SUCCESS STORIES

ransforming Saudi Arabia into an industrial powerhouse is one the country’s core objectives of the economic transformation. As one of the key programs, NIDLP was established to better present the investment opportunities in four linked sectors—industry, energy, mining, and logistics—and to attract foreign capital and expertise to build a more diversified and resilient economy. The Saudi Industrial Development Fund (SIDF) serves as key financial enabler for the program, while additional investments are set to come from the private sector.

One of the main success stories in industrialization has been the network of industrial cities, which is now also adapting to Industry 4.0 technologies in an effort led by MODON, benefiting from improved infrastructural developments.

Among the pull factors for industrial manufacturing in Saudi Arabia, interviewees mention relatively low production costs, including for labor, land and energy needs, while taxes remain low along with a range of supportive government incentive packages. The heavy emphasis on industrial development in recent years comes as a strong boost for the sector by both local and international firms. The country’s geographical location on the axes of three continents also serves the industry well, and, with support of the Transport General Authority, addition infrastructural investment are set to boost the Kingdom’s export

Tcapacities. Following an increase in public construction projects, including the Ministry of Housing’s residential complexes and PIF’s megaproject on the Red Sea and Qiddiya near Riyadh, an increase in demand is expected for the construction supply industries, including cement and steel.

RPDC, powered by innovation giants KACST, TAQNIA, KAUST, and KFUPM work on implementing actual innovation at the large corporates like Aramco, aiming to commercialize their patents, a new avenue for industrial innovation.

DEFENSE

The Kingdom continues to work on its localization objectives to achieve 50% domestic production by 2030, requiring significant investments while encouraging international firms to localize their operations and prepare a knowledge transfer.

Saudi Arabian Military Industries (SAMI) has made some critical acquisitions, aiming to become the central point for all military procurement, most notably Advanced Electronics Company (AEC) and Aircraft Accessories and Components Company (AACC).

In total, SAMI aims to have a direct contribution of all defense and aviation-related industries of around USD3.7 billion to the Kingdom’s GDP, with an investment in R&D of USD1.6 billion—in turn creating 40,000 direct jobs for Saudis. ✖

Moosa Al-Moosa

PRESIDENT, DOW CHEMICAL - SAUDI ARABIA

What role is the Industrial Valley of King Abdullah Economic City (KAEC) playing in the industrial revolution of Saudi Arabia?

The first and most important initiative to achieve KAEC’s vision of becoming a regional industrial and logistics hub is King Abdullah Port, which seeks to capitalize on 13% of world trade passing through the Red Sea. Having one of the deepest ports creates new opportunities, either through industries or a logistics hub. This provides global conglomerates the opportunity to do things more efficiently by saving time and gaining accessibility. Naturally, specialization is key to providing the maximum benefit to current and potential clients, which is why we decided to focus on light industries such as pharmaceuticals, which recorded 18% growth last year, and FMCGs. Our strategy is to attract players across the whole value chain, not only manufacturers, a goal in which we are supported by the single window regulator of the Economic Cities Authority. When international companies come, they want to deal with one government agency, not several. Moreover, we built the ecosystem to work on financing by launching the Industrial Export Incentive Initiative. We also brought together three government agencies that support industry acceleration and signed an MoU for land and loans in which the Industrial Valley offers the land, the Economic Cities Authority provides the license, and the Saudi Industrial Development Fund (SIDF) provides the investor financing facility to start development.

What operational measures must be taken to attract international investors to Saudi Arabia?

There must be a comprehensive, focused approach to attract players across the whole value chain from certain industries. For example, we do not focus only on pharma manufacturing companies, but we also have packaging companies that can serve other industries too. As such, the next step will be building three specialized zones: a gas zone; a technology park to attract top data center providers; and a bonded and re-export zone valley to make high-end plastics used in automotive, biomedical, construction, and food-packaging industries. The idea is to be proactive in implementing energy services within the industrial zone, since companies usually come with specific requirements in terms of power, storm drainage, and access to logistics services, for example.

What is your assessment of the National Industrial and Logistics Development Plan, and what is the key to ensuring Saudi Arabia remains an attractive investment location?

It re-emphasizes the need for the country to leverage its location. Indeed, integration between industry and logistics is always necessary to then focus on the sectors that the country really needs and has a competitive advantage in. This approach helps investors know where to invest and comforts the players on the supply side. Technology will continue to have a crucial role in keeping these facilities up to date with international standards through the use of robotics and advanced, technology-driven logistics practices in warehouses. Naturally, growing a city of this size and ambition implies challenges, but if we attract the right business and the right talent, we will keep moving forward and start tackling other areas. ✖