The close friendship and multi-dimensional relations between Saudi Arabia and Pakistan are indeed significant. The planned $25 billion investment from Saudi Arabia in various sectors, including agriculture, mining, and IT, will likely have a substantial impact on Pakistan’s economy. This investment is not only a testament to the strong political and economic ties but also demonstrates Saudi Arabia’s commitment to boosting Foreign Direct Investment (FDI) in Pakistan.
Furthermore, the presence of over 2 million Pakistani expatriates in Saudi Arabia and their role as the largest source of remittances for Pakistan adds another layer of importance to this relationship. These remittances play a crucial role in Pakistan’s economy, helping stabilize its finances.
It’s essential for Pakistan to carefully manage and leverage this investment to ensure economic growth and prosperity over the coming years. The IMF loan programme has provided some breathing room, and with prudent economic policies and effective utilization of foreign investments, Pakistan can work towards a more stable economic future.
| Net FDI In Pakistan Through Different Countries ($ Million) | |||||||||
|---|---|---|---|---|---|---|---|---|---|
| Country | 2015-16 | 2016-17 | 2017-18 | 2018-19 | 2019-20 | 2020-21 | 2021-22 | 2022-23 | 2023-24 (Jul-Aug) |
| China | 1,048.30 | 763.2 | 1,311.90 | 130.8 | 846.6 | 751.6 | 531.6 | 432.2 | 50.4 |
| UK | 151.7 | 215.4 | 304.6 | 185 | 119.1 | 141 | 31.8 | 65 | 10.9 |
| USA | 15.7 | 45.7 | 161.7 | 88.1 | 99.2 | 166.4 | 249.6 | 89.3 | 6.3 |
| Hong Kong | 187 | 123 | 183.6 | 171 | 190.7 | 157.2 | 137.7 | 101 | 33 |
| Switzerland | 59.5 | 101.7 | 78.5 | 21.2 | 62.8 | 61.7 | 146.2 | 134 | 36.5 |
| U.A.E. | 114.6 | 120.1 | -4.4 | 103.7 | -44 | 115.7 | 143.9 | 180.1 | 17.1 |
| Italy | 105.4 | 61.5 | 56.6 | 51.9 | 57.4 | 36.3 | 34.8 | 8.6 | 0 |
| Netherlands | 29.9 | 457.6 | 100.3 | 69 | 133.2 | 96.9 | 104.1 | 71.9 | 42.6 |
| Austria | 42.7 | 21.7 | 27.4 | 7.6 | 3.8 | 1 | 0 | -0.3 | 0 |
| Japan | 35.4 | 57.7 | 59.8 | 117.3 | 52.5 | -13 | -12.3 | 183 | 11 |
| Turkey | 16.9 | 135.6 | 29.8 | 73.8 | 26.1 | 13.4 | -0.3 | 17.6 | 1 |
| Others | 585.8 | 303.4 | 470.5 | 343 | 1,076.20 | 305.7 | 500.7 | 173.4 | 25 |
| Total | 2,392.90 | 2,406.60 | 2,780.30 | 1,362.40 | 2,597.50 | 1,820.50 | 1,867.80 | 1,455.80 | 233.8 |
Foreign investment
During first month of current financial year (2023-24) the Foreign Direct Investment in Pakistan registered about 17.3 per cent growth as against to the investment of the corresponding month of last year. By the month of July 2023, the FDI reached $87.7 million against the investment of $74.8 million in corresponding period of the last year, according to the Monthly Economic Update & Outlook August 2023.
To raise FDI in Pakistan under the supervision of the presently set up Special Investment Facilitation Council (SIFC), Saudi Arabia and UAE investments are part of a new strategy for economic revival. Established in June, the council comprises Pakistan’s civilian and military leadership. The SIFC’s potential it is emphasized to attract investments of up to $100 billion from Saudi Arabia, the UAE, Kuwait, Qatar and other Middle Eastern states.
The Government of Pakistan under the SIFC, could receive an unprecedented $25 billion each from the Saudi Kingdom and UAE. Pakistan is scrambling to deal statistics showed, with a critical balance of payments crisis. Pakistan of about 241 million people needs billions of dollars in foreign exchange to repay international debts and bridge its trade deficit in the current financial year.
Saudi Arabia and Pakistan also have shared concerns and interests on regional and global challenges of security and peace. In the recent past their partnership has taken a strategic shift, which is manifested chiefly in close collaboration in security and economic spheres.
Pakistan in bilateral and regional domains, has intensified security cooperation with Saudi Arabia. The Kingdom has undertaken major investments in its energy sector while continuing to aid Pakistan’s frail economy with significant loan commitments and oil supplies on deferred payments.
Under the Saudi Vision 2030 of Crown Prince and Prime Minister of Saudi Arabia Mohammed bin Salman Al Saud, the economic diversification offers various opportunities for Pakistan’s trade and investment relationship with the Kingdom and employing its skilled manpower in Saudi mega development projects.
In addressing Saudi Arabia’s growing needs for regional security amid the changing geo-strategic environment in the Middle East, Pakistan can likewise play a greater role. The Government of Pakistan with Saudi Arabia, must sustain closer and stronger economic ties. There are huge potentials available for Pakistan to improve its trade and investment ties with Saudi Arabia.
The private sector of Saudi Arabia and Pakistan should interact frequently for exchange of information related to available opportunities and meetings with counterpart’s traders. It is suggested that both countries should sign bilateral investment treaty in view of removal of complex investment methods and avoid of taxation complications. This will also enhance the investment relations.
Both states should formulate a procedure to reduce non-tariff initiatives which face through Pakistan in exporting agriculture products to Saudi Arabia. They should sign contract for fulfilling the requirement of skilled labour force in Saudi Arabia. As the process of economic development in Saudi Arabia is raising this shows the rising demand of skilled labor force.
Around the globe, Pakistan’s labour force is performing very well because of their hard work, intelligence and productivity. As our country continues to implement reforms and open up opportunities for financiers, it remains poised to further strengthen its position as an attractive destination for foreign investment in the region.