Scope of Saudi investment
PETROCHEMICALS are chemicals made from petroleum (crude oil) and natural gas, whereas petroleum and natural gas are made up of hydrocarbon molecules comprising one or more carbon atoms, to which hydrogen atoms are attached. Petrochemical plants convert natural resources such as crude oil, natural gas, ores and minerals into products for a wide range of applications. They produce many important building blocks for industry processes, including ethylene, propylene, butadiene, and aromatics. Saudi Arabia has the second largest share (11 per cent) in Pakistanís imports ó mainly Plastic, Rubber, Crude Oil, Fertilizers, Aluminium, Perfumes & Cosmetics and chemicals. Apart from that Pakistan imports food items including dates, oils, olives etc. However, Saudi Arabia invests a lot more in Malaysia, which has population of only 32 million against Pakistanís population of 210 million. Of course, Malaysia is one of the leading emerging markets, and it has a strong economy.
In late March 2018, Malaysiaís national oil and gas Company Petronas, and Saudi Aramco announced formation of two joint ventures for the Refinery and Petrochemicals Integrated Development (RAPID) project in Johor. This came a month after the two companies concluded negotiations regarding Saudi Aramcoís $7bn investment in the project. This represents the largest offshore investment ever made by Saudi Aramco and is the largest-ever foreign direct investment (FDI) in Malaysia. The collaboration will give the two companies equal participation in and ownership of the RAPID project, which consists of a refinery with the capacity to process 300,000 barrels of crude oil per day, and six petrochemicals plants with a combined annual output of more than 3.5m tonnes. Saudi Aramco will supply 50-70 percent of the crude feedstock for the refinery, while Petronas will provide natural gas, power and other utilities.
Saudi Arabia has bilateral economic and security ties with Pakistan that date back to the 1960s, when the two states signed a defence agreement that marked the start of a unique alliance between the two major Muslim states, with Pakistan providing soldiers for the protection of the holy places and Kingdom. Similarly, Saudi Arabia has supported Pakistanís position on the Kashmir dispute. The Kingdom has also been a major source of economic assistance to Pakistan. About two million Pakistani citizens work in the Kingdom and send home $7 billion in remittances every year. In the past, Saudi Kings and Crown Princes focused on expanding bilateral, economic, trade and defence cooperation. They agreed on further augmenting trade and commercial cooperation. Saudi Arabia has always helped Pakistan, especially when it was in dire straits after the US and the West slapped sanctions in October 1998 in the wake of nuclear tests in May 1998.
It helped Pakistan in the form of Saudi oil facility to meet Pakistanís fuel and energy needs, which kept the wheels of Pakistanís industry moving. Pakistan on its part had participated in security of the kingdom and deployed two divisions in Saudi Arabia during Gulf War in 1991. One brigade was stationed for years in Saudi Arabia; and even today Pakistanís military personnel are working in advisory capacity. The two allies have decisively relied on each other on the diplomatic front as well. When ties between the Kingdom and the US were strained in the mid-1980s, Pakistan played a crucial role as an intermediary between Riyadh and Beijing. Former King Abdullah had visited India and Pakistan in 2006. In his briefing of Indiaís tour, he said that he had urged the Indian leadership to strive jointly for maintaining peace in the region so that Islamabad and New Delhi could resolve their disputes including Kashmir amicably.
Saudi King was accompanied by a high-level delegation comprising cabinet members, officials and business leaders. Although there was a reasonable amount of Saudi investment in Pakistan, there existed tremendous potential to increase it manifold. Similarly, there is need to enhance trade and commerce between the two brotherly countries, as up till now it remains insignificant.
During King Abdullahís visit, five bilateral agreements were signed, which included the MoU on Political Consultations, Agreement on Avoidance of Double Taxation, Agreement on Cooperation in Science and Technology, Cooperation Programme in the field of Technical Education and Vocational Training, and Programme of Education and Scientific Cooperation. Both brotherly countries should examine periodically the progress made on the agreements signed between the two countries. As a follow up of the proposals at the OIC meetings, Pakistan and Saudi Arabia should take steps to increase volume of trade and set a paradigm for other Muslim countries to emulate.
In February 2018, Khaleej Times stated that the UAE and Saudi Arabia were set to significantly expand their investment in a wide range of sectors in Pakistan, and these measures would help boost Pakistanís economy in various sectors. High-level negotiations were held by the top leadership of the UAE, Saudi Arabia and Pakistan to boost trade and investment in the country. All three countries are now drawing up their final plans, high-level sources in Pakistanís ministries of finance, industry, commerce and the Planning Commission told Khaleej Times. The FPCCI and Pakistan businessmen and entrepreneurs were asked to participate in Expo 2020 in Dubai in which more than 100 countries will participate. Around 1.4 million Pakistanis reside in the UAE. Of course, the UAE has always helped Pakistan whenever it faced crisis. Efforts were made by the enemies of Pakistan to spoil relations between the brotherly countries, but leadership of these countries frustrated their designs.