Saudi investors have expressed serious concerns over the ‘change of policies’ and ‘trust deficit’ by different governments in Pakistan, terming it a threat to investment and wanting a guarantee that there would be ‘stable policies’ for future investments.
The government of Pakistan is looking towards Saudi Arabia for a multibillion-dollar investment that includes setting up an oil refinery and investment in the Rekodiq Project. Recently, a Saudi delegation comprising 120 investors visited Pakistan to find investment opportunities. Sources reported that the Pakistani side had proposed investment projects worth $2 billion to Saudi Arabian investors. Officials privy to the background discussion told the Express Tribune that Saudi Arabian investors were seriously concerned over the change in policies by the government of Pakistan, which had also led to different cases in international court.
“Who can guarantee that the government of Pakistan will not change its policies in the future if the new additional comes into power,” sources said quoting Saudi Investors.
Previously, a Saudi delegation comprising 200 investors had also visited Pakistan. Sources said that there had not been any progress regarding investment in other sectors except Rekodiq during the visit.
During the Pakistan Tehreek-e-Insaaf (PTI)’s government, when Imran Khan was in power, Saudi Crown Prince Mohammed bin Salman, also known as MBS, visited Pakistan and announced a $20 billion investment mainly to set up an oil refinery in Gwadar. Both parties developed differences later that resulted in halting multi-billion-dollar investment in Pakistan. This was despite the fact that the Saudi government had bailed out the PTI government by depositing funds into Pakistan’s central bank.
Now, the present government has been trying to normalise relations with Saudi Arabia and attract investment, especially in the oil and mining sectors.
The PTI government also developed differences with China so progress on the China-Pak economic corridor (CPEC), which the previous Pakistan Muslim League-Nawaz (PML-N) government had initiated, had stalled. The shift in priorities strained relations with China and although the current government has announced the start of work on CPEC 2, a trust deficit persists on concerns over potential policy changes in the future.
The current administration has also pressured Independent Power Producers (IPPs) to renegotiate terms, even moving to terminate contracts with five IPPs and identify 18-20 others for potential renegotiations. These IPPs were set up under different policies during the different tenures of different governments. Sources indicated that the recent move by the current government to scrap IPP deals has sent a negative signal to investors worldwide, including those from Saudi Arabia. They pointed out that various governments have previously introduced policies aimed at attracting investment, regardless of the policies’ effectiveness or appropriateness.
These sources stressed that once agreements are signed, the government should honour them to foster investor confidence. Saudi investors are reportedly closely monitoring these developments before making any decisions on investing in Pakistan.
Additionally, Pakistan has sought Saudi investment in the Rekodiq Project, which was previously subject to an international court case where foreign investors prevailed. The court-imposed multibillion-dollar fines on Pakistan, compelling it to reach an out-of-court settlement. Experts have suggested that the Pakistani government should implement long-term, stable policies to attract global investors. They further recommend ending the practice of pressuring investors to secure investment commitments.
Given Pakistan’s ongoing political turmoil, coupled with regulatory and security challenges, establishing consistent long-term policies could be key to securing sustained investments in the country.
