TRADE

NON-OIL TRADE FLOWS GIVE FRESH IMPETUS TO MANUFACTURING

Saudi non-oil trade flows are soaring as the manufacturing sector accelerates

By November 2022, the year-on-year growth rate of the Industrial Production Index (IPI) had surged 8.6%. Growth had turned positive in May 2021 after a long period of negative growth rates in 2019 and 2020, partly impacted by the effects of the worldwide pandemic, according to the General Authority for Statistics (GASTAT).

“Since mid-2021, the IPI growth showed a positive trend, accelerating at the end of 2021, continuing to grow by double-digit numbers in 2022,” GASTAT said in its latest report. While mining and quarrying, and electricity and gas subsectors slipped in November, manufacturing activity increased by 19.7% compared to the same month of the previous year.

The rise has translated into higher non-oil trade flows. Non-oil exports (including re-exports) increased by 4.4%, compared to October 2022, increasing to SAR 24.9 billion from SAR 23.9 billion in October 2021. Non-oil exports (excluding re-exports) increased by 7.4% as re-exports also fell by 11.7% in the same period. Non-oil exports (including re-exports) decreased compared to September 2022 by SAR 0.1 billion or 0.4%, GASTAT data shows.

Major non-oil export goods were "products of the chemical and allied industries" (40.9% of non-oil merchandise exports), which increased by 32.6% SAR 2.5 billion, and "plastics and articles thereof; rubber and articles thereof" (25.9% of non-oil merchandise exports) which decreased by 15.6% to SAR 1.2 billion from October 2022.

China emerged as the kingdom’s largest export destination in October, accounting for SAR 2.2 billion or 18.4% of the country’s total exports.

 

DEALS WITH CHINA

The manufacturing export flows are set to rise as Saudi Arabia forges closer trade and investment ties with China.

Saudi and Chinese companies signed 34 investment agreements during president Xi Jinping’s visit to Saudi Arabia.

“The agreements between the two sides covered several sectors in the fields of green energy, green hydrogen, photovoltaic energy, information technology, cloud services, transportation, logistics, medical industries, housing and construction factories,” according to the Saudi Press Agency.

 China is drawn to the kingdom’s Vision 2030 programme, which offers unprecedented investment opportunities in various sectors including renewable energy, industry, communications, information technology, biotechnology, tourism, as well as building and construction.

The volume of trade between the two countries hit SAR 304 billion in 2021, and trade exchange in the third quarter of 2022 was recorded at SAR 103 billion. 

 

AUTO DEVELOPMENT

Ceer, Saudi Arabia’s first electric vehicle brand, recently signed a SAR 359 million land purchase agreement with Emaar, the Economic City, for land at King Abdullah Economic City (KAEC) to develop Ceer’s manufacturing facility for electric vehicles. The site, located in Industrial Valley (IV) in close proximity to King Abdullah Port in KAEC, will span an area of 1 million square metres. Once complete, Ceer’s manufacturing facility will create thousands of direct and indirect high-skilled jobs, the majority of which will be filled by Saudi nationals. Construction at the site will begin early 2023.

The joint venture between the Public Investment Fund (PIF) and Hon Hai Precision Industry Co. (Foxconn), will manufacture a portfolio of technologically advanced sedans and sports utility vehicles at the factory in KAEC, with a start date of 2025.

“We have found a place that meets all our needs. KAEC offers us a great location with world-class logistics, effective access for our global and Saudi-based suppliers, and an ideal location to base and develop our future workforce,” said Ceer’s chief executive officer, James DeLuca. “KAEC will become our manufacturing hub as we work towards creating the first electric vehicle brand for Saudi Arabia and the wider region and, in doing so, contribute in a meaningful way to Saudi Vision 2030.”

Ceer’s launch is part of the PIF’s strategy to unlock opportunities in promising sectors in Saudi Arabia, including the automotive sector, and boost the country’s non-oil exports.

“We cannot wait to see the cars of the first Saudi electric vehicle brand coming out of Ceer’s factory at KAEC in a couple of years’ time, and we are proud to be able to contribute to a project that supports so many facets of Saudi Vision 2030,” said Cyril Piaia, CEO of Emaar, The Economic City, the master developer of KAEC.

The agreement is in line with KAEC’s newly formed strategy to encourage third-party anchor investors, developers and operators, and accelerate the city’s development.