Japan PM’s visit set to boost cooperation, says JETRO MD

Hideki Sho, MD of Japan External Trade Organization (JETRO) in his Riyadh office. (Rashid Hassan)
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Updated 12 January 2020

Japan PM’s visit set to boost cooperation, says JETRO MD

  • Abe's trip will promote bilateral ties and begin a new era of partnership between the two countries, Hideki Sho says
  • Saudi-Japan Vision 2030 covers trade, investment, energy, industry, infrastructure, finance and several other areas

RIYADH: Japanese Prime Minister Shinzo Abe’s ongoing visit to Saudi Arabia is timely and important, will boost cooperation between the two countries and promote bilateral ties, according to Hideki Sho, managing director of the Riyadh offices of the Japan External Trade Organization (JETRO) and Saudi-Japan Vision 2030.

In an exclusive interview with Arab News, Sho said: “It is the right time for our top leadership to visit. The Kingdom is the leader of the Arab world. The prime minister's decision to put Saudi Arabia at the top of his foreign countries to visit in 2020, reflects the very good relations between Japan and the Kingdom, and how much he values Saudi Arabia as a partner in this global economy.”

Saudi-Japan Vision 2030 was first suggested in September 2016 during Crown Prince Mohammed bin Salman’s visit to Japan. The Crown Prince and Prime Minister Abe agreed to bolster the two countries’ strategic partnership through the creation of the Joint Group for Saudi-Japan Vision 2030, “heralding a new era of partnership between the two countries,” according to Sho.

“Six months later, King Salman visited Tokyo and Saudi-Japan Vision 2030 was launched in March 2017,” said Sho. “Japan was the very first major economic partner who officially announced its support for Saudi Vision 2030.”

Sho said the Kingdom is expected to open its own Saudi-Japan Vision 2030 office in Tokyo in the first quarter of this year, in reciprocation of the Riyadh office that Sho heads, which was opened in 2018.

The joint initiative covers trade, investment, energy, industry, infrastructure, finance, SMEs, sports, culture, entertainment and several other areas. “It’s a much broader concept for Japan-Saudi collaboration,” he said.

“Before this, Japan’s relationship with Saudi was mainly oil-based — Saudi exported oil and Japan exported automobiles. That was very much a monoculture relationship. However, since this joint vision initiative our collaboration area has diversified (greatly).”

Both parties have so far identified 64 projects to work on together as part of the initiative.

Some of the key projects include the dispatch of a Japanese business mission to special economic zones in the Kingdom; cooperation on intellectual property and academic research (King Abdullah University of Science and Technology, or KAUST, has signed a five years agreement with the University of Tokyo); and cooperation in the transport sector (the Saudi Transport Ministry and the Ministry of Land, Infrastructure, Transport and Tourism in Japan has been conducting a study on the transport sector in the Kingdom).

In other deals, the Japanese Ministry of Internal Affairs and Communication and the Saudi Ministry of Communication and Information Technology have signed an agreement to strengthen cooperation in ICT; and the Japan Cooperation Center for the Middle East (JCCME) and the General Commission for Audiovisual Media (GCAM) have also been conducting joint activities to promote the development of human resources in the entertainment sector, including games, animation and graphic design.

On Saudi National Day this year, the Japanese entertainment conglomerate Avex produced the fireworks show “Star Island” in Jeddah. And in the health sector, the Saudi Ministry of Health and the Ministry of Health, Labor, and Welfare in Japan are conducting a one-year endoscopic treatment training program for Saudi doctors in Japan.

“Now our economic, political, social and cultural relationship is much more diversified, and deeper, with more people-to-people contact,” said Sho.

He said that the deepening of that relationship will be reflected in an increased number of Japanese tourists visiting the Kingdom, particularly since Saudi Arabia changed its tourism visa rules in October.

“The response is good,” he said. “Individual tourists have started visiting the Kingdom already, and major Japanese tourist companies and agents have started organizing Saudi tours. And you can see many Saudi tourism promotions on Yahoo! Japan nowadays.”

Sho said he hopes to see Saudi companies increase their presence in Japan in the near future. Giants like Saudi Aramco and SABIC already have offices in Tokyo, “but what we are trying to do at JETRO is to mobilize more Saudi companies (to do the same).”

He also stressed the potential of the Middle East market — particularly Saudi Arabia — for Japanese companies, adding that population growth, plus the fact that the average age of the population in the Gulf is so young, means more consumption and more economic activity, with higher spending on food, entertainment and cars. “So for Japanese companies, this area is a growing market,” Sho said.

Sho cited Japanese multinational Canon as a good example, saying it has started to invest in Saudi Arabia and aims to hire 300 Saudis as sales executives to expand its business in the Kingdom.

Sho said there are currently 95 joint projects — mostly in the industrial sector — underway between the Kingdom and Japan, worth $15 billion.

Saudi Arabia is Japan’s third-largest trading partner and second-largest source of foreign capital, and provides 40 percent of the country’s oil requirements, he said.

“Saudi Arabia has a huge trade surplus with Japan,” Sho said, adding that Japanese investments have so far created 6,500 jobs for Saudis.

He also praised the Kingdom’s preparations for its hosting of the G20 Summit (hosted by Japan last year), adding that the Saudi Arabian General Investment Authority (SAGIA) had already impressed him by reducing the time required for customs clearance from one week to within 24 hours.

He also welcomed the introduction of separate immigration counters at Riyadh airport for G20 delegates.

“The world is recognizing that Saudi is moving in a good (direction),” Sho said, pointing to the Kingdom’s ranking in the World Bank’s most-recent “Ease of Doing Business” report.

In the study, Saudi Arabia showed the biggest improvement, leaping 30 places up the rankings to number 62 out of 190 countries.

“Prime Minister Abe’s visit is kind of a commitment from the top leadership,” he said. “It is a very good sign from a foreign investment point of view.”

Oil world tries to read Chinese post-pandemic demand

Updated 27 sec ago

Oil world tries to read Chinese post-pandemic demand

  • The economic outlook for Asia will help decide some pretty pressing short-term policy issues
  • China’s refineries are getting back in top gear, and are looking to increase crude purchases in anticipation of economic recovery

DUBAI: While all eyes are on the US presidential election, the energy sector is keeping a watchful scrutiny on what is happening on the other side of the world, in China and the rest of Asia. Who the Americans choose will of course have enormous influence on energy policy for years to come, not least because Donald Trump versus Joe Biden is, in many ways, a runoff between the traditional oil and gas industry and the alternative renewable future.

But policymakers in the Middle East and in the broader OPEC+ alliance led by Saudi Arabia and Russia are looking eastward to determine more immediate priorities. The economic outlook for Asia, and of China in particular, will help decide some pretty pressing short-term policy issues.

At what official selling price should big producers such as Saudi Aramco and Adnoc mark their exports to China in the coming weeks? What stance should OPEC+ take toward compliance and compensation for the rest of this year? And, crucially, should it press ahead with plans to put an extra 2 million barrels per day (bpd) of oil on global markets in January, as the historic April cuts deal envisaged?

An added variable has been thrown into the works with higher-than-expected output from Libya, which has resumed production and exports from its war-torn facilities and could, according to some energy experts, be producing another 1 million barrels by the end of the year.

That is hardly a deluge of crude by global standards, in a world that consumes above 90 million bpd, though it is enough to complicate the already-delicate calculations of OPEC+ analysts.

But the big imponderable is China. The country blew hot and cold on oil imports since the April crisis, snapping up cheap oil one month and easing back on imports the next. It was hard to read the signals coming out of China.

Were the pauses in imports due to a slower rate of recovery from the pandemic economic lockdowns? Or was China simply chock-full of crude, to the extent that it had filled its strategic reserve and had nowhere else to store it?

Evidence of the latter came in the form of the flotilla of crude tankers waiting to unload off the coast of the Shandong oil terminal. At one stage, there were as many as 60 million barrels afloat awaiting discharge off China’s coast.

The people who make a living from tracking these things say that there has recently been evidence of a slow unloading from these ships, but that there is still an awful lot of crude afloat, waiting to come onshore.

There have also been signs that China’s refineries are getting back in top gear, and are looking to increase crude purchases in anticipation of economic recovery. One of the biggest, Rongsheng Petrochemical, recently snapped up 7 million barrels through Singapore, in a move taken by some to be the starting gun on an aggressive Chinese buying spree.

The economic logic suggests that if that is going to happen, it will take place pretty soon. According to the International Monetary Fund’s latest review, China — the only major economy forecast to grow in 2020, with 1.9 percent growth — will soar to 8.2 percent expansion next year. The country’s early and rigorous lockdown, and high levels of economic stimulus since then, are clearly paying off.

Whether the Chinese lift-off comes in time to affect OPEC+ calculations over the planned January increase remains to be seen. From where oil policymakers are looking at it at the moment, it looks like a good bet that China, at least, will need plenty of crude next year to fuel its post-pandemic recovery.