost restraint and move toward de-escalation,” the statement added.

Meanwhile, Federal Minister for Commerce Jam Kamal Khan, talking to The News exclusively on the expected outcome of ongoing visit of the Saudi delegation, said the Kingdom of Saudi Arabia (KSA) is the biggest economy in the Gulf region with GDP reaching $1.1 trillion in 2022. He said that apart from expected government-to-government (G2G) investment deals on Reko Diq and other sectors of economy during the two-day visit of Saudi delegation, Pakistan is also eying expected progress on business-to-business (B2B) deals for joint ventures (JVs) between top entrepreneurs of Pakistan and Saudi Arabia.

He said: “A very important delegation from KSA is currently on a two-day visit to Pakistan as a follow-up of a meeting between PM Shehbaz Sharif and Saudi Crown Prince Mohammad bin Salman, held in Riyadh on April 8, 2024, and it would pave the way and complete spadework for $5 billion investment in various sectors of economy in Pakistan in the first phase.” The Saudi crown prince is likely to visit Pakistan in May and sign some important agreements for billions of dollar investment in Reko Diq, refinery, agriculture, and mining.

The minister said that top Saudi business notches were also part of the delegation and authorities had lined up Pakistan businesspeople in all sectors of economy to meet counterparts and make B2B deals for trade and investment in the shape of joint ventures. “We arranged on Monday a meeting of top Pakistan business leaders at Karachi Governor’s House with entrepreneurs from the KSA and hopefully some better news would come on Tuesday (today) about the B2B contracts. “If it happens, then the required impetus in trade with the KSA would increase manifold.”

The first and largest-ever business delegation of top business groups of Pakistan earlier visited the KSA for the B2B Conference held on February 21, 2024 in Riyadh. Pakistan businessmen developed networking with Saudi entrepreneurs in Riyadh. “Now we have extended the scope of B2B avenues to more sectors such as IT, services, minerals and environment and logistics,” he added.

Pakistan is facing a huge deficit in trade with the KSA, the biggest economy in the Gulf countries, and it would try to increase export from Pakistan to the KSA through B2B trade on a big scale. The investment and impetus in trade would increase on a large scale once the initiative taken by Pakistan with GCC (Gulf Cooperation Council) member countries which include Kingdom of Saudi Arabia, UAE, Oman, Kuwait, Bahrain and Qatar that will pave the way for signing formal FTA with all these countries. There are some protocols for GCC FTA, which the authorities in the commerce ministry are aggressively pursuing to complete.

Pakistan and the GCC earlier on September 28, 2023 in Riyadh, signed a “preliminary” free trade agreement (FTA) draft. The KSA is the biggest economy in the Gulf region with GDP reaching $1.1 trillion in 2022 and Pakistan entrepreneurs need to make more inroads into the KSA market on B2B contracts basis.

The main products exported from Pakistan to Saudi Arabia were rice ($86.2 million), bovine meat ($32.7 million), and spices ($25.3 million). During the last 26 years, the exports of Pakistan to Saudi Arabia have increased at an annualised rate of 4.62pc, from $146m in 1995 to $472m in 2021. In 2021, Saudi Arabia exported $3.4B to Pakistan.

In 2021-22, the bilateral trade remained at $5.581 billion as Pakistan exports to the KSA stood at $428 million and imports from that country stayed at $5.152 billion showing a trade deficit of $4.723 billion. However, in 2022-23, the bilateral trade between the two countries declined to $4.753 billion because of less imports from the KSA, which stood at $4.190 billion due to restrictions on imports in the wake of dollars’ availability crisis. However, the country’s exports in 2022-23 slightly increased to the KSA registering growth at $563 million. The trade deficit in 2022-23 with the KSA stayed at $3.627 billion.

During the first half of the current fiscal 2023-24, the bilateral trade stayed at $2.482 billion during July-December 2023-24 period, as the imports stood at $262.58 million and imports from KSA remained at $2.219 billion showing a deficit in trade of $1.957 billion. The major export products from Pakistan are rice, meat of bovine animals, fruit and vegetables tents and camping. However, major imports from KSA are POL products, polymers of propylene and polymers of ethylene.