Saudi Arabia, Pakistan to sign 26 contracts valuing $2.2bn

ISLAMABAD: A high-level Saudi business and investment delegation on Wednesday arrived in Pakistan amid expectations that Riyadh and Islamabad will ink bilateral agreements worth $2.2 billion.

The 135-member delegation, led by Saudi Arabia’s Minister of Investment Khalid Al-Falih and comprising 12 deputy ministers and prominent Saudi businessmen, is likely to sign 26 contracts in areas of energy, IT, agriculture, construction, mining, financial, health and textile sectors.

Pakistan’s Energy Minister Musadik Malik, Commerce Minister Jam Kamal Khan and Privatisation Minister Abdul Aleem Khan received the delegation at the Noor Khan Airbase.

“In the delegation, chiefs of Saudi Central Bank, Investment bank, Telecom Authority, Exim Bank and Mining Department are also included showing this time KSA and Pakistan are set to advance economic and trade cooperation to a new trajectory. Almost 300 companies from Pakistan would interact with Saudi enterprises for B2B deals,” senior government officials told The News.

“In the energy sector, Saudi companies during the two-day visit may sign an accord with FWO for the white pipeline project that is to be laid from Machhikay to Taru Jabba. The KSA’s Mining Department is also likely to sign an accord with the Petroleum Division on mining of barite, zinc and lead from a mine earlier leased out to Pakistan Petroleum Limited. The internal rate of return of the said mine has been worked out at 50 percent. There are some reports that a Saudi company is also likely to purchase 77 percent shares of Shell Pakistan, and to this effect both entities may sign the contract.

“Both countries would make joint ventures (JV) in building textile mills of world class in KSA and Pakistan’s textile business figures would help erect textile units and provide expertise and required manpower also. And this is how Pakistan’s textile products would have a global supply chain facility in Saudi Arabia. The finances would be provided by Saudi companies,” the officials said.

Saudi Arabia and Pakistan, the officials said, would also sign for corporate farming for which 10,000 acres of land in Khanewal would be allocated to cater to the food needs of Saudi Arabia. The kingdom would provide financing for corporate farming and the crops, fruits and vegetables that would be produced are to be exported to that country.

Both sides are likely to sign the contract for cooperation on semiconductors and Saudi Arabia may also sign contracts for purchasing transformers.

“In the area of construction, Pakistan’s main groups such as Habib Rafique, ZKB and Askari would play their role in building the most modern city in KSA under Crown Prince Mohammad bin Salman’s vision. The said Pakistani company would not only construct the city but also provide the construction material and required human resources.

“Both the countries would also sign for high quality 12,000 human resource to be exported to KSA for services in various sectors.”

In the health sector, they said, Saudi Arabia and Pakistan would make a JV for building pharmaceutical units in each country.

Pakistan is facing a huge deficit in trade with Saudi Arabia -- the biggest economy in the Gulf countries -- and would try to increase exports from Pakistan to KSA through B2B trade on a large scale. The investment and impetus in trade would increase once the initiative taken by Pakistan with GCC (Gulf Cooperation Council) member countries -- Saudi Arabia, UAE, Oman, Kuwait, Bahrain and Qatar -- paves way for signing a formal FTA with the GCC countries. There are some protocols for GCC FTA which the authorities in the Commerce Ministry are pursuing to complete.

Pakistan and the GCC earlier on September 28, 2023, in Riyadh signed a “preliminary” FTA draft. Saudi Arabia’s GDP reached $1.1 trillion in 2022 and Pakistan entrepreneurs need to make more inroads in that country’s market on the B2B contract basis.

According to the schedule, the Saudi delegation will hold business-to-business meetings with Pakistani companies. The Saudi investment minister will address a business forum at a local hotel in Islamabad as well as hold talks with senior leadership of Pakistan’s private sector.

Meanwhile, Prime Minister Shahbaz Sharif called a special meeting of the federal cabinet on Thursday. According to sources, a special meeting of the federal cabinet would be held at the PM House. The MoUs and agreements with the Special Investment Facilitation Council and various countries would be approved in the meeting.

The sources said that special legislation is also likely to be presented as a table agenda in the meeting. Earlier, the government also secured a commitment of foreign loans amounting to $3.2 billion from international creditors including Saudi Oil Facility (SOF) of $1.2 billion for the next 12 months. The loan pledges include $1.2 billion loan facility promised by Saudi Arabia, $1 billion in commercial loans from Dubai Islamic Bank (DIB), $600 million from SCB, and approximately $430 million from Islamic Development Bank’s International Islamic Trade Finance Corporation (ITFC) facility. The development comes after the approval of a $7 billion new loan programme by the International Monetary Fund’s Executive Board last month which was subsequently followed by the receipt of first tranche of $1.03 billion.