ISLAMABAD: Pakistan's high growth and economic expansion will boost its business relations with the UAE and globally during fiscal-2015. The higher growth rate and business expansion forecast have been made this week by the International Monetary Fund, the World Bank, Asian Development Bank and several other foreign analysts.
The business and economic relations with foreign countries, particularly with UAE, have a great potential as the latest economic forecast by the IMF indicated. It said, Pakistan's GDP will rise to five per cent in the medium term, the highest in the last seven years, in FY-15. It will be "due mainly to easing fiscal adjustment and improvement in structural bottlenecks in the energy sector, public enterprises and the investment climate," Khaleej Times reported.
"Foreign reserves are expected to exceed $14 billion by end June FY-15 - a coverage ratio of over three months of imports," it said.
"Trade reforms are focusing on simplifying tariff rates, shifting most items to a lower rate and eliminating trade statutory regulatory orders that establish special rates and non-tariff barriers," IMF report said. Pakistan imports 80 per cent of its annual national requirements. In FY-14 it imported 19 million tonnes of petroleum products at a cost of $14.8 billion. The IMF projects Pakistan's overall import bill for all items in FY-15 will be $58.9 billion as against exports of $ 36.4 billion.
Pakistan's official reserves crossed a historic high of $15.098 billion in December. This major improvement in external balances will help the country expand its industrial output as well as export of food including fresh fruit and vegetable to all parts of the region, especially the UAE, which is a major market of these Pakistani products. As Pakistan will be in a position to import a larger amount of industrial inputs from the UAE and the region, it will also boost the trade between them. The UAE based exporters will get huge opportunities in Pakistani market for their goods, especially industrial input. In the other direction, Pakistan will find a major opportunity to meet the growing demand of food and fresh fruits and vegetables from the UAE.
This historic high amount will be equal to almost two-thirds of Pakistan's total worldwide exports in FY-14. The remittances already are a major contributor to Pakistan's forex reserves. As a big contribution to forex reserves and assisting in boosting industrial imports further, it will help expand trade with the UAE, the GCC and Saudi Arabia in FY-15.
The FDI inflows including those from the UAE are rising. This money is going into oil and gas exploration, power generation, telecoms, banks and financial services. The new FDI investment in Pakistan was $422 million in the first five months of FY-15, compared to $354 million in the same period of FY-14, State Bank of Pakistan reported. The central bank also reported this week, the FDI outflows of dividend income and profits in these five months - July-November, FY-15 was $606 million, up 30 per cent from the like period of FY-14.
Pakistani business relations with the UAE are also expanding. The annual bilateral trade between the UAE and Pakistan is set to touch $10 billion, as the number of items and services is increasing. More and more fresh-from-the-farm products are shipped to the UAE by high-speed boats, which will further enlarge the volume of trade. As of now, "the UAE is one of the largest investors in Pakistan with a focus on telecoms, banking, financial services, aviation, real estate and energy. Twenty-seven UAE companies are working in Pakistan in joint ventures, with a $21 billion investment.
"Pakistan is a key recipient of development assistance from the UAE," Dr Faisal Aziz Ahmed, Deputy Head of Mission, Embassy of the UAE. "The UAE-based banks, including Bank Alfalah, are doing highly profitable business in Pakistan, he said. The International Finance Corporation, an affiliate of the World Bank, has just injected Rs6.66 billion in Bank Alfalah, by acquiring 15 per cent equity investment to help it increase access to finance in Pakistan.
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