Saudi Arabia’s Crown Prince Muhammad Bin Salman is embarking on what is called Saudi Vision 2030 through a National Transformation Plan.
In this regard the Initial Public Offering of Aramco, a company worth an estimated $2 trillion, is sinking into the background. What draws attention is Muhammad Bin Salman’s urge to change the economy, which hitherto relied solely on a single commodity, into a modern, diversified and open one?
With more than half of the Saudi population under the age of 25, the young Saudi potentate is wending the conservative nation towards modernisation.
His recent political purge, defined by some as a ‘power grab’, and the conversion of the Riyadh Ritz-Carlton hotel into a gilded prison for the princes, conveys that the Crown Prince means business. With the Saudi economy opening up and brotherly ties existing between the countries one might ask: what is in it for Pakistan?
Apart from a strong religious bond, Saudi Arabia is the largest market for Pakistani workers. According to the Ministry of Overseas Pakistanis and Human Resource Development, 1.6 million workers migrated to Saudi Arabia for employment purposes.
Pakistan’s manpower export, however, consists mainly of drivers and labourers. For them modernisation might prove harmful. Given the latest decree by Muhammad Bin Salman allowing women to drive, the workers operating as drivers— most of them in Uber — might lose a huge chunk of their prime customers. Bloomberg estimates about 80 per cent of Uber users there are women.
Pakistan is also one of the top countries in terms of receiving Saudi remittances, which amount to a total of $2.1 billion from July to November FY2017-18.
With the lion’s share of remittances, the unskilled labour there needs to be replaced with skilled people. Mining industry in Saudi Arabia is another outlet for our young manpower. While the Kingdom is trying to wean itself off oil, its mining industry is not going anywhere anytime soon.
The metamorphosis of Saudi economy is a chance for Pakistan to fill the gap in terms of its economic standing. By providing expertise we can grab a few contracts. Preliminary developments are already underway as evidenced by the recent meeting of a seven-member Pakistani delegation at Saudi Ministry of Commerce and Investment in Riyadh.
Neom, the futuristic city, the King Fahad Economic District, and others are being touted as investment destinations. The soil there will be fecund to sow some seeds of hospitality ventures. If Saudi Vision is what it claims to be, the influx of visitors is all but certain.
The Kingdom is also extending its investment portfolio to sectors like technology and artificial intelligence. Digital infrastructure is a burgeoning sector.
According to Saudi Vision 2030 the Kingdom wants to expand their high-speed broad-band capacity by 90pc household coverage and 66pc in urban areas.
The promise to let foreign workers own property can open floodgates of opportunities for Pakistani businessmen. Moreover, plans to increase the usage of e-commerce by 80pc in the retail sector heralds “open for business” prospects for Pakistan.
Saudi Arabia is also mulling over plans to allow 100pc foreign ownership for engineering firms. That our bilateral trade and diplomatic relationships operate on friendly lines makes all the afore-mentioned prospects even more probable, easy and practical.
However, all of this might come at an opportunity cost. To think that the camaraderie between countries is centred on concern, compassion and love for one another is naivety. The principle of reciprocity is always at work.
China gives us China-Pakistan Economic Corridor; we reciprocate by applying lax business rules for them. Saudi allows us to invest; we might not be able, then, to stand our neutral ground. Pakistan has to tread very carefully.
As we discern the string of benefits we can reap from economic change in the Kingdom, the question of whether our capabilities are enough to take advantage of this opportunity remains. Do we possess the skills and expertise that the Kingdom is seeking?
Putting our own house in order and a strong and sincere plan to improve our collective economic acumen is direly needed. Letters need to be converted into spirits. Words need to enter the realm of practicality. n
Published in Dawn, The Business and Finance Weekly, January 8th,2018