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Saudi Arabia: Pakistan's trade partners.

Saudi Arabia has an area of 2,150,000 square kilometers and a population of 14 million. It is located with Red Sea in the West and the Gulf in the East. The oil sector constitutes the main stay of the Saudi Arabian economy. It provides about half the GDP, 90 per cent of Government revenue and practically all export earnings. Saudi Arabia possesses 40 per cent of the oil resources owned by OPEC and 26 per cent of world resources.

Economic development in Saudi Arabia has been achieved under a series of five year development plans. The fourth five year plan, covering the period of 1985 to 1990 aims at country's dependence on imports and places more reliance on private sector and free enterprise. Greater local industrial production is one of the aims of Saudi Arabia's fourth development plans.

Saudi Basic Industries Corporation operates iron and steel, chemicals, fertilizers, plastic and petrochemical industries. Most of the products produced are not only being marketed locally but are competing in the foreign markets. The sales of chemical products by the Saudi Basic Industries Corporation during the first quarter of 1988 stood at more than 900,000 tonnes. The products included butane, ethylene glycol, synthetic menthol, MTBE, styrene and
 COUNTRY PROFILE
Area (Sq. km) 2,150,000
GNP ($ billion) 86.527
Population (million) 14.016
GNP per Capita ($) 6,170
Agriculture share in GDP (%) 4
Daily Calorie Supply
per Capita (1986) ($) 3,004
Life Expectancy 64
Literacy Rate per cent 51


monovinyl chloride. Fertilizer sale during the same period came to about 400,000 tons, while plastic was about 250,000 tons. They included high and low density polyethylene,
 TABLE-I
 IMPORTS AND EXPORTS
 Exports to Imports from
Years Saudi Arabia Saudia Arabia Balance
1984-85 2,627 9,570 - 6,943
1985-86 3,470 6,719 - 3,249
1986-87 4,510 4,920 - 410
1987-88 3,892 5,622 - 1,730
1988-89 2,128 5,541 - 3,413
 Source: Federal Bureau of Statistics


melamine, polystyrene and polyvinyl chloride. Production and sales of caustic soda was more than 200,000 tons. Steel and iron - rods and bars - sales were about 500,000 tons.

The Saudi Iron and Steel Company at Hadeed produces 1.5 million tons of re-enforcing bars and wire rods, the Saudi Steel Rolling Company (at Sulb) has an annual capacity of 140,000 tons of rods and bars. On the chemical side, the Saudi Menthanol Company (at Ar-Razi) produces about 640,000 tons of menthanol annually and the Saudi National Menthanol Company has the production capacity of 770,000 tons of chemical menthanol per annum. Yanbu Saudi Petro-chemical Company has an annual capacity of producing 560,000 tons ethylene, 250,000 tons of ethylene glycol and 430,000 tons of polyethylene. While the Jubail Petro-chemical Company has a capacity of 300,000 tons of low-density polyethylene, Saudi Petro-chemical Company (at Sadf) turns out 760,000 tons of ethylene, 560,000 tons of chloride ethylene, 360,000 tons of styrene and 450,000 tons of caustic soda. The Arabian Petro-Chemical Company (Petrokemya) has a capacity of 650,000 tons of ethylene, 100,000 tons of polystyrene and 50,000 tons of butane -- 1. The Eastern Petro-Chemical Company (Sharq) produces 140,000 tons of low-density polyethylene and 330,000 tons of ethylene glycol.

In the fertilizer sector, the Saudi Arabian Fertilizer Company (SAFCO) produces 330,000 tons of Urea, 100,000 tons of melamine. The National Industrial Gas Company produces 146,000 tons of nitrogen and 438,000 tons of oxygen annually. The Saudi European Petro-Chemical Company (Ibn Zahr) produces 500,000 tons of MTBE (methyl tertiary butane ether), while the capacity of the National Fertilizer Company (Ibn Al-Baytar) is 500,000 tons of ammonia and 800,000 tons of compound fertilizers and phosphates per year.

The production of the National Plastic Company (Ibn Hayyar) is 300,000 tons of monovinyl chloride and 200,000 tons of poly-vinyl chloride and 200,000 tons of poly-vinyl chloride annually.

It would be seen that a total of eleven chemical and petrochemical industries in the kingdom have a production capacity of about 6 million tons of various types of products, and about 1.6 million of steel/iron rods and bars by two units.

The machinery and other equipment and facilities of these industries is most modern with arrangements to ensure quality products. The Government has taken measures to safeguard the local production by taxing the imports of such items and encouraging various departments to buy locally-produced goods. At times, the price in the international market may be less than the cost of production, but such eventualities have to be accepted. It would be advisable of Pakistan's business circles to take advantage of availability of these items at a shorter shopping distance and competitive prices instead of going to far-away markets.

Pak Saudi Trade

Saudi Arabia accounts for about 2.36 per cent of Pakistan's total world exports and similar is the share of Saudi Arabia in Pakistan's world imports i.e. 4.0 per cent. The balance of trade has remained all along in favour of Saudi Arabia, as may be observed from Table -1.

Both exports and imports have registered a declining trend. Exports from Pakistan have declined from Rs. 4,510 million in 1986-87 to Rs. 2,128 million in 1988-89. Imports from Saudi Arabia have also declined from Rs. 9,570 million in 1984-85 to Rs. 5,541 million in 1988-89.

The principal items of exports of Pakistan to Saudi Arabia have been rice, ready made garments, cotton fabrics, synthetic fabrics, made up textiles, tents and canvas, fruits and vegetables, spices, towels, carpets and rugs, sports goods, fish and fish preparations, handicrafts, leather manufactures and printed matters. These specified items accounted for 95 per cent of Pakistan's total exports to Saudi Arabia in 1988-89. The values of exports of these items from Pakistan to Saudi Arabia during 1987-88 and 1988-89 may be observed from Table-II

The chief items of imports from Saudi Arabia into Pakistan have been crude petroleum, polythene, plastic moulding powder, aluminum waste, urea, dates, copper wire and rods, ships and boats, ether and its derivatives, chemicals n.s., machines, paper waste, parts of aircraft and sulphur. These specified items accounted for 98 per cent of Pakistan's total imports from Saudi Arabia into Pakistan in 1988-89. The values of imports of these items into Pakistan from Saudi Arabia during 1987-88 and 1988-89 may be observed from Table-III.

Saudi Arabia has already invested substantially in some Pakistani key sectors of the economy and basic industries. The main contribution has been in the field of infrastructure, key industries, banking, irrigation, energy, fertilizer and port development like Mirpur Mathelo Fertilizer Plant, Pipri Thermal Power Project, Tarbela Dam repairs, Port Qasim etc. It is now for Pakistan to come forward in a big way to invest and contribute to Saudi Arabia's current economic development plan and provide the kind of skilled and sophisticated labour, expertise and training which is now in demand in Saudi Arabia.
 TABLE-III
 IMPORTS FROM SAUDI ARABIA
 (Rs. in million)
Items of Imports 1987-88 1986-87
Crude Petroleum (3330000) 5043 4565
Polyethene in Primary
form (5831100) 161 101
Plastic Moulding Power
& Comp (5852903) 33 27
Aluminum Waste (2882300) 20 27
Urea (5621600) -- 24
Dates (905796021) 13 21
Copperwire and Rod (96822106) 82 20
Ships and Boats (103) 27 16
Ether and Derivatives (5161101) 31 12
Ethylene Glycol (5121500) 57 9
Extracting Machines -- 8
Polyvinyl Chloride (5834900) 23 8
Polyethylene inplates (5831300) 4 8
Paper Waste (2511002) 9 6
Part Mining 21 --
Parts of Aircraft -- --
Other Articles 102 68
 TOTAL: 5622 4920
 TABLE-II
 EXPORTS TO SAUDI ARABIA
 (Rs. in million)
Items of Exports 1987-88 1986-87
Rice (0422101) 1097 1151
Ready Made Garments 415 1017
Cotton Fabrics 504 540
Synthetic Fabrics 663 470
Made up Textile (6589919) 255 389
Tents and Canvas (6582104) 206 257
Fruits and Vegetables (72722) 95 131
Spices (0752809) 60 68
Towels 48 40
Fish and Fish Preparation 27 34
Footwear (0341001) 31 12
Handicrafts (98992001) 33 31
Leather Manufactures 44 30
Books and Printed Matter 23 27
Tarpulilines of Cotton 140 --
Onyx manufactures 7 3
Carpets and Rugs 45 39
Sports Goods 16 37
Other Articles 180 233
 TOTAL: 3892 4509
COPYRIGHT 1990 Economic and Industrial Publications
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Copyright 1990 Gale, Cengage Learning. All rights reserved.

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Publication:Economic Review
Date:Mar 1, 1990
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