Japan has been a significant partner of Abu Dhabi for over 60 years, as can be seen with a steady growth of bilateral trade and mutual investments.
Abu Dhabi and Japan are expected to strengthen trade and investment links as top executives from the emirates gather in the Japanese capital this week for the first-ever Abu Dhabi Investment Forum.
The second-largest economy in the Arab world is broadening its economic ties with Tokyo in industries like advanced manufacturing, space technology, artificial intelligence, and clean energy.
Ahmed Al Zaabi, chairman of the Abu Dhabi Department of Economic Development, states that Japan has been a significant partner of Abu Dhabi for over 60 years, as can be seen with a steady growth of bilateral trade and mutual investments.
Over the last five years, the UAE’s compound annual growth rate (CAGR) trade with Japan was 11.9%, and its non-oil exports to Japan increased by 8.8%.
Among the Gulf nations, the UAE is Japan’s top trading partner for imports and exports. A recent state news agency, Wam, reports that 52% of Japan’s exports go to the Emirates.
The total trade volume between them in 2024 (including oil) was $49.6 billion, and non-oil trade was %17.5 billion.
Top officials from Abu Dhabi’s Department of Culture and Tourism, Abu Dhabi Securities Exchange, Abu Dhabi Global Market, Abu Dhabi Investment Office, Abu Dhabi Customs, and Khalifa Fund for Enterprise Development are traveling to Japan.
Shigeto Kondo, a senior researcher at the Institute of Energy Economics in Japan, stated that artificial intelligence and advanced technology would be most beneficial since “the UAE has a strong interest in it.” Japan also sees many opportunities to collaborate with the UAE.
There is already a good partnership between the two countries. Japan is helping the UAE launch its satellites by using its satellite launching pad.
Because of Japanese innovations in the field, particularly in the production of medical equipment, the healthcare industry is also “one of the most promising areas” for expanding cooperation with the UAE.
Since Japan depends on the UAE for its oil, its energy partnership will not change anytime soon, but the two countries aim to expand their collaboration to new fields.
Borko Handjiski, partner for government and public institutions at Oliver Wyman, Japan AI Strategy (announced in 2022), focuses on international cooperation, and the UAE would be a significant partner.
Both countries are dedicated to achieving net zero emissions by 2050, so there is much potential for collaboration in fields like hydrogen, solar and battery technology, nuclear, and carbon capture.
Additionally, the two countries are working together on clean energy.
Adnoc and Mitsubishi Heavy Industries of Japan agreed in 2023 to explore possible prospects for ammonia and renewable hydrogen value chains.
Masdar, a city in Abu Dhabi, also declared in the same year that it will investigate producing the first commercial-scale polypropylene in the world using carbon dioxide and green hydrogen in Abu Dhabi in collaboration with Mitsubishi Chemical Group and Inpex of Japan.
The UAE and Japan are also talking about a Comprehensive Economic Partnership Agreement (which will be finalized by the end of the year) to strengthen their relationship.
According to Mr. Handjiski, a Comprehensive Economic Partnership Agreement (Cepa) between the UAE and Japan would significantly help develop closer commercial relationships.
A Cepa would provide Japan with more opportunities, including AI, clean energy, and innovation-driven industries.
The United Arab Emirates is working to sign 26 Cepas with countries globally to attract more investments and diversify its economy as part of its Vision 2030.
Analysts predict that the relationship between the UAE and Japan will improve amid ongoing trade tensions between the US and China, the two biggest economies in the world.
According to Mr. Handjiski, Japanese companies might start to look for alternate production locations if trade tensions between the US and China continue.
The UAE may have a great chance, particularly in industries like logistics, advanced manufacturing, and clean technology, where it already has a significant competitive advantage.
