Despite of persistent economic and political uncertainty in the country to the extent that Pakistan might default, the United Arab Emirates (UAE) is planning to invest $1 billion in Pakistan’s economic and investment sectors.
The inflow is expected to strengthen investor confidence in the country. Foreign investors are examining the moves towards the revival of International Monetary Fund (IMF) loan programme in Pakistan which is the only hope left to bring the country out of emergency ward in short run. In the medium to long run, there are various possible ways to fix the deteriorating economy.
Grateful to my brother His Highness Sheikh Mohammed Bin Zayed Al-Nahyan @MohamedBinZayed
for the investment that the UAE is going to make in various sectors of Pakistan. Both brotherly countries are very keen to further strengthen their multifaceted relationship.
— Shehbaz Sharif (@CMShehbaz) August 7, 2022
The UAE investment will likely be made in major sectors including gas, energy infrastructure, renewable energy, healthcare, biotechnology, agriculture technology, logistics, digital communications, e-commerce, and financial services.
Pakistan has been a victim of serious energy crisis which caused hurdles at micro as well as macro level. Citizens and the business community experienced long hours of electricity load shedding and skyrocketing energy prices which resulted in closure of several factories.
Such closures caused massive problems as large number of workforces was made redundant and export sector faced immense difficulties in completing international orders.
Investment from the friendly country, UAE, might provide a cushion to worsening energy situation in the country as the sector exists in their focal areas of investment.
The United Arab Emirates (UAE) has been the biggest trade partner of Pakistan in the Middle East and North Africa (MENA) region with a trade volume of more than $8 billion.
Moreover, Pakistanis have made huge investments in the real estate sector of the UAE, third largest after India and United Kingdom (UK) as 19,662 country nationals own $10.6 billion worth of real estate in Dubai. Majority of these investors are top politicians and their family members.
Yesterday, when shared export numbers, many had an argument that India has a very large economy & population.
Investment in UAE
Ratio: 2.8X 🇮🇳 : 1 🇵🇰
Exports to UAE
Ratio: 22.63X 🇮🇳 : 1 🇵🇰
We need to change mindset & direction. pic.twitter.com/QU3ccSM535
— Economy of Pakistan (@Pakistanomy) May 18, 2022
Furthermore, rupee depreciation had dented profit margins (in dollar) of the foreign investors. Economic certainty and stability in the rupee-dollar parity are pre-requisites for attracting foreign investment to new projects.
Small steps make big changes, so is the case with Pakistani rupees which is moving towards stability after major depreciation against the greenback. Over the last four weeks, Pakistani Rupee to US dollar gained 7.85 percent after continuously declining for a long time.
Investment from the UAE is a ray of hope towards attracting more foreign investors to inject their capital in Pakistan. Recently, Bill and Melinda Gates Foundation invested $11 billion in a Pakistani start up, OneLoad. Such developments will eventually bring colors to the fading economy of Pakistan.