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Kuwait to help Pakistan deepen trade relations with AGCC states

ISLAMABAD - Kuwait has decided to help Pakistan deepen its business, trade and investment relations with the Arab Gulf Cooperation Council (AGCC), besides expanding bilateral economic links.

Islamabad's new "Look to Gulf" business policy will get a boost as a result of deeper relations with the six-nation AGCC, multilaterally, but also bilaterally with these countries, especially Saudi Arabia, UAE, Kuwait and Bahrain. The two-way trade - and investment - flows are already moving ahead, from a somewhat a comparatively slow pace since the mid-1990s. Experts also feel that besides investment and trade from AGCC countries, Pakistan will benefit from the fast growth that has already taken place in the region - and continues with a strong dynamism.

The latest spurt in this direction comes as a result of the just-concluded meeting of the Kuwait-Pakistan Joint Ministerial Commission (KPJMC). Kuwait Minister for Commerce & Industry Abdullah Abdul Rehman Al Taweel set the ball rolling at KPJMC for stepping up AGCC-Pakistan deepening and widening of investment and business relations. Kuwait will also help to develop a cooperative strategy between AGCC and Pakistan. Bilaterally, he also committed Kuwait larger investment for several infrastructure projects and trade expansion.

Taweel assured Finance Minister Shaukat Aziz on behalf of the Government of Kuwait (GoK) to move for securing "dialogue partner" status for Pakistan in the AGCC. Al Taweel said, " Kuwait will plead for Pakistan's case because it is our ally and a trusted friend of AGCC, and should be made an active partner for trade and economic activity in the Gulf. We are increasing the trade in the AGCC, and as we have done with India, we will take Pakistan aboard as well, and for this purpose I will talk to the Secretary general of AGCC." This will be a major help to boost Islamabad's endeavours and "look to AGCC " policy.

It will ensure a substantial business cooperation and opening up of FDI inflows from the six AGCC members, Bahrain, Kuwait, Oman, Qatar, Saudi Arabia, and UAE. Several hundred thousand Pakistanis are currently working at all levels of AGCC economies, ranging from banking to telecom and energy to services. Nearly a third of all home remittances of $3.5 to 4.5 billion a year come to Pakistan from this region.

Pakistan, during the KPJMC sessions and other meetings, appreciated the GoK interest in Pakistan, particularly via Kuwait Fund for Arab Economic Development (KFAED). Pakistan offers a number of opportunities for investment, both to private and the public sector for investment, Al Taweel was informed. AlTaweel informed KPJMC and various ministers that his government will "increase its investment in Pakistan in fields like highways and roads, oil & gas, electricity, water, telecom, real estate, financial services, and the social sector. Kuwait owns Karachi Sheraton Hotel. The two countries are already operating Pak- Kuwait Investment Company (PKIC) that has established Al Meezan Islamic Bank. PKIC and Al-Meezan Bank have now been asked to "tap more investment opportunities and participate in Pakistan's economic growth."

Kuwait and Pakistan have decided to expand their mutual trade to $1.0 billion annually in the next two to three years. The present level of Kuwaiti exports to Pakistan is $750 million. Pakistani exports to Kuwait are just $50 million. Al Taweel, in his talks with Pakistani Minister for Commerce Humayun Akhtar, proposed that trade between the two countries should be tripled from the existing level. The two sides signed a pact, ratifying Kuwait-Pakistan Bilateral Trade Agreement. "With the right kind of environment, bilateral trade can cross $1.0 billion, which will mean a narrowing of trade deficit for Pakistan," Aziz forecast. Pakistani exports to Kuwait, the AGCC region and Iraq can rise quickly if its businessmen accept Al Taweels offer to Humayun Akhtar to establish their warehouses in Kuwait Free Trade Zone to make their duty free exports to whatever destination they wish. The magnitude and potential for such business can be estimated from what Al Taweel said about the business with Iraq alone. "At present, one thousand trucks, loaded with different goods daily move out from Kuwait to Iraq. Pakistan should take advantage of such opportunities," he said.

Pakistan imports its entire requirement of fuel oil from Kuwait, Saudi Arabia and UAE. It also has received a very substantial help from Riyadh in the form of Saudi Oil Facility (SOF) since May, 1998 when Western nations had imposed economic sanctions against Islamabad after Pakistan staged its nuclear explosion, only days after India had carried out its own nuclear tests.

Al Taweel encouraged the Pakistani private sector to step up trade with AGCC, and Kuwait, in particular.

But, Pakistani private sector, including industrialists, exporters and businessmen, he advised, can immediately benefit if they focus on "Kuwait as a hub of economic activity for the entire Gulf region and consider it as a bridge to be used to reach Iraq for a share in its reconstruction." Pakistani businessmen, just like a host of other countries, have been complaining that they did not get anything out of the reconstruction and development plans for Iraq.

Al Taweel's offer can prove to be a major breakthrough to go in for massive Iraq-related business and reconstruction projects. "As an ally of the United States, Kuwait has got many projects going in Iraq, and we urge Pakistani businessmen to take advantage of these opportunities. Kuwait has established nearly a $1.0 billion fund to help entrepreneurs who wish to invest in Iraq. Kuwait will like companies from Pakistan, China, India, and Singapore, to work as sub-contractors of the primary contractors who are primarily US and British.

If Pakistani business like, they can come independently, or enter into joint ventures with the Kuwaiti private sector, but transparency and fair business is the name of the game in Kuwait," Al-Taweel said. He also said, "both the governments should push their respective private sectors to interact and get involved in business activity in each other's country, while the governments should only be facilitating and regulating them."

Finance Minister Shaukat Aziz, in his discussions with Al Taweel said: " we seek cooperation from Kuwait to act as a bridge for getting us a share for Pakistan's private sector in the reconstruction of Iraq." "On the labour front, we have informed Kuwait that human capital is the major strength of Pakistan, and asked Kuwait to encourage taking more work force from this country," Aziz said. Islamabad sought permission to open, in Kuwait, a branch of National Bank of Pakistan (NBP) to help the workforce already employed there to send home their remittances through legal means. National Bank of Kuwait (NBK) will open a branch in Pakistan."We will shortly be approaching Kuwait for investment in equities, too" Aziz said. Pakistan, at the same time, identified infrastructure and other projects for financing by KFAED.

KDF is willing to invest and be active in Pakistani development projects. KFAED, at present, has a portfolio of $245 million, spread over twelve projects in Pakistan, and "we will see, this portfolio and investment, expands now," Al-Taweel said. The projects will be financed on " highly concessional terms," Aziz said. Kuwait has already funded some major projects. These include Ghazi-Barotha Hydro Power, in this country. Pakistan put forward six major projects, including the high priority Lyari Expressway at Karachi that will require $65 million, that Kuwait has agreed to finance.

Al Taweel discussed with Pakistani ministers his country's investment in state-owned industry and business that is being currently privatised. Al Taweel said, he has "expressed Kuwait's interest in investment in Pakistan State Oil (PSO), and other entities, particularly, in oil and telecom sectors." Giant PSO has 70 per cent share in oil marketing in Pakistan, while the rest is shared between Shell, Caltex and Total. PSO's sale is scheduled to be completed within the next few weeks.

Pakistan is already in business with other AGCC countries, and all indications are that it will be helped to expand it in the days to come. Bahrian Prime Minister Shaikh Khalifa bin Salman Al Khalifa spoke to enlarge investment and trade relations with Pakistan last week. "We have all the admiration for Pakistan's great economic potential, especially as it is the gateway to the Central Asian Republics (CAR)," he said while talking to Liaquat Ali Jatoi, Pakistani Minister for Industries and Production who was visiting Bahrain. Al Khalifa said, "Bahrain enjoys excellent bilateral relations with Pakistan, which are built on strong foundations, but need to be strengthened further. Jatoi said "we are are eagerly looking forward to receiving Prime Minister Al-Khalifa to visit Pakistan. Al-Khalifa and Jatoi agreed to exchange Bahrain and Pakistan trade delegations in order to benefit from each other's expertise and technological know-how.

A Saudi diversified business group, Kanooz meanwhile, has announced plans to invest $100 million in housing and other fields in Pakistan. Group President Walid bin Hassan bin Mohammed Al Saygh, has signed a memorandum of Understanding (MoU) with Hafeezur Rehman, Chairman of Pakistan's Orient Group of Companies in Dubai for this purpose. Company officials said, Kanooz is a diversified business group, engaged in communications, trading, marketing and professional services, tourism, real estate, hotels and leisure industries. Orient, besides other engagements, focuses on construction, property development residential development, low-cost housing, tourism, leisure industries and hotels.

Aqeel Al-Jassem, President, Islamic Chamber of Commerce & Industry (ICCI), speaking to a large group of business and industry leaders, said, "Muslim countries should show greater cooperation in trade and investment to ensure maximum utilisation of their rich natural resources and potentials.