Pakistan Saudi Arabia Economic and Political Relations

(Dr.Syed Mehboob, Karachi)

Research scholar. Columnist
Pakistan and Saudi Arabia are two brotherly Islamic countries their relations are all weathers, time tested, and deep rooted, these relations are not limited to the leadership of the both countries but they are in the hearts and souls of people of both the Islamic countries. Both countries flags represent Islamic brotherhood with Saudi’s having Kalmia on it declaring that there is no God except Allah and Muhammad (peace be upon him) is His Prophet. The Pakistani flag with crescent and star reminds that this unique country is created in the Holy name of Allah Almighty. Saudi Arabia has always extended economic cooperation to Pakistan in the hour of need and workers remittances from this brother Islamic country plays a substantial role in strengthen the balance of payment of Pakistan. When seen in the backdrop of this overall picture, one aspect of the ties i-e bilateral trade seems relatively less pronounced and depicts a story of unrealized potential. Pakistan mainly imports oil and oil products from brother country which account 90 percent total import bill for the kingdom. Pakistan supplies rice, meat and meat products, spices, fruits, textile products, footwear and leather goods. Pakistan exports only 0.3% of the total imports of Saudi Arabia and serious efforts are needed to enhance Pakistan’s exports to Saudi Arabia. Considering the manufacturing base of Pakistan and thriving services sector, Pakistan has much more to offer Saudi Arabia and there is a huge potential of bilateral trade lying unrealized between two brotherly countries. There are number of areas in which the trade volume can be possibly enhanced. Pakistan specializes in textile products while textile comprises only 20 % of export mix to Saudi Arabia. The share of textile specially value added garments, bed linen can see a big jump if circumstances are aligned. Pakistan manufactures state of the art surgical instruments and world class sports goods, which can easily find their place in the Saudi market. Pakistan can easily cater to the rapidly growing sector of organic foods in Saudi Arabia. Similar potential exists in services sector be it financial sector services, insurance, IT services, entertainment industry etc. There is a great potential the Pakistan and Saudi Arabia join hands to invest and promote Islamic banking, Takaful (Islamic Insurance) and non interest based Islamic finance products. There is great scope for food products. Pakistan can easily cater to the rapidly growing sector of organic food in Saudi Arabia.
Pakistan Saudi Arabia needs to sign free trade agreement .This agreement would pave the way to enhance not only bilateral trade but also make door for Pakistan’s preferential entry into Gulf Markets. The signing of bilateral treaty between the two countries would be enormously beneficial. Pakistan China Economic Corridor opens the new vistas and great opportunities for Saudi investors and Pakistan desperately needs brother countries investment in various sectors.
Pakistan Saudi Arabia Trade Statistics
US$ million
Year Export import Balance of trade Total export of Pakistan % share in total exports
Total imports of Pakistan % share in total exports
2012 455.6 4282.5 -3287.9 24613.7 1.9 43813.3 9.8
2013 494.1 3847.2 25120.9 25120.9 2.0 43775.2 8.8
2014 509.7 4417.4 24722.2 24722.2 2.1 47544.9 9.3
2015 431.3 3006.8 22089.0 22089.0 2.0 43989.7 6.8
2016 380.4 1843.1 20435.0 20435.0 1.9 47155.0 3.9
2017 359.75 1800.00 -1400.00 20450.0 2.0 53000.0 3.00
Source: TDAP, SBP, PBS
Pakistani cabinet on the historical occasion of arrival of Saudi crown prince His Highness Prince Mohammad bin Salman to Islamabad on 17th February ,2019 has approved eight MoUs to be signed with Saudi counterparts. The government will take up preferential trade agreement and ease of doing visas with Saudi crown prince who head a big delegation with him and would hold talks with Prime Minister Imran Khan. Both countries will sign eight MoUs to promote bilateral trade and investment. The Wall Street Journal reported that Saudi Arabia and UAE had offered Pakistan approximately US$ 30 billion in investment and loan. In addition to oil import worth $ 6 billion on deferred payment, both the countries had already deposited $3 billion each in Pakistan’s central reserve bank to ease balance of payment crisis and support the rupee. The UAE and Saudi Arabia are going to set up mega refineries in Pakistan to cater to the local demand as well as to export surplus products to regional markets. An Oil refinery in Gawadar would be set up by Saudi investment which would be the largest one in Pakistan and its capacity would exceed cumulative capacity of all five Pakistani refineries.
Saudi Arabia is expected to announce $ 7 billion investment in power sector and $ 2 billion in renewable energy including solar and wind projects. It is also expected that bother country would also invest in mineral and mining projects including the Rekodiq. Pak Saudi coordination council is going to be formed to monitor the implementation of MoUs. Saudi investment at a very crucial period for Pakistan’s economy would provide a new life line to Pakistan’s economy which has recently down- graded to B negative from B by s & P Global rating agency. Timely help from china and Saudi Arabia would help to boost foreign investment which dropped by 19% in 20185.

About Saudi Arabia
Saudi Arabia is a country in western Asia consisting the bulk of the Arabia Peninsula. Its land area is approximately 2,150,000 sq kilometers. Saudi Arabia is the largest sovereign state in the Middle East, 2nd largest in Arab World, 12th largest in the world. Saudi Arabia is bordered with Jordan and Iraq to the north, Kuwait to the northeast, Qatar, Bahrain and United Arab Emirates to the East, Oman to the South East and Yemen to the south. It is separated from Israel and Egypt by the Gulf of Aqaba. It is only nation both Red Sea and Persian Gulf coast. Most of its terrain consists of desert.
Saudi Arabia is the largest economy in the Middle East, 18th in the world. It has second largest oil reserves in the world and is largest oil exporter of the world.
King Abdullah financial center is one of the largest investment centers in the world.

GDP ( Purchasing power parity ) : US$ 1.775 trillion
GDP ( Official exchange rate) : US$ 686.7 billion
GDP per capita : $ 54,500
Exports : $ 221.1 billion
Export partners : $ Japan 12.2% , China 11.7%, South Korea 9%
Export commodities : Petroleum & Petroleum products
Imports : $ 119.3 billion

Import partners : China 15.4% , US 13.6 % , UAE 6.5 % , Germany
Import Commodities : machinery and equipment, textiles, fruits, defence
Defence Equipments

Pakistan Saudi Arabia Joint Chamber of Commerce & Industry
Pakistan Saudi Arabia Joint Chamber of Commerce is coordinating between Pakistan and Saudi business communities and governments of both the brother countries to facilitate them for issuance of visa and to doing efforts to further enhance business and economic relations.
Major Items of exports
Million US$
Description 2012 2013 2014 2015 2016
Cereals 99.4 125.5 133.6 87.6 61.8
Meat and edible meat 54.1 58.3 67.2 69.1 58.0
Beverage ,Vinger 4.7 7.1 22.6 16.3 24.5
Coffee, tea and spice 20.1 19.8 21.5 21.1 21.3
% of total export 52 54 59 56 55

Major Items of Imports
US$ Million
Description 2012 2013 2014 2015 2016
Mineral fuels , mineral oil 3349.7 2916.9 3211.6 1716.8 394.6
Plastics and articles 406.8 408.7 554.2 502.0 470.3
Organic Chemicals 334.0 314.3 336.8 321.5 301.9
Fertilizers 78.4 91.2 175.6 348.4 57.0
Ships, boats and floating structure 0.00 2.8 22.0 5.1 28.1
% of total imports 97 39 97 96 35

About Saudi Arabia
Saudi Arabia is a leading Islamic country having the honour of custodian of two the holiest places of Islam, The Kaaba and Madina. Saudi Arabia is considered revered and enjoys high respect among Muslims of the world.
Saudi Arabia has land area of 2.5 million square km. It is the largest country in the Middle East, the fifth largest in Asia, and 12th largest is the world. It is bordered by Jordan and Iraq to the north, Kuwait to the north-east, Qatar, Bahrain and The United Arab Emirates to the east, and to the south east and Yemen to the south. It is only country with the red sea coast and a Persian Gulf coast.
His Majesty King Salman bin Abdul Aziz Al Saud, is dynamic, visionary, pragmatic leader of brother Islamic country and under his able leadership and guidance Saudi Arabia is leading towards the path of development, progress and prosperity.
Crown prince His Highness Mohammad bin Salman, a young, enthusiastic person who wants his people to pace with the people of world in progress and development and to meet the challenges of the modern world without sacrificing strong traditions and values of Saudi Arabia.
Saudi Arabia is an active member of UNO, OIC , GCC , OPEC , IMF .
Economy of Saudi Arabia
Saudi economy is petroleum –based and roughly 75% budget revenue and 90% export earnings come from oil industry.
Oil industry comprises 45% of its GDP and is about 260 billion barrels of oil reserve, comprising about one fifth of the world’s proven total petroleum. Every year about fifteen million people visit Saudi Arabia mainly for Hajj, Umra and Ziarah of sacred places.
Saudi economy is the 2nd largest economy in Arab world. It is the largest petroleum exporter of the world. It also has fifth largest proven gas reserves and considered as energy superpower. It has 3rd largest value of natural resources, valued at US$ 34.4 trillion in 2016.
Petroleum in Saudi Arabia is not only plentiful but close to the earth surface. This makes it cheaper and thus far more profitable to extract petroleum in Saudi Arabia than in many other places. Petroleum is about 42 5 of its GDP while 40% of GDP comes from private sector. About seven million foreigners are working here among them are Pakistanis who proudly serve their Saudi brethren and their contribution to development and progress of Saudi Arabia is a fact is laudable.
GDP (PPP) : $1.747 trillion
GDP (official exchange rate) : $ 683.8 billion
GDP (Per Capita) : $ 54,800

GDP composition by sector of origin

Agriculture : 2.6%
Industry : 44.2 %
Services : 53.2 %
Exports : $ 231.3 billion
Export commodities : Petroleum and Petroleum products
Export partners : Japan 12.2%, China 11.7 %,
South Korea 9%, US 8%, UAE 6% ,
Singapore 4.2%
Imports : $ 136.8 billion
Imports Commodities : Machinery, Food stuff, textiles,
Defence Ties: General ( R ) Raheel Sharif is commander in Chief of Islamic Military Counter Terrorism Coalition which shows firm commitment of Pakistan to fight against terrorism and to defend the holy lands against any invasion. With the passage of time both countries would move for further strengthening bilateral ties and would benefit for the people of both the countries.

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