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Shakeel Ahmad Ramay

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Hilal English

The Gulf Cooperation Council and Pakistan

March 2022

As the GCC countries have set out to diversity their economic mix, there are ample opportunities that Pakistan can benefit from to strengthen its presence in the GCC market.



The Gulf Cooperation Council (GCC) belongs to a region which has a historic and religious relevance for every Muslim and non-Muslim country. The region has a rich history, culture and is blessed with vast natural resources, especially gas and oil. 
GCC is a diverse group in terms of population, economy and politics. The Kingdom of Saudi Arabia (KSA) is the biggest country in terms of population (35.5 million) and economic size (USD 843 billion, estimated, IMF) of the region. Politically, Kuwait, Qatar, the United Arab Emirates (UAE) and Bahrain are semi-constitutional monarchies; these countries follow some norms of democracy. Saudi Arabia and Oman are absolute monarchies. GCC is also one of the biggest and busiest trade regions due to oil export and import of many consumer products. Its contribution in international trade is over USD 1 trillion. The abundance of natural resources make it one of the richest regions of the world, but their economies are not diverse and are heavily dependent on oil and gas reserves. 
GCC countries are cognizant of the fact and recognized the lack of diversity as a sign of weakness. Thus, in the recent past, they started to diversify their economies to minimize their reliance on the natural resources. For that purpose, all countries have come up with their visions like Saudi Arabia’s Vision 2030, Kuwait’s Vision 2035, Qatar’s Vision 2030, Oman’s Vision 2040 and Bahrain’s Vision 2030. UAE has just completed Vision 2021 and is now planning the future vision.
The diversification drive has compelled the GCC countries to explore new avenues for sustaining their economic growth and development status. Climate change is further accelerating the process. As we know, fossil fuels are the main cause of climate change and the world is striving hard to find its alternatives. The global leadership is under immense pressure to minimize the use of fossil fuel in order to control climate change, which is introducing new challenges for the GCC countries. COVID-19 is another factor which has shaken the economic landscape of the region and stressed the need to diversify. The major economies shrank by 4.1% (Saudi Arabia), 5.9% (UAE) and 3.2% (Qatar) due to COVID-19. 


The diversification drive has compelled the GCC countries to explore new avenues for sustaining their economic growth and development status. Climate change is further accelerating the process. As we know, fossil fuels are the main cause of climate change and the world is striving hard to find its alternatives. 


The GCC countries are on the crossroads, as on the one hand, their major source of income is on the decline and under immense pressure. On the other hand, they are under huge stress to secure food, and provide better education and health services to the increasing population. It has introduced cut-throat competition to lead the diversification and maximize the benefits. UAE and Qatar, which started the process of diversification much earlier than the other countries, are now reaping the benefits of diversification. UAE and Qatar have become the hubs of connectivity. The presence of many financial players further consolidates their position as a regional hub. The International Renewable Energy Agency (IRENA) has established its headquarters in UAE. Qatar will be the first country to host the football world championship (FIFA) in the region. Oman and Bahrain have also shown an appetite, but their domestic problems hinder the progress. 
Now Saudi Arabia and Kuwait are trying to lead the race for diversification. Saudi Arabia has also taken a few steps to materialize the dream of diversification. First, Saudi Arabia has announced that it will be aiming to become a new connectivity hub in the region and it is one of the main goals under Vision 2030. The government has planned to invest almost USD 130 billion to restructure, expand the airports, and related sectors. Saudi Arabia is also planning a new airline to realize the dream of being the regional hub of connectivity. This initiative has direct relevance for UAE and Qatar, as both are major hubs of connectivity in the region. Saudi Arabia is also trying to attract major companies to the Kingdom.
Kuwait is another regional country which is striving hard to diversify. The country is also engaged in building huge infrastructure for connectivity, maritime, and tourism etc., and has also initiated the process to build a new city. The diversification and expansion of investment across the world is another strategy adopted by Kuwait. It offers huge opportunities for Pakistan as Kuwait is very keen to invest in Pakistan in the fields of oil, agriculture, and Special Economic Zones (SEZs). It is also actively looking to import skilled human resource from Pakistan. Cybersecurity can be another area of interest. 


An analysis of the GCC market and Pakistan’s strengths, weaknesses, opportunities and threats (SWOT) shows that food is an area where Pakistan can make tremendous progress in the short run. It will also provide a sustainable base for long-term relations. 


The GCC countries offer huge potential for Pakistan in multiple fields including infrastructure, food, and services. It is stated in Saudi Arabia’s Vision 2030, Kuwait’s Vision 2035, Qatar’s Vision 2030, Oman’s Vision 2040 and Bahrain’s Vision 2030, that all countries will be building new infrastructure and looking for skilled labor force. It will open doors for construction workers and companies. Adaptation of modern technology, especially in the field of cyber technology, will also create many opportunities which Pakistan can exploit. Additionally, Pakistan can also benefit from the emerging job market in the services sector. As Saudi Arabia has decided to become a connectivity hub, it will bring new job opportunities in great numbers. Kuwait is also looking to enhance the presence of Pakistanis in the services sector, like education, health and security. Pakistan can also benefit by venturing in the food and restaurant industry by tagging it to food commodities of Pakistan. Oman, UAE, Qatar, and Bahrain can also offer diverse opportunities for Pakistan in different fields. Simultaneously, Foreign Direct Investment (FDI) will also be enhanced by these countries, especially in the fields of agriculture and technology.
Howbeit, to exploit the potential of job market and investment opportunities, Pakistan will have to work on three areas. First, Pakistan will have to reform its investment climate to attract investment from the GCC countries. It will have to make it business friendly. Second, the country will have to develop skills. For that purpose, Pakistan will have to run a specialized program by keeping in mind the new job market of Kuwait, Oman, Qatar, and Saudi Arabia, etc. We also need to say goodbye to old strategies and practices. Third, the country will have to work on the communication and public relations skills of the labor as most of the jobs will be in the field of public engagement sectors. 
However, an analysis of the GCC market and Pakistan’s strengths, weaknesses, opportunities and threats (SWOT) shows that food is an area where Pakistan can make tremendous progress in the short run. It will also provide a sustainable base for long-term relations. As we know, the GCC bloc is highly deficient in food production. The current statistics show that the group heavily relies on imported food. For example, the import of food by Saudi Arabia is 80 percent, Kuwait at 90 percent, UAE at 85 percent and Qatar at 90 percent. Presently, the leading exporters to the region are western countries except India, Morocco and Egypt. Despite the huge potential and market of Pakistani commodities like mango, rice and halal meat, Pakistan does not fall in the category of major exporters at all. 
It is good to note that lately these countries have shown a huge appetite for Pakistani food commodities and products. There are three leading factors which are contributing to the demand. First, Pakistan can supply fresh and quality food due to its close proximity to the region.  Second, shortage of food during COVID-19 urged the GCC countries to look for a reliable food supply and Pakistan has emerged as one of the reliable partners. Third, halal food credentials of Pakistan is another strong point. GCC countries are desperately looking for quality halal food. Right now, they import live animals from long distances and slaughter them in their own countries to meet the requirements of halal food. For example, Kuwait imports live animals from Australia and other countries. It is predicted that the halal food market will further grow in the coming years and Saudi Arabia will be leading the market in the region. It has been forecasted that Saudi Arabia’s halal food market size would be around USD 6 billion in the next five years. Pakistan, being a Muslim country with a huge livestock production base, can be a natural choice in this category. Fourth, Pakistan also has a huge diaspora in these countries which can act as a catalyser for food imports in the short run and pave the way for the long run.
These countries are also investing in other countries to secure a sustainable supply of food. For example, UAE has planned to invest almost USD 20 billion in Morocco. Other countries are also in the process to make such investments. Pakistan, by devising the right set of policies, can attract good investment in agriculture. It will be a win-win cooperation as the GCC needs food and Pakistan needs investment in its agriculture sector. 
In conclusion, Pakistan must be conscious of the changing dynamics of the region, both in terms of economy and geopolitics. Pakistan should try to understand the real dynamics as well as conduct a detailed analysis of the changing scenarios and regional tensions. Moreover, Pakistan will have to analyse the visions, plans and future course of diversification by these countries, as we discussed above that the GCC is on a diversification drive and new markets are emerging with a new set of demands. For example, unskilled labor demand will vanish soon. Thus Pakistan needs to strategize its policies and plans to export human capital accordingly, otherwise Pakistan will lose a big base of remittances and opportunities in the future. 
The geopolitical and economic vision analysis will help Pakistan devise a balanced and wise policy. Howbeit, Pakistan should win the trust of all countries as it will be a sustainable and beneficial policy for Pakistan.


The writer is CEO of Asian Institute of Eco-Civilization Research and Development.
E-mail: [email protected]

  

Shakeel Ahmad Ramay

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