Saudi Crown Prince Mohammed bin Salman bin Abdulaziz wrapped up a recent visit to Japan with a meeting with Emperor Naruhito, who acceded to the throne in April, with congratulatory wishes.
Japan is one of Saudi Arabia’s most important Asian partners. Last year, trade grew to almost $75 billion and cooperation is growing deeper. Japanese exports increased more than 10% to $41 billion and Saudi exports grew more than 20% to nearly $34 billion in 2018.
Tokyo hosted a Saudi-Japan Vision 2030 Business Forum in June during which the Saudi Arabian General Investment Authority signed various agreements.
Crown Prince Mohammed was in Japan to lead the Saudi delegation at the G20 summit, where he met with world leaders, dined with US President Donald Trump and addressed the meeting’s closing ceremony. The next G20 summit is scheduled to be in Saudi Arabia in November 2020. It will be an important opportunity for Riyadh to demonstrate its ambitions for economic and social development.
Before going to Japan, Crown Prince Mohammed visited Seoul for his first official bilateral summit with South Korean President Moon Jae-in. This was the first visit by an heir to the Saudi throne to Seoul since Crown Prince Abdullah bin Abdulaziz visited in 1998.
Despite trade of more than $30 billion between Saudi Arabia and South Korea last year, the potential for growth is significant. In the buildup to the summit, officials from both countries participated in the second Saudi-Korean Vision 2030 meeting in April.
Crown Prince Mohammed’s visit led to agreements worth $8.3 billion pertaining to cooperation in energy security, industrial cooperation in automotive, shipping, defence, tourism and health care.
“Saudi Arabia is the largest oil supplier for us and it’s the biggest customer for South Korean construction firms. It is also our No. 1 trade partner in the Middle East,” Moon said.
The flagship agreement involves a $6 billion deal between Saudi Aramco and S-Oil for the construction of a state-of-the-art oil refinery and petrochemical complex in South Korea. Saudi Aramco signed a series of agreements with Korea National Oil Corporation and other private sector energy companies as it aims to develop a more strategic footprint in the region.
With more than 40 initiatives in play under the umbrella of Saudi-Korean Vision 2030, the scope of bilateral cooperation is expected to grow. Crown Prince Mohammed met with leaders of South Korea’s largest conglomerates, including Samsung, LG and SK Group, which are keen to expand their activities in Saudi Arabia.
Moon said South Korea is keen to deepen cooperation under the Vision 2030 framework. Moving beyond “traditional cooperation on energy and construction,” Moon said South Korea intends to “expand cooperation with Saudi Arabia to the areas of information and communications technology, smart infrastructure, defence, health and medicine.”
South Korean Ambassador to Saudi Arabia Jo Byung-wook said South Korean companies will be looking beyond exporting “made in Korea” products and increasingly towards working with Saudi partners to develop strategies to “make” in Saudi Arabia itself.
It is a trend already developing. Take, for example, the agreement between Saudi Arabian Military Industries and Hanwha Group to establish a joint venture in Saudi Arabia to manufacture munitions.
The joint venture will aim to expand into product lines in future phases, including heavy weapons such as rockets and artillery systems, as well as electronics such as command, control, communications, computers and intelligence systems, and intelligence, surveillance and reconnaissance systems.
Another example is between Saudi Arabia’s International Maritime Industries (IMI), which is behind the largest shipbuilding facilities in the Middle East and North Africa region at the King Salman Complex in Ras Al-Khair, and South Korea’s Hyundai Heavy Industries (HHI).
Saudi tanker company Bahri is ordering very large crude oil carriers from IMI, which will work with HHI to construct the vessels at a Korean dockyard before technology transfer and infrastructure development in Korea will allow the building operation to be shifted to Ras Al-Khair. HHI has just upped its stake in IMI to 20%.
These developments reinforce the strategic nature of Riyadh’s foray into Asia. The fastest growing demand for Saudi oil is in Asian economies and, as Saudi Arabia develops and implements Vision 2030, it, too, has fast-growing demand for Asia-produced goods and services.
As Vision 2030 is about diversifying the Saudi economy, Asian countries have a key role to play. Having already become world leaders in technology and innovation, Asia is home to a growing range of government and industry partners Saudi Arabia needs to deepen technical cooperation with.
This year, the crown prince concluded high-profile visits to China, India and Pakistan, all of which resulted in groundbreaking cooperation agreements. Now Saudi Arabia’s future partnership with South Korea has also had its lift off.