The visit of Saudi Crown Prince Muhammad Bin Salman has heralded a new era of closer cooperation in the economic and strategic fields besides robust support on the international forums. It was the cool relations between the two countries during the previous government that Saudi Arabia abstained from the voting of Financial Action Task Force held in Paris in April last year which first led to the grant of three months short leash and then greylisting of Pakistan in June.
During the current visit of the Crowned Prince Memoranda of Understanding worth $ 20 billion dollars have been signed which according to Royal guest it is the initial dose and more investment will follow. The financing will cover the projects in industry, energy, agriculture and mining sectors. There is no denying the bitter truth that both agriculture and manufacturing sectors are in a state of deep crisis due lack of induction of latest technology and agriculture sector is also facing acute shortage of water because of not investing in water conservation with construction big and small dams.
In the energy sector shady deals were made with private local and foreign companies jacking up the tariffs of energy inputs to the sky. Likewise, the induction of state-of-the-art technology was neither encouraged nor made mandatory for the lease holders of mines, resulting in colossal waste of precious mineral resources. Oil and Gas development Corporation Limited have identified 41 blocks for the exportation and Saudi investment will boost the local production of oil and gas. The share of petroleum products in total imports $ 46 billion is 27 percent and the fluctuation in the global market necessitates substantial increase in production of crude oil from the proven domestic reserves and enhancement of refining capacity.
Foreign direct investment has been on the decline over the past 10 years. In the first five months of the current fiscal year foreign direct investment (FDI) from all foreign sources dropped by 35 percent to $ 880 million as compared with $ 1359 million in the same period last year, showing a significant drop of $478 million. China was the main the main source of FDI whose investment went to CPEC related projects of high tariff thermal power stations and non-productive projects like Lahore Orange Train and Multan Metro scheme. Total Chinese investment during the last fiscal year stood at $ 2.85 billion. In October last year foreign investment went down to $161 million whereas it was $354 million in the same month in 2017. Global investors have remained shy of long term investment since 2008. The major factors that hindered long-term direct foreign investment were rampant corrupt practices of the leadership of ruling political parties, their preference to remain in the constant state of denial towards the extremely bad security environment and delaying tactics applied on foreign investors. It was the delaying tactics to get kickbacks for operationalising a Malaysian thermal power plant that the firm abandoned the project in the previous government. This time maximum transparency shall be maintained if the MOUs are to be moved forward to the stages of letter of intent and financial close.
Saudi Arabia can extend its support to Pakistan on the peaceful resolution Kashmir dispute and buttress its role in to reach a political settlement in Afghanistan. Hopefully, the present sincere and clean political leadership has the capability and determination to take the mutually beneficial relations to all time high level.
