MANUFACTURING

International manufacturing companies are making a beeline for Saudi Arabia, drawn by its strong industrial base and spate of available opportunities.

The manufacturing sector secured around 60% of all new foreign investment licenses in the summer of 2021, according to latest available data from the Ministry of Investment of Saudi Arabia (MISA). 

A total of 174 licenses were issued for the retail and e-commerce sector, with manufacturing (104), construction (87), ICT (52), and professional and scientific (50) sectors, accounting for more than 81% of new licenses awarded during the quarter.

“Growth in FDI inflows continues to go from strength to strength, with Summer 2021 seeing the highest increase since 2010 to reach USD 13.8 billion,” MISA said in its most recent assessment in November. “Although the Aramco pipeline deal accounts for USD 12.4 billion, the remaining USD 1.4 billion of inflows in the Summer represents a 56% year-on-year increase in inflows. This follows a 20% increase in 2020, according to UNCTAD’s World Investment Report 2021 and strong figures for the first half of 2021, which all indicate continued upwards momentum.”

 

International companies continue to set up base or expand their operations in the kingdom.

The Saudi Arabian Military Industries (SAMI), a subsidiary of the Public Investment Fund (PIF) and the National Champion of Military Industries Localization, signed a joint venture agreement in December with France’s FIGEAC AERO Group, and the Saudi Arabian Industrial Investments Company (Dussur). The deal will create the SAMI FIGEAC AERO Manufacturing LLC, which aims to build a high-precision manufacturing facility in Saudi to produce aerostructure components.

“The joint venture aims to develop Saudi Arabia’s aerostructure manufacturing capabilities, train Saudi engineers and technicians to work as part of the project, and boost the localisation of military and civil aerospace industries in line with Saudi Vision 2030. Initial products will focus on machining and processing of light alloy (aluminium) and hard metal (titanium) aerospace parts,” the companies said.

In December, India’s Larsen & Toubro announced a collaboration with the Saudi Arabian Oil Company to develop manufacturing facilities in the kingdom. The companies also signed a memorandum of understanding outlining co-operation on L&T’s efforts to establish the region’s first heavy wall pressure vessels facility at Jubail Industrial City. 

The Indian engineering company is set to start construction on the new facility soon, and targets to complete the project by the third quarter of 2022. Spread over an area of 120,000 square metres, the manufacturing facility aims to produce critical equipment for several industries, including the oil and gas, and power sectors.

“This manufacturing facility, once completed, will provide a large number of skilled job opportunities for Saudi youth, localise the ‘know how’ of heavy wall vessels in the kingdom, and deploy the latest manufacturing technologies to serve the kingdom and MENA region,” according to Aramco’s senior vice president of technical services Ahmed Sa’adi. “We expect this facility to help Aramco and others in the kingdom to increase localisation and optimise capital cost.”

Meanwhile, the Saudi Advanced Technologies Company (Wahaj) announced that it will manufacture and export a wide variety of spare parts to Honeywell Aerospace in the US, Europe, and Asia.

Wahaj is among a handful of companies in the country to receive the AS9100 accreditation. It is involved in the manufacturing of high precision components and other parts in the aviation industry.

As part of the agreement, Wahaj will provide Honeywell with original spare parts such as tyres, brakes, energy systems, as well as aero and thermal systems. It will also assist energy units for several main platforms, including Airbus 350, 330, 320 neo, Boeing 737MAX and 777, Dassault Falcon 8X/M1000 and McDonnell Douglas 11. 

 

ROLLING OUT NIS

To further boost investments in manufacturing and other sectors, the kingdom rolled out its National Investment Strategy, which aims to attract a fresh wave of capital into various sectors in the country, including the industrial sector.

The NIS is designed to accelerate economic growth, achieve the goals of the Saudi Vision 2030 programme, and raise the private sector’s contribution to GDP to 65%. In addition, it aims to increase the contribution of FDI to GDP to 5.7%; raise the non-oil exports’ GDP share 16% to 50%; reduce unemployment rate to 7%; and position the kingdom among the top 10 economies in the Global Competitiveness Index by 2030.

“The National Investment Strategy is all about empowering investors, offering investment opportunities, providing financing solutions and enhancing competitiveness,” said His Royal Highness Prince Mohammed bin Salman bin Abdulaziz, Crown Prince, deputy prime minister, and chairman of the Council for Economic and Development Affairs. “It also clarifies the partnership between the public and private sectors, as our mission is now to open the door to the private sector and allow it to grow and prosper.”