Saudi Arabia, Turkiye forge stronger defense ties in high-level talks
Updated 15 January 2024
Arab News
RIYADH: Defense cooperation between Saudi Arabia and Turkiye is poised to strengthen following high-level talks on military capabilities, technology transfer, and scientific research development.
The bilateral committee involving the two countries convened its fourth meeting in Istanbul, according to the Kingdom’s Ministry of Defense.
The meeting was attended by Saudi Assistant Minister of Defense Talal bin Abdullah Al-Otaibi, Turkish Deputy Minister of Defense Celal Sami Tufekci, and President of Turkiye’s Defense Industry Agency Haluk Gorgun.
Saudi Arabia’s Ambassador to Turkiye Fahd bin Asaad Abu Al-Nasr also joined the attendees, along with specialists from the Saudi Ministry of Defense, the General Authority for Military Industries, the General Authority for Defense Development, and Saudi Military Industries — an affiliate of the Public Investment Fund.
Meanwhile, Al-Otaibi visited Turkiye’s leading drone manufacturer Baykar. He discussed the existing cooperation between his ministry and the Turkish company.
In August 2023, Saudi Arabian Military Industries, also known as SAMI, signed a localization agreement with Baykar with the aim of strengthening the Kingdom’s manufacturing capabilities for electronic systems, mechanical parts, and aircraft structures, in addition to conducting aviation testing.
The collaboration was announced to be primarily targeting the localization of drone manufacturing and associated systems in the Kingdom, SAMI posted on messaging platform X, formerly known as Twitter at that time.
The purpose of the collaboration is not only to focus on improving defense self-reliance but also to capitalize on the growing Saudi-Turkish strategic alliance in the sector.
In July, the defense minister announced the signing of an executive plan for defense cooperation with Turkiye’s Minister of National Defense Yasar Guler, according to the Saudi Press Agency.
Prince Khalid said in a statement on his X account that two contracts with the Turkish side to acquire drones were signed.
Saudi Arabia’s oil legacy fuels shift to renewable energy hub
Updated 16 sec ago
Nirmal Narayanan
RIYADH: Saudi Arabia’s established prowess in crude oil production could help the Kingdom emerge as a global leader in the renewable energy sector, experts suggest.
Paul Sullivan, an energy and environment expert at Johns Hopkins University, emphasized that Saudi Arabia possesses the technical and engineering skills necessary to become a central hub for renewable energy.
Speaking with Arab News, he explained that the Kingdom’s vast experience in energy production could be leveraged to accelerate its transition toward cleaner energy sources.
Bolstering renewable energy capacity is critical for Saudi Arabia as it aims to generate 130 gigawatts of clean energy by 2030 and achieve net-zero emissions by 2060.
At the center of this ambitious plan is NEOM, a flagship project through which Saudi Arabia intends to become a leading manufacturer and exporter of green hydrogen. NEOM, in partnership with ACWA Power and Air Products, aims to export up to 600 tonnes of hydrogen per day by 2026.
“Saudi Arabia has many technical, business, and engineering skills that can spill over from oil and gas to renewables. One obvious one is drilling. Advanced drilling techniques can be used to develop geothermal energy in many places in the Kingdom,” said Sullivan.
He further noted: “Saudi Arabia has massive potential for geothermal energy. Skills in developing pipelines, refineries, ports, pumping stations, and more could also be transferred to geothermal.”
Sullivan also pointed out that expertise in electrical engineering and the construction industry, honed through Saudi Arabia’s legacy oil business, can be used to build new energy systems, including wind, solar, geothermal, and nuclear power.
“Saudi Arabia has a lot of financial clout from its oil business that could be redirected, but properly, to green energy and other environmental industries such as advanced desalination,” he added.
Technical and commercial expertise
Peter Brishimov, a partner in Energy and Process Industries at Kearney Middle East and Africa, echoed similar sentiments, emphasizing that Saudi Arabia’s experience in crude oil production provides a solid foundation for future renewable energy projects.
“In terms of technology, it is leveraging its track record in effectively deploying large-scale capital projects. On the commercialization front, given that the market for renewable energy is not yet as global as the one for oil, the Kingdom is building the bridge to make renewable energy commercially viable in both the short term and long term,” Brishimov explained.
He noted that Saudi Arabia is also focused on expanding its interconnection infrastructure and advancing green hydrogen production, which would enable the Kingdom to meet its own renewable energy needs while positioning itself as a global player.
Sullivan suggested that Saudi Arabia could quickly transform its traditional energy infrastructure into facilities capable of producing green energy.
“All over the world, traditional energy systems are being transformed into green energy hubs. The knowledge is out there. Saudi Arabia can build on that with its excellent energy research institutes, universities, and think tanks. KAPSARC comes to mind,” he said.
In August, a collaboration between KAUST, NEOM’s Education, Research, and Innovation Foundation, and ENOWA was announced to accelerate the development of Saudi Arabia’s hydrogen economy. As part of the agreement, ERIF will sponsor three strategic projects focused on hydrogen research, working in partnership with KAUST researchers to advance the development of hydrogen as a renewable energy source.
Human capital development
Sullivan also emphasized the importance of retraining the Kingdom's workforce to support the green energy transition.
“The traditional energy workforce will need retraining for the skills that are not transferable. Some people may not move that easily to newer ways of doing things, and some may be left behind. Younger people should be educated in the new opportunities. The training and education systems for traditional energy can be developed alongside the same for the new systems,” he said.
Brishimov highlighted that human capital development is crucial for the energy transition, often overshadowed by factors such as natural resources and capital availability.
“Based on its track record in building an oil industry, the Kingdom is in a strong position to do the same in the renewable energy domain. Through its national policies for enabling human capital development and Saudization requirements, Saudi Arabia is positioning itself to successfully transition its workforce,” he added.
Potential challenges
Discussing potential obstacles, Sullivan pointed out that some critical minerals and metals required for green energy production, particularly in electric vehicles, will need to be imported. However, he noted that Saudi Arabia is making strides in developing its mining sector, which could mitigate this issue in the future.
“The fact that it is so inexpensive to get the oil out of the ground can hamper the development of green energy. Legacy systems that are cash cows can slow down the development of new industries,” Sullivan said.
However, he also noted that, as seen in China’s transition, the development of green energy does not necessarily hinder the growth of new energy sectors.
“The development of green energy as the Chinese used coal to develop their green energy. So, it is not necessarily the case that being successful in legacy energy will slow down the growth of new energy,” he explained.
Saudi Arabia has set a bold target of deriving 50 percent of its power generation from renewables by 2030. According to Brishimov, this goal presents significant challenges, especially in terms of the speed of infrastructure deployment. “In excess of 100 GW of renewable capacity will need to be deployed by 2030,” he said.
He further noted that Saudi Arabia is addressing this challenge by using a combination of renewable energy auctions and direct deployment by the Public Investment Fund (PIF) to ensure rapid progress. Additionally, the Kingdom is pursuing ambitious localization targets within the renewable energy sector. “These targets must be achieved in parallel, without hindering the speed of deployment or the commercial attractiveness of renewable energy projects,” Brishimov explained.
Balancing old and new energy systems
Energy experts have long emphasized the importance of a gradual transition to renewables, rather than a sudden shift away from traditional energy sources. Haitham Al-Ghais, secretary- general of OPEC, stated in July that oil will continue to play a crucial role in future energy pathways, particularly as petroleum products remain essential for various industries, including electricity generation.
“Oil will continue to play a pivotal role in future energy pathways,” Al-Ghais said. He added that OPEC member countries, including Saudi Arabia, are developing clear national electrification plans that align with efforts to reduce emissions.
Sullivan shared a similar perspective, arguing that the future energy landscape should incorporate both traditional and renewable energy systems to ensure energy security. “For energy and economic security, resilience, and reliability, both new and old systems need to be developed. Oil will be needed for a long time to come,” he said.
He concluded: “Saudi Arabia and many in the GCC can also gain by jumping onto the new energy train. If anything, it brings business and economic diversification for a risky future of change.”
Pakistan weekly inflation increases for third week in a row
Pakistan’s annual consumer inflation slowed to 4.9 percent in November, lower than the government’s forecast
Major increase observed in prices of chicken, tomatoes, sugar, vegetable ghee, liquefied petroleum gas and soap
Updated 10 min 48 sec ago
Pakistan
ISLAMABAD: Short-term inflation, measured by the Sensitive Price Index (SPI), has risen to 5.08 percent in Pakistan on a year-on-year basis, the country’s statistics bureau said this week, with an increase observed in prices of edible items.
The SPI, which comprises 51 essential items collected from 50 markets in 17 cities, is computed on a weekly basis to assess the price movement of essential commodities at shorter interval of time so as to review the price situation in the country.
The SPI for the week ending on Dec. 26 increased by 0.80 percent as compared to the previous week, according to the Pakistan Bureau of Statistics (PBS). This is the third time short-term has increased in the South Asian country. Weekly inflation last decreased by 0.34 percent in Pakistan in the week ending on Dec. 5.
“During the week, out of 51 items, prices of 17 (33.33 percent) items increased, 10 (19.61 percent) items decreased and 24 (47.06 percent) items remained stable,” it said in a report.
Major increase was observed in prices of chicken (22.47 percent), tomatoes (20.75 percent), sugar (2.19 percent), vegetable ghee 1 kilogram (1.17 percent), firewood (0.95 percent), cooking oil 5 liter (0.74 percent), cooked beef and mustard oil (0.69 percent) each, liquefied petroleum gas (0.18 percent) and washing soap (0.09 percent).
The items that recorded a decrease in prices included onions (8.13 percent), potatoes (2.38 percent), bananas (0.68 percent), rice (0.50 percent) and eggs (0.30 percent).
Pakistan’s annual consumer inflation slowed to 4.9 percent in November, lower than the government’s forecast, according to the PBS. The finance ministry had projected inflation would slow to 5.8 percent-6.8 percent in November and ease to 5.6 percent-6.5 percent in December.
Consumer inflation cooled from 7.2 percent in October, a sharp drop from a multi-decade high of nearly 40 percent in May 2023.
Suzuki Motor former boss Osamu Suzuki, who turned minicar maker into global player, dies at 94
Suzuki was known for his candid remarks and friendliness, calling himself an ‘old guy from a small to mid-size company’
Born on Jan. 30, 1930 as Osamu Matsuda, Suzuki worked in banking after graduating from Tokyo’s Chuo University School of Law
Updated 19 min ago
AP
TOKYO: Osamu Suzuki, the charismatic former boss of Suzuki Motor Corp. who helped turn the Japanese mini-vehicle maker into a globally competitive company, has died, the company said Friday. He was 94.
Suzuki was known for his candid remarks and friendliness, calling himself an “old guy from a small to mid-size company.” He became CEO of Suzuki in 1978 and was leading the company when it became the first Japanese automaker to start local production in India, where its cars proved hugely popular.
Born on Jan. 30, 1930 as Osamu Matsuda, Suzuki worked in banking after graduating from Tokyo’s Chuo University School of Law. He joined Suzuki Motor, which is based in the central Japanese city of Hamamatsu, in 1958 when he married a daughter of the company’s then-president Shunzo Suzuki, who belonged to the company’s founding family. As is sometimes the custom in such situations, Matsuda adopted his wife’s maiden name.
In 1979, a year after he became Suzuki Motor’s fourth company president, he launched an affordable minicar, which became a big hit and was promoted to world markets.
Under Suzuki’s leadership, the company’s sales grew more than tenfold to 3 trillion yen ($19 billion) in the 2000s.
Suzuki also led business tie-ups with other global leaders such as General Motors and Volkswagen AG in the 2000s. Amid intensifying competition and industrial transformation, Suzuki also formed a capital alliance with Toyota Motor Corp. in 2019 to co-develop self-driving vehicles.
While other Japanese automakers have expanded in the US and Chinese markets, offering a wide range of vehicles, Suzuki has stuck with mini and compact cars, mostly in South and Southeast Asia.
Suzuki stressed the importance of understanding the grassroots level.
“Making good quality and low-price products is the basis of manufacturing,” Suzuki once told an interview with the broadcaster NHK television. “We cannot lower costs while sitting in the offices of president or chairperson, so I have to be in a factory to understand the work and get ideas.”
Suzuki stepped down as president at age 85 in 2015, handing the post to his son, Toshihiro Suzuki. He served as an adviser to the company after resigning as chairman in 2021.
The company said Suzuki died Wednesday of malignant lymphoma.
BNPL emerges as the preferred payment option for Saudi consumers
Updated 27 December 2024
Nour El-Shaeri
RIYADH: The fintech landscape in Saudi Arabia is rapidly transforming daily financial practices, with buy now, pay later services gaining significant popularity. This shift is simplifying access to flexible payment options, reshaping how people manage their finances and make purchases across the nation.
According to a recent report from leading BNPL provider Tabby, 77 percent of Saudi consumers now use BNPL for essential purchases.
Data from Tabby shows that first-time BNPL transactions are twice as likely to be for necessary items rather than discretionary ones, with education and medical expenses at the forefront. This indicates that a large portion of BNPL usage is dedicated to essential transactions rather than non-essential wants.
Tabby’s data also reveals that the average value of essential purchases made through BNPL is higher than that of discretionary spending. This suggests that while consumers are prioritizing needs, BNPL offers an accessible and affordable way to purchase high-value necessities, such as insurance and home goods.
Impact of BNPL
By allowing payments to be spread over an extended period, BNPL has revolutionized shopping habits. Not only does it provide consumers with more control over their finances, but it also alters their relationship with businesses.
In an interview with Arab News, Tarabut CEO Abdulla Al-Moayed explained that the rise of BNPL among Saudi consumers can be attributed to several factors.
Tarabut CEO Abdulla Al-Moayed
“BNPL’s interest-free installment structure makes it an attractive and Shariah-compliant payment option for many Saudi consumers — a positive shift from traditional credit cards or loans,” he said.
“Because BNPL offers a low-barrier alternative to traditional credit, it doesn’t require a high credit score or lengthy approval process, making it accessible to a wider population, particularly younger and lower-income individuals. The ease of using BNPL through mobile apps and online platforms also aligns well with a generation that values convenience and speed,” Al-Moayed added.
He also pointed out that the supportive regulatory environment in Saudi Arabia has fueled the rapid growth of fintech solutions, leading to the emergence of various local BNPL providers. This increased competition has ultimately led to better services and offerings for consumers.
Arjun Vir Singh, partner and global head of fintech at business intelligence firm Arthur D. Little, offered another perspective on the surge in BNPL adoption. He noted that the e-commerce boom, accelerated by COVID-19, has significantly driven the growth of BNPL among consumers. Singh also emphasized the growing convergence of online and offline shopping experiences.
Arjun Vir Singh, partner and global head of fintech at business intelligence firm Arthur D. Little. Supplied
“As customers’ journeys and payment methods in-store and offline become increasingly digital, we expect BNPL adoption to expand into this segment as well,” he said.
Singh further explained that digital payments, seamless integration, merchant sponsorship, and the rising cost of living have all contributed to BNPL’s rapid growth.
BNPL vs. traditional credit
Singh noted that BNPL is beginning to disrupt traditional credit models in consumer finance, a trend that is expected to expand as BNPL adoption spreads across sectors like travel, real estate, and automotive. “Arguably, the biggest impact will come if BNPL successfully expands into the B2B credit and financing segment,” he stated.
Singh also highlighted that banks and credit card companies are already responding to the rise of BNPL by adjusting their consumer finance offerings. Many are now partnering with BNPL providers or collaborating with major players like Visa and Mastercard, which are concerned about losing consumer spending. Some banks are even developing their own flexible payment solutions that mimic the BNPL model.
For Al-Moayed, the simplicity, transparency, and digitalization of consumer credit will force traditional credit models to adapt.
“Traditional credit models that rely on rigorous background checks and higher entry barriers need to evolve quickly while still managing risk effectively, in order to appeal to a broader consumer base and offer more flexible, secure, and customer-friendly credit options,” he said.
He also emphasized the role of Open Banking in this evolution, saying it could revolutionize credit risk management by utilizing real-time and historical behavioral data. “Open Banking has the potential to make a significant impact by giving lenders more agile and secure access to data, enabling personalized credit solutions,” Al-Moayed added.
As BNPL expands consumer spending power, he believes that as the market matures, empowered consumers will become more financially literate, leading to better-informed financial decisions.
“Open Banking will help by providing enriched data to improve insights into consumers’ financial health, preventing unsustainable debt,” he said.
Al-Moayed also pointed out that early adopters of Open Banking will gain a competitive edge by providing more intelligent financial services, better user experiences, and faster, more affordable options for all consumers.
Singh concurs, noting that as traditional players adjust to the changing landscape, innovation in consumer finance will continue to flourish. “This shift includes segmenting customers based on different criteria, using alternative data to enhance credit models, and adapting models to the nature of the spend. Innovation is also extending to customer service, not just credit models,” Singh said.
Merchants and BNPL
“Retailers have been the greatest sponsors of BNPL, helping to legitimize and drive the growth of e-commerce,” said Singh. This was initially true for e-commerce platforms, but as more retail experiences shift online, BNPL adoption among merchants has grown exponentially. “The adoption of digital payment solutions across all retail models is driving BNPL growth,” Singh added.
Arthur D. Little’s proprietary research has shown that merchants are seeing substantial benefits from BNPL, including increased average transaction values, more frequent purchases, access to new customers, and lower customer acquisition costs. Merchants also enjoy a differentiated offering compared to their competitors.
Al-Moayed agrees that BNPL offers numerous advantages for merchants but suggests that more value could be unlocked by leveraging the data collected on consumer behavior and spending patterns. “Merchants should explore how to use this valuable data to offer personalized promotions or product recommendations,” he said.
“Hyper-personalized sales and marketing will be key to increasing customer engagement and loyalty. This will soon be expected across the Kingdom’s retail market,” Al-Moayed added.
The future of BNPL
“Over the next few years, BNPL services will become even more integrated into the broader financial ecosystem, using Open Banking to enhance personalization and accessibility,” said Al-Moayed.
He also foresees the global adoption of big data and artificial intelligence further enhancing the BNPL customer experience. “We may see BNPL providers developing educational tools to help consumers manage their financial health effectively while using these services,” he added.
Singh, however, envisions a different future for BNPL. “BNPL will expand into the B2B segment, particularly as a tool to service underserved micro and small businesses,” he said.
Singh also predicts that AI, enhanced regulations, and market consolidation will all play crucial roles in BNPL’s future growth.
Saudi Arabia introduces new laws to streamline business registration and trade names
Updated 27 December 2024
Miguel Hadchity
RIYADH: Saudi Arabia’s new regulations designed to streamline commercial registration and trade name processes have been described as a “game-changer” for entrepreneurs.
Approved in September, the laws are set to come into force in the coming weeks and aim to enhance business efficiency and improve the overall commercial environment.
Experts have told Arab News that the new regulations will help encourage small businesses, particularly those led by women — key components of the Kingdom’s Vision 2030 economic diversification strategy.
In the first quarter of 2024 alone, the trade sector saw 104,000 new commercial registrations, marking a 59 percent increase compared to the same period in 2023. The Ministry of Commerce also issued 65,363 permits during this time last year.
When the changes were announced, Minister of Commerce Majid bin Abdullah Al-Qasabi said they were designed to simplify business operations by offering a unified national registration system.
Ryan Al-Nesayan, partner at business intelligence firm Arthur D. Little, hailed these regulations as a “game-changer,” stating that by simplifying and speeding up the registration process, the new laws eliminate bureaucratic bottlenecks that previously slowed down business launches.
Ryan Al-Nesayan, partner at business intelligence firm Arthur D. Little. Supplied
He told Arab News: “This is especially important for startups where every delay can cost momentum. Entrepreneurs can now get their ventures off the ground quickly, focusing on growth rather than navigating paperwork.”
Al-Nesayan noted that the sharp rise in business registrations is a clear indication that Saudi Arabia is becoming a magnet for entrepreneurial activity. He attributes this growth to the government’s focus on business-friendly reforms and Vision 2030 initiatives, which are creating a more streamlined business environment.
Notably, women received 44 percent of the new registrations in the first three months of 2024, underscoring a significant rise in female participation in the business world.
Al-Nesayan emphasized the importance of this statistic, pointing out that the new regulations are removing barriers that previously discouraged female entrepreneurs.
He added: “As the environment becomes more accessible, we’re likely to see continued growth in women-led businesses, which supports gender inclusivity in Saudi Arabia’s economic development.”
The introduction of these regulations brings the total number of commercial certificates issued across Saudi Arabia to over 1.45 million.
Jihad Chidiac, a Lebanon-based attorney, explained that the two new laws, the Commercial Registration Law and the Trade Names Law, are set to take effect 180 days after their publication in the official gazette, which is expected within the next few weeks.
Jihad Chidiac, a Lebanon-based attorney. Supplied
These laws will fully replace older legislation, with the current Law of Commercial Register having been in effect since 1995 and the Trade Names Law issued in 1999.
According to Chidiac, the introduction of these two laws “comes in alignment with the recent legal reforms the Kingdom is undertaking, including the new Investment Law permitting full foreign ownership of companies, and the amendment of the Labor law, while having as the main goal the implementation of Vision 2030 and the attraction of foreign investments into the Kingdom.”
Chidiac further elaborated that the new Trade Names Law specifically enhances the legal protection of intellectual property, making it easier for businesses to reserve, transfer, and protect their trade names.
He noted that the new law “prohibits the registration of names similar to existing ones regardless of different business activities, and simplifies the transfer of trade name ownership without requiring the transfer of the entire business.”
This step, according to Chidiac, is aimed at reducing conflicts and enhancing fair competition by encouraging businesses to adopt unique, distinctive trade names.
The new laws also set guidelines for the resolution of disputes related to trade names and business registration.
Chidiac commented that the centralized electronic database for business and trade name registrations will reduce duplication, improve transparency, and promote uniformity across the Kingdom.
He explained that the improved registration processes and enhanced legal framework will likely prevent conflicts over similar trade names.
He also mentioned that Saudi Arabia’s legal system encourages alternative dispute resolution methods such as mediation and arbitration, which help reduce the burden on courts and offer flexible options for businesses involved in disputes.
According to Abdulrahman Al-Hussein, spokesperson for the Ministry of Commerce, the new system is based on international best practices.
Arthur D. Little’s Al-Nesayan agreed, noting that the adoption of international best practices in the new registration system will make Saudi Arabia a more attractive market for foreign investors.
He explained: “The unified national registration system is a major win for both local and foreign businesses. It removes the complexity of dealing with multiple agencies and provides a one-stop platform for all business-related registrations.”
This, he added, signals a more predictable and transparent operating environment, aligning with global standards and making market entry far smoother for international companies.
The reforms also provide enhanced trade name protection, which Al-Nesayan highlighted as crucial for businesses looking to scale both domestically and internationally.
“In today’s market, a business’s brand is often one of its most valuable assets,” he said. “By ensuring stronger protection for trade names, companies can confidently invest in their brand, knowing it’s secure. Over time, this will build consumer trust, enhance market presence, and support long-term growth.”
For those with existing sub-registers, a five-year grace period is being offered to either transfer or cancel their registrations. Chidiac pointed out that while this grace period offers flexibility, it also raises challenges for businesses regarding the company’s history and anteriority, particularly if they opt to cancel their sub-registers.
He explained that companies must carefully consider the potential impact on their business identity when making decisions during this transition phase.
Alongside these changes, the cabinet also approved a new real estate transaction tax system and other related measures. Chidiac explained that the new real estate law replaces the previous 15 percent VAT on real estate sales with a 5 percent tax on property ownership transfers.
He noted that this reform will not only ease the financial burden on businesses but also attract local and foreign investment into the real estate sector.
Certain transactions, such as inheritance distribution and charitable transfers, are exempt from this tax, which Chidiac believes will stimulate increased activity in the real estate market.
Al-Nesayan also highlighted the significance of this new real estate transaction tax system, noting that it complements the broader business reforms by promoting a more structured and transparent property market.
He explained that such transparency is essential as Saudi Arabia grows as a business hub, stabilizing property markets and supporting broader economic diversification efforts.
Chidiac added that legal counsel will play a crucial role in helping businesses navigate the transitional period for the new regulations, particularly regarding the five-year grace period for existing registrations.
He emphasized the need for businesses to stay informed and seek professional advice to ensure compliance with the updated regulations.
Al-Nesayan echoed this sentiment, advising businesses to engage with legal and business advisory services early on to fully benefit from the streamlined processes.
He added: “Being agile in adapting to these reforms will give businesses a significant competitive edge in this evolving landscape.”
