PAK-QATAR ECONOMIC TIES

SHAMSUL GHANI
(feedback@pgeconomist.com)
Mar 22 - 28, 2010

Pakistan and Qatar economies can best be described as two unmatchable economies: latter is an oil-rich economy with huge surplus and the second highest per capita GDP while former is debt-ridden and deficit economy with a high incidence of poverty.

But the chances of sustained economic cooperation between two dissimilar economies are far higher than those between the equal-status economies, as surpluses on either side are easy to trade off. For example, excessive unemployed manpower in the poor economy can be advantageously absorbed by the rich economy. Similarly, energy sector surpluses can be transferred by the energy-rich economy to the benefit of the energy-deficit economy, which the poor economies are bound to be. Moreover, the expertise of certain areas in which the poor economy excels might be in demand at the other end of the nexus. Pakistan financial, IT, education and defense sectors can be of some interest to a smaller country like Qatar.

In the wake of an unprecedented oil boom, the Qatar economy recorded high growth levels during the current decade by posting its eighth consecutive budget surplus in 2008. Qatar's oil reserves are estimated at 15 billion barrels, while its known gas reserves are said to be around 26 trillion cubic feet. The major component of Qatar income comes from the export of oil and gas that accounts for 50pc of the GDP, 85pc of the total export and 70pc of the total government revenue. Prior to the oil discovery that started from 1940, Qatar's economy was based on fishing and pearl hunting. Japanese researchers' work on "cultured pearls" affected the natural pearl market and Qatar's pearl economy began to show signs of decline. But the discovery of oil transformed Qatar into a highly rich economy with its citizens enjoying high standards of living comparable with any developed western nation.

According to an IMF report, Qatar has the highest per capita GDP in the Arab world, and the second highest in the entire world, according to the CIA Facebook.

Although oil and gas are destined to remain the major planks of Qatar economy for a considerable period of time, the Qatari leadership has taken measures to transform the energy economy into knowledge economy. The establishment of Education City under the aegis of Qatar Foundation and the launch of Qatar Science and Technology Park in 2004 are steps in this direction. Efforts to stimulate private sector and attract foreign investment have expanded the horizon to sports and entertainment fields. The organization of 15th Asian Games in Doha led to the construction of Doha Sports City with multi-faceted high-value sports facilities including Khalifa Stadium and Aspire Sports Academy. Encouraged by the successful organization of 15th Asian Games, the government of Qatar made a bid to host the 2016 summer Olympics.

The visionary economic diversification has resulted in the creation of Qatar Financial Centre (QFC) that channels country's financial and investment activities by providing to the financial institutions services related to investment, margins, non-interest loans, and capital support. QFC not only supports the local financial activities but also acts as a channel for other GCC countries to pool investment resources for profitable utilization by the network of respective financial institutions. This offers an opportunity to the GCC countries and their financial institutions to get access to the one trillion dollar investment funds expected to be raised during the decade.

One would like to expect, from Pakistan's point of view, closer energy relationship between the two economies. The long standing brotherly relationships and absence of any political or religious disputes warrant closer economic ties between the two countries.

Unfortunately, we have not been able to ensure a long term mutual transfer of economic benefits depending on the state of economy of the two countries. Perhaps, this is our political deficit rather than the economic deficit. From the inception, we are trained to indulge in the politics of alienation. Give us an issue and we will antagonize any nation in the world to the point of no compromise. We hardly know to benefit from the surpluses of our neighbors and in return let them benefit from our surpluses. We are miserably short on oil and gas but despite having brotherly relations with all energy-rich Arab and non-Arab Muslim nations, we have failed to strike a deal with any of them to solve our energy problems. For the time being, we forget our own water and coal resources as a solution to these problems.

Since 1992, we have entered into three gas import agreements with Iran, Turkmenistan and Qatar but none of them has seen the light of the day. Experts say that out of the three only Iran, Pakistan, India (IPI) project is feasible but our political relationship with India and our ineptitude to effectively handle her make the project a doubtful starter. A lot of work and cost go into the development of a project. One can rightly question why impractical and doubtful projects are conceived after all. Even if conceived, why these projects are not abandoned immediately? The Pak-Qatar gas project was conceived in 1990 followed by the signing of MoU in 1992. It is almost two decades since its conception, and we still remain undecided about the fate of the project. Besides energy, we could create economic synergies in IT, education and financial sectors. Possibly, the most significant economic tie between the two countries is our human capital. The sustained and improved inflow of workers' remittance is a clear indication of growing demand for human capital in a country where expatriates form the major segment of the total population. Besides skilled and unskilled labor, we can export IT, education and finance people to boost remittances.

WORKERS' REMITTANCE FROM GCC COUNTRIES (MN$)

COUNTRY 2003-04 2004-05 2005-06 2006-7 2007-08 2008-09*
Bahrain 81 91 101 136 141 128
Kuwait 177 215 247 289 385 360
Qatar 89 87 119 171 233 277
S.Arabia 565 627 750 1024 1251 1264
Oman 105 119 130 161 225 231
UAE 597 713 716 866 1090 1367
* Figures for 9 months