UAE-Pak Greater Economic Integration

Mehmood Ul Hassan Khan

United Arab Emirates (UAE) and Pakistan are strategic partners in true sense of geo-politics, geo-strategy and of course socio-economy. Rigorous commercial diplomacy is going on to translate the spirits of brotherhood into greater economic integration for the win-win situation for both the countries. Pakistan is a lucrative country for foreign direct investments and the UAE has plentiful resources to assist it.

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During his private visit to Pakistan the President, His Highness Shaikh Khalifa bin Zayed Al Nahyan, met Pakistan Prime Minister Mian Muhammad Nawaz Sharif. “We are looking forward to further developing the fraternal relations between the UAE and Pakistan and always strive hard to bring benefits to the people of the two countries,” Shaikh Khalifa said.

UAE Commitments for Pakistan’s Energy Deficits

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11th joint ministerial commission meeting was held in Islamabad. UAE Foreign Minister H.E. Sheikh Abdullah Bin Zayed Al Nahyan headed the UAE delegation. Pakistan is currently passing through a sever energy crisis. Addressing a joint news conference H.E. Sheikh Abdullah bin Zayed Al-Nahyan said there was huge potential to cooperate in the energy sector, especially the renewable energy and the UAE would be looking at ways and means to develop this sector in Pakistan. Since Pakistan is an energy deficit country and cooperation in alternative energy i.e. solar energy from the UAE would pay its dividends in the days to come. Cooperation of the UAE private companies and especially MASDAR would free us from the siege of darkness in the days to come.

UAE: Leading Country of Renewables

UAE is the leading countries in terms of renewable energy development in the Gulf Cooperation Council and MENA. It has vast experience of renewables production and supply. It has rich experience in solar, wind and other mix of the energy. Its national energy subsidiary Masdar has joint ventures in many parts of the countries including, Spain, UK, France and Korea. So energy cooperation of the UAE and Pakistan would be beneficial for us in the days to come.

UAE-PAK Energy Collaborations

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Most recently, Pakistan and a Dubai-based company signed a memorandum of understanding (MoU) for the construction of two 660 megawatt (1,320MW) coal based power generation plants at the Pakistan Power Park in Gaddani.

The company will also build a jetty in addition to the power projects, which will bring about US$2.5 billion investment. The projects will be completed in three years. Prime Minister Nawaz Sharif expressed happiness over the signing of the MoU and said the government had taken bold initiatives to address the issue of energy shortfall through several short and long-term projects.

Details

The MoU was signed between Private Power and Infrastructure Board (PPIB), Ministry of Water & Power and Arab National Construction (ANC) Holding LLC, Dubai. It was signed by Faris Tayeb Abdul Rahim Al-Baker, Vice Chairman and chief executive officer (CEO) of ANC, and NA Zuberi, Managing Director, PPIB. Khawja Muhammad Asif, Minister for Water and Power, Abid Sher Ali, MOS for Water and Power, Saifullah Chatta, Secretary Water and Power, and other officials were also present.

Pakistan appreciates UAE Private Company Investments

Prime Minister Nawaz Sharif appreciated the power sector investment by the UAE private company in Pakistan and expressed the hope that it would help Pakistan overcome the energy shortages. He said his government was giving priority to the power sector and had planned several projects in this regard. He announced that 10 coal-based power plants with capacity of 660MW each will be constructed at the Pakistan Power Park in Gaddani, where the Chinese have agreed to invest in six projects; two projects will be constructed by the ANC Dubai and one project has been initiated by the Government of Pakistan. He said that two coal-based power plants are being built at Port Qasim having the same capacity.

Pakistan’s government Energy Integrated Efforts

The government of Pakistan is taking all possible measures to get ride from the looming energy crisis in the country. Diversified energy policy is being carried out in different parts of the country.

Twelve coal-based power plants of identical capacity have been planned at Sahiwal and five other locations in the Punjab. Coal mining at Thar coal fields and mine-mouth power plants in Sindh Province, 1,000MW Solar Power Park in Punjab, 1,420MW hydel powerhouse at Tunnel 4, Tarbela Dam, and 1,310MW Hydel powerhouse at Tunnel 5, Tarbela Dam, have also been planned, the prime minister reminded. He said Pakistan was offering several incentives for investment in the power sector.

While dilating upon the development projects, Prime Minister Nawaz Sharif said that the MoU with Qatar for the import of LNG and US$1 billion investment by the ADB in Jamshoro power generation project are clear manifestations of foreign investors’ trust in Pakistan government’s pro-investment policies.

Dubai EXPO 2020 and Expected Bounties for Pakistan

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UAE won the bid to hold Dubai EXPO 2020. It has multiplier effects for the society and macro-economy of the UAE. It would also open gate for greater economies ties between the UAE and Pakistan in terms of labour exports, food security, information technology experts and the last but not the least, construction.

Keeping in view the trans-regional strategic importance of the Dubai EXPO 2020 the President of the Federation of Pakistan Chambers of Commerce and Industry (FPCCI) said on that the chamber will set up an office in Dubai for a proper coordination for participation in Expo 2020 Dubai, which is going to be the world’s largest event after the Olympics and FIFA World Cup, a statement said.

The FPCCI president said that Expo 2020 Dubai is an opportunity, which needs to be exploited by aggressive planning, marketing and strategies to make maximum benefits from this event, particularly in terms of projection of Pakistan in the field of exports, manufacturing capacity, investment opportunities, new business ideas, tourism, heritage, culture, service sector, etc.

According to Dubai official figure around 25 million foreign visitors are expected to visit Expo 2020 due to which the population of Dubai during the six months of expo will increase approximately three times, resultantly the requirement of hotels / apartments will be doubled, while the existing capacity is insufficient and more hotels / apartments, new restaurants, shopping malls, thematic parks, roads, overhead bridges, etc. will be constructed. The chamber has already identified the sectors of construction material, including cement, tiles, sanitary wares, wooden material, building material, furniture, electrical goods, carpets and skilled manpower, etc. for further enhancing of economic, trade and commerce relations of the UAE and Pakistan in the days to come.

Furthermore, this mega project, around 273,000 jobs will be created in hotels, constructions, machine operators, engineering, designing and architecture, transport, marketing and other sectors in Dubai, which Pakistan can easily provide.

UAE’s Positive Role in the Economy of Pakistan

The UAE has been emerged as one of Pakistan’s major economic and trading partners. Bilateral trade between the two countries has crossed $10 billion target and the UAE has become the largest trading partner of Pakistan.

According to an official figure, trade between the two countries is increasing day by day it has surpassed $US 10 billion during 2012-2013. The following given table shows the volumes of bilateral trade between the two countries.
(US$ Million)
Year Exports Imports Total Trade Volume Trade Balance
2006-07 1,392.50 3,280.40 4,672.90 (1,887.9)
2007-08 2,070.95 4,985.30 7,056.25 (2,914.35)
2008-09 1,469.90 4,399.62 5,869.52 (2,929.72)
2009-10 1,720.41 4,781.84 6,502.25 (3,061.43)
2010-11 1,855.18 5,812.01 7,667.19 (3,956.83)
2011-12 1,891.45 6,350.894 8,242.346 (4,459.442)
Source: SBP & BOI (2013)

The above table show the balance of trade towards the UAE which should be gradually rectified by changing our trade priorities and, preferences with the help of better commercial diplomacy.

Moreover, according to the data of SBP and Board of Investment (BOI), the UAE is the biggest investors in Pakistan. Its collective investment in the country has reached to $US 21 billion in 2012-2013. In the last decade, UAE merged as the biggest investor in Pakistan. The major proportions of the UAE investments (private & public) came from banking, telecommunication, information technology, ICT, electronics, real estate, agricultural and corporate farming.

In the times of national constant budgetary deficits, a worker remittance is the hope of the last resort. According to latest report of the SBP (November, 2013) overseas Pakistani workers remitted an amount of $5,275.61 million in the first four months July to October of the current fiscal 2013-14 (FY14), showing a growth of 6.27 percent when compared with $4,964.21 million received during the same period of last fiscal year July-October FY13.

Every year, the 1.5 million Pakistanis working in the UAE send the valuable remittances reaching to $2.5 billion due to which UAE has now the biggest country of the Pakistani worker remittances in the world. It shows the close trade & commerce relations between the two countries.

Ajman Free Zone attracts Pak investors

Ajman Free Zone Authority has urged Pakistani investors to take advantage of the business opportunities in the Middle Ease by establishing their presence.

Ali Hussain Fahmi, head of customer service of Ajman Free Zone Authority, at a press conference said, at present, over 1,800 Pakistani businesses are registered with the free zone of the total 9,000 registered businesses, it said.

A two-member delegation of the authority organized a seminar on February 20 and met Pakistani investors to further explore the growing inward investment from Pakistan.

On the occasion, the message from Mahmood Al Hashemi, director general of Ajman Free Zone Authority, was read out in which he said: “We want to enhance business relations, promote trade and strengthen ties with Pakistan’s business community. ”“The road show is aimed at Pakistani businessmen, entrepreneurs and investors that would like to spread their operations internationally, especially in the Middle Eastern region, whereby the UAE serves as a springboard and a centre point to enter the regional markets,” he added.

Concluding Remarks

United Arab Emirates and Pakistan greater economic integration would be roller-coaster for both the countries. It would open avenues of public-private partnership. It would speed up our energy cooperation; strengthen trade and commerce ties and the last but not the least, food security in the days to come.

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