Saudi Arabia’s Public Investment Fund (PIF) announced plans to significantly increase its investment in Japan, aiming for a total of $27 billion by 2030. This commitment, revealed at the Future Investment Initiative (FII) Priority Asia Summit in Tokyo, signals a deepening economic partnership between the two nations and a broader shift in global investment flows. The move underscores Saudi Arabia’s ambition to diversify its portfolio and capitalize on opportunities in the Japanese market.
The announcement, made by PIF Governor Yasser Al-Rumayyan, builds on existing investments totaling $11.5 billion between 2017 and 2024. The FII Priority Asia Summit, themed “New Asia,” brought together over 1,000 leaders to discuss economic trends and opportunities across the continent. This event highlights the growing importance of Asia as a global economic powerhouse.
Expanding Saudi Investment in Japan
The planned increase in investment in Japan is part of Saudi Arabia’s broader strategy to diversify its economy away from oil and build a more sustainable financial future. According to Al-Rumayyan, the Kingdom sees Japan as a key partner in achieving these goals, citing the country’s technological innovation and stable economic environment. The PIF’s focus will likely include sectors such as technology, infrastructure, and renewable energy.
Strengthening Financial Partnerships
The commitment follows a series of memorandums of understanding (MOUs) signed in October 2023 with major Japanese financial institutions, including Mizuho Bank, Sumitomo Mitsui Financial Group, and MUFG Bank. These agreements, totaling over $51 billion, aim to facilitate increased capital flows and strengthen financial market cooperation between Saudi Arabia and Japan. The MOUs cover debt instruments and collaborative financial initiatives.
Additionally, Mizuho Financial Group launched the “One ETF FTSE Saudi Arabia Index” on the Tokyo Stock Exchange at the end of 2023. PIF and Mizuho jointly provided seed investment for the ETF, which currently has a market capitalization exceeding 15 billion yen, making it the largest Japan-listed ETF focused exclusively on the Saudi market. This demonstrates a concrete step towards increased accessibility for Japanese investors seeking exposure to Saudi Arabian assets.
Saudi Arabia’s AI Ambitions
Beyond financial investments, Al-Rumayyan also emphasized Saudi Arabia’s growing role in the global artificial intelligence (AI) landscape. He stated that the Kingdom, with its abundant energy resources, available land, and government support, is well-positioned to become a global hub for advanced data and AI technologies. This ambition aligns with Saudi Arabia’s Vision 2030 plan, which prioritizes technological innovation and economic diversification.
The FII Institute also launched the fifth edition of the Global Future of Work Compass, focusing on Asia. The report examines AI adoption, automation risks, and youth skills across nine key Asian economies, surveying 200 companies and 100 young people. The findings indicate that Asia accounts for 25% of global R&D and 70% of patent applications, with innovation concentrated in China, Japan, South Korea, and Singapore.
However, the report also highlights varying levels of AI adoption across the region. While 86% of executives in emerging Asia plan to adopt AI within five years, only 64% in advanced Asia anticipate the same, potentially due to a lower risk appetite despite greater financial resources. Skills gaps also remain a challenge, with significant differences in STEM specialization rates among graduates in different countries – for example, 40% in China versus 20% in Japan.
Richard Attias, CEO of the FII Institute, underscored that “New Asia” is now a primary driver of global economic growth. Tokyo Governor Yuriko Koike formally opened the summit, praising Asia’s dynamic role in trade, technology, and investment, and urging leaders to embrace collaboration for shared prosperity. The summit’s focus on Asia reflects a broader geopolitical shift and the increasing importance of the region in the global economy.
Looking ahead, the PIF is expected to outline specific investment targets and timelines in the coming months. The success of this initiative will depend on factors such as geopolitical stability, regulatory frameworks, and the continued strength of the Japanese economy. Monitoring the implementation of the MOUs and the performance of the “One ETF FTSE Saudi Arabia Index” will provide key indicators of the deepening economic ties between Saudi Arabia and Japan, and the overall impact of increased foreign direct investment in the region.
