China is betting big that infrastructure investment in Pakistan will prove profitable.
Now the gulf’s largest economy, Saudi Arabia, is following suit.
Saudi Crown Prince Mohammed bin Salman said last month that his country will invest $20 billion on Pakistani energy and mining projects.
The Saudi $20 billion comes on top of $60 billion in Pakistani investment commitments by China, part of that country’s $1 trillion “Belt & Road Initiative (BRI).” It aims to create trade routes on land and by sea that connect 70 countries in Asia, Africa and Europe.
"Pakistan is going to be a very, very important country in the future and we want to be sure that we are part of that," bin Salman said in a televised address, announcing the investment, calling it “phase 1.”
"We believe in our region that's why we are investing in it and we believe that we are going to have one day a great Middle East surrounded by Pakistan from the east side,” said bin Salman.
Strategically-positioned between western China and the Indian Ocean. Pakistan has become something of a trade gateway between the world’s most populous country — China is now home to 1.4 billion people— and the natural resource-rich trading centers of the Middle East.
Pakistani business leaders say the infrastructure investment offers a chance for the county, home to some 200 million, to finally reach its economic potential.
“If we look back 5 years, back to 2013 Pakistan was suffering from large amount of brownouts and huge challenges in infrastructure,” said Ali Jehangir Siddiqui, a Pakistani entrepreneur who recently served as Pakistan’s Ambassador to the United States.
Siddiqui was speaking at the Atlantic Council Global Energy Forum, held in Abu Dhabi in Jan.
The Atlantic Council is a Washington, D.C.-based think tank focused on international relations and free trade.
“Today, we have millions of workers going back to work in factories running two shifts,” Siddiqui said. “It’s been a big, big change. The effect it has had on the economy is tremendous, both for employment but also from the prospective of building growth and just the general stimulus.”
And put in perspective, that stimulus has the potential to be among the largest in global economic history.
The Chinese and Saudi commitments amount to a startling 25 percent of Pakistan’s $305 billion annual gross domestic product (GDP). They are the equivalent of a $5 trillion investment in the United States.