Need for new trade corridors

Business Recorder

15-05-2025

The strategic direction of United States and Saudi Arabia relations is entering a new phase of profound transformation, driven by mutual economic interests, energy diversification, and geopolitical recalibrations. President Donald Trump's recent visit to the Kingdom of Saudi Arabia marks a new chapter in bilateral cooperation, signaling an intensified push toward joint investments, technology transfer, and large-scale infrastructure collaboration.
Trump's visit to Saudi Arabia was planned not only to reaffirm the historical alliance between the two nations, but also to align their visions for the future in areas ranging from autonomous mobility to cultural revitalization. Also, the main purpose was to consolidate strategic economic partnerships and to position American firms and technologies at the heart of Saudi Arabia's ambitious Vision 2030 agenda with expected outcome to redefine trade flows, investment channels, and regional stability.
The autonomous vehicle revolution took center stage at the Saudi-US Investment Forum, where Uber CEO Dara Khosrowshahi announced that autonomous vehicles would begin operations in the Kingdom within the current year. The statement reflected Saudi Arabia's emergence as one of Uber's fastest-growing markets, with 140,000 Saudi drivers serving 4 million riders across 20 cities. Deployment of autonomous vehicles aims to reduce transportation costs and improve safety, leveraging 18 global technology partnerships. The commitment to launch these vehicles highlights a critical technological leap, offering a safer and more cost-effective transport model supported by American innovation.
Transformation of Diriyah into a globally renowned cultural and heritage site represents another monumental milestone. The US$63.2 billion investment into the 14-square-kilometer Diriyah project will not only preserve the historical birthplace of the First Saudi State but also integrate it into the global tourism circuit. Similarly, Diriyah project displays the tangible fruits of US-Saudi collaboration, which already attracts 3 million visitors and employs 45,000 workers including 83 American companies. Preservation of UNESCO-designated At-Turaif district alongside modern infrastructure demonstrates how historical preservation and economic diversification can coexist.
Exposure of the New Murabba project, particularly the Mukaab, highlights Saudi Arabia's ambition to create architectural marvels of global significance. The Mukaab, a cube-shaped megastructure 22 times larger than Las Vegas' MSG Sphere, will incorporate AI, holographic environments, and immersive experiences, transforming Riyadh into a futuristic tourism hub. The building will redefine global architectural standards and attract both tourism and investment, with substantial input from American design and engineering firms. The project further symbolizes how bilateral cooperation can turn visionary concepts into concrete landmarks.
The NEOM project remains one of the most expansive undertakings under Vision 2030, spanning 26,500 square kilometers, roughly the size of Massachusetts, NEOM integrates smart city design, renewable energy, and sustainable agriculture. The infrastructure groundwork has been significantly advanced, with 500 kilometers of fiber optic cable laid, operational solar and wind farms, and over 190 kilometers of water pipelines installed. The project's Green Hydrogen initiative, in partnership with US-based Air Products, highlights the dual commitment to environmental stewardship and industrial innovation. NEOM reflects a new economic paradigm where American firms are co-developers in reshaping the region's future.
The tourism sector's exponential growth exemplifies the tangible impact of Vision 2030 reforms. The Kingdom is positioning itself as a top five global destination, from 50 million visitors in 2019 to 115 million in 2024, including 30 million international tourists, Saudi Arabia has already exceeded its 2030 tourism target. The goal is to reach 50 million international visitors and raise tourism's GDP share from 5 to 10 percent by 2030.
The opening of electronic visas to citizens of 65 countries and the strategic partnership with the US in areas like hospitality, aviation, and entertainment are instrumental to this growth. The tourism sector's workforce share has also risen from 2 to 7 percent, driven by educational exchanges and vocational training collaborations with American institutions.
The economic ramifications for both countries are profound. The United States stands to benefit from new investment avenues, export opportunities for high-tech goods and services, and expanded market access in energy, tourism, and infrastructure. Saudi Arabia gains by accelerating its diversification goals, adopting world-class technology, and drawing from American expertise in areas ranging from artificial intelligence to green energy. These initiatives collectively establish a template for 21st-century bilateralism, where mutual growth is anchored in innovation and sustainability.
On the other hand, approval of the International Monetary Fund's Extended Fund Facility (EFF) and a new arrangement under the Resilience and Sustainability Facility (RSF) marks pivotal moments for Pakistan. The US$ one billion disbursements under EFF, bringing total disbursements to US$ 2billion, reflects international confidence in Pakistan's economic management.
IMF's recognition highlights Pakistan's reform momentum, which testifies inflation at its lowest level since 2015, and macroeconomic stability being gradually restored. The RSF's additional US$1.3 billion will further strengthen climate resilience, enhance water use efficiency, and align infrastructure with sustainable development goals.
IMF's support outlines a multi-pronged reform approach. A tight monetary policy will ensure that inflation remains within 5-7 percent target range. Fiscal reforms, including amendments to agricultural income tax regimes across provinces, will broaden tax base while enabling more equitable revenue collection. Additionally, energy sector reforms, aimed at cutting inefficiencies and privatizing loss-making units, will reduce circular debt and lower energy tariffs.
Similarly, public finance improvements such as the electronic Pakistan Acquisition and Disposal System (e-PADS) promote transparency, while structural reforms boost private sector confidence and productivity. These actions collectively pave the way for long-term macroeconomic resilience.
Trade opportunities presented by President Trump during his visit to Saudi Arabia offer Pakistan a parallel growth avenue. American commitment to open new trade corridors to include emerging economies in bilateral and multilateral agreements presents Pakistan with a timely chance to integrate into global supply chains. Leveraging these opportunities through strategic alignment with American firms in clean energy, digital infrastructure, and agriculture could significantly strengthen Pakistan's export base. Alignment with US technology providers and climate-smart infrastructure firms could further support Pakistan's goals under the RSF.
The economic blueprint for Pakistan must be reoriented around sustainable development, export-led growth, and institutional transparency. The influx of IMF resources should be targeted at high-yield sectors such as agro-processing, IT services, and renewable energy. Public-private partnerships can help de-risk infrastructure investment, while vocational training aligned with global market needs can unlock youth employment.
Collaboration with US institutions, particularly in the context of Saudi-led projects, can provide additional funding, technical expertise, and export demand. Similarly, capitalizing on President Trump's trade initiatives could allow Pakistan to position itself as a strategic manufacturing and services hub in the region.
The economic resurgence of Pakistan is contingent upon sustained policy discipline, strategic alliances, and institutional reform. The convergence of IMF support, Vision 2030 partnership opportunities, and President Trump's trade overtures offers a rare window for transformative change. Pakistan's leadership must act decisively to convert these prospects into inclusive, durable, and self-reinforcing growth.
The reallocation of public funds toward education, health, and infrastructure will not only ensure long-term stability but also enhance citizen well-being. Adoption of green technologies and integration into global trade systems will provide the bedrock for a resilient, prosperous, and forward-looking Pakistan.
(Huzaima Bukhari and Dr Ikramul Haq, lawyers and partners of Huzaima & Ikram, are Adjunct Faculty at Lahore University of Management Sciences (LUMS), members Advisory Board and Visiting Senior Fellows of Pakistan Institute of Development Economics (PIDE) and Abdul Rauf Shakoori is a corporate lawyer. They have coauthored a book, Pakistan Tackling FATF: Challenges and Solutions)
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