A high-profile visit with vision in mind

Updated 26 August 2016
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A high-profile visit with vision in mind

Saudi Arabia’s links with Asia are interesting. The Kingdom established diplomatic relations with China in 1939. In 1946 a friendship treaty was signed. Links with Japan are only a little more recent. Both Beijing and Tokyo saw the virtue in friendship with the Middle East’s key economic and political player.
Thus when Deputy Crown Prince Mohammed bin Salman, second deputy premier and minister of defense, visits Japan and China next week, he will be greeted as an old friend.
The Kingdom has been a major oil supplier to both countries. These contracts have been notable for their stability. Even as its economy has slowed, China’s demand for energy has remained strong. Saudi crude imports continue to be a trusted source. The Kingdom is Beijing’s largest oil supplier. China has a Saudi trade deficit. In 2014, its Saudi imports were $48.5 billion. This was principally for oil and petrochemicals. By contrast, China’s sale of goods and services to Saudi Arabia was $20 billion.
Japan has no domestic hydrocarbon reserves. It is therefore reliant on oil and its imports. Much of Japan’s gas is supplied as LNG from Indonesia. But Saudi Arabia has long been a key oil supplier. In 2014, Japanese imports from Saudi Arabia were worth $14.5 billion while the Kingdom bought $9.9 billion worth of goods from Japan.
These figures hint at the important role that China and Japan can play in Saudi Vision 2030. This January, Chinese president Xi Jinping began his Middle East tour in Riyadh. He arrived almost ten years to the day after the late King Abdullah broke new diplomatic ground by visiting Beijing.
Officials on both sides had done a great deal of preparatory work. No less than 14 separate agreements and memoranda of understanding were signed. Among them was a framework agreement between Saudi Aramco and the Chinese National Company for Petrochemicals. Other projects ranged from energy to science and technology, satellite navigation, renewables and nuclear power. Beijing will provide an important technology input for development of our non-oil economy. Two deals covered Saudi investment in ground-breaking Chinese environmental schemes. The technological benefits of these projects will ultimately feed back to the Kingdom.
Japan already has an extensive record of investment in Saudi projects. As early as 1957, a Japanese oil firm was granted an exploration and production license. In 1971, the late King Faisal paid a state visit to Tokyo. Commercial links have since grown steadily. Japan’s involvement in the Kingdom has focused principally on petrochemicals. It now has 74 Saudi joint ventures with projects capitalized at SR67.4 billion.
Japanese trading companies have a reputation for careful research and analysis. They will establish themselves in a country and patiently watch and assess market opportunities. They are prepared to wait for the right deals, not the first deals that come along. Thus Japan is well equipped to understand the Saudi market. Its trading companies fully appreciate the potential for their country’s companies. The extent of Japan’s existing commitments fully demonstrates this.
After concluding his visit to Japan, the deputy crown prince will go to China for the G-20 summit in Hangzhou. The leaders of the world’s major economies have much to discuss. Global growth is once more slowing. There are fears of a return of recession. But Prince Mohammed will bring some positive news. He has already made successful presentations of his Vision 2030 in the United States and France. This will be the first time that he has been able to set out Vision during the G-20 summit.
The Kingdom is fortunate. Despite weak oil prices, it has sufficient resources and the political will to invest for growth. The increase in the Kingdom’s wealth generation will come from the non-oil economy. The Vision cannot be achieved without foreign financial and technological investment. Since it became a full World Trade Organization member in 2005, Saudi Arabia has steadily honored its obligations under WTO rules. It now conforms to global corporate and regulatory standards. It has a stable business environment.
So at a time when international companies are casting around for profitable new opportunities, Saudi Arabia offers considerable prospects. This key message to his G-20 colleagues will doubtless be inspirational. Instead of pulling in its financial horns, the Kingdom has decided to go invest for growth. By the time the international confidence picks up, Saudi Arabia will be well into its ambitious economic transformation.


EDITORIAL: Jeddah floods a reminder of why we need the anti-corruption drive

Saudi drivers take a flooded street in Jeddah on Tuesday. (AFP)
Updated 22 November 2017
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EDITORIAL: Jeddah floods a reminder of why we need the anti-corruption drive

It has happened again. The roads, streets and many underpasses in Jeddah were flooded with rainwater on Tuesday. Many areas were turned into lakes because of the heavy, though forecast, downpour. In some areas, water was knee-deep while in others it was chest-deep. People were stuck in their vehicles and many were seen pushing their vehicles to the side of the roads with great difficulty. In low-lying areas, citizens struggled to remove their belongings from flooded houses.

For the residents of Jeddah, rain has, more often than not, brought trouble and devastation. Whenever the skies open up, thoughts go back to that “Black Wednesday” of November 25, 2009, when more than 100 people lost their lives and property worth billions of riyals was destroyed. An investigation was opened into the disaster and some of the guilty were taken to court and tried; some of the small fry were even jailed. As has been the case in the past, the mighty arm of the law could barely touch those at the top who enjoyed immunity from prosecution.

And so it was business as usual until the rain began to wreak havoc again, reminding us that the laws of nature take their course and that hiding your head in the sand does not chase the clouds away.

Having said that, it must be admitted that, yes, lessons were learned. A disaster management team was set up. The weather forecast department became active in issuing alerts. In fact, Tuesday could have been far worse had it not been for the timely alert from the Presidency of Meteorology and Environment (PME) and a prompt decision by the Ministry of Education to suspend classes, schools and universities in and around Jeddah. That helped in keeping people and vehicles off the streets. At noon on Tuesday, it looked as if the city were under some kind of curfew.

The questions that are on everyone's minds right now are: Why is it that rain renders the city helpless and immobile at this time every year? Why have efforts to create effective rainwater drainage systems not borne fruit despite pumping billions of riyals into new projects such as dams and canals? Why is it that the authorities are found wanting whenever heavy rain occurs? More importantly, what is the solution?

Here is the answer. These floods are a stark reminder of why the current drive against corruption is so essential. It is required in order to instill the fear of law into high-ranking officials and heads of construction companies and civic bodies who have failed in their responsibilities. Those who have cut corners and have pocketed public money, those who have not delivered on the projects and who have provided substandard services must pay for their sins of omission.

This is exactly what is happening. No one is above the law. The guilty, whoever they are, however high up they are, will have to pay — and they are. In this new era of transparency and accountability — initiated by Crown Prince Mohammed bin Salman — word has gone down from top to bottom that no one is immune. If you are guilty you will be punished. Those responsible for the havoc of the floods on Tuesday will have no rest either.