ECONOMIC TIES WITH UAE
SHAMSUL GHANI (email@example.com)
Nov 16 - 22, 2009
Like world's other developed economies UAE also took the brunt of global financial meltdown and experienced a downslide in its burgeoning economy. The impact was more pronounced in the second half of 2008 (when oil prices tumbled) and the first half of 2009.
Although the year 2009 turned out to be the most difficult year for the UAE economy in the recent past, the recessionary pressures now seem to ease down as the year 2009 reaches a close. The coming years, particularly 2010 and 2011, might well see the economy back on the rails. An early 2009 Dubai Chamber Economist report said:
"The United Arab Emirates, and indeed the GCC as a whole are in a strong position to withstand the global economic turmoil even though all components of GDP are expected to weaken in 2009. As mentioned, international agencies suggest that real GDP growth will moderate to 2% in 2009 from an expected 7.4% in 2008. Several years of strong fiscal and current account surpluses have resulted in a large buildup of net foreign assets, increasing the ability of the government to support the wider economy and this will help the government ride out any weakness in economic growth this year."
Pakistan and UAE relationship is something that goes beyond the economic and financial facts. There is definitely a touch of brotherhood in this relationship. Be it the gift of 320 MW power plant to meet the acute power shortage or an MOU for participation in a housing project to help IDPs of Swat and Malakand Division, the relationship continues to highlight the element of mutual affection between the two nations. The impact of wide-range ties can be seen in the multiplicity and diversity of economic projects that the two economies have undertaken to help each other. UAE has presence in Pakistan's banking, telecommunication, hydro power, coal and renewable energy, refinery, and real estate sectors.
The ongoing UAE investment in Pakistan's agriculture sector will open new vistas of economic cooperation. This program of cooperative farming will provide food security to UAE on one hand, and will generate jobs in Pakistan's farming and allied sectors on the other. According to the government sources, more than 50,000 acres of land has been allotted to UAE based investors who will enjoy 100 per cent ownership with subsidy provision for import of machinery and fertilizers. The investors will have the option to export to UAE 100 per cent of the farm yields. The farm yields may include dairy products, human food grain, animal feed, vegetables, fruits etc. UAE investors' acquisition of farmland in Balochistan to save food import cost shows their confidence in Pakistan's ability to amicably resolve the political issues of the beleaguered province.
The most important part of the relationship is that this has not been a one-way affair. Pakistani investors have also a sizeable stake in UAE economy. According to an estimate, more than 6,000 Pakistani companies are operating in UAE. Pakistan's cooperation in the field of defense is another landmark in the brotherly ties of the two countries. Besides, Pakistan is reportedly the third biggest investor in Dubai's real estate market. A recent Dawn article says:
"Over the first half of the current year, Pakistanis were the next to the UAE and the UK nationals who contracted to buy new property in Dubai. According to figures reported in Dubai press in the fourth week of October, 3290 units were registered in names of the UAE nationals, followed by 3243 by the UK, 2510 by Pakistanis and 2450 by Indians."
UAE investors, on the other hand, have also interest in Pakistan's potential real estate market. Groups like Emaar and MAF investments have a number of real estate projects in Pakistan. Government's ongoing efforts to woo UAE investors to invest in Pakistan also seem to gain momentum.
In July this year, the president invited Abu Dhabi Fund for Development (ADFD) to make investment in energy and infrastructure projects of Pakistan. Established in 1971, ADFD stands to assist development economies through investment in their development projects. During the last 37 years, the Fund has assisted 52 developing countries in their 267 development projects worth UAE dirham 23 billion.
UAE is a major source of FDI for Pakistan, ranking second after US in terms of the size of FDI. The following table presents a comparative view of major FDI contributors to Pakistan's economy.
INFLOW OF NET FOREIGN PRIVATE INVESTMENT (MN US$)
USA 1309 439 1748 745 (278) 467 UAE 589 4 593 170 9 179 UK 460 (125) 335 220 (75) 145 Hong Kong 340 (245) 95 124 (35) 89 Norway 275 0 275 92 0 92 Switzerland 169 (98) 71 210 (39) 171 Japan 131 10 141 65 (4) 61 Netherlands 122 24 146 64 9 73 Mauritius 99 6 105 321 3 323 Germany 70 (1) 69 60 0 60 Australia 70 (73) (3) 79 (12) 67 S. Arabia 46 (2) 44 (55) 0 (55) Kuwait 36 28 64 11 10 21 Singapore 25 20 44 246 (35) 211 China 14 0 14 (70) 0 (70) Canada 13 0 13 2 0 2 Others 1385 52 1437 921 (4) 917 Total 5153 39 5192 3205 452 2753
Similarly UAE ranks second, after US, with respect to the workers' foreign remittance inflow. During the first nine months of FY09, workers remitted $1436 million, $1367million, and $1264million from US, UAE, and Saudi Arabia respectively. UAE remittances included $815million from Dubai alone.