VIBRANT UAE FIRMS WORKING IN PAKISTAN
Mar 12 - 18, 2012
Pakistan enjoys deep-rooted cordial relations with the United Arab Emirates for more than four decades. The volume of trade between the UAE and Pakistan hovers around $ 7.6 billion. The UAE is one of the biggest foreign investors in Pakistan after the United States and the United Kingdom in key sectors such as energy, telecommunications, real estate, aviation, and banking.
Investments from UAE witnessed a surge since 2005 and UAE became single largest source of FDI in Pakistan in 2005-06. However, since then the FDI from UAE has been declining. However, the trade between the two countries is increasing and UAE has emerged as second largest destination of Pakistani exports.
UAE has an open economy with a high per capita income and a sizeable annual trade surplus. Economic diversification has reduced the portion of the GDP based on oil and gas output of 25 per cent.
These factors can be potentially highly beneficial for the economy of Pakistan. There are ample opportunities to the corporate sector of UAE and Pakistan to further reinforce bilateral ties.
Pakistan is a growing market and UAE based companies operating here are being pushed to make long-term strategic investment. More than 27 corporate giants and conglomerates from UAE are targeting the manufacturing, trade, services, investment and tourism sectors in Pakistan. They are identifying areas of common interest in these sectors and strengthening public and private sector ties between the two countries. Major UAE based corporations working in Pakistan include Pakistan Telecommunication Corporation, Etihad Airways, Bank Alfalah, Dubai Islamic Bank, KESC (acquired by Abraaj Capital), Descon Engineering, Fly Dubai. Pakistan has a huge market of around 180 million people and resilient economic fundamentals alluring foreign investors.
All these firms are having enormous profits and lucrative environment. Pakistan Telecommunication Company Ltd (PTCL) has expressed intention to pour further investment in Pakistan to fully transform it into a world-class telecom company.
PTCL is now offering all ICT products in Pakistan. Bank Alfalah is also a sizeable investment of UAE. The contribution in banking sector is particularly important, as it has developed money market in Pakistan. FlyDubai has increased its business in Pakistan considerably. Dubai Islamic Bank is also expanding its branch network to over100. It intends to offer the entire range of Shariah compliant products.
Etihad Airways has also penetrated Pakistan market, and is planning to enhance operations with the expansion of fleet. They are already running daily flights from Karachi, Islamabad, Lahore, Peshawar to UAE and will soon start lifting Pakistani passengers for Frankfurt and Munich.
The state airline of Ras Al Khaimah, RAK Air, got license from Pakistan and is expected to start operations soon, which will further boost air-to-air contacts between Pakistan and the UAE. The Maaza International Group of Companies is also ready to make investment in the agro and dairy industry of Pakistan as agro and dairy industry is making 300 per cent profit in Pakistan. This group is going to import maximum inputs from Pakistan to meet the requirement of its 30 food processing units. Some of the UAE based firms are keen to import rice from Pakistan.
Moreover, several UAE based firms have shown interest in making joint ventures with Pakistan to develop agricultural land on a large scale in Sindh and Punjab which will benefit both countries. Pakistan has huge cultivatable land while UAE can bring technology that will not only improve the per acre yield but also boost supply chain from farm to markets. Karachi Electric Supply Company (KESC) with the management of Dubai based firm Abraaj Capital has invested almost $500 million in the city's power company. The 560-MW Combined Cycle Power plant would be completed by next year. KESC has also struck a deal with a foreign firm to get power from Thar Coal.
In order to boost the trade activities between Pakistan and UAE a marvelous single country exhibition UAE Expo 2011-Magnificent 7 was held on November 2011 at Karachi Expo Centre. High profile government officials and CEOs of conglomerates participated from seven Emirates in the mega event. This venture attempted to disseminate the message that Pakistan has liberalized its foreign exchange regime and profits, royalties can be fully repatriated thereby attracting further investors from UAE as well as other countries of the world. Consul Generals and commercial officers of US, China, Germany, Japan, Russia, Afghanistan, and Korea also visited the UAE Expo 2011 Magnificent-7 and took keen interest in the products at display.
It is high time to persuade investors to tie the knot with Pakistan's natural resources and low-cost production centers. We can in turn take advantage of UAEs' world brands and distribution networks, which will not only help in employment generation opportunities and increased revenue in Pakistan but also enhance competitive advantages as a regional hub. Pakistani exports to UAE can be enhanced from two per cent of UAE's global trade to six per cent with the help of planned efforts. We must aim at having at least 10 Pakistani leading companies' shares to be traded on the Abu Dhabi and Dubai financial markets.
There is still enough room to further promote investment and trade relations between the two countries. We need to underline new and untapped sectors like mining, iron ore, livestock, energy, real estate as well as others which would result in tangible and plentiful gains to both. Businesspersons from the Ras Al Khaimah and Ajman free zones should also be invited to study the opportunities and capitalize on them. Pakistan needs to translate these interactions into joint ventures and explore new avenues for investment.