- Explore the evolving trade ties between Pakistan and the UAE, highlighting exports, investments, and future opportunities
The trade relations between Pakistan and the United Arab Emirates (UAE) have been robust and multifaceted, evolving over the decades since Pakistan recognized the UAE in 1971. This report provides a comprehensive overview of the trade dynamics between the two countries, highlighting key aspects such as trade volume, major exports and imports, investment flows, and the broader economic and political context.
In the early years, the trade relations between Pakistan and the UAE were characterized by the exchange of traditional goods such as textiles, spices, and dates. Pakistani traders were actively involved in the UAE’s markets, and the UAE imported various goods from Pakistan, including food products, textiles, and leather goods. This period laid the groundwork for the future expansion of trade relations.
Economic Cooperation Agreements
Over the years, Pakistan and the UAE have signed several economic cooperation agreements to enhance bilateral trade and investment. These agreements have provided a framework for the promotion of trade and economic cooperation, facilitating smoother business transactions and mutual investment.
Key agreements include:
- Agreement on the Avoidance of Double Taxation on Income (1993): This agreement aimed to prevent double taxation of income for businesses and individuals operating in both countries, thereby encouraging cross-border investment and trade.
- Support and Promotion of Investment (1993): This agreement provided a framework for the protection and promotion of investments between the two countries, ensuring a favorable environment for investors.
- Trade Agreement (1995): This agreement aimed to enhance trade relations by reducing trade barriers and promoting the exchange of goods and services.
- Economic Cooperation Agreement with the Gulf Cooperation Council (GCC) (2004): This agreement strengthened Pakistan’s economic ties with the GCC, including the UAE, by promoting economic cooperation in various sectors.
- Memorandum of Understanding on the Securities Sector (2013): This MoU aimed to enhance cooperation in the securities sector, promoting capital market development and investment.
Trade Volume and Major Exports/Imports
The trade volume between Pakistan and the UAE has grown significantly over the years, reflecting the strength of their economic relationship. In recent years, the UAE has emerged as one of Pakistan’s major trading partners, with substantial trade flows in both directions. Pakistan Exports to United Arab Emirates was US$1.4 Billion during 2023. Likewise in the same year the United Arab Emirates (UAE) exported $1.40 billion worth of goods to Pakistan. The UAE is Pakistan’s second-largest trading partner, with a 10.4% share of Pakistan’s trade.
The main products exported from the UAE to Pakistan in 2022 were: Crude petroleum ($2.29 billion), Refined petroleum ($1.3 billion), and Propylene polymers ($212 million).
Exports from Pakistan to UAE:
- Textiles and Garments: Pakistan is a major exporter of textiles and garments to the UAE, supplying a wide range of products such as cotton fabrics, readymade garments, and home textiles.
- Food Products: Pakistan exports a variety of food products to the UAE, including rice, fruits (especially mangoes and citrus), vegetables, meat, and seafood.
- Leather Goods: Pakistan’s leather industry is well-established, and the country exports leather goods such as shoes, bags, and accessories to the UAE.
- Sports Goods: Pakistan is known for its high-quality sports goods, and the UAE imports various sports equipment and accessories from Pakistan.
- Chemicals and Pharmaceuticals: Pakistan exports a range of chemicals and pharmaceutical products to the UAE, contributing to the healthcare and industrial sectors.
Imports from UAE to Pakistan:
- Crude Oil and Petroleum Products: The UAE is a major supplier of crude oil and petroleum products to Pakistan, meeting a significant portion of the country’s energy needs.
- Machinery and Equipment: The UAE exports machinery and equipment to Pakistan, supporting various industrial and infrastructure projects.
- Chemicals and Plastics: The UAE supplies chemicals and plastics to Pakistan, which are used in manufacturing and construction.
- Consumer Electronics: The UAE exports consumer electronics such as mobile phones, computers, and household appliances to Pakistan.
- Precious Metals and Jewelry: The UAE is a significant exporter of precious metals and jewelry to Pakistan, catering to the demand for luxury goods and investment products.
Investment Flows
Investment flows between Pakistan and the UAE have been substantial, with both countries benefiting from mutual investment in various sectors. The UAE is one of the largest investors in Pakistan, with investments spanning a wide range of industries.
UAE Investments in Pakistan:
- Telecommunications: The UAE has made significant investments in Pakistan’s telecommunications sector. Companies like Etisalat and Warid Telecom have established a strong presence in the country, contributing to the growth of the telecom industry.
- Banking and Financial Services: UAE-based banks such as Dubai Islamic Bank and Bank Alfalah have played a crucial role in the development of Pakistan’s banking sector, offering a range of financial products and services.
- Real Estate and Construction: The UAE’s real estate developers, such as Emaar Properties, have invested in various real estate and construction projects in Pakistan, including residential and commercial developments.
- Energy Sector: The UAE has invested in Pakistan’s energy sector, particularly in oil and gas exploration and production, as well as renewable energy projects.
- Aviation: UAE airlines, including Emirates and Etihad Airways, have significant operations in Pakistan, enhancing connectivity and contributing to the aviation sector’s growth.
Pakistan Investments in UAE:
- Textile and Garment Industry: Pakistani textile and garment companies have invested in the UAE, setting up manufacturing units and distribution centers to cater to the regional market.
- Food Processing: Pakistani food processing companies have established operations in the UAE, producing and distributing a range of food products to meet local demand.
- Retail and Wholesale: Pakistani entrepreneurs have invested in the UAE’s retail and wholesale sectors, operating various businesses such as supermarkets, clothing stores, and electronics shops.
- Healthcare: Pakistani healthcare professionals and investors have contributed to the UAE’s healthcare sector by establishing clinics, hospitals, and diagnostic centers.
Future Prospects
The future of PAK-UAE trade relations looks promising, with several initiatives and agreements in the pipeline. The pending Comprehensive Economic Partnership Agreement (CEPA) and Free Trade Agreement (FTA) could provide a significant boost to bilateral trade. Additionally, ongoing cooperation in the energy and renewable energy sectors is expected to further strengthen economic ties.
Conclusion
The trade relations between Pakistan and the UAE have been characterized by mutual cooperation, significant investment flows, and a strong economic partnership. As both countries continue to work towards enhancing their trade and economic ties, the future holds great potential for further growth and development.
The author, Nazir Ahmed Shaikh, is a freelance writer, columnist, blogger, and motivational speaker. He writes articles on diversified topics. He can be reached at nazir_shaikh86@hotmail.com