Newsletter No. 847
News-Analysis
December 15, 2007

 

POLITICAL AND BUSINESS LEADERS PONDER JAPAN-SAUDI INVESTMENT

A number of stories have appeared in the first half of December that suggest more attention is being paid among Japanese businessmen and government officials to investment relations between Japan and Saudi Arabia.

The most obvious sign of this was the December 12th meeting in Riyadh entitled the “Fifth Round of Formal Negotiations on Bilateral Investment Agreement between Japan and the Kingdom of Saudi Arabia.” The most senior Japanese official at these talks was Shinsuke Sugiyama, deputy director-general of MOFA’s Middle Eastern and African Affairs Bureau. The most senior Saudi official was Dr. Awwad al-Awwad, deputy governor of the Saudi Arabian General Investment Authority (SAGIA).

It wasn’t clear from the official MOFA statement whether the talks went well or poorly, but it did note that the “two parties decided to hold the next round of negotiations in Tokyo at an appropriate time early next year.”

In a more concrete development, the Mizuho Financial Group intimated to the press that they have plans to set up an investment bank in Saudi Arabia in the first half of 2008. Bloomberg says that the unit will initially hire about twenty local bankers, and that Mizuho is seeking an investment-banking license in Saudi Arabia.

They also quoted investment analyst Katsuhito Sasajima as follows: “Japanese banks are laggards in getting into the Middle East… With US and European banks tripped up by subprime, they can catch up quickly even though they started a lap behind… Japanese banks must go where the money is. They cannot sit still in Japan where they are unlikely to generate much profit.”

Obviously, this renewed Japanese interest in Saudi investment stems from the soaring oil prices which have rejuvenated many Gulf region economies and put them back on the map. In 2006, JETRO statistics reported a net annual Japanese investment of Saudi Arabia of US$254 million, and no recorded Saudi investments in Japan at all.

POSSIBLE EXPANSION OF THE PETRORABIGH PROJECT

Some news items have appeared regarding the massive ARAMCO-Sumitomo Chemical Rabigh Refining and Petrochemical Company (PetroRabigh) on the Red Sea coast. We have followed this project especially in Shingetsu Newsletter Nos. 56, 208, and 814.

The PetroRabigh is already consuming something like US$10 billion, but apparently the partners are now discussing a possible US$1.8 billion expansion beyond even that hefty figure. The Nikkei has reported that the proposed expansion would build a new plant in Saudi Arabia for compound resin for digital consumer electronics such as liquid crystal display TVs and automobiles as early as 2012. If the new expansion is approved, the partners would probably begin actual construction by the end of 2009.

The Khaleej Times was recently able to interview Saad al-Dosari, the president and CEO of PetroRabigh. It was noted that Saudi ARAMCO's existing Rabigh refinery produces fully 19% of the country’s refining capacity. Al-Dosari was quoted directly as saying: “Saudi Arabia has long thrived on oil production, but this enterprise marks a new direction. Previously Saudi ARAMCO produced massive amounts of relatively low-value products at the Rabigh refinery. Now we can convert these into extremely valuable commodities… Petrochemicals are all around us, in everything from car parts to shampoo. This project therefore has the potential to fuel Saudi manufacturing industry… This venture will provide more employment opportunities to Saudi people and contribute major share in the country's GDP growth. The atmosphere is positive. We are paving the way for a new Saudi Arabia."

SAUDI NURSES COMPLETE TRAINING PROGRAMS IN JAPAN

Arab News reported at the end of November that eighteen Saudi nurses have completed a three-year training program in Japan. This three-year program consisted of various workshops for teaching different areas of the field, such as disaster response and forensics.

Ryuichi Tomizawa, resident representative of the Japan International Cooperation Agency (JICA) at the Embassy of Japan in Riyadh stated: “The basic topic today is about disaster nursing, which is convenient to be discussed at this time of the year before the hajj season… This training gives the opportunity for these nurses to utilize their knowledge in disaster nursing during hajj when many accidents happen.”

Toshimitsu Ishigure, consul general of Japan in Jeddah added: “Japan’s government has been very cooperative in developing human resources… We have no oil or mineral resources ourselves, so we are keen on developing our people. That is why we are happy to cooperate with Saudi Arabia to develop its own human resources.”