The Saudi government shows keen interest in pursuing investment opportunities in the China-Pakistan economic corridor, confirms communications minister Hafiz Abdul Kareem. Saudi involvement in the project has the potential to change the political and economic landscape of the region.
During a meeting with Saudi ambassador Nawaf Saeed Ahmed Al-Malkiy, Pakistan’s Minister for Communications Hafiz Abdul Kareem briefed the delegation about the investment potential the CPEC might hold for Saudi Arabia.
Interest in Saudi-Pakistan trade
The Pakistani envoy stated that both countries enjoy close brotherly relations and expressed the country’s hope for Riyadh to play a significant role in the economic progress of Pakistan.
ValueWalk's Raul Panganiban interviews John Quealy, CIO and PM of the ESG Global Equity Strategy at Trillium Asset Management, and discuss his approach to investing, ESG, and where he finds opportunities. Q1 2021 hedge fund letters, conferences and more The following is a computer generated transcript and may contain some errors. Investment Interview with Trillium's Read More
Communications Secretary Siddique Memon said that both dignitaries discussed matters of mutual interest and that the Saudi delegation was briefed about the ongoing road and rail infrastructure projects in Pakistan.
Ambassador Nawaf Saeed Ahmed Al-Malkiy confirmed the country’s interest in the China-Pakistan Corridor, as well as the Gwadar port development. While speaking to state-run media, the ambassador said that being such a huge project, CPEC boasts numerous investment opportunities and has the potential to strengthen and enhance Saudi-Pakistan relations.
During the meeting held earlier this month, both envoys spoke on the issue of brotherly relations between the two countries, as well as strategic and bilateral trade relations. Both parties stated that solid steps are already being taken in order to improve and enhance Saudi-Pakistan trade.
According to The Times of Islamabad, Nawaf Saeed Ahmed Al-Malkiy praised the impact Pakistani expats (of whom there are about three million) have on the progress and prosperity of Saudi Arabia.
While the exact scope of Saudi Arabia’s involvement in CPEC still remains unclear, its involvement in the project could drastically change both the political and the economic landscape of the region.
Pakistan could mend broken relations in the region
Most foreign policy analysts agree on the fact that Pakistan’s economic and strategic ties to its Islamic neighbors will play a major role in mending the broken relations in the region, especially those between Saudi Arabia and Iran.
Earlier this year, Tehran said that the country was interested in joining CPEC “with its full capabilities, possibilities and abilities.” Saudi’s newly formed interest in the multi-billion-dollar project could make way for the two countries’ bilateral relations to improve.
Qatar, a long-serving ally of Pakistan, has seen all its diplomatic and trade ties with Saudi Arabia severed this summer. Given the interest both countries have shown for joining CPEC, Pakistan could be the force that mends the diplomatic crisis that many believe has started to impact the region.
Both Islamabad and Tehran have expressed interest in increasing their bilateral trade, and the recent lifting of the UN economic sanctions will enable new trade deals to be made. The support and involvement of such an energy-rich country could significantly impact the speed and efficiency in which the CPEC is brought to completion.
Saudi Arabia’s involvement with CPEC could be a major step in their Vision 2030 plan.
Saudi Arabia’s involvement with the multi-billion-dollar infrastructure project could provide the country with the outlet they need to bring their Vision 2030 sustainability plan to life.
Prince Mohammed bin Salman’s new economic strategy, which focuses on transitioning away from a combustion economy, while in theory a rock-solid plan, in practice lacks an element crucial to its successful realization – infrastructure.
Heavy investments in such a huge project that is the CPEC could provide Saudi Arabia with the road and rail infrastructure it needs to bring the Vision 2030 project to life. Aramco, the kingdom’s national oil company, plans on investing in renewable energy sources and diversifying into non-combustion chemicals. With an abundance of petroleum, the government plans to implement initiatives that will create a thriving market for small- and medium-sized businesses producing petrochemicals and petroleum products.
A production-oriented economy can’t thrive without adequate infrastructure to support its exports, which is where CPEC steps in. The future corridor will solve the problem of Pakistan’s notoriously undeveloped infrastructure, giving Saudi Arabia a direct line to China.
Getting clear access to what has recently been a mostly untouched market could help the oil-dependent economy stand on its feet and stabilize its growth. Joining CPEC would give Saudi Arabia uninterrupted access to the port of Gwadar in Pakistan, effectively boosting their exports and enabling easier and cheaper import.
Saudi investments could pave way for other countries to join CPEC
Despite its unsteady economy, Saudi Arabia is still a force that has the power to bring significant geopolitical change to the world. Its involvement in the CPEC has the potential to bring other countries to join the deal.
Countries such as Azerbaijan, which has experienced a significant drop in its GDP, are flocking to the project driven by Pakistan’s thriving Stock Exchange and thriving construction industry. With British Minister of State for International Trade Greg Hands stating that the UK wants to be “an important partner” to its allies China and Pakistan, more than 50 countries have declared open interest for joining CPEC.
Earlier this year, after a meeting with Pakistani president Mamnoon Hussain, Chairman of House of Representatives of Belarus, Vladimir Andreinchenko, expressed his country’s interest in joining CPEC. With Belarus joining the project, and in light of the increasingly improved relations with both China and Pakistan, Russia’s involvement in the deal seems not only feasible, but increasingly probable.
Impact of Saudi investments yet to be seen
However lucrative and prosperous CPEC might prove to be to the countries involved, it does not come without its drawbacks. The project has received a lot of criticism, with the most vocal attacker being India.
How big of an impact will CPEC’s position in the international community have on its investors is yet to be seen. Whether or not Saudi Arabia’s involvement with the project will bring global super forces such as Russia and the US on board is still up for debate.