Business owners in Pakistan have their eyes set on the Riyadh meetings as developments in the Future Investment Initiative (FII) are underway.
Prime Minister Shahbaz Sharif and the delegation from Islamabad is expected to bring back upwards of $12 billion in investments.
Premier will be meeting the Crown Prince Muhammad bin Salman along with other high-ranking officials in an attempt to secure Saudi investments.
Earlier this month, prior to the Shanghai Cooperation Organization (SCO) summit, a major Saudi delegation invested nearly $2 billion dollars into the country. With the Saudis expected to continue bankrolling investments in Pakistan, business owners are preparing to celebrate.
This is due to the fact that Saudi investments will allow Pakistani businesses to expand their operations significantly. Businesses are already doing well, as can be seen with the Pakistan stock exchange (PSX) closing over 91000 points today.
With international investments pouring in from Riyadh, investor confidence is projected to increase and further contribute to the growth of businesses in the economy.
Riyal-fueled growth is likely to scale up the scope for projects of businesses, which will result in new employment posts. Once the hiring process by businesses ends, the situation of unemployment is likely to improve in the economy.
Currently, the unemployment rate sits at an uneasy 5.5%, which translates into around 4.5 million people who are out of work. With more people working and with an increase of money flowing in the economy, businesses are likely to see an increase in the demand for their goods.
The bulk of the Saudi investment will be made towards the petroleum refinery sector.
If Pakistan is to develop a more extensive network of refineries, it could be able to greatly benefit from future oil discoveries.
This is because Pakistan would have the necessary infrastructure to purify its own crude oil and not have to rely on foreign powers for petroleum imports. If oil is to be discovered and the refineries manage to reach the necessary capacity with Saudi investments, an annual saving of around $16.91 billion could be seen – as that is the current annual value of petroleum imports.
The result of this could be appreciation of the PKR with fewer imports as the Pakistani rupee will be buying up fewer commodities in international markets, resulting in a reduction in its supply.
This will spell great news as businesses that rely on processing imported goods to produce final goods will be able to import goods cheaply with strengthened rupee.
Currently, the textile sector is involved in the importation of dyes and pigments to produce final products. However, these imports could be made cheaper if Saudi investments fund the construction of refineries.
Economic collaboration between Saudi Arabia and Pakistan will be extremely beneficial to the latter.
Will Islamabad’s delegation manage to snag billions in investments? Or will they return home empty-handed? Time shall tell.
