SAGIA keen to emulate Japanese SMEs’ success

Japan remains a model for successful SMEs and the Kingdom would like to emulate its examples, said a senior official from Saudi Arabian General Investment Authority (SAGIA) in Riyadh on Sunday.
Addressing a 20-member Japanese trade delegation, Adnan Alsharqi, deputy of Investor Services, said Japan had an impressive record in fostering innovation and was home to the world’s strongest SMEs. “We would like to learn from their experiences and present them with what the Kingdom could offer to Japan,” he added.
The delegation, headed by Toru Shiraishi, currently in the Kingdom, visited SAGIA headquarters in the capital on Sunday. In addition to the businessmen, the delegation also comprised four members of the Japanese legislature.
Officials from the SAGIA, Saudi Industrial Property Authority (Modon), and the National Industrial Clusters Development Program (NICPD) presented the visiting team with the Kingdom’s attractive investment opportunities and incentives across various sectors followed by open discussions on the way forward.
In his speech, Shiraishi said the Kingdom remained Japan’s important trade partner, supplying a large portion of its oil to Tokyo.
He said the purpose of his mission was to exchange experiences in the SME’s sector for the mutual benefit of both countries. “We will be conducting business matching seminars at the Riyadh Chamber of Commerce and Industry on Monday and in Jeddah in the coming days. The delegation is slated to visit Unisharm, a Japanese joint venture in the capital and a MODON industrial factory during its stay in Riyadh,” he added.
This visit came following the visit of Crown Prince Salman, deputy premier and minister of defense, to Tokyo in February where SAGIA’s leadership met with major Japanese companies interested in investing in the Kingdom.
As the second largest trading partner for Saudi Arabia with an export value of SR180.83 billion, Japan’s investment projects in the Kingdom have shown a steady increase of 67 percent from 2007 to 2010. Japanese FDI stocks have increased by SR21.11 billion during the three-year period.
During the presentation it was revealed that the Saudi economy is one of the world’s largest, ranking 19th in the world for its GDP that has tripled to $727 billion in the past decade alone.
Given the Kingdom’s strategic location between the East and the West, coupled with its expanding youth demographic and direct access to a large and growing free-trade market, inward investment into the Kingdom is well positioned to build strategic alliances with Japan.
An Increase in the balance of trade between Japan and Saudi Arabia strengthens this global partnership, with 2011 witnessing the highest balance of trade in 6 years, reaching a value of SR149.764 billion.
It was pointed out that SAGIA is interested in building global partnerships to deliver aggressive growth in new sectors, and where Japan is concerned the focus would be on renewable energy, health care and transportation.
The objective is to leverage future expenditures in these sectors, in order to create new business opportunities, generate new job prospects and localize manufacturing and services.
Other major sectors for further diversification that have been identified are petrochemicals and smart manufacturing, with several Japanese companies already active in these areas within the Kingdom.
Saudi Arabia is particularly well placed to profit from developing a smart manufacturing sector involving hi-tech and bio products, however a smart policy framework is required to enable this, in addition to an increased investment in infrastructure combined with the promotion of open trade.
Lucrative incentives already exist for investors in these segments as the Kingdom offers financial support and research grants through existing science and technology institutions as well as high quality serviced land at low costs for manufacturing, warehousing, research and other commercial uses.
A further key investment opportunity for overseas partners such as Japan is in the Human Resources development, education and training sector, particularly when factoring in Saudi Arabia’s population demographics.
Thirty-five percent of the Kingdom’s population is under 15 years of age, with 61 percent within employment age, making these areas advantageous for deepened business relations.
The Kingdom also provides added incentives to enhance foreign inward investments in these sectors by permitting businesses to set up in one of the 24 industrial cities or in the innovative economic cities and offers no minimum capital requirements for foreign investors.
Saudi Arabia has a history of fostering partnerships founded in excellence, most recently helping to build the world’s leading petrochemical industrial complexes.
This fact combined with Saudi Arabia being ranked as the third fastest growing economy among the G20 makes it an attractive destination for foreign direct investment.
Japan’s 10th position ranking out of 144 participating countries in the 2012 World Economic Forum’s Global Competitiveness Report can assist the Kingdom in accomplishing its commitment to initiatives that support Saudi Arabia’s competitiveness, specifically in the pillars of business sophistication and innovation.
As the Kingdom moves toward its next phase of economic development, the future of the global partnership between these two nations will focus on engaging in discussions on market flexibility, employment and legislation to enhance inward investment opportunities.