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Japan, Gulf Continue Discussions on Free Trade Agreement

Japan’s Ambassador Extraordinary and Plenipotentiary to Saudi Arabia Fumio Iwai. (Japanese Embassy in Saudi Arabia)
Japan’s Ambassador Extraordinary and Plenipotentiary to Saudi Arabia Fumio Iwai. (Japanese Embassy in Saudi Arabia)
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Japan, Gulf Continue Discussions on Free Trade Agreement

Japan’s Ambassador Extraordinary and Plenipotentiary to Saudi Arabia Fumio Iwai. (Japanese Embassy in Saudi Arabia)
Japan’s Ambassador Extraordinary and Plenipotentiary to Saudi Arabia Fumio Iwai. (Japanese Embassy in Saudi Arabia)

Japan’s Ambassador Extraordinary and Plenipotentiary to Saudi Arabia Fumio Iwai underscored on Sunday the strategic ties that bind his country with the Kingdom.

In remarks to Asharq Al-Awsat Iwai revealed that Japan and Gulf countries are studying several potential projects. Discussions are also ongoing between Tokyo and the Gulf Cooperation Council (GCC) over a Free Trade Agreement.

As strategic partners, Saudi Arabia and Japan have always sought to expand their bilateral relations to include several new fields, such as information technology, healthcare, space, sports, entertainment, culture and tourism.

He noted that in 2025 both countries will mark 70 years since the establishment of diplomatic relations between them. They are determined to forge ahead in developing them on all levels to achieve sustainable development goals.

Iwai congratulated Custodian of the Two Holy Mosques King Salman bin Abdulaziz, Prince Mohammed bin Salman, Crown Prince and Prime Minister, and the Saudi people on the occasion of the Kingdom’s 94th National Day, which falls on September 23.

Since their establishment in 1955, Saudi-Japanese relations have developed year after year, with a focus on the energy sector, he went on to say.

After the launch of Saudi Arabia’s Vision 2030, these ties needed to follow the plan, so they launched their joint Saudi-Japan Vision 2030 during Crown Prince Mohammed’s visit to Tokyo in 2016, added the ambassador.

The move underscored Japan’s major support to the social and economic reforms Saudi Arabia has adopted.

Since the establishment of their joint vision, Saudi Arabia and Japan have intensified contacts and visits. Crown Prince Mohammed held a virtual meeting with Prime Minister Fumio Kishida in May. They agreed to form the strategic partnership council to bolster bilateral cooperation and coordination in all fields, noted Iwai.

Japan has become one of the main countries attracting Saudi investments, he remarked. Both countries are also developing their relations further in the culture, tourism, sports, entertainment, e-games and academic sectors.

Trade relations between Riyadh and Tokyo continue to grow immensely, he stated. The value of Japanese exports to Saudi Arabia topped 892.5 billion yen in 2023, up by 33.6 percent from the year before.

Moreover, over 120 Japanese companies are operating in Saudi Arabia and since the launch of Vision 2030, several more companies in vital sectors have opened offices in the Kingdom. Among these companies are Cannon Medical Systems, Monstarlab, Fujifilm Healthcare, HIS, SYSMEX, AIZAWA Concrete, Avex and Takeda Pharmaceutical.

Iwai highlighted 2023’s Manar clean energy initiative as one of the most important projects launched between Saudi Arabia and Japan. Tokyo supports Saudi Arabia’s ongoing efforts to become a hub for clean energy, mineral resources and supply chains.

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Saudi Arabia's Digital Advertising Boom: Addressing Economic Leakage, Boosting Local Content

A digital advertising event recently held in Riyadh (Asharq Al-Awsat)
A digital advertising event recently held in Riyadh (Asharq Al-Awsat)
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Saudi Arabia's Digital Advertising Boom: Addressing Economic Leakage, Boosting Local Content

A digital advertising event recently held in Riyadh (Asharq Al-Awsat)
A digital advertising event recently held in Riyadh (Asharq Al-Awsat)

Saudi Arabia’s digital advertising sector is experiencing rapid growth, but a significant portion of its revenues is leaking to foreign platforms. To maximize the impact on the national economy, experts are calling for strategies to curb this outflow and redirect it to local channels.

The importance of retaining digital ad revenues lies in the substantial size of this market. It is estimated that approximately $1 billion in ad spent is lost annually to foreign platforms, representing a considerable loss to Saudi Arabia’s economy.

Dr. Ebada Al-Abbad, CEO of Marketing and Communications at Tadafuq, a Saudi digital advertising network, told Asharq Al-Awsat that the problem stems from the fact that although advertisers, products, and audiences are often local, the largest share of financial gains goes to foreign platforms. He estimated that 70-80% of the $1.5 billion spent on digital advertising in Saudi Arabia in 2022 went to global platforms such as Google and Facebook. This results in the national economy losing nearly $1 billion annually from this sector alone.

Al-Abbad noted that government agencies in Saudi Arabia also contribute to the outflow. He explained that public sector spending on digital advertising, intended to raise awareness among citizens and residents, frequently ends up on foreign platforms. Government spending makes up about 20-25% of the total digital ad market in the Kingdom, meaning hundreds of millions of riyals leave the country annually, weakening the local digital economy.

Al-Abbad argues that Saudi Arabia needs strong local digital ad networks to keep this revenue within the national economy. These networks would help create jobs, drive innovation, and promote cultural diversity in digital content. Developing local platforms would also enhance Saudi Arabia’s digital sovereignty by ensuring that data remains within the country and is not controlled by foreign entities.

Moreover, local networks would reduce dependence on international platforms, ensuring that the economic benefits of digital advertising remain in the Kingdom, he said, stressing that this would align with Saudi Arabia’s broader Vision 2030 goals, which emphasize building a robust, diversified economy driven by local industries and digital transformation.

Globally, the digital advertising sector is growing rapidly. In 2022, worldwide spending on digital ads reached $602 billion, and it is projected to hit $876 billion by 2026. In the Middle East and North Africa (MENA) region, the digital ad market grew to $5.9 billion in 2022, with Saudi Arabia’s market accounting for over $1.5 billion.

In other countries, the digital ad sector plays a crucial role in boosting national economies. For example, in the United States, the digital advertising industry contributed $460 billion to the GDP in 2021, about 2.1% of the total. In the UK, the sector accounted for 1.8% of GDP in 2022. This shows how important digital advertising can be in driving economic growth.

One of the key challenges facing Saudi Arabia’s digital ad sector is the dominance of global platforms like Google and Facebook, which control 60% of the global digital ad market, Al-Abbad told Asharq Al-Awsat. This dominance results in a significant outflow of revenue and allows these platforms to control digital data and content. He warned that this could undermine Saudi Arabia’s national sovereignty over its digital economy.

To counter this, he emphasized that Saudi Arabia needs to build competitive local networks that can retain a larger share of the market. This will not only keep more revenue in the country but also strengthen the Kingdom’s control over its digital data and content.