ISLAMABAD: No doubt ties between Pakistan and Saudi Arabia have touched new high with investment of $20 billion, including $10 for refinery and petrochemical complex in Gwadar, as announced by Crown Price Mohammed bin Salman but if compared with India’s ties, the ground reality is otherwise.
Some 10 months back, Saudi Arabia signed in New Delhi an agreement to install $44 billion refinery in western India. The crown prince is going to announce today in New Dehli in his two-day visit more investment of billions of dollars in areas of tourism, customs and investment.
Saudi Arabia contributes significantly to India’s energy security needs by supplying about 20% of crude requirements to India. It is worth noting that Saudi Arabia is most likely to come up with investment in the National Investment and Infrastructure Fund (NIIF) of India.
The Kingdom walks in the footsteps of Abu Dhabi’s sovereign wealth fund, which is the first institutional investor in NIIF’s Master Fund in 2017 with a commitment of $1 billion. In 2018, Dubai-based DP World Ltd and NIIF announced a plan to jointly invest over $3 billion in India.
Pakistan’s bilateral trade with Saudi Arabia stood at $1.871 billion in 2017-18 with exports of just $170 million and imports of $1.7 billion, but the trade of India with Saudi Arabia reached at $27.48 billion in the financial year 2017-18. Saudi Arabia's exports to India stood at $22.06 billion whereas India's exports were $5.41 billion in the last financial year.
In Saudi Arabia, just over 2 million Pakistanis are working whereas close to 2.7 million Indian lives there. Pakistan’s total remittances from abroad stands closed to $20 billion out of which approximately $6 billion come from Saudi Arabia whereas India attracts $80 billion per annum in the head of remittances of which $10.5 billion come from Saudi Arabia.
Saudi Arabia is ranked at 15th position in country-wise FDI joint venture in India and it is second in Arab countries followed by the UAE. Saudis have $21.55 million worth in FDI joint venture from 2004-05 to 2007-08. Saudi Arabia is also among the major FDI investing countries in India. It has invested $5.9 million during August 1991 to December 1999 and ($9.6 million) during January 2000 to August 2008. Investment is observed in diverse fields such as paper manufacture, chemicals, computer software, granite processing, industrial products and machinery, cement, metallurgical industries.
In Pakistan, there is no worth mentioning investment from Saudi Arabia in the past except some financing from Saudi Fund for Neelum-Jhelum Hydropower project and other projects. However, Pakistan has maintained a unique position to assist Saudi Arabia with its defense needs. According to BBC report 2013, Saudi Arabia has invested in Pakistan's nuclear weapons projects. Both Pakistan and Saudi Arabia publicly denied the report. The Kingdom has often tried to woo Pakistan by giving it gifts and loans, often these are gifts with symbolic religious value, for example in 2014 it gifted Pakistan 200 tonnes of dates.
Saudi Arabia gave a grant of $1.5 billion to Pakistan in early 2014 to become balance of payment issue. And during the era of Imran Khan as Prime Minister of Pakistan, Saudi Arabia has extended $3 billion loan to remain in Pakistan foreign exchange reserves with $3 billion oil facility for three years to again support of balance of payment issue showing Pakistan will have the oil facility of $25 million every month.
Saudi-Pak Industrial and Agriculture Investment Company Limited with paid up capital of Rs6.6 billion with 50:50 percent shares was established for corporate product services. The said company also owns a twenty storey high rise building in Islamabad known as Saudi Pak Tower. The building, constructed in the year 1991, is known as a landmark of Islamabad. The tower is fully occupied with tenants including several national and multinational companies, financial institutions, telecommunication companies, hospital service oriented concerns etc.
Pakistan state company Nespak is contributing to economy of Saudi Arabia. NESPAK made its debut in the Kingdom by setting up a joint venture with the Ar-Riyadh Development Authority in 1978. The Company established its Regional Office in Riyadh in 1982.
Initially, Nespak acquired in the energy sector in the KSA, but later the Company was awarded projects in the sectors related to the fields of environmental and public health engineering, highways, architecture and planning, water resources and dam engineering, oil and gas, industrial, airports and ports and harbours.
Nespak has been providing services for 28 projects in the environmental and public health engineering sector, 27 projects in the energy sector, 22 projects in highways sector and 19 projects in the architecture and planning sector.
Nespak is associated with two Saudi companies in terms of business acquisition and the provision of consultancy services in the Kingdom of Saudi Arabia.
Nespak joined hands with the Saudi Consulting Services (SAUDCONSULT) in 1986 by working on the project titled “Sedimentation Control Project for Jazan Dam Reservoir” as lead firm. The two companies carried out 34 projects together.
To date, Nespak has secured 115 projects worth $ 21 billion out of which 22 projects are in operation. The ongoing projects are being handled by the NESPAK Regional Office and 22 site offices scattered all over the Kingdom. Pakistan State Life is also working in Saudi Arabia.
Apart from it, according to official at Board of Investment, there are other Pakistan companies which are operational; in Saudi Arabia that include FWO and NLC. Habib Rafique Group is also operational in Saudi Arabia in construction sector. Pakistan’s KNN is in joint venture with Saudi Arabian company Danube Hyper market and Mitchel Pakistan and Mehran companies is working in food sector in Saudi Arabia.
The investment regime is very restrictive in Saudi Arabia as at the time of renewal of licence, a non-Saudi company has to deposit 60,000 Saudi riyals whereas Saudi company has to submit only Rs500 Saudi riyal. Apart from it Pakistani companies have to submit 2.5 percent as zakat.
Pakistan companies have started business there under the title of Saudi companies and this is the main reason that number of Pakistani companies is not visible in Saudi Arabia in a big scale.
However, as many 69 India companies are working in Saudi Arabia in various fields such as travelling, insurance, telecommunication, civil construction, automotive, information technology, metals, jewellery, meat and animal products, construction, contracting, duct work and cleaning, maintenance, sale of chemical, service, education, service, education, cosmetics, bathroom fittings, fixtures & accessories and active pharmaceutical ingredient.
The Indians are either owners or are partners in 322 companies working in S Arabia. An Economic Times report said that Crown Prince Mohammed bin Salman will sign an MoU during his visit to India for constituting Saudi-Indian Supreme Coordination Council.
Some of the names of the companies working in Saudi Arabia include New India Assurance, Saudi Indian Insurance, Telecommunications Consultants India, Wipro Ltd. Riyadh, Tata Motors Ltd, Tata Consultancy Services Ltd. (TCS) Tata Consultancy Services Ltd, Larson & Toubro Saudi Arabia L.L.C, Saudi Al-Terais Co. for Contracting, Ayim Punjlloyd Construction Contracting Co Ltd, Lulu Saudi Hypermarkets LLC, Virtusa Polaris, Star Printing Press, S J Iron & Metals, Godrej & Boyce Mfg. Co. ltd, Dar Arms International, Contracting Establishment, and Sona Jewellers.
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Soon after the blast, the police reached the site and cordoned off the area.