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Saudi Arabia, Japan Sign 15 Agreements, Establishing Qualitative Partnership

The Saudi-Japanese Investment Forum was held in Riyadh. (Asharq Al-Awsat)
The Saudi-Japanese Investment Forum was held in Riyadh. (Asharq Al-Awsat)
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Saudi Arabia, Japan Sign 15 Agreements, Establishing Qualitative Partnership

The Saudi-Japanese Investment Forum was held in Riyadh. (Asharq Al-Awsat)
The Saudi-Japanese Investment Forum was held in Riyadh. (Asharq Al-Awsat)

The Saudi-Japanese Investment Forum in Riyadh resulted in the signing of 15 agreements covering technology, artificial intelligence, industry and clean energy.

Riyadh and Tokyo announced they plan to move to a qualitative partnership as an essential pillar for joint future-building projects in industrial and digital transformation.

The forum stressed the need to move towards broad cooperation in qualitative fields and boost investment relations between Saudi Arabia and Japan in all areas.

Saudi Minister of Investment Khalid al-Falih and Japanese Minister of Economy, Trade, and Industry Nishimura Yasutoshi attended the event.

The forum underscored 40 Japanese investments that have taken place in the Kingdom since 1973 and another 40 memorandums of understanding (MoU) signed during a virtual meeting in 2019.

Falih revealed that 99 Japanese companies are investing in Saudi Arabia in specific sectors, acknowledging that the investment between the two countries falls short of aspirations.

He stressed that the two countries had bolstered their relationship with tremendous dedication as the Kingdom targets $3.3 trillion worth of investments with Japan by 2030.

E-sports

Falih said Saudi Arabia aims to become a major hub for gaming and e-sports by 2030 with content that can be exported to the region and globally, noting that the Kingdom sought to build the five largest marine industry parks in the world in Ras al-Khair.

The minister explained that Riyadh and Tokyo focus on several sectors, including energy, stressing that they plan to bolster cooperation through energy transformation.

He noted that the investment relationship between the two countries over the past seven decades focused on oil and petrochemicals, while the focus is now on new energies.

Saudi Arabia is focusing on manufacturing, said Falih, adding that the Kingdom is cooperating with Japan in four areas, including minerals, marine industries, petrochemicals, flexible global supply chain, and the automotive industry, which is targeting production of more than 500,000 electric vehicles (EV) annually by 2030.

The Saudi minister underlined that the 15 agreements signed on the forum's sidelines will increase mutual investments between Riyadh and Tokyo and achieve the goals of Saudi Vision 2030 that align with the strategic directions of the Japanese government.

The agreements signed in energy, hydrogen, and ammonia, will enable the two countries to build qualitative partnerships in energy in the long run.

Clean energy

Falih pointed out that the existing transformation would continue and accelerate in clean and new energy, explaining that Saudi Arabia is determined to be the major country in this field under the directives of Crown Prince Mohammed bin Salman.

Japan is one of the three largest investing countries in the Kingdom, affirmed the minister, noting that it boasts mega investments in Jubail factories, the electrical appliances field, and several sectors, exceeding billions of dollars.

Moreover, the Global Supply Chain Resilience Initiative (GSCRI), launched by Crown Prince Mohammed in October, aligns with Japan's need to expand production.

It will benefit from the Kingdom's competitive edge in terms of production cost, strategic location, and availability of primary materials, as well as the skilled Saudi workforce, which has proven its competitiveness in many companies, including Japanese ones.

Falih asserted that Japan is Saudi Arabia's friend because it is one of the most advanced countries in technology, industries, and logistics in global trade, digital technology, and quality of life.

Mutual investments

Furthermore, he pointed out that mutual investments between their countries started with Vision 2030 to move to new qualitative fields with advanced technologies, indicating that Crown Prince Mohammed directed officials to establish a joint committee to achieve partnerships with Japan and its private sector.

He added that Saudi officials held the last meeting several weeks ago in Tokyo. They met many leading companies in energy, hydrogen, and ammonia, adding that the two sides signed several agreements, establishing a qualitative model partnership.

The strong Saudi-Japanese relations relied over the past decades on energy, petrochemicals, and mutual investments between the two parties, said Falih, stressing that Saudi Arabia has a competitive advantage due to its strategic location, low costs of energy and raw materials, and the global initiative for supply chains.

Saudi Arabia intends to provide 500,000 cars, which provides a massive potential for Japanese companies to invest in the Kingdom.

Reliable partner

For his part, Nishimura stressed that the Kingdom is a reliable partner and the largest source of crude oil supplies to Japan.

He lauded Saudi Arabia's continuous efforts to promote stability in global oil markets.

The minister noted that the two countries plan to cooperate in strategic storage, noting that Japan signed with Saudi Arabia two memorandums of cooperation in circular carbon economy and recycling, clean hydrogen, and ammonia fuel and its derivatives.

He asserted that both countries should work together to reach zero carbon neutrality, adding that they will make a joint effort to reduce emissions.

Nishimura described a Japanese technology that converts carbon dioxide into essential products, such as plastics, and energy sources, through the practical application of the circular carbon economy approach and carbon recycling technologies.

Nishimura noted that both countries boasted several investment opportunities, which would contribute to the diversification of global supply chains through localization strategies that depend on relative strength.

Moreover, he said the Russian-Ukrainian war necessitated cooperation between Riyadh and Tokyo to restore energy market stability, stressing the importance of collaboration to extend strategic storage and partnership in the circular carbon economy.

Strategic directions

During panel discussions, the forum reviewed investment opportunities in major sectors to strengthen investment relations in various fields.

The forum also addressed cooperation and partnership opportunities and reviewed available investment opportunities in Saudi Arabia and Japan.

It included meetings between significant companies and representatives of the private sector from both sides, with the participation of representatives of government agencies, the private sector, and essential Saudi and Japanese companies.

The forum was attended by 400 investors from Saudi Arabia and Japan and heads of Saudi companies who underlined their intention to engage in Vision 2030, in line with the strategic directions of the Japanese government.

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Business

From Aramco's Profits to State Budget Revenue: How Do Oil Proceeds Reach Government Coffers?

A general view shows Ras Tanura's oil production plant near Dammam in Saudi Arabia's Eastern Province (AFP)
A general view shows Ras Tanura's oil production plant near Dammam in Saudi Arabia's Eastern Province (AFP)
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From Aramco's Profits to State Budget Revenue: How Do Oil Proceeds Reach Government Coffers?

A general view shows Ras Tanura's oil production plant near Dammam in Saudi Arabia's Eastern Province (AFP)
A general view shows Ras Tanura's oil production plant near Dammam in Saudi Arabia's Eastern Province (AFP)

Saudi Aramco's financial results and Saudi Arabia's third-quarter budget performance report, released on the same day, revealed a divergence between the company's rising profits and declining government oil revenue recorded in the state budget.

While Aramco's net income rose 34.2% during the first nine months of 2026 to SAR 380.6 billion ($101.5 billion), government oil revenue fell 1.3% over the same period and declined approximately 23% in the third quarter alone.

Comparing the two indicators does not necessarily imply a direct relationship between the company's profits and the revenue flowing into government coffers. Corporate earnings are recognized under different accounting principles from those governing the calculation and collection of government revenue.

The financial relationship between Aramco and the government also involves multiple channels, including taxes, royalties, dividends and offsetting settlements, each with its own payment and collection schedule.

Aramco's Profits and Cash Flows

Aramco reported net income of SAR 380.6 billion ($101.5 billion) for the first nine months of 2026, compared with SAR 283.6 billion ($75.6 billion) in the corresponding period last year, an increase of 34.2%.

Adjusted net income reached SAR 368.9 billion ($98.4 billion), up from SAR 302.3 billion ($80.6 billion) a year earlier.

However, the increase in earnings was not accompanied by a comparable rise in cash generated by the company's operations, according to its financial report.

Cash flow from operating activities totaled SAR 355.8 billion ($94.9 billion), compared with SAR 357.6 billion ($95.4 billion) in the same period last year, remaining largely unchanged.

Aramco attributed this to changes in working capital, which refers to funds tied up in day-to-day operations, including outstanding sales receivables, inventories and amounts owed to or by the company.

These movements limited the extent to which higher earnings translated into operating cash flow.

Meanwhile, free cash flow increased to SAR 221.6 billion ($59.1 billion), compared with SAR 217.3 billion ($57.9 billion) a year earlier.

This metric measures the cash remaining after capital expenditures are deducted from operating cash flow. It benefited from a reduction in capital expenditures to SAR 134.2 billion ($35.8 billion), from SAR 140.3 billion ($37.4 billion) in the comparable period.

Oil Revenue in the State Budget

On the other side of the equation, Aramco's earnings growth was not mirrored by a corresponding increase in government oil revenue.

Ministry of Finance data showed that oil revenue fell 23% year on year in the third quarter to SAR 116.5 billion ($31.1 billion), compared with SAR 150.8 billion ($40.2 billion) in the same period last year.

Over the first nine months of 2026, oil revenue totaled SAR 446.3 billion ($119 billion), down from SAR 452.4 billion ($120.6 billion) in the corresponding period of 2025, representing a relatively modest decline of approximately 1.3%.

By contrast, non-oil revenue increased 8% during the nine-month period to SAR 412.5 billion ($110 billion), helping lift total budget revenue by 3% to SAR 858.9 billion ($229 billion).

In the third quarter alone, non-oil revenue rose 20% to SAR 142.6 billion ($38 billion).

The growth in non-oil revenue therefore helped cushion the impact of declining oil revenue on the government's overall income.

Third-quarter expenditure totaled SAR 343.4 billion ($91.6 billion), against revenue of SAR 259.1 billion ($69.1 billion), resulting in a quarterly budget deficit of approximately SAR 84.3 billion ($22.5 billion).

Why Don't the Figures Move in the Same Direction?

Part of the divergence between Aramco's financial results and government budget revenue stems from the different nature of the figures themselves.

The company's profits are recognized according to its accounting results, while budget figures reflect government revenue actually collected during the reporting period.

Moreover, the government's financial returns from Aramco's operations flow through several channels, including taxes, royalties and dividends, with differences in when these amounts become due and when they are paid.

Accounting profits do not necessarily translate into cash inflows during the same period. Liquidity is affected by the timing of receivables collection, inventory movements and operating payments.

This distinction is also evident in financial transactions between Aramco and the government, which are not limited to direct cash payments but include the settlement of certain mutual obligations through offsets.

For example, Aramco's cash income tax payments fell to SAR 2.8 billion (approximately $747 million) in the third quarter, compared with around SAR 51 billion ($13.6 billion) in the second quarter, as amounts due to the company from the government were settled by offsetting them against its tax obligations.

Under this mechanism, amounts owed to one party are deducted from what that party owes the other, rather than transferring the full amount in cash.

Such offsets affect both the volume of cash payments and the timing of financial transfers between Aramco and the government.

Consequently, government oil revenue does not necessarily move in the same direction as Aramco's financial results, since each is influenced by different factors and accounting mechanisms.

While the company's profits reflect its financial performance during a given period, government revenue recorded in the budget depends on the taxes, royalties and dividends due to the state, as well as the timing of their collection and settlement.

Aramco's profits may therefore increase during a period when government oil revenue is declining.

Overall, the results demonstrate Aramco's continued ability to generate strong profits and maintain substantial cash flows, supporting its capacity to sustain investment and distribute dividends to shareholders, foremost among them the Saudi government.

At the same time, growth in non-oil revenue underscores the importance of diversifying budget income sources to mitigate fluctuations in oil revenue, broaden the sources supporting public finances and advance the Kingdom's economic transformation.

Business

Crypto Dips on Democrat Midterm Wins, Binance Hack Dents Optimism

Representation of cryptocurrencies are seen in this illustration taken September 10, 2025. (Reuters)
Representation of cryptocurrencies are seen in this illustration taken September 10, 2025. (Reuters)
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Crypto Dips on Democrat Midterm Wins, Binance Hack Dents Optimism

Representation of cryptocurrencies are seen in this illustration taken September 10, 2025. (Reuters)
Representation of cryptocurrencies are seen in this illustration taken September 10, 2025. (Reuters)

Cryptocurrencies briefly dipped on Wednesday as Democrats won majorities in both the Senate and House in the US midterm elections, a potential blow to an industry that has pushed for faster deregulation for digital assets.

The sector has spent more than $300 million backing crypto-friendly Democrats and Republicans in roughly equal measure during the current and previous election cycles, hoping to pass legislation US crypto companies say will ‌put them on ‌a solid legal footing and allow them to thrive.

Bitcoin ‌briefly ⁠touched a six-week ⁠low before recovering to trade roughly flat by 0715 GMT at $78,070. Ether traded at $2,292, up just 1%.

Bitcoin has fallen by around 41% since hitting record highs above $122,000 in October 2025, bringing the value of the broader crypto market to around $2.61 trillion, according to CoinMarketCap.

The market has lost some $300 billion in value in the last month alone, as deepening concern about future returns from AI and the ⁠strain of rising borrowing costs pushed investors into less risky ‌assets such as government bonds and ‌safe-haven currencies.

Sentiment has also been hurt by the $6 billion hack of the Binance platform last ‌week, the largest heist in history.

On Tuesday, Binance customers had withdrawn ‌a net $4.72 billion from the world's largest cryptocurrency exchange since it reopened following the hack at the weekend.

"The market may be re-evaluating the risk-reward profile of crypto assets. On one hand, the string of security incidents is forcing investors to re-examine the ‌industry's security infrastructure and custody risks," Tim Sun, senior researcher at HashKey, said.

"On the other hand, potential shifts in ⁠the US political landscape ⁠could stall the progress of structural crypto legislation and institutional framework development. All of these factors leave the crypto market facing strong headwinds," he said.

US President Donald Trump, who vowed to make the United States the "crypto capital of the world" during his 2024 presidential campaign, has made his own forays into digital assets, with the launch of his "Trump" meme coin, plus his family's World Liberty Financial crypto platform, among other ventures.

The sector has seen sweeping reforms in the almost two years since Trump returned to office, including lighter enforcement and the creation of a strategic bitcoin reserve.

Washington has also allowed for easier access to banking and exchange-traded products and passed a federal stablecoin law that could help these assets move into the mainstream payments and money transfer systems.

Business

Saudi Non-Oil Sector Expands for Seventh Straight Month

A view of Riyadh, Saudi Arabia. (Getty Images file)
A view of Riyadh, Saudi Arabia. (Getty Images file)
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Saudi Non-Oil Sector Expands for Seventh Straight Month

A view of Riyadh, Saudi Arabia. (Getty Images file)
A view of Riyadh, Saudi Arabia. (Getty Images file)

Saudi Arabia’s non-oil private sector continued to expand in October, with business activity and output growth accelerating despite a decline in the Riyad Bank Purchasing Managers’ Index (PMI) to 54.0 from 55.3 in September, according to data compiled by S&P Global.

The seasonally adjusted index remained above the neutral 50-point threshold for the seventh consecutive month, signaling continued improvement in operating conditions. Although it eased from September’s seven-month high, October’s reading was the second-highest since February.

Output growth accelerated to a strong pace from the previous month, supported by improving underlying demand and increased sales and marketing efforts. New orders also continued to rise, although more slowly than in September and at a rate below the survey’s historical average.

Domestic demand remained the main driver of growth, while export orders declined for the eighth consecutive month, with the contraction accelerating.

Survey respondents cited shipping disruptions, higher transport and insurance costs, and competitive market conditions as factors weighing on overseas sales. About a quarter of firms reported a decline in export orders in October.

Employment increased for the fourth consecutive month, although hiring remained modest and slowed from September. Backlogs of work rose slightly for the second straight month, reflecting higher sales and some delays in supplier deliveries.

Supplier delivery times improved only marginally, marking the weakest improvement since April, as disruptions to maritime routes continued to affect shipments. Some businesses consequently increased their reliance on domestic suppliers to secure production inputs.

Cost pressures intensify

Cost pressures mounted at the start of the final quarter, with purchase prices rising at their fastest pace in six months, driven by higher shipping, insurance, raw material and energy costs. Staff cost inflation also reached its highest level since February.

Despite rising input costs, the rate of increase in selling prices slowed to a nine-month low as companies offered larger discounts amid intensifying competition. Nevertheless, selling prices continued to rise at a strong pace.

Commenting on the findings, Naif Al-Ghaith, chief economist at Riyad Bank, said the non-oil private sector demonstrated resilience in October, supported by sustained domestic demand, stronger business activity and continued employment growth.

He noted that the PMI’s position above the 50-point threshold indicated improving operating conditions despite its decline from the previous month.

Al-Ghaith explained that faster output growth reflected Saudi businesses’ ability to respond to domestic demand through operational efficiency, marketing initiatives and increased sales activity.

New orders maintained strong growth, although demand had become more selective, he added.

Continued hiring, inventory accumulation and purchasing activity reflected companies’ readiness to meet demand, while expectations for output over the coming year remained only mildly positive and below the survey’s historical average.