RIYADH, 4 October 2006 — The Kingdom will hold the first round of talks with Japan in order to produce a bilateral investment treaty between the two countries. The two-day trade dialogue will begin in Tokyo tomorrow, a senior official at the Japanese Embassy announced here yesterday.
During the talks, the Saudi team will be led by Dr. Awwad Al-Awwad deputy governor of Saudi Arabian Investment Authority (SAGIA) for investment affairs, while the Japanese side will be chaired by Ito, deputy director general of the Foreign Ministry.
“The Japanese government aims to promote investment between the two countries and plans to discuss broad investment-related issues, including granting each other most-favored nation treatment,” Oka Hiroshi, deputy chief of mission at the Japanese Embassy told Arab News. He added that the proposal for a bilateral investment treaty was sequel to talks held by Custodian of the Two Holy Mosque King Abdullah in April during his visit to Japan. He pointed out that such a treaty would definitely promote future Japanese investments in the Kingdom.
Japanese investment in the Kingdom has reached $ 13 billion in 2005, including the Rabigh project worth $10 billion. Japan imports $19 billion worth oil and petrochemical products from the Kingdom, while Saudi Arabia imports automobiles, machines and electronics from Japan to the tune of $3.8 billion. The Saudi Arabian Oil Company (Saudi Aramco) and Sumitomo Chemical Co., Ltd. (Sumitomo Chemical) signed an agreement in August last year to become joint venture partners in the development of a large, integrated refining and petrochemical complex in the Red Sea town of Rabigh.
When completed in late 2008, the Rabigh project will be one of the largest integrated refining and petrochemical projects ever to be built at one time. A total of 2.4 million tons of petrochemical solids and liquids, along with large volumes of gasoline and other refined products, will be produced.
In late September, Japan held its first meeting with the Kingdom and the other five GCC oil producing countries to work out a free-trade agreement. Japan has free trade deals with Singapore, Mexico, Malaysia and the Philippines as Tokyo steps up efforts to expand the pacts to keep its economy afloat and compete with China, which is moving ahead in forming regional trade pacts. It also recently concluded talks with Chile, with final government approval expected early next year.
The Japanese government hopes to strengthen relationships with Saudi Arabia through investment and free-trade pacts. Japan relies heavily on crude imports from the Middle East. In August, Japanese refiners and traders imported 20.01 million kiloliters, or 4.06 million barrels a day, of crude oil, of which about 30% came from Saudi Arabia and 90 percent from the Middle East, according to the Ministry of Economy, Trade and Industry. Japan would like to enhance the investment environment with Saudi Arabia and Saudi Arabia is likely to seek active investment from Japan including in the auto industry,” an official at Japan’s foreign ministry in Tokyo said.