Pak-Saudi trade volumes are not even close to their true potential

Saudi Arabia is Pakistan’s foremost trading partner in the Middle East. This is understandable as both are bound by centuries old cultural ties and spiritual bonds. However, the current bilateral trade volume of $3.5 billion falls short of the strong political ties and close defense co-operation. It also does not match the extent of the two markets and its massive potential. Goods exchanged currently depict a narrow range that can be expanded and diversified for the mutual benefit of both countries through a number of measures.

A regular measure adopted to boost trade is to hold mega events and trade exhibitions abroad, putting on display the goods and services which could be of interest to importing countries. In a few weeks, the Trade Development Authority of Pakistan is holding a “Made in Pakistan” exhibition in Jeddah. The idea is to connect Pakistani business houses with the Kingdom’s importers and investors. This will be a single-country exhibition, and 133 Pakistani companies have already registered for participation.

At this time, the nature of bilateral trade depicts a narrow band of commodities exchanged. The bulk of the Kingdom’s exports to Pakistan are oil, plastic products and fertilizers. Pakistani exports are mainly textiles, cereals, fruits, vegetables and meats. Leather goods, pharmaceutical products, surgical instruments, information technology still remain largely untapped. Pakistan also produces high quality marble and furniture. The exhibition would also be availed to hold meetings between Pakistani exporters exhibiting their products and potential Saudi businessmen interested in importing those items.

In a few weeks, the Trade Development Authority of Pakistan is holding a “Made in Pakistan” exhibition in Jeddah. 

Javed Hafeez

Trade also promotes people to people interaction and allied activities like banking and tourism. A large number of Pakistani pilgrims visit the Holy Lands every year to perform Hajj and Umrah. However, the number of Saudi citizens visiting Pakistan for business and tourism is far below potential. This can be increased through trade promotion and tourism development measures. Pakistan’s northern areas have excellent tourist sites, mild summer temperatures, some of the world’s highest peaks and pristine lakes. This area is excellent for family tourism. What is required is world-class infrastructure including hotels, a couple of international airports and fool-proof security.

For international trade, three things are important: quality, price and timely delivery. International trade is very competitive. Textiles are the mainstay of Pakistani exports. A number of other countries including Turkiye, Egypt, China, India, Bangladesh and Vietnam also export textiles on a large scale. Pakistan has to compete with them on all three counts. It has to export quality textile products at a competitive price and deliver those within the stipulated time. The same is true about cereals, including rice, which are produced and exported by a number of countries. Greige cloth is a major item of export from Pakistan. Of late, Pakistan’s textile industry had been facing challenges like expensive energy, high interest rates and volatile exchange rates. Now these issues are receding, and textile production is picking up again.

Diversification of the economy is the major objective of Saudi Vision2030. Dependence on energy exports would be decreased by promoting tourism and non-oil sectors. Similarly, Pakistan can reduce its dependence on agriculture and textiles by promoting information technology and defense production for exports. In fact, Saudi capital combined with Pakistani expertise and low-cost labor can produce both hard and soft ware at competitive prices. This would be a real win-win situation for both countries as surplus goods and services could be exported to other countries.

With the operationalizing of Gwadar port, transport costs between the two countries will decrease and that should further promote bilateral trade. The Kingdom is right now the most important source of foreign remittances sent to Pakistan by its expat workers. The economic strength of a nation has become an important determinant of its international stature. Trade creates jobs and strengthens the economy, which is now recognized as an important component of national security. Economic strength also helps in developing credible defense capability. So, trade indirectly promotes the ability to defend and ensure security.

Pakistan with its population of 250 million people is the fifth largest nation in the world. It offers a vast market to the Kingdom’s products and looks to remain one of the foremost countries in terms of numbers for religious pilgrimage. The strengthening of bilateral political ties is reflected by the number of high-level visits exchanged frequently. Joint military exercises and training programs reflect the depth of defense co-operation. And now, efforts are underway to bring trade relations up to par as well.

The Joint Commission should regularly monitor bilateral trade and guide the two commerce ministries with a view to enhancing the trade volume for the mutual benefit of the two brotherly countries.

– Javed Hafeez is a former Pakistani diplomat with much experience of the Middle East. He writes weekly columns in Pakistani and Gulf newspapers and appears regularly on satellite TV channels as a defense and political analyst. X: @JavedHafiz8