Batsman Azam has played only three Tests, narrowly missing out on a century in Pakistan's loss to New Zealand in Hamilton this week when he was left unbeaten on 90 as the side was bowled out.
In his 18 one-dayers, he has scored three centuries, all of which came in consecutive matches against the West Indies earlier this year.
"He (Azam) is a young gun who will be an exceptional player," Arthur told Perth's 6PR radio ahead of Pakistan's sole warm-up match for their three-Test series against Australia.
Pakistan have resisted the temptation to change and retained the same 16-man squad for Australia that lost the recent series against New Zealand 2-0.
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For South African Arthur, it will be his first time facing Australia since he coached them over a two-year tenure that ended in June 2013.
He said Pakistan were ready to fire against an Australia Test team coming off a demoralising 2-1 series loss to South Africa and had learned a lot in New Zealand.
"Hopefully, this has put us in good stead for what we can experience in Australia."
Pakistan play a three-day pink-ball clash next week against a Cricket Australia XI in Cairns before the first Test -- a day-night affair in Brisbane -- from December 15.
The remaining two Tests are in Melbourne (December 26-30) and Sydney (January 3-7).
They will also play five one-day internationals in Australia.
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