Saudi Crown Prince Muhammad Bin Salman is likely to visit Pakistan in October for a much-anticipated visit. It will be after four years that he will pay a visit to Pakistan. Given the fraternal ties and the breadth and depth of the strategic partnership between Pakistan and Saudi Arabia, the visit by the Crown Prince carries immense significance for the future trajectory of the bilateral relationship. Moreover, given the economic crunch Islamabad is currently in, the visit is also likely to have far-reaching implications on Pakistan’s short-term and long-term economic outlook.
Pakistan and Saudi Arabia enjoy a historical relationship based on concurrences of religion, culture, and commonality of views on various regional and global issues. Saudi Arabia hosts the largest Pakistani diaspora community in the world and is among the major export destinations for Pakistani goods. The oil-rich Arab kingdom is home to Islam’s two holiest sites in the cities of Makkah and Medina, which attract thousands of pilgrims from Pakistan each year.
Pakistan has a declaratory commitment to the defense of Saudi Arabia and has stationed troops in the kingdom for years, which constitutes just an aspect of the wider defense partnership between the two brotherly countries. Most importantly, the Pakistan-Saudi strategic partnership has stayed impervious to the global dynamics and has strengthened over the years. Such is the strength of the unique relationship that the Saudi Crown Prince during his last visit to Pakistan famously designated himself as “Pakistan’s Ambassador to Saudi Arabia”.
As Pakistan deals with the economic crunch, Saudi Arabia has emerged as Pakistan’s foremost economic backer. Riyadh has been depositing huge sums of money in Pakistan’s central bank to bolster Islamabad’s foreign currency reserves and has provided oil on deferred payments. In addition, it has extended unconditional support for Pakistan’s economic bailouts at multilateral forums like the International Monetary Fund (IMF).
Given the backdrop of the unique relationship between the two countries, expectations are high in Pakistan’s policy-making circles that the upcoming visit by the Saudi Crown Prince will lay the groundwork for much-needed and much-anticipated investments in Pakistan, which would not only help Islamabad salvage itself from immediate economic challenges but would also set the foundation for Pakistan to achieve its long-term economic goals.
Weeks before the completion of its tenure in the office, Pakistan’s previous government accorded the establishment of the Special Investment Facilitation Council (SIFC), which is tasked to provide a one-window operation for making investments in Pakistan. The council has representation from all the stakeholder institutions aims to expedite and make more convenient the investment process in Pakistan by overcoming bureaucratic red tape and other structural challenges. Under SIFC, five major areas have been identified for potential investments in Pakistan including agriculture, Information Technology, mining and minerals, industries, and defense production.
While SIFC is aimed at improving the overall investment environment and the objective is to attract investments from around the world, Pakistani authorities are banking heavily on potential investments from Saudi Arabia and the United Arab Emirates (UAE) for the success of the initiative. Pakistan’s caretaker PM recently confirmed that the country is expected to receive about $25 billion in investments only from Saudi Arabia over the next two to five years. The media report on Saudi Crown Prince’s upcoming visit claims that during the trip the establishment of a major oil refinery in the port city of Gwadar and investments in Reko Diq mines are expected to be finalized. The potential investments in the agriculture sector would also likely come under discussion — through which Pakistan aims to revamp its massively underutilized agriculture sector and transition to emerge as the breadbasket for the largely uncultivable Gulf monarchies.
Auspiciously, Pakistan’s attempts to undertake domestic reforms to facilitate investments are in perfect alignment with the changing regional environment of the Gulf and Saudi Arabia’s own economic goals for the current decade. Saudi Arabia is moving at a fast pace to realize Crown Price’s objective of diversifying the Saudi economy away from oil and making the desert kingdom a hub of business activity. To achieve the ambitious goals, Riyadh has been making investment overtures worth billions of dollars to countries in the East. While Pakistan is the most probable destination for potential Saudi investments, thanks to its geography, Pakistan also has the potential to facilitate Saudi investments in Central Asia. At the recently held Gulf-GCC Summit, proposals were floated to establish economic connectivity between the Gulf and the mineral-rich Central Asian states, which would open up opportunities for Pakistan to leverage its potential as a regional connectivity hub thanks to its unique geography, which makes it a bridge between the Gulf and Central Asia.
Under the landmark China-Pakistan Economic Corridor (CPEC), Pakistan received investments worth nearly $30 billion (and still counting), which significantly improved the country’s infrastructure and ended the country’s energy woes. More importantly, under CPEC the strategic port of Gwadar in the Arabian Sea was built and expanded. Once operations to its maximum capacity, the Gwadar Port would provide the most convenient gateway for the Gulf nations to establish connectivity with land-locked Central Asia – of course, complemented by improved on-land infrastructure under CPEC. Though there has not been an official acknowledgment as yet, it appears that Islamabad aims to supplement the achievements of CPEC by SIFC.
Taken together, Saudi Arabia’s investments overtures to the countries of the East, changing regional reorientation to geo-economics and growing focus on regional economic integration, and Pakistan’s ongoing internal reforms provide the most opportune ecosystem for investments and business in Pakistan. Once materialized, these massive economic ventures would not just fundamentally transform Pakistan’s economic outlook from a cash-starved struggling economy to a vibrant industrialized nation, but would also usher into a new era of multidimensional cooperation between Pakistan and Saudi Arabia.
