By TBY | Saudi Arabia | Sep 29, 2017
While the world’s mainstream media continued to obsess over the 1,500-strong delegation, 500 tons of equipment, and two limousines accompanying HRH King Salman Bin Abdulaziz on his Asia tour, they […]
While the world’s mainstream media continued to obsess over the 1,500-strong delegation, 500 tons of equipment, and two limousines accompanying HRH King Salman Bin Abdulaziz on his Asia tour, they glaringly neglected the purposeful and far-sighted vision that Saudi Arabia is testing in Asia: its “Look East“ policy.
It is no secret that 2016 brought unprecedented challenges upon the Kingdom. It has witnessed low oil prices eat up USD258 billion from its foreign reserves, a rise in regional tensions fuelled primarily by Iran’s reintroduction into the global domain and continued proxy expansionism, and a sense of uncertainty echoing from Washington’s new administration.
These challenges have forced the Saudi leadership, led by the Custodian of the Two Holy Mosques and the enthusiastic Crown Prince, HRH Mohammed Bin Salman, to explore fresh opportunities across the Kingdom’s sectors, new markets for trade and investment, and an overall foreign policy pivot. And while the month-long Asia tour—the longest of any Saudi monarch—at first glance meets these objectives, it is important to divide these into two separate tranches; that is to say, King Salman’s visit to China and Japan satisfied somewhat different goals than his stay in Malaysia, Indonesia, and Brunei.
In April 2016, the Crown Prince famously launched Vision 2030—a broad-based program that is set to revolutionize the economy from within through reforms such as privatization and widespread economic diversification. A major aspect to the latter includes positioning the Kingdom as a global leader in innovation and technology.
The go-to destination for the 31-year-old Prince was Japan, and in October 2016 he committed USD45 billion to Tokyo-based SoftBank’s “Vision Fund,“ which will invest in the future of technology, including robotics and microchips. As such, King Salman paid the company’s CEO, Masayoshi Son, a royal visit during his recent stop to the world’s third-largest economy, showing encouraging signs for their bilateral effort to rule the digital waves. More encouraging yet, Japan’s Prime Minister, Shinzo Abe, pledged to fully support the Kingdom’s effort to diversify its economy by launching a suitably named Japan-Saudi Vision 2030, which will overwhelmingly expand cooperation in energy, manufacturing, and infrastructure.
From China, the message was typically bold, yet equally strategic and comprehensive. On his first day touching down in Beijing, King Salman wasted no time in tying up USD65 billion worth of deals with President Xi Jinping, primarily in the petrochemicals and energy sectors—a key example of the Kingdom’s ability to secure game-changing contracts in its core business amidst ongoing uncertainties in energy markets. And China’s significance is both fresh and calculated; it comes after a challenging 2016 when the world’s second-biggest economy agreed to expand trade with Iran to a whopping USD600 billion, and the Kingdom (1.02 million barrels per day) was overtaken by Russia (1.05 million bpd) as the biggest oil exporter to China. Yet most importantly perhaps is the fact that Saudi’s dealings in China are being spearheaded by heavyweights Aramco and SABIC, at a time when Vision 2030 anticipates the former to undergo a historic USD2 trillion IPO (likely part in Hong Kong), and SABIC—the biggest listed company in the Middle East—reaps the benefits of the vision’s goals to revolutionize the downstream petrochemical sector.
The remaining stopovers on the Asia tour were likewise marked by highly lucrative and strategic deals, with Aramco’s USD7 billion investment in Malaysia’s state-owned oil giant Petronas’ refinery project leading the pack. Yet, there was a clear, underlying geopolitical purpose in King Salman’s visit to Brunei, Malaysia, and Indonesia, the biggest nation in the Islamic world. The fall in oil prices, ongoing conflicts in Yemen and Syria, coupled with an uncertain tone from long-time ally the US, indirectly leading to Iran’s emergence onto the global stage, have unarguably taken a toll on the Kingdom’s ability to assert itself on the international arena, instead forcing the leadership to look within for answers to its many challenges.
Yet in the spirit of the old Chinese proverb in that every crisis lies the seed of opportunity, King Salman’s Asia tour delivered just that. Not only was it a testament that widespread reforms were firmly in place and that a farsighted vision had been set-out, but for anyone seriously doubting Saudi Arabia’s international stature, this was a message loud and clear that the Kingdom was more than capable of thriving in the new normal, cultivating groundbreaking bonds with the world’s fastest growing economies. The significance of Malaysia, Indonesia, and Brunei in this regard is that despite glaring fractures in the Islamic world, the Custodian of the Two Holy Mosques is continuing to lead the sunnah into this new era of unprecedented opportunities and challenges.