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Pakistan-UAE trade relations rising high: Arab federation sees investment in CPEC

Pakistan’s relations with the United Arab Emirates (UAE) are remained extremely close, shared faith and traditions and even enjoying good business deals and the eager interest of further investments into the Pakistan by the UAE investors. Opening the new avenues of mutual cooperation and joint ventures, Pakistan has recently invited the UAE investors and companies to make use of investment opportunities under China-Pakistan Economic Corridor (CPEC), a great investment project of economic well beings for not only Pakistan but for all the regional countries of Asia. The United Arab Emirates (UAE) expressed interest in increasing investment into Pakistan from an existing six billion dollars level through exploring opportunities in various economic sectors.

China-Pakistan Economic Corridor (CPEC), is a part of China’s ambitious One-Belt, One-Road multi-billion dollar initiative, and also part of Pakistan’s Vision 2025. Pakistan and China are working on huge projects on infrastructure, roads and railway networks. Most significantly, both countries are also investing in the energy sector also.

The decision taken by the government has brought in macroeconomic stability. Infrastructure expansion of over $55 billion is already being implemented under the program. Pakistan is fortunately on position to become a hub to connect growing regional markets of over 3 billion people.

A TRUSTED FRIEND

Pakistan is not only a trusted friend but a strategic partner of UAE. It had always extended strong support to UAE and Pakistanis, who are a great nation, had contributed a lot in his country’s social and economic development.

Sheikh Nahyan bin Mubarak Al Nahyan, heads the United Arab Emirates Ministry of Culture, Youth, and Social Development, expressing his sentiments said Pakistan was the second home to him like UAE for thousands of Pakistanis pursuing their career there in different fields. Both the countries would continue to explore ways for strengthening their cooperation on social and economic fronts.

Sheikh Nahyan, who is also the chairman of Abu Dhabi Group, said Pakistan is UAE’s strategic partner and participated in the development of UAE and its institutions. “We are indebted to this country and we have been investing here in good times as well as in bad times,” he said. “UAE will invest more in Pakistan.”

Abu Dhabi Group who invests in emerging markets already has large investment in Pakistan, including Bank Alfalah, Warid Telecom, Al Razi Healthcare and Wateen Telecom.

Sheikh Nahyan, said his privately-owned construction firm, Dhabi Contracting, had signed a MoU with Pakistani real estate tycoon Malik Riaz Hussain to build residential properties on an island in Karachi.

“We have signed a MoU but a lot of studies will still have to be done,” he told newsmen on the sidelines of a defense industry exhibition in the UAE capital, recently.

Sheikh Nahyan, who is also the UAE’s minister for higher education, gave no details of how he would finance such huge developments, beyond saying it could be done through loans or cash, but says “It will be in phases. Every phase will be studied by itself… It depends on the situation when we decide to go ahead with the projects.”

A member of Abu Dhabi’s royal family says he plans to spend $45 billion over up to 15 years on a real estate project in Karachi, touted in Pakistan as the country’s biggest ever foreign investment. The investment plans in Pakistan included plans to construct a miniature seven wonders of the world, the tallest building in the world, a sports city, an education and medical city, an international city and a media city.

Sheikh Nahyan said that a final decision to build the world’s tallest tower had not been made, adding that developments would be mainly residential. The tallest tower currently is the Burj Khalifa, built in Dubai at a cost of $1.5 billion.

UAE COMPANIES IN OPERATION

The UAE, a federation of seven states in Middle East, is the biggest investors in Pakistan among all the member countries of the Gulf Cooperation Council – Saudi Arabia, Kuwait, Qatar, Bahrain and Oman.

During the 2004-2010 periods alone, the UAE’s public and private sectors invested around $3.74 billion in Pakistan.

A number of UAE companies are currently operating in the country, including Emirates National Oil Company, International Petroleum Investment Company, Etisalat, Dana Gas, Al Ghurair, Emaar, DP World, Abraaj Capital, Thani, Danata, Atharihra Agricultural Company, Julfar, Emirates Investment Group, Arab Company for Packaging and Al Nasser Holdings.

Abu Dhabi Group also owns Bank Alfalah and United Bank Limited.

Moreover, the UAE’s ministry acknowledges vast foreign direct investment and joint venture opportunities in infrastructure development, electricity generation, water desalination, agricultural-based industries, insurance and real estate.

PAKISTAN STOCKS ATTRACTION

Pakistan Stock Exchange (PSX) had emerged as the best exchange in Asia and was included among the top ten best stock exchanges in the world.

PSX was going for international bidding to offload its 40 percent shares very soon that would further boost this institution. Due to positive economic indicators, including reduction in terrorist activities, PSX had become very attractive for foreign investment.

Pakistan is quickly reclaiming its shares of foreign investments and the reclassification of the equity market to the MSCI’s (Morgan Stanley Capital International) Emerging Market Index is a manifestation of global investor confidence in Pakistan.

The country’s equity market decided to open its shares for trading in public and diversify its shareholder portfolios, currently limited to brokerage houses.

The divestment of gross 60 percent shares is a part of demutualization process under which three stock exchanges (in Karachi, Lahore and Islamabad) had been integrated into the PSX.

The government of Pakistan is focusing on creating a business-friendly environment that will be a boost to economy and attract foreign direct investment in the country.

“Our foreign exchange reserves stand at a comfortable level of $23 billion (Dh84.48 billion). This year Pakistan is set to cross the 5 per cent GDP growth threshold, and is projected to grow over 8 per cent in the next decade.

CPEC BENEFITS

Road and rail infrastructure, industrial parks and economic zones along the length and breadth of Pakistan will culminate in state of the art Deep Sea Port at Gwadar. In time, Gwadar is expected to service not only Pakistan and the Asian continent, but, by slashing distances and cutting costs, also the markets of the Middle East and North Africa region.

Located at the intersection of four engines of growth in Asia, South Asia, China, the Middle East and Central Asia, Pakistan is uniquely positioned to become a hub to connect growing regional markets of over 3 billion people, and the CPEC is helping realize that dream.

As part of the One Belt, One Road project, China is creating a vast network of highways and railways connecting the Pakistan port city of Gwadar with China’s northwestern region of Xinjiang.

UAE INVESTORS INTEREST BEFORE NOW

This is an excellent investment opportunity for UAE investors. UAE was the second largest Gulf Cooperation Council (GCC) trade partner of Pakistan, with a trade surplus of US$5 billion. UAE is important to Pakistan. Pakistani nationals send US$4.5 billion in remittances each year from the UAE to their home country.

UAE is already one of the main investment partners in Pakistan. According to some estimates, it is the third largest investor. In the last few years, UAE companies have invested billions of dollars in all major sectors, particularly banking, infrastructure and communications.

These sectors provide a lot of opportunities for further investment, as Pakistan’s fast-expanding economy expects to achieve 5.5 percent GDP growth this year.

UAE current investment portfolio stands at $6 billion and further investment will be done in all sectors.

The people of Pakistan have a special affinity for the UAE, its people and its leadership. The bilateral trade between the two countries is about $7 billion in 2015. The government is trying to implement an aggressive security improvement strategy.

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