MANUFACTURING

FOREIGN INVESTMENT UNDERPINS SAUDI’S INDUSTRIAL STATUS

Saudi Arabia issued 102 industrial licenses in March, with a capital base of SAR 15.23 billion, according to the Ministry of Industry and Mineral Resources.

The capital outlay during the month was 55% higher compared to the same period last year.

The ministry’s National Center for Industrial Information report also noted that nearly 39 factories began production in March, a 26% increase compared to the previous month, while the volume of investments in new factories that started production witnessed a growth of 681%, month on month.

Factories operating in other non-metallic minerals products accounted for the largest percentage of activities of the new licenses issued during March, with 21 factories, followed by food products and factories making metal products with 14 factories. Chemical and chemical products accounted for 11 factories, factories making paper and products saw seven factories.

Overall, there are now 9,589 industrial entities in the kingdom with a combined investment of SAR 1,123 trillion.

Indeed, the kingdom’s industrial sector is emerging as a destination for foreign investors. 

Recently, Pakistan and Saudi Arabia held high-level talks, which included co-operation on manufacturing and mining sectors.

“The number of Pakistani investment licenses in the kingdom in 2020 increased dramatically,” the Saudi Press Agency (SPA) quoted Khalid Al-Falih, minister of investment, as saying. It also reported that the Ministry of Investment granted 52 investment licenses to Pakistani companies, while the number of licenses granted in 2019 amounted to around 24 licenses, “which is a clear indication of the increasing demand for Pakistani investors to take advantage of the promising investment opportunities and the competitive advantages of the Saudi economy”. 

Similarly, Saudi and Malaysian officials recently explored opportunities to boost foreign trade and investment into the kingdom.

“The latest developments pertaining to joint projects and agreements in various fields, including investment opportunities in the field of export-import areas, and ways to enhance economic relations between the two countries were discussed,” by the two parties, SPA stated.

To boost employment in the country’s industrial sector, the Ministries of Human Resources and Social Development, Industry and Mineral Resources launched a wage subsidy programme, in co-operation with the Human Resources Development Fund "Hadaf", the General Organization for Technical and Vocational Training, and the Council of Saudi Chambers.

The entities said they will look to attract Saudis to jobs in Saudi factories, by nurturing a conducive work environment and creating rules and regulations that will appeal to the workforce.

The programme will provide young men and women looking for work with the necessary skills through training programmes provided by Hadaf and technical and vocational training. 

“The two ministries clarified that the programme will work through many paths to attract these jobs, and stimulate factories to raise the rates of localisation of jobs because of what this sector represents in terms of generating jobs, whether direct or indirect, indicating that 50% of the wages will be supported in the event of hiring, training and qualifying Saudis at the helm,” according to the ministry.

PHARMA MANUFACTURIN

The development of pharmaceuticals in the kingdom has gained added importance in light of the pandemic. 

In February, Bandar bin Ibrahim Al-Khorayef, the minister of industry and mineral resources, said they are looking to develop a pharmaceutical industry so as to achieve drug security in the kingdom.

Saudi’s pharma market is currently valued at SAR 30 billion, which the ministry aims to broaden in partnership with the National Center for Industrial Development and other government agencies.

“The health challenges that the whole world went through as a result of the corona pandemic created a great challenge that the world had not witnessed before, starting with the health and medical challenge. And its impact on supply chains and on the way of life and the practice of daily life,” according to the ministry, noting that it is prioritising areas within pharma that it plans to localise in partnership with the private sector.

Al-Khorayef noted that the development of infrastructure in industrial cities and financing through The Industrial Development Fund and the launch of the Export Bank, in addition to many legislations will makethe industrial sector a promising and attractive sector for investments.

Saudi Arabia’s pharma sector accounts for 30% of the Middle East market, while the number of pharmaceutical factories registered in the kingdom stand at around 40, covering 36% of the Saudi market's need for medicines. 

The volume of growth in this sector is estimated at 5% annually, with exports exceeding SAR 1.5 billion.