Pakistan anticipates a surge in investment from UAE entities as it privatises state-owned assets, a minister has told The National during the Sharjah Investment Forum.
Qaiser Ahmed Sheikh, Pakistan's Investment Minister, said economic growth is picking up pace amid International Monetary Fund-backed reforms, and the South Asian nation now presents a compelling case for more Emirati investments.
“The UAE is very close to Pakistan and we have traditionally good relations,” Mr Sheikh said.
“I had a good meeting with the UAE Investment Minister [Mohamed Alsuwaidi] and things are progressing well.”
There are good investment opportunities in sectors including agriculture, mining and infrastructure development, Mr Sheikh added.
UAE's global push
The UAE, the Arab world's second-largest economy, over the past few years has built its trade and investment ties around the world through comprehensive economic partnership agreements, or Cepas, to diversify its non oil economic base.
The Emirates has signed Cepas with countries including India, Indonesia, Turkey, Malaysia, Israel, Georgia, Costa Rica, Australia and New Zealand, to reduce tariffs and remove trade bottlenecks.
State-owned as well as private sector companies in the Emirates are also aggressively expanding their global footprint through investments and partnerships.
International Holding Company, the largest listed company on the Abu Dhabi Securities Exchange, acquired a majority stake in Pakistan’s state-owned First Women Bank last week amid growing interest from UAE firms in Islamabad's strategic banking and financial assets.
The acquisition follows a joint venture signed in February by IHC subsidiary International Resources Holding with the government of Balochistan and local partners for exploration of minerals, IHC said at the time.
There have also been other UAE investments in Pakistan including AD Ports' 50-year agreement to develop Karachi Port as well as a partnership to explore new avenues in trade, transport and logistics infrastructure in the South Asian nation.
Pakistan is also planning to transfer operations of Islamabad's international airport to the UAE under a framework agreement, the country’s Deputy Prime Minister and Foreign Minister Ishaq Dar said last month.
Pakistan's Cabinet Committee on Inter-Governmental Commercial Transactions decided to finalise arrangements with the UAE Government through a government to government model for the transfer of operations of Islamabad International Airport under a framework agreement, Mr Dar added.
Mr Sheikh said discussions are continuing on the airport operations deal with the UAE but nothing has been finalised yet.
Pakistan is also holding negotiations with a number of different investors on the privatisation of Pakistan International Airlines, he added.
“We are looking for a better investor. There are discussions with various investors but nothing has been finalised so far,” Mr Sheikh said.
Islamabad is in talks with Russia for a steel mills project in Karachi and is in discussions with other countries for investments in different sectors, he added.
Economic revival
Pakistan’s economy has continued to stabilise after the country was granted a $7 billion loan under the Extended Fund Facility initiative by the International Monetary Fund last year. As part of the deal, it also received $1.2 billion from the IMF last week.
The South Asian nation's recovery remains on track, with inflation contained, external buffers strengthening, and financial conditions improving as sovereign spreads narrowed significantly, the IMF said last week.
It expects Pakistan’s economy to expand 2.7 per cent this year from 2.5 per cent last year. The economy is expected to further pick up pace and grow by 3.6 per cent next year.
“Pakistan has become a stable economy. All three rating agencies have upgraded Pakistan and the IMF has expressed confidence in Pakistan’s economy,” Mr Sheikh said.
Fitch Ratings upgraded Pakistan's credit rating to 'B-' from 'CCC+' with a stable outlook in April. It cited improved fiscal performance, lower inflation and economic stability for the improved rating.
