- Bilateral trade surpasses US$5.7bn, supported by oil imports, remittances, agriculture, and technology cooperation
The relationship between Pakistan and Saudi Arabia stands out as one of the most significant in the Muslim world. Initially rooted in shared faith and mutual assistance, this bond has transformed into a pragmatic cooperation. Recently, both nations have sought to expand their friendship into a broader economic partnership to aid Pakistan in achieving its growth objectives and align with Saudi Arabia’s Vision 2030 diversification plans. Saudi Arabia continues to be one of Pakistan’s key trading partners and a crucial source of foreign currency. Current data indicate that bilateral trade has surpassed US$5.7 billion, primarily driven by Pakistan’s oil imports from Saudi Arabia.
Pakistan’s economy is in dire need of energy, making essential fuel imports from Saudi Arabia and other nations crucial. Conversely, Pakistan provides a stable and reliable market for Saudi oil exports, highlighting their interdependence. In addition to trade, Saudi Arabia plays a critical role in the economic stability of Pakistan through remittances. More than two and a half million Pakistani workers in the Kingdom send over US$6 billion annually, bolstering Pakistan’s current account. These remittance inflows not only help maintain the balance of payments but also support the livelihoods of millions.
The economic narrative of Pakistan and Saudi Arabia has evolved beyond oil and remittances. Recognizing the importance of removing barriers and enhancing collaboration, both nations have made significant efforts to expand their partnership. The secretariat of the council has established a one-stop shop to encourage Saudi investment in key areas such as agriculture, information technology, renewable energy, and infrastructure, while the Special Investment Facilitation Council (SIFC) aims to develop infrastructure. Although still relatively small in comparison to imports, Pakistan’s exports to Saudi Arabia are on the rise, showing positive trends. The main exports consist of food items, textiles, rice, and meat. As global food security becomes a critical concern, Saudi investors are increasingly interested in Pakistan’s agriculture sector. There are opportunities to develop corporate farming, halal meat processing facilities, and cold-chain logistics systems. Through these initiatives, Pakistan can shift from being a low-value commodity exporter to a dependable supplier of value-added food products for the Gulf region.
In addition, the technology sector also offers promising opportunity for both nations. Pakistan’s exports of IT and IT-enabled services to Saudi Arabia are expected to increase to USD 50 million, with a goal of reaching USD 100 million in the next term. As Saudi Arabia speeds up its Vision 2030 NEOM smart city initiative, there is an increasing demand for software development, cybersecurity services, and AI solutions. Thanks to its large pool of technology graduates and competitive pricing, Pakistan is well-positioned to take advantage of these prospects. Areas that hold potential for mutual benefits include partnerships in Fintech, digital payment systems, and e-governance. In the last two years, high-level visits and business summits have successfully attracted over USD 20 billion in Saudi investments into Pakistan, spanning sectors such as oil refining, renewable energy, mining, and housing. The planned joint venture oil refinery in Gwadar, estimated at USD 10 billion, could significantly enhance Pakistan’s refining capabilities and reduce the nation’s reliance on imported refined fuels, while also creating thousands of jobs. The focus on renewable energy sources, like wind and solar, is also crucial as it will aid Pakistan in its energy transition and decrease the country’s dependence on imported fossil fuels.
Active discussions are happening about working together on infrastructure goals. The proposed initiatives to create logistics hubs, industrial zones, and special economic regions as re-export centers for Saudi products to Central and South Asia show how Saudi Arabia aims to improve Pakistan’s trade links through the CPEC. Integrating Pakistan into Gulf-Asia supply chains adds another advantage. However, there is often another side to the story. Pakistan faces issues with poor governance, including excessive bureaucracy and administrative delays, which result in inconsistent and unclear policies. These systemic problems could slow down project execution and lead to dissatisfaction among stakeholders and investors.
To keep investor interest, Pakistan needs to make economic reforms and improve stability, while also enforcing legal agreements effectively. Managing high inflation, currency swings, energy shortages, and overall economic conditions is a tough challenge.
The friendly approach taken by Saudi Arabia and the current relationship could grow from simple transactions into a strategic partnership if we engage thoughtfully. A practical way forward would be to focus on regulatory reforms, simplify approval processes for foreign investors, and enhance public-private partnerships in agriculture, technology, and renewable energy. Strengthening institutional capacity and ensuring transparency will build investor confidence and can turn this bilateral relationship into a foundation for regional economic integration, promising sustainable growth for both countries.
The Author is MD IRP /Faculty department of H&SS- Bahria University Karachi