- Careful management must for effective and sustainable G2G contracts
- Political, economic stability amid investor-friendly environment benefit relationship
- Product diversification, quality standards help improve export performance
Conversation with Mr Zia-ul-Mustafa Awan, President & CEO of House of Professionals
Profile:
Mr Zia-ul-Mustafa Awan is a multifaceted professional with over two decades of experience in diverse sectors including strategy, operations, project management, and financial management. His professional credentials, including CMA, and CMP from internationally recognised institutions, have been the foundation of his career, allowing him to develop expertise across manufacturing, engineering, banking, and education.
In his journey, he has embraced leadership roles in various esteemed organisations, driving strategic initiatives and contributing to organisational growth.
Currently serving as the President & CEO of House of Professionals and the Chairman of the Strategic Board of ICMA Pakistan, he is passionate about advancing the field of finance and strategic management, fostering professional development, and leading through innovation and exemplary governance.
Pakistan & Gulf Economist had an exclusive conversation with Mr Zia-ul-Mustafa Awan about bilateral trade relations between Pakistan and the UAE. Following are the excerpts of the conversation:
In my point of view, the bilateral trade between Pakistan and the United Arab Emirates (UAE) presents both challenges and opportunities, which include the following:
Opportunities:
- Diverse trade portfolio: The UAE is a hub for trade in the Middle East, providing Pakistan with opportunities to diversify its export portfolio, including textiles, agricultural products, and more recently, IT services.
- Investment prospects: UAE has been one of the largest investors in Pakistan, with investments in various sectors like telecommunications, real estate, and energy. This not only boosts Pakistan’s economy but also strengthens ties between the two nations.
- Strategic location: Pakistan’s strategic location as a gateway to Central and South Asia can be advantageous for UAE-based businesses looking to expand in these regions.
- Labour market: Pakistani labour constitutes a significant portion of the workforce in the UAE, contributing to both economies and strengthening bilateral ties.
- Energy cooperation: Pakistan, facing energy shortages, can benefit from the UAE’s expertise and investments in the energy sector, especially in renewable energy.
Challenges:
- Trade imbalance: There’s a significant trade imbalance, with Pakistan importing more from the UAE than it exports. This creates a dependency on imports, affecting Pakistan’s trade deficit.
- Limited export base: Pakistan’s exports to the UAE are limited to a few commodities. Diversifying its export base is essential for sustainable trade relations.
- Regulatory and logistic hurdles: Differences in regulatory frameworks, logistical challenges, and customs procedures can hinder the smooth flow of trade.
- Political stability: Political instability in Pakistan can be a deterrent for UAE investors and may affect long-term trade relations.
- Competition with other markets: Pakistan faces stiff competition from other countries in sectors like textiles and agriculture, which are major export items to the UAE.
In my point of view, the prospects of UAE investment in Pakistan are quite promising, characterised by a combination of opportunities and strategic benefits for both countries.
Here’s a detailed look:
- Energy Sector
- Renewable energy projects: With Pakistan’s increasing energy demands, there are substantial opportunities for UAE investments in renewable energy projects, including solar and wind energy.
- Oil and gas exploration: The UAE’s expertise in oil and gas can be leveraged in Pakistan’s exploration and production sectors.
- Real Estate and Infrastructure
- Development projects: The UAE has shown interest in investing in Pakistan’s real estate sector, including housing projects and urban development.
- Infrastructure development: Investment in infrastructure such as roads, ports, and airports can help bolster Pakistan’s economic growth and regional connectivity.
- Telecommunications and IT
- Digital infrastructure: Investments in digital infrastructure and the IT sector can capitalise on Pakistan’s growing tech talent pool and expanding digital market.
- Tourism and Hospitality
- Hotel and resort development: The scenic landscapes of Pakistan offer potential for investment in tourism infrastructure, including hotels and resorts.
- Cultural exchange: Encouraging tourism through investment can also foster a deeper cultural exchange between the two countries.
- Agriculture and Food Security
- Agricultural investments: UAE can invest in Pakistan’s agriculture sector, which has immense potential for growth and export.
- Food processing and packaging: Investing in food processing and modern farming techniques can help increase productivity and exports.
- Financial Services and Banking
- Banking sector: The UAE can expand its banking services in Pakistan, offering more sophisticated financial products and services.
- Fintech development: There’s room for growth in fintech, leveraging Pakistan’s young and tech-savvy population.
- Retail and Consumer Goods
- Retail networks: Investment in retail infrastructure and networks can tap into Pakistan’s large consumer market.
- Export of UAE brands: Introducing UAE-based brands to Pakistan can be mutually beneficial.
- Healthcare and Pharmaceuticals
- Hospital and clinic investments: The UAE can invest in healthcare facilities, benefiting from Pakistan’s large population and healthcare needs.
- Pharmaceutical production: Collaborations in pharmaceutical production and research can be explored.
The prospects for UAE investment in Pakistan are diverse and potentially lucrative. However, realising these prospects will require addressing certain challenges, primarily in terms of political and economic stability, and creating an investor-friendly environment.
Pakistan’s export policies towards the UAE encompass various support mechanisms to facilitate increased exports, but they also face certain issues that need to be addressed for more effective trade relations.
Supportive Policies:
- Trade agreements and protocols: Pakistan and the UAE are part of several bilateral and multilateral trade agreements that aim to reduce trade barriers and promote exports.
- Export incentives: The Pakistani government offers various incentives for exporters, including tax exemptions, subsidy schemes, and support in meeting international standards.
- Trade facilitation measures: Efforts to streamline customs procedures, improve logistics, and enhance port facilities are aimed at reducing the cost and time involved in exporting goods.
- Focus on key sectors: The government has identified key sectors such as textiles, agriculture, and IT for export promotion to the UAE.
- Diplomatic efforts: Diplomatic channels are being used effectively to explore new markets and opportunities in the UAE for Pakistani products.
Issues in export policies:
- Product diversification: Pakistan’s exports to the UAE are heavily concentrated in a few sectors. There’s a need for diversification to reduce dependence on traditional exports.
- Quality and standards compliance: Pakistani products sometimes face challenges in meeting the stringent quality and safety standards of the UAE market.
- Logistical challenges: Inefficient logistics and higher transportation costs can make Pakistani products less competitive in the UAE market.
- Lack of market information: There is a gap in market intelligence which hinders the ability of Pakistani exporters to effectively tap into the UAE market.
- Financial and banking challenges: Issues related to banking channels, payment mechanisms, and access to finance can impede smooth trade relations.
- Regulatory hurdles: Bureaucratic processes and inconsistent regulatory policies can act as a barrier to effective export promotion.
- Limited branding and marketing: Pakistani products often lack sufficient branding and marketing efforts needed to establish a strong presence in the competitive UAE market.
- Political and economic stability: Domestic political and economic instability in Pakistan can deter efforts to increase exports as they affect investor confidence and business planning.
While Pakistan’s export policies to the UAE are supported by trade agreements and government incentives, issues such as product diversification, quality standards, logistical challenges, and marketing need to be addressed to enhance export performance.
Government-to-Government (G2G) contracts between Pakistan and the United Arab Emirates (UAE) are a crucial aspect of the bilateral relations between these two countries. These contracts typically encompass a wide range of sectors and are aimed at enhancing cooperation and mutual benefits.
Here’s the crux of these contracts:
Key Areas of G2G contracts:
- Energy cooperation: A significant focus has been on energy, with the UAE investing in Pakistan’s energy sector, including both traditional energy resources and renewable energy projects.
- Infrastructure development: Contracts often involve infrastructure projects, including road and building construction, port development, and other large-scale infrastructure ventures.
- Defence and security: Defence cooperation is another critical area, with agreements potentially covering military training, defense production, and the sale of military equipment.
- Economic and Trade Agreements: These contracts facilitate trade and investment between the two countries, aiming to boost economic ties and reduce trade barriers.
- Labor and Employment: The UAE is a significant destination for Pakistani labor, and agreements in this area focus on the rights, welfare, and regulation of Pakistani workers in the UAE.
- Healthcare and medical research: This includes collaboration in healthcare services, medical research, and the exchange of medical expertise.
- Education and cultural exchange: Contracts often include educational cooperation, cultural exchange programs, and scholarships for students.
Characteristics of G2G Contracts:
- Bilateral nature: These contracts are mutually agreed upon by both governments, emphasising cooperation and mutual benefit.
- Strategic long-term planning: They often form part of broader strategic relationships, with long-term goals and objectives.
- Regulatory frameworks: These contracts are typically governed by international law and bilateral agreements, ensuring compliance and enforcement.
- Financial and economic implications: They have significant financial implications, often involving large-scale investments, aid, or loans.
- Political and diplomatic considerations: These agreements are influenced by the broader political and diplomatic relations between the two countries.
Challenges and Considerations:
- Political stability: The political environment in Pakistan can affect the implementation and continuity of these contracts.
- Economic viability: Ensuring the economic viability and sustainability of the projects is crucial for their long-term success.
- Transparency and Accountability: Maintaining transparency and accountability in G2G contracts is essential to avoid corruption and ensure effective utilisation of resources.
G2G contracts between Pakistan and the UAE cover a wide range of sectors, from energy and infrastructure to defence and cultural exchanges. These contracts are pivotal in strengthening bilateral ties and promoting mutual interests, although they do require careful management and oversight to ensure their effectiveness and sustainability.