SAUDI MANUFACTURING CONTINUES TO LURE INVESTORS

New investments continue to pour into the kingdom’s industrial sector.

The Saudi Arabian Ministry of Investment (MISA) licensed 348 new foreign investment projects in the first quarter – its strongest period for investor interest in 10 years. The ministry issued 69 industrial and manufacturing license in the first quarter, compared to 40 during the same period last year, according to MISA’s half-yearly investment report.

“This can be largely accredited to momentum carried over from 2019, another record-breaking year, and is highly encouraging given the uncertain economic climate. As MISA, we have been given the mandate of safeguarding the stability of the kingdom’s full investment ecosystem, and this is the central aim of our COVID-19 business continuity initiatives,” according to Khalid Al Falih, minister of investment.

In June, Nusaned Investment and Germany’s Schmid Group said they completed a joint venture transaction to build a vanadium redox flow batteries (VRFB) facility in Saudi. The Riwaq Industrial Development Company will join the JV as an additional investor and shareholder over the next few months.

“The JV aims to become a global technology leader and champion in the fast-growing utility-scale energy storage segment, supporting the kingdom’s Vision 2030 economic diversification objectives,” Schmid said in a statement. “With R&D facilities in Germany and Saudi Arabia, the JV plans to set up a GW-scale manufacturing facility in the kingdom, expected to be in production in 2021. The JV’s strategy for developing value chain integrated production will allow it to achieve global cost leadership.”

The facility aims to produce energy storage systems for use alongside utility-scale renewables projects, telecom towers, mining sites, remote cities and off-grid locations.

The products can be utilised for renewables capacity grid integration, establishment of mini grids at remote locations, optimisation of diesel generator capacity, and power back-up, the company said.

The development will help the Saudi government realise its ambition to install 57.5 GW of renewable capacity in the kingdom by 2030.

In June, the General Authority for Military Industries (GAMI) signed two co-operation agreements with the Ministry of Industry and Mineral Resources and The Royal Commission for Jubail and Yanbu (RCJY) to localise military industries in the country.

The industrial cities are being eyed for more investments, with a media report suggesting that requests for investments in the cities stood at SAR 50 billion during the first quarter.

Saudi Arabia’s manufacturing sector also received a big boost in June as the government looked to support key parts of the economy and position them for growth as the virus subsides.

In June, the Saudi Industrial Development Fund (SIDF) launched initiatives valued at SAR 3.7 billion (USD 986.40 million) to support private sector industrial enterprises.

The SIDF noted that 536 industrial companies will benefit from the initiatives, which includes deferral or restructuring of small, medium and large enterprises loans. Other measures include a new financing product to support manufacturers of medical supplies and medicines to purchase raw materials, apart from launching a line of credit to support operating costs of small and medium enterprises (SMEs).

“The fund pointed out that small projects that (had) their instalments postponed and restructured reached 381 with a value exceeding SAR 800 million, while the medium-sized projects reached 123 projects with a value exceeding SAR 900 million, and large projects reached 18 projects with a value exceeding SAR 1.3 billion, in addition to 14 medical projects with a value exceeding SAR 74 million,” SIDF said.

The fund granted 53 loans to SMEs valued at SAR 519 million, while the medical equipment sector saw five projects worth SAR 254 million.

In another move, the Saudi Authority for Industrial Cities and Technology Zones (Modon) cut annual rents by 25% until the end of 2020 and delayed the payment of other fees by 90 days for 1,800 factories across the kingdom’s industrial zones.

Saudi industrial sector is also embracing digitisation in the post-COVID-19 era with upgrades to take advantage of the 4th Industrial Revolution in line with the massive National Industrial Development and Logistics Program.

In May, SIDF said it is teaming up with US technology services company SAP to replace more than 70 legacy applications, bringing in real-time digital dashboards, fully automating system, and going paperless, with completely electronic approvals, the company said.

“As the kingdom’s industrial sector grows, SIDF needed to migrate 40 years’ worth of data to one digital platform to deliver the optimal financing for the kingdom’s industries,” said Abdulaziz Al-Ghufaili, vice president of technology, SIDF. “Now, we have full and real-time visibility on our loan processes, leading to more streamlined loans and a more competitive industrial sector aligned with Saudi Vision 2030,” he added.

Tawkeen Advanced Industries Company, a supplier of plastic conversion technologies, also digitally transformed on SAP’s cloud data centre. The company said it replaced 24 paper forms with a single digital system, boosting employee efficiency by 10% and reducing human resources emails by 70%.