Pakistan-Saudi Arabia Investment Forum 2024 has set the tone for the future strategic partnership of Pakistan and Saudi Arabia. The forum met with the aim of providing a push for the South Asian nation to secure foreign financing to foster investment and cooperation. Saudi Assistant Minister of Investment Ibrahim Al-Mubarak along with a 50-member delegation from over 30 public and private enterprises spanning various sectors arrived in Pakistan to attend a two-day investment conference which is considered to be a huge milestone in the two countries’ long history of partnership. With this investment pitch, the two countries reaffirmed a commitment to expedite a previously discussed investment package of $5 billion.

Hosted by Pakistan’s Ministry of Energy and Petroleum, the forum received substantial support from Special Economic Zone officials. The conference was an upshot of Pakistan-Saudi Arabia bilateral trade and investment deals after Pakistani Prime Minister Shehbaz Sharif met Saudi Crown Prince Mohammed bin Salman on two separate occasions earlier this year. The two-day conference concluded Pakistan as a “high-priority economic investment and business opportunity” for Saudi Arabia.

The relationship between the two countries is long and deep, with both economic and religious factors at play, Pakistan has for decades exported labour to the kingdom and benefited from the foreign exchange these workers send back to the country.

It is also a fact that the Sharif family has always enjoyed a close affinity with the House of Saud, a relationship that has benefited both states at several levels. Though the $5 billion will not dramatically uplift the economic situation in Pakistan however, the signalling factor associated with this investment will be substantial for Pakistan to let the world know that Pakistan is pretty much open for business in several sectors.

It is no surprise that Saudi Arabia has often come to Pakistan’s help regularly in the past from providing direct financial support to providing it oil on deferred payments to help stabilize its economy. The two countries seem to be hard-wired to improve the investment ecosystem in Pakistan however one can speculate that this call for constructive engagement and collaboration can irritate several fractions inclining Iran because as much as Pakistan is looking forward to a Saudi investment they are equally anxious to revive an Iranian natural gas supply project that has been delayed by sanctions for years now whereas, on the other hand Saudi government is also looking for a transformation and alternative from being oil-based economy to diversify income sources.

This is the long-term goal envisioned by Muhammad bin Salman under the banner of Vision 2030 to enhance Saudi economic success and competitiveness built around three primary themes: “a vibrant society, a thriving economy and an ambitious nation”. Eight years after Vision 2030 was unveiled, the kingdom has made many headline-grabbing reforms, as Saudi Arabia is emerging as a new destination for international events in entertainment and sports, musical concerts, sharing Saudi culture through cinema, empowering women and welcoming the world like never before.

To achieve a thriving economy, the Kingdom is not only looking forward to creating dynamic job opportunities for its citizens but the major focus is to diversify its economy and create income flow which is based on diverse income sources.

It is interesting to see what Pakistan has to offer to be a long-term beneficiary of Saudi Vision 2030. Saudi Arabia has committed to investing $25 billion in Pakistan focusing on energy, IT, minerals, defence, and agriculture sectors over the next five years.

With an expected integration of a $10 billion Saudi Aramco refinery project into the China-Pakistan Economic Corridor (CPEC), it has the potential to reduce Beijing’s dependency on Iranian oil making Saudi Arabia an important stakeholder in South Asia.

On the other hand, the China-Pakistan bilateral project has ample space for additional partners to invest and share the dividends. In the past Pakistan had already invited Iran and the US to join CPEC so in that sense inviting Saudi Arabia is nothing new but would rather prove to enhance the image of the mega project as well as increase the credibility of Gwadar as a stable opportunity for further foreign investment and would indirectly serve to meet Chinese oil needs.

It is expected that Saudi investment of $154 million in Greenfield Mine Development would result in a 50% return on investment and the payback period is estimated to be five years. Then the second avenue that will yield a 34% return on investment will be over $25 million investment in the agriculture sector with a payback period of just three years. Pakistan has also pitched Saudi Arabia to acquire 50,000 acres of land on lease for corporate farming with an estimated of 22% return on the investment in corporate farming with a payback period of six years. Thirdly in the mineral sector, a 20% return on around $1.5 billion investment is expected in the development of the Iron Ore Mining and Steel Mills Complex.

Whereas, Pakistan also aims to dilute 25% shares of the Reko Diq project to Saudi Arabia along with the following expected projects being offered to Saudi Arabia; a $2 billion project for a strategic rail link development connecting Reko Diq mines with Gwadar port, a $680 million transmission line project, setting up of a 600MW Solar Park, and investment in a 1320 MW Thar Coal power project as well.

The profitability for the majority of these projects is estimated in the range of 14% to 15% with some falling in the profitability of 19-20%.

Locating at the crossroads of rapidly rising economies, Pakistan connects the Middle East to Central Asia. Its exceptional geographical and strategic location, market size, skill set and workforce of 250 million populations most of whom are under 30, and its rich natural resources offer great prospects as well as capacity to augment the kingdom’s development plans and mutually beneficial economic cooperation in the long run. With unity of purpose and perspicuity of vision, the two brotherly countries are aiming high to set their economic partnership to new heights and future high-level discussions and interactions will surely unlock immense potential for both sides towards mutual growth and development.

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