Saudi King Salman begins month-long Asia tour to promote investment

Saudi Arabia’s King Salman starts a month-long Asian tour on Sunday to build ties with the world’s fastest growing importers of Saudi oil and promote investment opportunities, including the sale of a stake in its giant state firm Saudi Aramco.

The octogenarian monarch, who has overseen the launch of an ambitious economic reform plan since his accession two years ago, is expected to visit Malaysia, Indonesia, Japan and China.

In a sign of the importance which the kingdom places on strengthening economic ties with Asia, Indonesian officials say Salman will be accompanied by a 1,500-strong entourage including 10 ministers.

Energy Minister Khalid al-Falih and Aramco executives will travel with him, sources told Reuters, on the king’s first trip outside the Middle East and North Africa since he visited the United States in 2015.

Saudi officials are keen to court Asian investors for the sale of a 5 per cent stake in Aramco in 2018, which is expected to be the world’s biggest IPO, and have solicited financial advice from banks with links to China.

Asian banks and companies are also expected to play major roles in the kingdom’s plans to develop non-oil industries and expand its international investments, all part of the crude exporting giant’s attempts to reduce dependence on oil revenues.

The kingdom in August signed 15 preliminary agreements with China – ranging from house-building in Saudi Arabia to water projects and oil storage – during a visit by the king’s powerful son, Deputy Crown Prince Mohammed bin Salman, who is spearheading the economic reform plan.

It has also agreed to invest up to $45bn in a new technology fund with Japan’s SoftBank Group.

While it pushes ahead with its diversification efforts, Saudi Arabia is at the same time seeking to cement its position as the world’s biggest oil exporter and establish itself as the dominant oil supplier to Asia’s emerging markets.

In China, which is challenging the United States as the world’s biggest oil consumer, Saudi has just been pipped by Russia as the top supplier.

MALAYSIAN DEAL

Saudi Arabia has yet to announce Salman’s trip, but officials in Malaysia say he will start his tour there on Sunday, accompanied by his son Prince Mohammed.

Aramco is expected to sign an agreement during the visit to collaborate with Malaysia’s state oil firm Petroliam Nasional Bhd (Petronas) on its Refinery and Petrochemical Integrated Development (RAPID) project.

The king, who is thought to be 81, will travel to Jakarta and Bali in Indonesia from March 1-9, and Japan from March 12 to 14, officials in those countries told Reuters.

Indonesian Cabinet Secretary Pramono Anung said the government hopes the visit will bring Saudi investments of up to $25bn. Jakarta’s state-owned energy company Pertamina and Aramco are working together to upgrade Indonesia’s largest refinery complex and are looking at other opportunities.

Indonesian television said the Saudi delegation will stay in seven 5-star hotels in the Bali resort area of Nusa Dua.

Salman is also expected to go to China, although neither Saudi nor Chinese officials have confirmed the visit, before spending the last two weeks of March on holiday in the Maldives, according to a Maldives diplomat. Local newspaper Mihaaru reported that three resorts have been reserved for his stay.

MILITARY TIES

Asia also figures in the kingdom’s plans for military cooperation, with Malaysia and Indonesia listed as members of a Saudi-led Islamic Military Alliance formed just over a year ago.

Riyadh’s announcement of the counter-terrorism alliance in December 2015 took many people by surprise, including officials of some member countries, and it is not yet clear what role it will play.

Washington remains Saudi Arabia’s chief military partner, but Riyadh has adopted a more assertive policy in response to what it perceived as U.S. disengagement from the region under former President Barack Obama.

China has traditionally played little role in Middle East conflicts or diplomacy, despite its reliance on the region for oil. But it has been trying to get more involved in efforts to end Syria’s six-year-old civil war, where Riyadh supports rebels battling President Bashar al-Assad.

Last year China also offered support for Yemen’s government, which is backed by a Saudi-led Gulf Arab coalition in a war against the Iranian-aligned Houthi movement that controls much of the country.

China has had to tread a careful line, though, as it also has close relations with Iran. President Xi Jinping visited both Saudi Arabia and Iran Tehran in January last year.