ISLAMABAD (Big Digit) Pak-Saudi Economic Partnership: Joint Fund Established for Bilateral Trade
ISLAMABAD (Big Digit) Pakistani and Saudi investors have announced a joint fund to foster economic partnership, bilateral trade, and investment.
Relations between Pakistan and Saudi Arabia span decades, rooted in a shared faith, cultural affinity, and strategic interests. Historically, these ties were largely confined to security, diplomatic cooperation, and the provision of financial aid or loans during challenging times. However, the evolving geo-economic landscape of the 21st century has prompted both nations to shift their priorities. A joint council of Saudi and Pakistani investors has now established a private investment fund, designed to promote private-sector trade and investment between the two countries.
According to the Saudi-Pak Joint Business Council—established with the collaboration of both governments—the fund has an initial corpus of several hundred million dollars, with the potential for further expansion as investment opportunities arise across various sectors.
A statement issued by the Council indicates that 75 percent of the fund will be allocated for investments in Pakistan, while the remaining 25 percent will be directed toward projects in Saudi Arabia.
This development comes at a time when Islamabad and Riyadh are further strengthening their long-standing relationship—particularly in the defense sector—even as there remains no significant diplomatic breakthrough in resolving the months-long conflict between the United States and Iran. In the context of Saudi Arabia’s ‘Vision 2030’ and Pakistan’s ongoing economic reforms and efforts to attract foreign investment, the focus has shifted from traditional aid toward commercial partnerships and mutual investment. The recent announcement of a joint fund by the Pak-Saudi Joint Business Council serves as clear evidence of this strategic transition. Structured as a private-sector-led private equity fund, its primary objective is to provide investors from both nations with a secure and profitable platform.
* Investment Allocation: 75% of the fund will be invested in high-growth projects within Pakistan, while 25% will be earmarked for commercial opportunities in Saudi Arabia.
* Mutual Partnership: The fund is based on a model of equal contribution from investors in both countries and is designed to position the private sector as the engine of economic growth.
Strategic Benefits for Pakistan: A significant portion (75%) of the fund will be deployed across various key sectors in Pakistan, fostering economic innovation and creating new employment opportunities:
1. Infrastructure and Logistics: Development of motorways, expansion of ports, and modernization of transport networks to boost regional trade.
2. Agriculture and Food Security: The Pakistani private sector aims to increase agricultural exports to the Gulf states—particularly Saudi Arabia—to reach an annual value of $3 billion. Saudi Arabia’s ‘Vision 2030’ is not merely a national reform program; it is a revolutionary initiative poised to impact the economy of the entire region. Under the leadership of Saudi Crown Prince Mohammed bin Salman, the primary objective of this vision is to end the Saudi economy’s dependence on oil and transform the nation into a hub for digital, industrial, and tourism sectors. For the mega-projects under Vision 2030—such as NEOM and the Red Sea Project—a large number of individuals from Pakistan are entering the Saudi market; this includes not only traditional laborers but also highly educated IT experts, engineers, healthcare professionals, and managers. Through its Public Investment Fund (PIF) and private-sector entities, Saudi Arabia is establishing long-term partnerships within Pakistan’s mining and energy sectors.
The China-Pakistan Economic Corridor (CPEC) serves as the backbone of Pakistan’s economic future. The involvement of Saudi Arabia in this landscape has further expanded the project’s global reach. Situated at the gateway to the Gulf of Oman and the Persian Gulf, the port of Gwadar offers a strategic advantage that Saudi Arabia can leverage to facilitate its trade access to Central Asia and China.
The proposed establishment of an oil refinery and petrochemical complex in Gwadar—developed in collaboration with Saudi Aramco—will stand as a landmark achievement for both CPEC and the Pakistan-Saudi trade partnership, ultimately helping to reduce Pakistan’s import bill.
A key objective of the joint Pakistan-Saudi fund is to facilitate the commercial utilization of Pakistan’s Special Economic Zones (SEZs) and its vast mineral reserves. Saudi and Pakistani investors are establishing joint manufacturing plants within industrial zones—such as Rashakai, Allama Iqbal, and Dhabeji—developed under Phase II of CPEC. Through this fund, the private sector will produce goods that can be exported directly to Saudi Arabia.
Saudi investors are showing keen interest in Pakistan’s mining sector, particularly regarding the country’s vast copper and gold reserves (such as the Reko Diq and Chagai projects). The private fund is intended to provide financial support to private companies involved in logistics, transportation, and refining operations linked to these mining projects.
In the context of CPEC, Saudi Arabia was formally invited to become a third strategic partner, with the objective of further expanding the economic and industrial network in the region. Under this partnership, Gwadar and other key trade routes are being made operational. This trilateral strategic partnership between Pakistan, China, and Saudi Arabia is laying the foundation for a new economic bloc in the region. While China provides the infrastructure and logistics, Saudi public and private capital will play a pivotal role in making this framework commercially vibrant. The inclusion of Saudi Arabia as a third strategic partner will directly link the Gwadar Port to Saudi Arabia’s western ports (such as the Jeddah Islamic Port) and the coastal projects under ‘Vision 2030.’ This will halve both the distance and transit time of maritime routes, directly benefiting private importers in both Pakistan and Saudi Arabia. To support the joint investment fund, Pakistan has introduced specific legal and financial reforms to provide comprehensive protection for foreign and private capital. In this regard, the Special Investment Facilitation Council (SIFC) is providing a ‘one-window’ operation to eliminate bureaucratic hurdles and accelerate private joint ventures in sectors such as mining, agriculture, and IT. The Pak-Saudi joint investment fund is not merely a temporary financial arrangement; rather, it serves as a strategic roadmap to elevate economic relations between the two brotherly nations to new heights. Moving beyond the traditional aid-based model toward one rooted purely in commercial, industrial, and private-sector partnership, this approach is essential for Pakistan’s economic self-reliance. The inclusion of Saudi equity in CPEC infrastructure, the productive capacity of Special Economic Zones (SEZs), and the mining sector in Balochistan will not only bolster Pakistan’s financial stability but also support the realization of the manufacturing and supply chain objectives outlined in Saudi Vision 2030. It is now time for the private sectors of both nations to fully leverage this historic fund and embark on a journey toward long-term economic prosperity. To safeguard private and foreign capital while eradicating bureaucratic hurdles, the Special Investment Facilitation Council (SIFC) has emerged as a robust mechanism, offering investors a ‘one-window operation.’ Through the collaborative efforts of both civilian and military leadership, the SIFC ensures the rapid implementation of policies and serves as a vital bridge between the federal and provincial governments for foreign joint ventures.It should be noted that a staff-level agreement has been reached between Pakistan and the International Monetary Fund (IMF) regarding the fourth review of the $7 billion Extended Fund Facility (EFF) program and the third review of the $1.4 billion Resilience and Sustainability Facility (RSF). Following this, Pakistan will become eligible to receive approximately $1.2 billion. Pakistan’s Federal Minister for Finance, Muhammad Aurangzeb, has announced that Saudi Arabia has “rolled over” its $3 billion deposit—currently held within Pakistan’s foreign exchange reserves—for an “appropriate period.” The Finance Minister explained that Saudi Arabia has extended the maturity of the $3 billion provided to Pakistan in April of this year. He remarked, “I also had a very productive meeting with the Saudi Finance Minister; given the nature of our relationship with Saudi Arabia, there is no cause for concern.” He added that no further support from Saudi Arabia is currently required, noting that “we have an import cover of three months.” Furthermore, during meetings with Saudi officials on the sidelines of the World Bank and IMF gatherings in Bangkok, the maturity of a $5 billion deposit facility was extended until 2028. Pakistan currently holds total reserves amounting to $26.75 billion; according to the State Bank of Pakistan, it holds $21.5 billion, while commercial banks hold $5.2 billion. However, a significant portion of the foreign exchange reserves held by the State Bank consists of deposits provided to Pakistan by friendly nations. Of the $21.5 billion held by the State Bank, $12.7 billion consists of deposits—comprising $8 billion from Saudi Arabia, $4 billion from China, and $700 million from Kuwait. Currently, deposits from friendly nations constitute a significant portion of Pakistan’s foreign exchange reserves; these were also a factor in the establishment of Pakistan’s loan program with the IMF. During negotiations for the current program, the IMF requested that Pakistan obtain written commitments from these friendly nations to “roll over” their deposits, ensuring that foreign exchange reserves remained at a specific level. Following these written assurances, the deposits have continued to be rolled over; most recently, Saudi Arabia has rolled over $3 billion. Remittances sent by overseas Pakistanis have provided essential support to the country’s external financing, while deposits from friendly nations have helped maintain Pakistan’s foreign exchange reserves at a reasonable level.