Abu Dhabi: Bilateral trade between Pakistan and the UAE has dropped by $2 billion (Dh7.34 billion) last year due to low oil prices, a senior diplomat from the Pakistan Embassy told Gulf News in an interview on Thursday. Oil prices have dropped by more than 50 per cent from their peak levels in 2014 due to over production and weak demand benefiting oil importing countries like Pakistan, which is a significant importer of crude oil from the UAE.
“The bilateral trade between the two countries has gone down from $9 billion in 2014 to about $7 billion last year largely due to drop in oil prices, which has benefited Pakistan. The balance of trade is in favour of UAE,” said Moazzam Ahmad Khan, Pakistan’s Ambassador to the UAE. “Pakistan is facing huge challenges in terms of electricity shortage and with the oil prices going down, production of electricity has become cheaper.”
The UAE is the largest trading partner of Pakistan in the Gulf region, with Pakistan exporting about $1 billion of goods last year, like textiles and food grains, and importing about $6 billion in the form of oil and petrochemical products from the UAE.
There are also several UAE-based companies that are active in Pakistan like Emaar, Etisalat, Abraaj Group, Al Futtaim, Mashreq, Bank Al Falah among others.
According to the embassy, the total FDI (foreign direct investment) from the UAE to Pakistan amounted to $216 million for 2014-15 and $164 million during 2015-16.
The ambassador said there are more than a dozen UAE-based companies with huge investments in Pakistan, especially in the construction and energy sectors.
“We expect the investments to go up as the country focuses on improving the business environment. The stock market is doing well and the country’s growth rate has been about 4.7 per cent last year.”
However, security has been a major deterrent in attracting FDI to Pakistan. But the ambassador said the present government is focusing on eliminating the terrorist network to improve the confidence of investors. “The government is totally determined to eliminate terrorism. We are not going to allow any group to challenge the writ of the government and use Pakistan’s territory against anyone,” he said.
Khan further said that China is investing $46 billion in Pakistan in developing infrastructure network and energy sectors as part of the One Belt, One Road strategy. “Chinese investments would be a game changer in the coming years with new developments taking place in railways and ports. The UAE would also benefit from this new initiative as the distance to transport goods to China would be greatly reduced.”
As part of the One Belt, One Road project, China is creating a vast network of highways and railways connecting the Pakistan port city of Gwadar with China’s northwestern region of Xinjiang, he added.