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Economy

What do Riyadh's reformer and SoftBank's Son have in store?

Saudi Deputy Crown Prince Mohammed bin Salman, left, meets Japanese Prime Minister Shinzo Abe in Tokyo on Sept. 1.

TOKYO -- Mohammed bin Salman, Saudi Arabia's deputy crown prince, has been making the global rounds to promote his plan for reforming the kingdom's economy and society. His recent visit to Japan included meetings with a host of industry leaders. One unexpected name stood out on his itinerary: Masayoshi Son, the chairman and CEO of SoftBank Group.

The meeting has generated a buzz about what sort of business Son hopes to do in the Middle Eastern country.

The prince's father, King Salman bin Abdulaziz al Saud, has granted him authority over a range of policy fields, including diplomacy, security, the economy and oil. The world is watching where the prince leads Saudi Arabia as he seeks to wean the country off its dependence on crude. He was "very confident when he discussed reforms," a Japanese business leader said after meeting him.

Following visits to the U.S. and Europe, Mohammed bin Salman arrived in Japan on Aug. 31, his 31st birthday. He was accompanied by some 500 people, including almost all of the kingdom's cabinet ministers in charge of economic affairs: foreign, information and finance along with energy, industry and mineral resources and economic planning. They flew in on 13 planes.

The large delegation reflected Riyadh's hopes for Japanese cooperation with the prince's Vision 2030, a strategy unveiled back in April. The plan includes the listing of state-run Saudi Arabian Oil, or Saudi Aramco -- the world's largest oil company -- to raise funds for nurturing other industries and creating jobs.

The prince is looking for foreign investment and technology transfers to help make it work.

During his stay in Japan through Sept. 3, Salman met with Prime Minister Shinzo Abe and Defense Minister Tomomi Inada. As is the norm for Saudi leaders, he also sat down with resource, trading and engineering executives -- people such as Hiromasa Yonekura, an adviser to Sumitomo Chemical; Yasushi Kimura, chairman of oil conglomerate JX Holdings; and Hiroaki Nakanishi, chairman of Hitachi

Nakanishi doubles as head of the Japan Cooperation Center for the Middle East, a foundation affiliated with the Ministry of Economy, Trade and Industry.

But other meetings signaled the shift in Saudi Arabia's priorities. Salman met with chief executives of Japan's top three commercial banks, as well as officials of the Tokyo Stock Exchange.

Then there was the meeting with Son. Judging only from Japan-Saudi Arabia relations to this point, few would have anticipated the two getting together.

Talk of the town

The official Saudi Press Agency distributed a photo of Son and the prince conversing in Tokyo on Sept. 3. The caption said the pair discussed investment in the kingdom and ways the Japanese telecommunications conglomerate could support Vision 2030.

Masayoshi Son, chairman and CEO of SoftBank Group, chats with Deputy Crown Prince Mohammed bin Salman at the Guest House in Akasaka, Tokyo, on Sept. 3.

On Sept. 1, Son met other Saudi officials at a Tokyo hotel. Energy Minister Khalid al-Falih, a close aide to the prince, was on hand, as were executives of the Public Investment Fund. According to the Saudis, Son made a 30-minute presentation, complete with reference materials.

What, exactly, Son talked about is a matter of rampant speculation. Some suggest his presentation may have touched on opportunities in solar power and robotics.

At the same time, it is no secret that the prince has a strong interest in information technology. When he went to the U.S. in June, he met some of the biggest names in the sector, including Facebook CEO Mark Zuckerberg and Apple CEO Tim Cook.

Meanwhile, the Saudi delegation quietly sought to spur cooperation in the entertainment business -- a potentially controversial field.

Executives of Sega Sammy Holdings met top officials of the Saudi General Authority for Entertainment, according to the Japanese amusement company's public relations department. Sega Sammy executives had been scheduled to meet the prince himself at the Saudis' request, but the meeting was canceled. 

The Saudi entertainment authority was established under Vision 2030, which aims to increase spending on cultural and entertainment activities to 6% of household expenditures by 2030. The ratio currently stands at 2.9%.

The two governments also considered arranging a meeting between the prince and executives of Toei Animation. This did not happen, either, though Toei representatives did see aides to Salman and officials of the Saudi government's investment division. Various business proposals were discussed, according to the company's strategy department.

Toei produces hit Japanese anime series such as "One Piece" and "Dragon Ball." The deputy crown prince is purportedly a fan of Japanese animation, particularly "One Piece."

But Saudi Arabia is also home to Mecca, the holiest city in Islam. Religious figures adhering to a strict interpretation of Islamic law wield strong influence. The promotion of entertainment is one aspect of Vision 2030 they are likely to resist, along with the utilization of female labor. 

Aside from conservative forces, the prince faces a big challenge in reforming an economy where welfare and education are wholly financed by the state on the back of ample oil revenue. As the man in charge of security, he must also contain risks stemming from the Saudi intervention in Yemen's civil war and the decision to sever diplomatic ties with Iran.

Salman has been able to launch the bold reform initiative because of his youth, coupled with the power bestowed upon him by the king. Yet many still question the plan's feasibility. 

It is clear that, with Salman pushing to transform Saudi Arabia into a "common country," the economy is unlikely to return to exclusive reliance on oil. But the kingdom remains a vital source of fuel for Japan and the world. Its stability and economic direction have huge implications.

It is in Japan's interest to expand its relationship with Saudi Arabia, unbound by old conventions. This is where someone like Son could come in.

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