Pakistan, Saudi Arabia and Türkiye together represent an economic bloc worth more than $3 trillion, raising hopes that their new strategic partnership could pave the way for greater investment, trade and industrial cooperation.
A Defence Pact With Wider Economic Potential
ISLAMABAD: The trilateral defence agreement signed by Pakistan, Saudi Arabia and Türkiye in Makkah has been described as a major development in regional security. However, its most significant long-term impact could potentially extend beyond defence and into the economic sphere.
The agreement comes as Pakistan continues efforts to revive economic growth, attract foreign investment, increase exports and strengthen energy security. Greater strategic coordination with Saudi Arabia and Türkiye could provide opportunities for investment, trade and industrial partnerships if the security relationship is followed by practical economic measures.
Together, the three countries represent an economic bloc worth more than $3 trillion and a combined market of roughly 380 million people. Economists believe this creates considerable potential for deeper regional integration.
Trade Between the Three Countries Remains Below Potential
Despite longstanding diplomatic and defence ties, trade between Pakistan, Saudi Arabia and Türkiye remains relatively modest.
Pakistan’s annual trade with Saudi Arabia is estimated at around $4–5 billion, while bilateral trade between Pakistan and Türkiye stands at approximately $1.3–1.5 billion.
By comparison, trade between Saudi Arabia and Türkiye has already crossed $8.5 billion, with the two countries targeting $10 billion in the near term and potentially $30 billion over the longer term.
These figures highlight the room available for Pakistan to expand its commercial relationship with both partners.
Saudi Arabia Could Play a Major Investment Role
Saudi Arabia has emerged as one of Pakistan’s most important prospective sources of foreign investment.
Through the Special Investment Facilitation Council (SIFC), Riyadh has expressed interest in investments of up to $10 billion across sectors including mining, oil refining, petrochemicals, renewable energy, agriculture, food security, logistics, tourism, ports, industrial zones, healthcare and digital infrastructure.
Potential flagship projects include Saudi participation in the Reko Diq copper and gold project, an oil refinery and petrochemical complex, renewable energy projects and logistics infrastructure.
A stronger strategic relationship could help improve investor confidence and provide greater momentum to projects that have been under discussion.
Proposed $6.7 Billion Saudi Oil Facility
Energy cooperation could be one of the earliest areas where the growing relationship produces a direct economic benefit.
Pakistan is seeking a $6.7 billion concessional oil financing facility from Saudi Arabia for 15 years, including a five-year grace period, at a proposed interest rate of around 1%.
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If approved on the proposed terms, the facility could reduce pressure on Pakistan’s foreign exchange reserves and provide greater stability in oil financing during periods of volatile global energy prices.
The proposed arrangement would replace an earlier Saudi deferred oil payment facility under which Pakistan had access to around $1.2 billion in financing at an interest rate of approximately 6%. That arrangement expired earlier this year.
Türkiye Brings Industrial and Manufacturing Expertise
While Saudi Arabia has significant financial resources and investment capital, Türkiye could contribute industrial expertise, engineering capabilities and manufacturing technology.
Turkish companies have already invested more than $2 billion in Pakistan and have participated in projects involving construction, transport, municipal services and infrastructure.
The new strategic framework could encourage additional Turkish investment in sectors such as engineering, renewable energy, railways, urban transportation, healthcare technology, information technology, food processing, automotive manufacturing and industrial machinery.
Pakistani companies, meanwhile, have also expanded their presence in Türkiye in areas including IT, manufacturing, hospitality, trade and real estate.
Turkish Energy Investment Gains Momentum
There are already signs of increasing Turkish involvement in Pakistan’s energy sector.
The Turkish Petroleum Overseas Company (TPOC) recently signed five Petroleum Concession Agreements, covering three offshore and two onshore blocks. The agreements mark the company’s entry into Pakistan’s upstream oil and gas sector.
The exploration programme, being conducted with Pakistani exploration and production companies, is expected to involve approximately $300 million in investment.
TPOC is also expected to deploy seismic survey vessels later this year for exploration activities in the offshore Indus Block-C.
Beyond oil and gas, Turkish investors have shown interest in Pakistan’s privatisation programme, including the proposed acquisition of the Faisalabad Electric Supply Company (FESCO).
Defence Manufacturing Could Create New Industries
Defence manufacturing is likely to remain an important area of cooperation between the three countries.
Pakistan and Türkiye already have extensive defence cooperation, particularly in naval shipbuilding, aerospace and military modernisation. At the same time, Saudi Arabia’s Vision 2030 includes an objective of localising a significant share of the Kingdom’s defence procurement.
This creates the possibility of combining Saudi investment, Turkish technology and Pakistani manufacturing capabilities.
Potential areas of joint production could include drones, naval vessels, armoured vehicles, electronic warfare systems, ammunition and defence software.
If developed successfully, such projects could generate skilled employment, support technology transfer and create high-value export opportunities in addition to strengthening defence capabilities.
Opportunities Beyond Defence
The potential economic benefits are not limited to military industries.
Pakistan could increase exports of textiles, apparel, rice, surgical instruments, sports goods, leather products, pharmaceuticals, engineering goods, halal food and IT services to Saudi Arabia and Türkiye.
At the same time, access to Turkish machinery and industrial technology could help modernise Pakistani manufacturing, while Saudi investment in mining, energy and infrastructure could support the country’s industrial expansion.
Business-to-business engagement will be particularly important. Companies from all three countries have increasingly explored joint ventures in construction, logistics, renewable energy, mining, agriculture, healthcare, tourism, food processing and digital technologies.
Pakistan’s Geographic Advantage
Pakistan’s location provides another major advantage.
The country sits at the intersection of South Asia, Central Asia, China and the Middle East, offering access to regional markets through its ports, transport corridors and industrial infrastructure.
The three economies also have complementary strengths. Saudi Arabia brings substantial investment capital, Türkiye offers manufacturing and engineering expertise, while Pakistan provides strategic geography, a large workforce and a sizeable domestic consumer market.
Challenges Could Still Delay Investment
Despite the opportunities, economists caution against expecting an immediate investment boom simply because of the Makkah agreement.
Foreign investors will continue to assess Pakistan’s macroeconomic stability, taxation system, regulatory environment, legal protections, energy availability and ease of doing business before committing large amounts of capital.
Pakistan also faces structural challenges, including policy uncertainty, infrastructure bottlenecks, energy constraints and delays in implementing major investment projects.
Therefore, announced investments will need to move from agreements and memorandums to actual projects, factories and commercial operations for the partnership to have a lasting economic impact.
From Strategic Trust to Economic Growth
The Makkah pact could nevertheless provide Pakistan with a significant opportunity to strengthen its economic relationships with two important regional partners.
If security cooperation is followed by trade facilitation, investment protection, technology transfer, industrial joint ventures and stronger private-sector engagement, the partnership could help Pakistan attract foreign capital, diversify exports and become more integrated into regional supply chains.
Ultimately, the importance of the Makkah agreement may be judged not only by its defence implications but also by whether strategic trust can be converted into investment, factories, infrastructure, technology, employment and sustainable economic growth.
For Pakistan, the opportunity is substantial. The challenge now is turning that potential into measurable economic results.
