NIDLP Delivery Plan

National Industrial
Development & Logistics

Program
Delivery Plan 2018-2020

V.M
3
National Industrial Development & Logistics Program
Table of Contents SECTION 6: LOCAL CONTENT AND ENABLERS

SECTION 6.1: LOCAL CONTENTT
3. Current Situation
282
284
286
4. Strategy 292
SECTION 1: National Industrial Development and Logistics Program NIDLP 6 5. Existing Initiatives 314
1. National Industrial Development and Logistics Program NIDLP 6
2. Aspirations 14 SECTION 6.2: FINANCIAL ENABLEMENT 318
3. Current Situation 20 3. Current Situation 320
4. Strategy 24 4. Strategy 324
5. Initiative Portfolio 74 5. Existing Initiatives 328
6. Game Changer 78
SECTION 6.3: RESEARCH, DEVELOPMENT AND INNOVATION 332
SECTION 2: INDUSTRY SECTOR 80 3. Current Situation 334
SECTION 2.1: NATIONAL INDUSTRIAL STRATEGY NIS 82 4. Strategy 336
2. Aspirations 90 5. Existing Initiatives 364

3. Current Situation 92
SECTION 6.4: THE INDUSTRY 4.0 370
4. Strategy 96
5. Existing Initiatives 164
4. Strategy 374
SECTION 2.2: AQUACULTURE 170 5. Existing Initiatives 400
2. Aspirations 172
3. Current Situation 174 SECTION 6.5: EXPORT SUPPORT 404
4. Strateg 180 3. Current Situation 406
5. Existing Initiatives 184 4. Strategy 410
SECTION 2.3: MILITARY INDUSTRIES 188 5. Existing Initiatives 420
2. Aspirations 190
3. Current Situation 191 SECTION 6.6: HUMAN CAPITAL DEVELOPMENT 424
4. Strateg 192 5. Existing Initiatives 426

SECTION 3: ENERGY SECTOR 198 SECTION 6.7: SPECIAL ECONOMIC ZONES (SEZs) 430
2. Aspirations 200 3. Current Situation 434
3. Current Situation 204 4. Strategy 444
4. Strategy 208 5. Existing Initiatives 464
SECTION 6.8: POLICES, REGULATIONS AND MEASURES 474
SECTION 4: MINING 216 3. Current Situation 476
2. Aspirations 218 4. Strategy 480
3. Current Situation 222 5. Existing Initiatives 486
4. Strategy 228
5. Existing Initiatives 242 SECTION 6.9: SUPPORTING THE DEVELOPMENT OF INDUSTRIAL CLUSTERS,
SMALL AND MEDIUMSIZED PROJECTS 490
SECTION 5: LOGISTICS 248 3. Current Situation 492
2. Aspirations 250 4. Strategy 494
4. Strategy 258
SECTION 6.10: GOVERNANCE 506
4 5
1. National Industrial
Development and Logistics
Program
6 7
1.A. Description of National Industrial Aspirations

Development and Logistics Program NIDLP
The NIDLP aspires to:
The Strategic Management Committee, on 15 July 2017, approved the delivery plan
• Transform KSA into a leading industries powerhouse and a global logistics hub
for the National Industrial Development and Logistics Program (NIDLP). The program
in promising growth sectors (with focus on Industry 4.0)
is mandated to transform the Kingdom of Saudi Arabia into a leading industrial
powerhouse and a global logistics hub in promising growth sectors (with focus on • Generate major job opportunities for Saudi citizens
Industry 4.0), which would generate ample job opportunities for Saudis, enhance the
trade balance and maximize local content. • Improve KSA trade balances
The program focuses on four key sectors: Industry, Mining, Energy and Logistics, • Maximize local content
and many enablers including the development of Policies and Regulations, Financial Exhibit 1.1: Aspirations
Enablement, Infrastructure, Industrial Lands, Special Economic Zones, Research,
Development and Innovation (RDI).
Focus areas
The program focuses on four key sectors:
Industry Mining Energy Logistics
It also focuses on designing and providing the required enablers,

including:
Policies and Financial Infrastructure Industrial

regulations enablement land
SEZs and Research and Other enablers

The Kingdom through satellite image
digitization innovation (including capability building)
Exhibit 1.2: Focus areas
8 9
• Industry • Logistics
The NIDLP seeks to achieve inclusive development of the industrial sector, including: The NIDLP seeks to position the Kingdom as a global logistics hub, focusing on 3 key
components:
1. Developing promising and competitive industries and increasing their share of
the GDP and job market (including automotive industry, pharmaceutical industry, 1. Creating an export platform,
medical supplies, etc.).
2. Localizing military industries. 2. Developing a regional distribution platform,
3. Expanding oil and gas industries.
4. Developing food industries. 3. Establishing an efficient internal distribution network to enable industry and
5. Promoting local content in the industrial sector. service supply chains.
6. Aquaculture. All those components aim at improving infrastructure, transport networks and
logistics standards in order to develop freight and passenger services, turning KSA
into an international logistics hub capable of leveraging its geographical location.
Over 15 working groups have been engaged and collaborated on NIDLP sub-
• Mining components to ensure consolidated joint efforts across various sectors. Several
workshops were held with participants from 20+ relevant entities and communication
1. The NIDLP aims at developing the mining sector and increasing its contribution was maintained with every team throughout the planning phase.
to national economy. The program covers all stages of the value chain from
exploration to mining and intermediate industries. Current and past experiences of more than 40 countries, input of over 100 experts
from various fields and reviews of over 500 documents from private and public
academic sources were integrated and drawn upon.
• Energy Comprehensive cooperation with various stakeholders/teams to leverage

international experiences and global experts
In the energy sector, the NIDLP aims at:
Working with all stakeholders… … and draw lessons from their experiences
1. Enhancing power supplies and prices (the objective is to achieve fiscal balance
while maintaining KSA economy›s competitiveness).
2. Improving the competitiveness of the electricity sector through restructuring and
exploring power exportation opportunities.
50+ direct members in 14+ teams working on 20+ workshops on Reviewing 500+
3. Increasing the share of the renewable energy sector in local consumption. the working group NIDLP components complementarity documents from private
and public academic
sources
20+ stakeholders in the Consulting 100+ Drawing lessons from Developing and
program experts with extensive 40+ countries discussing 450+ initiative
knowledge plans
Exhibit 1.3: NIDLP stakeholders and lessons learned
10 11
1.B. Direct Level 3 Objectives 1.C. Indirect Level 3 Objectives
The NIDLP covers 11 direct objectives out of 96 Vision 2030 objectives. The program The NIDLP covers 23 indirect level 3 objectives from Vision 2030 as shown in Exhibit 1.5:
mapped the direct objectives to the four key sectors, as well as local content and the
required enablers as shown in Exhibit 3:
The program aims to achieve 11 direct objectives from Vision 2030 and
indirectly supports the achievement of 23 objectives (2/2)
Direct Vision 2030 objectives mapped to the program
3.1.1 2.4.3 2.4.1

Enhance ease of doing business Protect & rehabilitate natural Reduce all types of pollution (e.g.
(especially from the regulatory landscapes (e.g. beaches, islands, air, sound, water, soil)
perspective) natural reserves)
6.2.1 4.3 3.3.2

Industry Mining Energy Logistics Enhance businesses’ focus on their Create jobs through SMEs and Develop the digital economy
social responsibility micro entities
3.2.3 3.3.1 3.2.2 3.5.1
Develop oil and gas- Grow and capture Raise gas production and Create and improve the 3.1.3 3.1.2 6.2.2
adjacent industries maximum value from the distribution capacity performance of logistics Privatize selected government Unlock state-owned assets for the Enhance businesses› focus on
mining sector hubs services private sector the sustainability of the national
3.3.3 3.2.4 economy
Localize promising Grow the contribution 3.5.2
manufacturing industries of renewables to the Improve local, regional
national energy mix and international 3.1.6 3.1.5 3.1.4
3.3.4 connectivity of trade and Attract foreign direct investment Enable financial institutions to Ensure the development of an
Localize military industry 3.2.5 transport networksor (FDI) support private sector growth (e.g. advanced capital market (e.g.
Enhance the secondary market) primary market)
competitiveness of the
energy sector 3.6.3 3.6.2 3.6.1
Develop economic ties with global Develop economic ties with the Push forward the GCC integration
partners region beyond GCC agenda
Local content 4.1.3 3.7.2 3.7.1

Enhance fundamental education Develop promising local Support national champions in
3.3.7 outputs companies into regional and global consolidating their leadership
Increase the local content in non-oil sectors leadersً globally
Enablers 4.1.6 4.1.5 4.1.4

Ensure alignment of education Provide qualitative knowledge Improve the ranking of educational
3.1.7 outputs with labor market needs for the brightest minds in priority institutions (e.g. Universities)
Create special zones and rehabilitate economic cities areas
Exhibit 1.4: Direct level 3 objectives mapped to NIDLP 4.1.7 4.3.1

Expand vocational training to Nurture and support the
provide for labor market needs innovation and entrepreneurship
culture
Exhibit 1.5: Indirect level 3 objectives mapped to NIDLP
12 13
2. Aspirations
(NIDLP-Overall)
14 15
2.A. 2030 Aspirations When designing initiatives, strategies prepared by different sectors have taken into
consideration geographic diversity and human and natural resources distribution,
making the program an effective tool in KSA’s field planning and ensuring balanced
development between its regions.
The NIDLP seeks to position KSA as a leading industrial destination and a global
logistics hub. To that end, KSA needs a new growth approach based on utilizing its In line with this approach, field distribution of NIDLP impact will be relatively balanced
competitive advantages, increasing private sector participation and underlining with an increase of local-sector impact, such as energy and mining. Nevertheless,
clear socio-economic benefits (section 4.A. details both KSA›s previous and proposed some players may monopolize certain sectors due to their competitiveness and
growth approach). resources. For example, aquaculture contribution will be essentially based in the
To realize this vision, the program has set clear aspirations for macroeconomic west, limited by the Red Sea coastline, whereas automotive compounds will be
indicators and for each sector: concentrated in industrial zones in the east such as Jubail. Similarly, general mining
impact will be concentrated around natural resources and will depend on the first
• Macroeconomic aspirations: resources to be discovered by the private sector.
The program aspires to enhance 6 macroeconomic measures:
Considering their key enabling role, other components such as logistics and energy
• GDP contribution will impact a wider geographical area. For instance, the logistics component should
• Private sector employment develop sufficient key infrastructure across KSA and enable the easy movement of
• Exports goods and passengers between different regions.
• Local content contribution
• Non-governmental investments
• Additional non-oil returns
16 17
The Program Covers All Parts Of The Kingdom. 2.B. 2020 Commitment
NIDLP is a long-term program that aims at achieving robust and effective development
of traditional and modern industrial sectors. Therefore, NIDLP’s impact will only be
visible after 2020.
Arar Nevertheless, NIDLP will adopt two integrated methodologies to achieve positive
and tangible economic impacts over the next two years:
Al Jawf
Rafha
Sakakah
Northan
Boarder
1. Accelerating the completion of specific initiatives, namely quick-win initiatives
Tabuk
Tabuk
Hafr Al Batin
‫ﺣﺎﺋﻞ‬ Different initiatives have been assessed, tiered and prioritized, which helped
Ha'il
Buraydah Dammam
determine a set of quick-win initiatives (40+) that will be implemented first. A
Qaseem Al Zulfi number of these initiatives focus on amending current laws and legislations to
Al Rass
Riyadh enable important competitive advantages and rapid development of modern
Yanbu
Madina
Madina Afif
Dawadmi
Al Kharj
industrial sectors or to bring in new investments in traditional sectors such as
mining. The mining initiative proposes to regulate and amends the sector’s
Riyadh
legislations to attract foreign investment. The program determined another set
Thuwal Makkah Al Aflaj
Eastern Province of initiatives that will boost traditional industrial sectors (oil chemicals, mining,
Makkah
Jeddah
Taif food processing, aqua culture, etc.) enabling them to achieve global leadership or
Al Bahah
Bisha
Wadi ad Dawasir accelerate local growth. For example, several initiatives aim at building solar and
Asir
wind energy farms to achieve renewable resource energy capacity.
Khamis
Mining sites Mushayt Najran
Abha Logistics platforms 2. Providing enabling conditions for sectors
Oil and Gas Jizan Sharurah
Industrial / Economic Cities Jizan Border crossing points
Ports Double transfer methods NIDLP will create favorable growth conditions, infrastructure and environment
Airports Highways to enable vital sectors to achieve rapid growth in the coming years and meet its
(Railways (existing (Railways (Planned (Railways (planned
aspirations. In this context, a number of initiatives have been developed most
prominently the establishment of capacity development centers specialized
in Industry 4.0 technologies enabling leading industrial players to use modern
Exhibit 2.1: Aspirations of zones program: Identified Key Points technologies that will assist them to increase competitiveness and productivity.
In addition, other initiatives include launching negotiations with global partners
and setting the geographical and legislative environment to build key industrial
compounds in the region such as Jubail Automotive Manufacturing City, as well
as various infrastructure projects like the expansion of airports, seaports and
roads.
18 19
(NIDLP-Overall)
20 21
3.A. Main Challenges
During the past 25 years, the size of industry, mining, energy, and logistics sectors • First, there are many global trends with potential impact on the future of industries,
quadrupled. As a result, the Kingdom became home to the largest and most as well as the importance of competitive factors that would ultimately determine
competitive manufacturers not only in the region, but also worldwide, particularly leading economies, and may lead to KSA failure. These trends impact competitive
in chemical and dairy industries, and other basic industries. This steady growth was factors by either increasing or minimizing the importance of each one. For instance,
driven by competitive input prices across these sectors, capital accessibility, energy, research, innovation, and productivity currently have greater importance in light
and government support policies concerning land and water. Additionally, the low- of the technological evolution. However, energy or the availability of energy and
tax environment enhanced cost competitiveness, in addition to labor market policies capital minimized their importance. While it currently falls behind in increasingly
and regulations which facilitated growth in these sectors by relying on low-cost important areas such as research, innovation, productivity, and logistics, the
foreign labor. Several large SOEs such as Saudi Aramco have successfully localized Kingdom is ahead in areas of decreasing importance such as capital and energy.
their business value chains.
• Second, KSA introduced a number of major reforms. While these reforms are
However, these efforts have come short of diversifying the sources of competitive key to a financially sustainable economic model, they have an impact on the
advantage. The industrial sector did not look for other sources, relying on state- development of the industry, mining, energy and logistics sectors. These reforms
subsidized inputs. Furthermore, low-cost labor limited investment in technologies include energy price modification and labor market restructuring to minimize
used to improve productivity and increase efficiency and innovation. As a result of reliance on foreign labor and government support for primary inputs like
the industrial sector’s growth, KSA established a large industrial base that includes agricultural activities. Thus, industry, mining, energy and logistics sectors should
a number of industrial sectors; however, this base is not sufficiently diversified and find new ways to boost their competitiveness and achieve growth in light of
mainly relies on the low-cost advantage. current challenges.
NIDLP faces challenges related to three factors: • Third, there are several challenges facing program sectors. They are detailed in
The first is global trends that impact industry worldwide, the second is the changing section 3.A. of the strategy booklets.
internal economic trends, while the third is related to the challenges across the
sectors and components of the program.
22 23
We aim to transform the

chemicals sector from the
4. Strategy depending on low cost
(NIDLP-Overall) to focus on creating high
added value
An aerial view of a factory in Al Jubail Industrial City
24 25
4.A. Strategic Pillars
We aim to generate more

The first industrial development wave in the Kingdom has quadrupled sector
growth during the last 25 years, leveraging oil resources, government support and than 400,000 jobs in the
investments. chemicals sector.
Going forward, Vision 2030 is going to set ambitious targets for the Saudi economy,
including the industrial sector, which should grow faster than ever in order to
contribute to vision realization. At the same time, growth must be accompanied by
a new set of guidelines as a result of changing international and local dynamics. The
second growth wave must be based on a more diversified portfolio of sectors, and led
by the private sector, while the government will play the role of the enabler.
In parallel, international trends reduce the Kingdom›s competitive advantages by

increasing the relevance of the factors that relatively impede the Kingdom (e.g.
productivity, logistics, policies and regulations), and reduce the importance of
competitive advantages that were once amongst the Kingdom›s strengths (e.g.
capital and energy availability).
Accordingly, in an attempt to achieve the targeted growth and adapt to changes in

international competitiveness, the NIDLP has set a new plan based on 4 strategic
pillars:
• Leverage / maximize natural resources revenues

• Support demand and status to empower strategic competitive sectors
• Provide companies with an «enabling system» to compete effectively at the
regional and international levels
• Support technological innovation and the spread of Industry 4.0 to improve
productivity and maintain priority sectors competitiveness
These pillars are translated into 24 interlinked factors. They cover 4 key sectors and
support the required local content and enablers.
Oil refining plant
26 27
• First Industrial Development Wave

The program›s sectors GDP: SAR mn, 2010 prices
Industrial, logistics, mining and energy sectors contribution to the Kingdom’s GDP
has increased quadrupled during the last 25 years, as their contribution scaled up The program’s sectors GDP in SAR mn, Total % of sectors share from the GPD of
from about 9% of the GDP in 1990 to ~17% in 2016. This increase is attributed to 3 key 2010 prices 2016
components:
428,000
• Hydrocarbons Concentration through forward integration, especially in
Program’s total 16.8
petrochemicals, plastic and rubber CAGR
%5.4 Industry 9
• Intensive government support in the form of power support, public investments
in sectors through state-owned enterprises and intensive infrastructure Logistics 3.9
development 9,3
103,000 Energy 2.6
• Appropriate foreign workforce policies and systems that would help sectors
attract the necessary workforce with growth enabling competitive rates
1990 1995 2000 2005 2010 2016 Mining 1.2
Industrial, logistics, mining, and utilities sectors contribution to the Fabrics/app Mining Machinery and Petrochemicals
Kingdom’s GDP has increased 4x during the last 25 years. Food and beverages Rubber/plastic/Packaging equipment
Other industries
Logistics Medicines Electricity Transportation
Wood-related stuff Metals Energy
1-The program’s sectors include industry, energy, mining and logistics | Source: General Authority for Statistics of
Saudi Arabia and the World Bank
Previous approach to achieve industrial development
Focus on hydrocarbon Government support, Foreign workforce

competitive advantage e.g. supporting energy, in line with the
(e.g. petrochemicals) developing industrial appropriate labor
lands and investing in systems and
energy and water regulations
Exhibit 4.1: Kingdom›s historical growth approach
28 29
• Second wave of industrial development: a faster wave with The future most important competitiveness factors
new guidelines in accordance with new trends.
Competitiveness
Kingdom›s
Vision 2030 sets very ambitious targets for the Kingdom, as the non-oil GDP is Led by major trends Factors
Position
Enhancement
Factor
expected to grow, thereby achieving the fastest growth in the country›s history.
Sectors
RDI
transforming Progress + reasonable
Accordingly, the industry and logistics sectors must grow faster than ever in order innovative technologies prices
to contribute to realizing the vision. Local changes require that the second wave of technologies Productivity
industrial development be based on a new set of guidelines, especially: Workforce is transforming Increase of
Fluctuating labor from low cost employment importance level Logistics
requirements to medium/highly skilled
• Growth must focus on a diversified portfolio of sectors that are based on a employment Policies and
sustainable competitive advantage systems
Transfer of demand
New markets with higher Market (local
towards southern
and increasing population
• Private sector must lead the growth process, as the government plays the role of and eastern regions and exports)
the enabler Same level of
Natural
New products are replacing resources
Products life cycle importance
old ones, thus generating
• Growth must generate clear socio-economic revenues (GDP and jobs contribution) shortening
opportunities Taxes
KSA faces an additional challenge in achieving the targeted growth in the changing Increase of capital Access to capital became Workforce cost
international manufacturing landscape. Theses fluctuations/trends reduce the availability easier
Kingdom›s competitive advantage by increasing the relevance of the factors that Capital
Increase in competitiveness
relatively impede the Kingdom, as well as the importance of these factors that Context change in due to the availability of Decrease of
previously were a traditional strength point in the Kingdom: energy sector natural gas + renewable importance level Energy
energy
• For example, the two major international trends, technology disturbances and
short life cycle products, contribute to increasing the importance of research,
Relative disadvantage Relative advantage
innovation and productivity as elements enhancing competitive capability.
However, these two trends are not amongst the kingdom›s strengths.
Exhibit 4.2: Kingdom›s position in terms of various competitiveness factors
• On the other hand, increasing capital availability and the fluctuating energy
landscape contribute to reducing the value of energy and capital that are These fluctuating competitiveness factors highlight the fact that the Kingdom’s
usually considered amongst the Kingdom›s strengths, as factors that enhance historic growth approach will not be enough to face the 2030 challenges. Therefore, a
competitiveness [to see a full list on the changing importance of different new approach must be established in line with the kingdom’s competitive advantages
competitiveness factors, kindly refer to exhibit 4.2] and certain industries developments.
30 31
• The new approach of success Future industrial development in the Kingdom requires a new approach
that spreads across 4 growth areas
The NIDLP approach focuses on 4 strategic pillars, two of which focus on improving Enhance Competitiveness
the kingdom›s competitiveness, while the other two focus on identifying and
developing certain industries (exhibit 4.3).
1. Provide companies with an «enabling system» to compete effectively at the

regional and international levels
Accelerate innovation to maintain Provide an enabling and competitive
The enabling system will for example, provide financial enablement to enhance current features and formulate new ones environment for priority sectors
private and public funding system (banks, Saudi industrial development fund,
Public Investment Fund), and develop certain products to enable industrial Logistics
development, as well as policies about local content, exports/trade and Productivity and Industry 4.0
government support to encourage the development of targeted industrial clusters Financial enablement
SEZs
2. Support technological innovation and industry 4.0 to improve productivity and Research, Development and Innovation
maintain priority sectors competitiveness Clusters development support
Industry 4.0 is going to generate an economic impact on the Kingdom’s industrial Exports support
sectors by 2030. Moreover, research quality and outputs will improve as the Human capital enablement Energy sector transformation
Kingdom will greatly focus on marketing and harmonizing its research efforts
with priority sectors. Energy pricing and support
3. Leverage / maximize natural resources revenues Realize / Develop selected industries

• In the mining sector: leveraging mineral resources and establish industries
along the value chain that is comprised of more than 30 metals
• In aquaculture: leveraging from the Kingdom’s natural resources that are
abundant on the western coast to build an aquaculture center
• Logistics: Turning the Kingdom into a regional hub by leveraging its Leverage demand on products to Invest the Kingdom’s natural resources
distinguished position on the main trade route between Asia, Africa, and establish strategic competitive benefits with highest socio-economic revenues
Europe
Local content Logistics
4. Leverage local and regional demand, as well as the Kingdom›s strategic position
to improve sectors and their competitiveness Military industries Oil & gas related industries (e.g.
chemicals, plastic, and packaging)
Medical supplies Pharmaceuticals
This would take place in the pharmaceutical sector (building the first vaccine
Transformative industries of renewable energy
plant in the region), medical supplies, and automotive sector (vehicles powered Aircraft
Vehicles
manufacturing
by internal combustion engine and electric vehicles, food industry, military Mining
industries, equipment and machinery).
Food processing
Aquaculture
Policies, regulations, and standards
Exhibit 4.3: NIDLP components distributed on the 4 strategic pillars

32 33
NIDLP’s «enablers» primarily focus on the first pillar (not exclusively). The objective The second pillar tackles the importance of innovation manufacturing scene. To that
is to improve the kingdom›s position regarding the aforementioned competitiveness end, NIDLP stressed that all strategies must include future technological trends, thus
factors. it has set 2 innovation strategies, which are: Productivity and industry 4.0 strategy,
and research and innovation strategy. Kindly refer to exhibit 4.5 to view examples of
For example, the standards, SEZs, and policies and regulations strategies aim at the various technologies included in the plans of NIDLP’s strategies.
improving the kingdom›s regulatory environment – a key issue of which investors
complain. Similarly, the human capital strategy seeks enhancing productivity, which The latest technologies and scientific development provide the Kingdom with
would lower Saudi employment costs and dependence on expats. Kindly refer to options to develop new competitive advantages
exhibit 7 to know more about the kingdom›s competitiveness factors contributing to
NIDLP’s components.
Scientific development
Enablers were selected to assist the Kingdom in achieving a competitive advantage
through different factors
Competitiveness The Targeted Components dealing with the factor
enhancement kingdom›s position Communi- Computing
factor position Data Robots
cation power
Research, • Research,
Development Development
and and Innovation
Innovation strategy Sensors have increased 50 bn devices will be 100 times increase in 63% growth in the
from 4.2 bn in 2012 to 50 connected by 2025 computing power / mm2 number of industrial
• Productivity • Human capital bn in 2017 in the last 7 years robots between 2015 and
Productivity and industry 4.0 development
strategy strategy 2019
• Infrastructure
Logistics • Logistics strategy strategy New technologies on which advantages are based
Policies and • SEZs strategy • Standards strategy • Policies and
regulations regulations
Data, computing power, Analysis and Intelligence
and communication Digitization and advanced(
Market (local • Local content • Policies and
regulations (tax Big data, Internet of Things,( )analysis
and exports) strategy policies) )and cloud computing
Natural • Mining strategy

resources
Taxes • SEZs strategy

• Policies and
regulations (tax Transformation from digital Industry 4.0
policies) to tangible
Advanced robots and 3D(
Technologies Human-robot interaction
touch interface), Virtual reality/(
• Human capital )printing Augmented reality
Workforce development
cost strategy
• Financial
Capital enablement
strategy
• Industry sector • Energy pricing

Energy transformation and support
strategy strategy
Relative disadvantage Relative advantage

Exhibit 4.5: Examples on the technologies from which the Kingdom can benefit to acquire new competitive advantages
Exhibit 4.4: NIDLP’s components addressing to the kingdom›s position in various competitiveness factors
34 35
The third pillar focuses on harvesting the Kingdom›s natural resources to maximize The fourth and final pillar focuses on enhancing certain industries. Selecting these
socio-economic revenues (exhibit 4.6). The Kingdom›s various sectors are replete with industries depends on the localization opportunities within the Kingdom’s fields of
great untapped capacities. For example, the Kingdom is located on the trade route high demand. The Kingdom, for instance, is the only country among the top 20 (with
between Asia, Africa, and Europe, which represents 12% of global trade. This provided the highest demand on vehicles) which does not have a regional production center.
a great opportunity to develop the logistics sector thus positioning the kingdom as Moreover, there is a great opportunity in the Kingdom to localize medical supplies
a global logistics hub. Similarly, the undiscovered potential reserves amounting to given its great dependence on imports (90%), and the local demand that amounted
USD1,3 tn provide a unique opportunity for the mining sector, while the 2600 km red to SAR2,4 bn in 2016. Kindly refer to exhibit 4.7 to view the full list of sectors and their
sea coast line represents a significant opportunity for developing aquaculture. potential demand.
The NIDLP targets Saudi sectors replete with natural resources.
Great untapped potential
Logistics
1. Central location on the trade route between Asia, Africa,
and Europe, which constitute 12% of the international
trade
2. Potential advantage in terms of costs reaching 15% as
a regional center for the Arabian Peninsula, the Arab
common market, and east Africa
Oil and gas related industries

1. Huge potential to increase exports value (between 41%
and 122%)
Renewable energy and manufacturing industries

1. Best solar radiation and strong winds
2. An 8% advantage in terms of costs on some renewable
components
Mining
1. Undiscovered reserves ranging between USD0.3 and 1.3 tn
across more than 30 value chains
Aquaculture
1. Abundant resources on the 2600+ km coastline, and
untapped fishing capacity
2. A fishing capacity of ~1 million Tons Water Desalination Plant
Exhibit 4.6: untapped sectors with big potential
36 37
The high demand can be exploited to increase competitiveness • NIDLP Design
The four pillars are operated through 24 components of the program. The components
Pharmaceuticals
are spread across 4 different sectors: industry, mining, energy, and logistics, and two
1. Increasing local demand (8% annually thus reaching about
interrelated sections related to local content and enablers (exhibit 4.8)
USD30 bn by 2021). The Kingdom meets only 20% of this
demand
2. High regional demand (higher than local market demand by
3 times) Industry
Medical supplies
1. High local demand (USD2.4 bn in 2015) increasing by 12% 1 Machinery and equipment 4 Pharmaceuticals 7 Civil aviation
annually 2 Desalination 5 Medical Supplies 8 Oil and gas related industries
2. High dependence on imports (90% of local market)
3 Renewable Energy Industry 6 Automotive 9 Food Industries
Machinery and equipment Minerals1 Construction material1 National industry strategy
1. Significant local consumption (SAR57 bn), with a high potential
to replace imports (imports meet 80% of Saudi demand) 11 Aquaculture 12 Military industries
Desalination Mining Energy Logistics

1. Expected local demand growth on desalinated water by 60%
by 2035
12 Mining 13a Energy sector structuring 14 Logistics
2. SAR8 bn opportunity to localize desalination products
manufacturing 13b Energy pricing and support
Automotive Gas supply development

1. The only country among the top 20 countries (in terms of
demand) that lacks a local/regional production center Local content
2. High regional demand amounting to 1.3 bn vehicles in 2016,
as the Kingdom›s share exceeds 50% 15 Local content enablers and localization opportunities
Food industry
1. Local growth is 8% (SAR176 bn in 2016) Enablers3
2. International growth is 5% (SAR6.3 tn in 2016)
16 Financial enablement 19 SEZs Policies, Tegulations and
3. Halal meat center 22 Standards
Military industries 17 Productivity and Industry 20 Export Enablement

4.0 23 SMEs and industrial
1. High local demand (third worldwide) primary met by imports clusters developments
2. Significant growth of demand on advanced technology 18 Research, Development 21 Human capital
equipment (such as drones)
and Innovation development 24 Renewable Energy Industry
1. Mentioned in the mining strategy. 2.Executed by Aramco. 3.Includes initiatives from the mining and national industry
Exhibit 4.7: Sectors with significant potential demand strategies.
Exhibit 4.8: NIDLP Design
38 39
4.B. Strategic Considerations
The NIDLP strategies and structure were set in light of various strategic considerations. 4.B.1 Establishing program strategic pillars and enablers
Some of which are general and program-wide, while others independently relate to
program’s components, as detailed below: NIDLP sectors contribution to national GDP more than tripled during the last 25 years.
This growth was primarily driven by the industrial sector, which led to an increase in
Below are some detailed considerations: national GDP contribution for all sectors. Four components were mainly responsible
for this growth:
Subject Description Decision and implications
• Integration of hydrocarbon resources to post-production
• Generous government support for industries in the form of energy subsidies and
4.B.1 Program strategic • Many trends impact industrial • The program’s strategic pillars
pillars and enablers perspective and competitiveness factors. and enablers were set (Industry industrial land development (among others)
selection This change was considered in KSA to 4.0, human capital development, • Favorable labor laws enabling industries to leverage foreign labor
develop a sustainable industrial and strategic stakes, etc.) in light of • Energy and water investments through national utilities companies despite
logistics strategy overall trends
difficult conditions
4.B.2 Program • NIDLP includes a highly interconnected • The program’s success relies on To achieve Vision 2030 aspirations, NIDLP sectors should register more rapid growth
components integration ecosystem backed by a robust logistics the full integration of program (9% vs. 6% historically). This required us to further focus our approach on industrial
infrastructure and requiring close components. We made sure this growth around three guidelines:
component integration was taken into consideration
in each individual strategy
(examples are listed below) • Growth consolidation in sustainable competitive advantages
• Growth coupled with minimizing government burden through subsidies and
intensive support
4.B.3 Stress testing of • NIDLP includes 15+ strategies that were • Strategies were adjusted • Growth generating tangible socio-economic returns like job creation and GDP
program component tested to ensure consistency with global to reflect stress testing
strategies trends and competitive advantage recommendations
growth
sustainability
This will improve our position in manufacturing, from 23rd to top 15, to surpass
advanced economies such as UK (exhibit 4.9 highlights country ranking in
manufacturing sector size)
40 41
This task is far from easy. However, the global manufacturing landscape won’t For example, China climbed from 12th place to the top since 1990 up to 2010, by
remain stagnant if some countries climbed to the top of manufacturing ladder while leveraging low-cost labor and establishing an enabling infrastructure. Since then,
others fell behind. (exhibits 4.9 highlight historical changes in manufacturing sector the country added innovation to the mix to maintain its leading position while
rankings) capitalizing on the increase in local demand.
Global industrial landscape saw many changes in recent years… These changes saw China reach and maintain global leader status in manufacturing
Manufacturing sector’s added value globally in the nineties
1990 2000 2010 2015 1990 2000 2010 2015
Japan USA China China Japan USA China China

China maintained its leading position
USA Japan USA USA USA Japan byUSA
leveraging higher USA
local demand
and focusing on innovation
Germany Germany Japan Japan Germany Germany Japan Japan
Italy China Germany Germany Italy China Germany Germany

Low cost and adequate
France Italy Brazil Brazil France infrastructure
Italy contributed
Brazil Brazil
to China’s growth
Brazil Brazil Italy South Korea Brazil Brazil Italy South Korea
UK France South Korea India UK France South Korea India
Russia UK India Italy Russia UK India Italy
Spain Spain France France Spain Spain France France
Mexico Mexico UK Russia Mexico Mexico UK Russia
China South Korea Russia UK China South Korea Russia UK
South Korea Russia Mexico Indonesia South Korea Russia Mexico Indonesia
Australia India Spain Mexico Australia India Spain Mexico
Netherlands Indonesia Indonesia Spain Netherlands Indonesia Indonesia Spain
Exhibit 4.9: Manufacturing sector’s added value globally, 1990-2015 Exhibit 4.10: China’s progress in added value ranking in manufacturing, 1990-2015
42 43
China wasn’t the only to achieve such progress. South Korea and India followed suit, Change in industrial landscape isn’t limited to emerging markets. Advanced countries
but through different approaches. Korea moved from the 13th to the 6th place by underwent change, with some, maintaining their positions, especially those ranked
manufacturing innovative products spearheaded by leading national companies. in the top three (USA, China and Japan). They achieved that by consistently leading
On the other hand, India leveraged its low cost/highly skilled labor advantage, local innovation and productivity through leveraging technological advancement and
demand increase and ability to attract FDI through economic liberalization policies promoting the workforce quality. For example:
to advance to 7th place in 2015. • USA began its strategy to accelerate the pace of advanced industries in early
2012, under supervision from the President›s Council of Advisors on Science and
India and South Korea became the economy’s driving forces by adopting a different Technology
approach from China in 2000-2010 • Germany launched “Industrie 4.0” as part of its advanced technology strategy,
with a focus on becoming a leader in cyber-physical systems
• Japan focused on maintaining its leading position in robotics through “New
1990 2000 2010 2015 Robot Strategy”
Japan USA China China

1990 2000 2010 2015
USA Japan USA USA
Japan USA China China
Germany Germany Japan Japan
South Korea ranked 10th on the USA Japan USA USA
Italy China top 10 list of industrial Germany
Germany countries by
manufacturing innovative products Germany Germany Japan Japan
France Italy Brazil
led by national champions Brazil
(e.g.
Samsung and LG) Italy China Germany Germany
Brazil Brazil Italy South Korea
France Italy Brazil Brazil
UK France South Korea India 3 out of the 4 top industrial leaders
Brazil
maintained Brazil
their positions with time Italy South Korea
Russia UK India Italy by consistently leading innovation
Despite lagging to reach the top list, andUK France
productivity (leveraging South Korea India
Spain Spain India leveraged its low-cost
France France/ highly technological advancement and
skilled labor force, rising demand, Russia workforce quality)
promoting UK India Italy
Mexico Mexico and
UK FDI (attracted by economic
Russia
liberalization) to promote its Spain Spain France France
China South Korea industrial
Russia ranking. UK
Mexico Mexico UK Russia
South Korea Russia Mexico Indonesia
China South Korea Russia UK
Australia India Spain Mexico
South Korea Russia Mexico Indonesia
Netherlands Indonesia Indonesia Spain
Exhibit 4.11: India and South Korea’s ranking progress in manufacturing industry added value, 1990-2015 Netherlands Indonesia Indonesia Spain
Exhibit 4.12: Added value ranking for USA, Japan and Germany in manufacturing, 1990-2015
44 45
However, other advanced economies underperformed as a result of their inability Winners in the new industrial era are those capable of adapting to future trends. We
to innovate or enhance productivity quickly enough, which cost them their leading identified these trends by examining and summarizing 30+ trends based on their
positions vs. emerging industrial countries. strong correlation with the Kingdom and NIDLP.
Below are six of these trends

Fall back in competitiveness, higher labor cost and relatively lower productivity lead
to downgrading some advanced (European) countries 1. Increased technological advancement and affordable technologies have
disrupted many industries
1990 2000 2010 2015 2. Labor requirements switch from low-cost to highly-skilled
Japan USA China China 3. Energy landscape changes; proximity to natural gas resources is no longer an
The lack of fast-paced innovation advantage, given the shale revolution, and renewable energy competes with
USA Japan USA USA conventional energy
or productivity improvement led
to some advanced countries losing
Germany Germany Japan Japan 4. Capitals are largely available and access is no longer an advantage. Investors
their positions to emerging, low-
cost producing industrial countries in have more capitals than ever to operate and seek positive returns
Italy China Germany Germany
innovation or productivity improvement
5. Demand is shifting to South and East markets. International Co-operative
France Italy Brazil Brazil Alliance is the new “BRICS”
Brazil Brazil Italy South Korea 6. New products are rapidly substituting old ones.
UK France South Korea India
Russia UK India Italy

3 key technological trends started disrupting the labor market with a
Spain Spain France France
projected pace acceleration
Mexico Mexico UK Russia
China South Korea Russia UK

Analytics
Digital
Automation and machine
Platforms
South Korea Russia Mexico Indonesia learning

Computers, robots and Platforms facilitating Use of public and private
Netherlands Indonesia Indonesia Spain other surveillance systems communication and data and analysis tools
to execute physical and interactions among a to enhance and/or
Exhibit 4.13: Added value ranking for Italy, France, UK and Spain in manufacturing, 1990-2015 cognitive tasks currently large number of users replace human decision-
performed by humans at a low cost making process
46 47
... whi ch w i ll result in a lack of highly skilled workers and excess of low-
skilled workers
High-skill workers shortage
Total shortage 38- 41 13
١٨-١٦
In advancedeconomies 16- 18 10
In China 23 16
Low-skill workers surplus
Total surplus 89- 94 10
١٨-١٦
In advancedeconomies 32- 35 11
In India and Y
oung 59 10
Developing economies
of supply of skill cohort % of demand for skill cohort %
Exhibit 4.15: Evolution of labor requirements
Solar Power Water Desalination Project in Al Khafji City
48 49
Capitals have increasingly become cheaper… Working age population (15-64), in Bn
Long-term government interest rates in select developed economies, %

1,2
%
Africa
14
India
1,0
12
China
10
0,8
8
0,6
6 Southeast Asia
Latin America
4 0,4 Europe
2 North America
0,2
0
1980 1985 1990 1995 2000 2005 2010 2015
Japan
0
1970 1980 1990 2000 2010 2020 2030 2040
Nominal values Ex-post real values
Capital availability is no longer a competitive advantage Opportunities are emerging in Africa, India and China
• Cost of capital progressively decreased until it reached its lowest since the eighties • Working age population is the highest spending group in most societies.
• Low cost of capital indicates sufficient supplies and allows project funding, joint • Traditionally, the working age population will decrease in the high-spending
ventures and initiatives without adding a heavy financial burden. European market. The North-American market will continue to register limited
growth. Integration opportunities may arise in these markets.
• At this price point, the availability of capital is no longer considered an important
competitive advantage • Developing markets such as Africa and India present the largest numbers of new
opportunities and business growth.
Exhibit 4.16: Increase in capital availability
• Markets with billions of individuals such as Africa, India and China will register
an increase in demand and provide diverse opportunities and easily scalable
businesses.
Exhibit 4.17: Demand shift to markets in the South and East
50 51
These trends impact the factors of competitive advantage by increasing or minimizing

Increase in the adoption rate of new products/technologies… the relevance of each one. For instance, research, innovation, and productivity are
currently more relevant in light of the technological evolution. However, energy or
Time to reach 50 million users, years the availability of energy and capital minimized their importance.
38
Unfortunately, while the Kingdom currently trails in increasingly relevant areas, it is
ahead in areas of decreasing importance.
Radio
TV Some of these competitive elements will allow KSA to influence these measures on
the short term, while the execution of others will require more time. For instance,
13 Listening Devices we can easily improve our position concerning policies and regulations by redefining
the system to introduce a conducive environment for both investors and businesses.
Facebook However, improving our position in research and innovation sectors requires a long
term approach in our research national agenda.
4 3
Internet
1
These trends impact the importance of competitive elements that would ultimately
determine leading economies and may lead to KSA failure
Factors that Competitive Factor KSA Ability in influence in short time Need to
… Increasing importance of new products as they substitute conventional products on are.. position
the short term • Build long-term competitiveness
Low through focused national research
RDI
agenda where KSA can build natural
Example of new products that are expected to disrupt current industries leadership
Implications on automotive industries Electric Vehicle (EV) share of new car Increasing in Productivity • Develop focussed skills (e.g. vocational
skills) to support specific industry
sales, % relevance
Medium development (e.g. mining, industrial
• EVs will replace ICEs in the near 44% Logistics equipment)
future, which renders ICE factories
13% Policies and systems
obsolete • Ramp-up logistics infrastructure and
Medium improve performance of existing
Market (local and assets and services
• Demand on EVs is not high, which exports)
makes them less competitive than 31%
Remaining • Reshape system to create an investor
ICEs Natural resources
equally relevant and business friendly climate while
1% balancing the need for reducing
High
2015 2030 Taxes fiscal burden with need for focused
incentives (e.g. financing, focused
compensation for energy costs)
Workforce cost
Status of progress Basic condition
Capital
Exhibit 2.18: Product short lifecycle
Decreasing in
relevance Energy
Relative disadvantage Relative advantage Ability to achieve short-term impact
Exhibit 1.19: KSA evaluation against specific global trends
52 53
4.B.2.1 Integration of program components
NIDLP consists of 24 key complementary and productive components with detailed

visions, strategies and initiatives for each component. These components are closely
interconnected given their integration and interdependence, making such integration
a key requirement for the program’s success. (see exhibit 4.20)
Productivity and
Special economic zones Policies and standards 4.0 industry Human capital
Operations support Financing and

investment policies PPP frameworks
Governance support
Incentive policies Standards
Regulations support Sector regulations
Trade policies
Capability centers Foundational elements for a
Productivity program technology ecosystem
Supply demand matching
Increase labor capacity in NIDLP
sectors
Logistics Mining Zinc Energy
Plastics, rubber, specialty

Ceramics chemicals
Silicon, Turbines
~0,8 M
15--20 M
Rail, Phosphate tonnes Renewables
TEU
Ports additional
ports,
roads ~24 M manufacturing
capacity tonnes Copper Chemicals Power
Organic
Titanium ~8M chemicals 8 GW
tonnes
~6 M Wires, cables, Power sector
engines
TEU pa Sodium ~ 0,7 M
Military transformation
additional
~ 1,5 M tonnes
capacity
Rail tonnes
Heat
exchangers,
industries Pharma
Co – invest
New N-S
Aluminum Machinery Heat exchangers, Plastics for in select
access to valves, Titanium prosthetics, gold for
Abha 2 GW ~ 1,7 M tonnes
& equipment implants
opportunities
across priority
Metals,
sectors
materials
Gold Silicon 1,8 M

Roads 9 M tonnes
tonnes
Fish,
shrimp
Desalination Aviation Medical
3rd Jeddah Mecca supplies Energy pricing
highway Cement ~0,5 M tonnes
Steel and support
Paints, car interiors,
Glass Food Batteries, values, pumps, HVAC body
Aquaculture
Airports ~90 M ~80 M processing
tonnes tonnes
163 M passenger
capacity in 4 major
airports
~2,5 M tonnes Automotive
Infrastructure development, FDI

attraction
• Enhanced export ecosystem Improved Local RDI capabilities

• Export capabilities and Policies to regulation, Public debt financing Sector specific RDI plans
• Export promotion stimulate process and access Public equity Conductive RDI environment
demand financing
Export Local content Financial SME and cluster development Research,

enablement enablement Development
Exhibit 4.20: Integration of program components and Innovation
54 55
In this regard, the program identified relations and requirements across different Taking into consideration these interlinkages and integration pillars in identifying
program components to achieve integration at a high level of accuracy. Five levels of initiatives, aspirations and implementation mechanisms, the program would
integration were used: have offered overall alignment which will ensure program success and aspirations
fulfilment.
1. Timeline cohesion
2. Overlapping scopes of work For instance, mining sector outputs have been integrated with priority industrial
3. Trade-offs across initiatives to achieve optimal resource allocation sectors’ inputs to ensure the largest quantity possible of industrial sector basic
4. Possible integration to incorporate value chain materials locally with the required quality, which will help increase industrial local
5. Linkage to supporting enablers content (see exhibit 3)
Interlinkages and requirements have been accurately identified for each level
We incorporated the program’s components in detail based at 5

integration levels
19 + 40
mn were provided as budget initiatives were identified as preconditions
due to initiative overlapping to accelerate budget availability
and integration
Reliance on 100
frequency initiatives (out of ~300) prioritized
to capture budget support
Overlapping
Trade-off
scopes
Interlinkages
Value
Reliance on
chain
enablers
integration
Identifying adequate
production capacities across
+150
integration points across program + 15
enabling components and its value chains in mining and
sectoral components industry sectors
56 57
Mining- we mapped production capacities and integrated industrial and

mining clusters across 12 value chains in mining
Local market
Mining
Industry
Military industries Phosphate
Zinc around
around 24m tons
Titanium 0.8m tons
Paints, car
interiors, body Chemicals
Automotives Batteries, Plastics, rubber,

values, specialty chemicals Ceramic
pumps, Titanium
Copper around 8m
HVAC around 1.5m
around tons
tons
Machinery and 0.7m tons
Heat
Medical Equipment Equipment exchangers,
Wires, cables, engines
Plastics for
prosthetics,
gold
Sodium
Organic around 9m Gold
Pharmaceuticals Desalination
chemicals Aluminum tons around
around 1.8m 1.7m tons
tons
Silicon,
Silicon
Turbines
around
Renewable 0.5m tons
Energy Supplies Food Processing
Steel Cement
Heat exchangers, around 80m around
valves, Titanium tons
Fish, shrimp 90m tons
Aviation Glass
around
2.5m tons
Aquaculture Housing
Export
Market
In general, industrial sectors are integrated with the program by identifying their
requirements and enablers which will help developing and enhancing competitive
advantages. After that, special initiatives for every enabler are identified to ensure
sector requirements.
58 59
Policies, standards and local content- NIDLP sectors require a number of

4.B.1.3 Stress-Testing Program Component Strategies
changes to policies to enable future investments
NIDLP covers +15 strategies that were stress-tested to ensure alignment with global
Sector regulations trends and sustainability of competitive advantage. Program component strategies
Improve competitiveness across priority sectors and attract were stress-tested across 3 perspectives, as summarized in Exhibit 4.21.
private/foreign investment
We stress tested the component strategies on 3 levels
Standards Stress Test Framework
Protect local manufacturers and consumers from poor quality
dumping
Sustainable Requirements Aspirations and Increase in capital Innovative Change in

competitive and enablers impact availability trends that labor market
Commercial policies advantage hinder industries requirement
Enhance trade effectiveness and penetrate foreign markets
Strategic Overall global

Requirements Agility and perspectives trends Shorten product Shift in energy
Local content and procurement & enablement flexibility lifecycle system
Drive demand on NIDLP sectors by ensuring government factors
demand
Industrial Sector trends Shift in

PPP framework structure/ demand
Operational towards south
Minimize tax burden by enabling and accelerating private model and east
sector participation in public and infrastructure projects
Mining Automotives Energy Medical supplies Pharmaceuticals
Incentive policies
Support growth across priority sectors and minimize external
factors +200 stress test meetings +100 experts achieved
were held mutual benefit
Funding and investment policies
Improve financing environment effectiveness and capital
mobilization conditions
+300 documents were
+20 entities engaged in
reviewed/used to
the work
conduct the stress tests
Aspirations and requirements were identified across sectors in detailed and gross
terms. Then the different enabling sectors’ components were determined and
initiatives designed to help meet these requirements, which concluded with the
identification of ~300 initiatives. Exhibit 4.21: Example of discussion of meetings
60 61
The strategies were stress-tested across 6 sector trends that were discussed in Stress testing individual component strategies across 6 strategic
section 4.B.1.1. Their endurance was also put under test through sector-specific trends. perspectives
Exhibits 4.22 and 4.23 show mining trends included in the sector strategy.
Stress-Test Strategic Perspectives
We checked if and how the mining strategy addressed each specific trend. 1. Sustainability of competitiveness
• Is our competitive positioning sustainable in light of global
and local trends, expected sector challenges and industry
How the Saudi mining strategy responds to How to address the identified gaps disruptions (Industry 4.0)?
this trend
Decreased • The mineral capacity assessment determined

exploration success potential untapped/unexplored mineral
probability reserves of USD +1.3 tn, which presents a 2. Target markets
tempting opportunity for international
entities and explorers in the mining sector • Are these the right markets to focus on?
• What do we deem appropriate to reach the target demand?
Growing • Measures are being taken to accelerate
investment in exploration activities and attract
exploration international players (e.g. the national
activities geological database, co-financing
exploration program, and license issuance 3. Aspirations and impact
time reduction) • Are the aspirations and proposed impact of the sector
realistic?
Shift towards • KSA actively promotes the capacity to attract • How will impact on prioritization of aspirations change (i.e.
localizing human medium and small projects in order to bring
resources in international players to the mining sector GDP vs jobs)?
(e.g. enhancing marketing morals)
Decline of • Four initiatives for talent development, • As part of NIDLP, mining and Industry
global mining including expanding range of vocational and 4.0 teams aligned several developed 4. Requirements and enablers
productivity professional mining programs initiatives and the use thereof to • Will the sector be able to access the required resources and
• Three research and innovation initiatives promote Industry 4.0 practices and enablers in reality?
(including establishment of a mining improve productivity
excellence center and a metal alloy • Do returns support resource privatization?
development center) to drive the
development and usage of new technologies
Increased focus • Initiatives were developed to modify 5. Flexibility / Risk mitigation

on local and environment, health and safety regulations
environmental in the mining sector and implement a
• How flexible / agile is the sector in facing key supply and
communities system to monitor compliance as part of demand risks?
broader plans to meet the sector needs • What measures should be taken to mitigate risks?
• Four initiatives were set to develop talents
and boost Saudization in the sector
6. Industrial structure / operational model

• Is the proposed groups’ governance structure feasible in line
Exhibit 4.22 – Mining trends
with group development plans (at the government level)?
• Do we have the right formula for participation of private and
public sectors?
Exhibit 4.23: Strategic perspectives
62 63
The strategies were stress-tested across 6 sector trends that were discussed in 4.B.2 Component or Cluster Considerations
section 4.B.1.1 to ensure they are taken into consideration in the strategic component
identification framework
The mining strategy response to international changes in the sector were Subject Description Decision and implications
determined and assessed Industry
• Sector • While developing the NIDLP delivery • Program-level prioritization ensures the
selection and plan, there is a need to prioritize sectors government has a clear point of view on
How was change considered in the mining How was change integrated into the prioritization and activities that will drive the desired development requirements and knowledge
strategy? program? (detailed below) economic impact of the program of regions in need of support
• Prioritizing sectors and initiatives helps
achieve maximum impact of government
Sector- • Adoption of three research and
support of economic development
transforming development initiatives in the sector • As part of NIDLP, mining and Industry
innovative areas (including an initiative to establish 4.0 teams aligned several developed • Medical supplies • Choosing short term-focused products • Less complex products were prioritized in
technologies a mining excellence center, and another initiatives and the use thereof to instead of long-term ones took into the strategy to focus on the short term (e.g.
to establish a steel industry development promote Industry 4.0 practices and consideration Saudi manufacturers’ consumer products and hospital furniture);
center) to encourage sector players to improve productivity current capacities and readiness focus was on more complex products for
adopt new innovations and technologies medium and long term (e.g. orthopedics
and high-tech medical supplies)
Labor requirement • Set up of four initiatives that develop
change qualified HR, increase Saudization, • Pharmaceuticals • Selecting segments and products • Several segments, including plasma and
including focus on advancing vocational took into consideration the national vaccines, were prioritized for national
mining programs security aspects and required capability security reasons
assessment
Energy context • Development of a precise model to assess • A set of procedures are being developed • Renewables • Renewables strategy was based on • Focus on manufacturing cell modules-
change the impact of energy prices scenarios on to support sector players and reduce local and regional plans to develop strips and wind tower components
sector development scheme and on its energy reform impact on mining sector capacities and leverage local content
economic and social returns policies
• Automotovies The sector considered several strategic Automotive strategic decisions were taken
Demand shift • Most sector development schemes
options when designing auto sector after deep-dive analysis (detailed in section
towards south and targeting different minerals aim mainly
strategy, including: 4.A. Automotive strategy in Automotive
east at achieving self-sufficiency by meeting
• Technology selection: ICEs vs EVs Strategy appendix), in summary:
internal demand (e.g. developing
• Target market: Local vs regional • Technology selection: dual strategy
aluminum and steel extraction
• Target products: medium class vehicles focusing on ICEs and EVs
is essential to support industrial
to reduce cost competitiveness vs small • Target market: regional market focusing
development program)
passenger vehicles on leveraging strong ties with neighboring
• Some export-oriented sectors enjoy high
• Cluster development: supplier-driven countries
competitiveness and low operations cost
growth focusing primarily on system • Target product identification: light vehicles
(e.g. phosphate). The focus will be on
developments vs OEM-driven growth (within USD 20K) according to local
strongly-growing markets like Southeast
focusing primarily on attracting OEMs demand
Asia, South Asia and Africa
• Cluster development: OEM-driven
approach due to small supplier system
Increased capital • Set up of several initiatives that provide
availability financing sources matching the sector
development efforts (e.g. initiative • Aquaculture • Aquaculture strategy development • The result was the set up of a priority
of establishing excavation financing requires prioritizing potential viable framework of 6 fish types for further study
program, mining sector development types in KSA, taking into consideration and development as part of the strategy
fund) climate, ocean environment, and local
fish preferences
Reduced product • While most mining sectors aim at
lifecycle meeting increasing internal demand
(imports currently meet part of this
demand), recycling technology usage
remains limited in KSA
64 65
Subject Description Decision and implications 4.B.4.1 Industry sector selection and prioritization criteria
• Military • The military strategy development • Developing the military strategy by GAMI
industries should take into consideration dual-use requires assessment of aggregate demand Upon developing NIDLP’s delivery plan, there is a need to prioritize sectors and
applications (in both military and civil (in both military and civil sectors) on a activities that will lead the program’s desired economic impact. As the private
sectors) when setting product priorities to set of products and services to find viable
focus on future partner companies projects that attract investors sector will eventually lead several investment decisions, the program’s prioritization
will ensure the government has a clear point of view regarding the development
• Oil & Gas- • Energy price reforms could significantly • Several energy price scenarios were tested;
related impact competitiveness in chemicals in most cases, KSA remained on the cost requirements and knows the areas that need support the most.
industries competitiveness curve from Q1 to Q3 Prioritizing sectors and initiatives helps in achieving the maximum impact of
• Food • Food processing strategy should be • Alignment between food industry government support in economic development through:
processing aligned with agriculture and aquaculture and agriculture strategy is underway
plans (agriculture strategy development is in 1. Implementing impactful activities
progress)
Identifying the sectors and initiatives that provide the highest impact for a certain
Mining investment of public resources (for instance, be it financial resources, or implicit
• Sector • We prioritized the minerals that will drive • Prioritizing mineral value chains helps subsidies such as lands, or receiving inputs such as gas)
selection and the program’s target economic impact achieve the maximum impact of
prioritization when developing the mining strategy government subsidies on economic 2. Ensuring implementation capacity
(detailed development
below) Narrowing the government’s scope of work to manage sensitive initiatives based
on the available capability and diversity in management and leadership
Energy
• Energy mix (Refer to energy sector) This prioritization is important on two levels: sectors prioritization to develop
Logistics strategies and eventually provide support and initiatives prioritization to support the
development of these sectors.
• Logistics • Current and planned capacity of transport • Based on current port infrastructure and
infrastructure for ports to accommodate pipeline projects, there is no need for Identifying sectors and subsectors depends on two guidelines:
growth in trade flow additional projects to increase Saudi port
capacity; forecasts show KSA will remain 1. Possible impact on the Kingdom’s economy through:
incapable of meeting demand in 2030
• Direct impact in terms of GDP, jobs, or exports, or the non-economic impact such
Enablers as food security of national security considerations
• Export • National export strategy prioritized a set • 176 products were prioritized and aligned • Other sectors enablement through either developing a bigger impact on clusters
promotion of target products and markets that KSA with priority sectors in the national or facilitating value chains in the lowest stages of industry
should focus on industry strategy
• 48 markets for KSA were prioritized
2. Implementation feasibility in terms of current or possible competitiveness and
according to the demand on goods in the degree of the needed support for developing this industry
target markets; moreover, access to said
markets was facilitated
• Human • Human capital enablement strategy took • Human capital enablement strategy
capital into consideration the current issues in identified 3 strategic pillars to take on
enablement the education sector (qualitative and current challenges; it also determined
quantitative issues in kindergarten until several program initiatives, some of
secondary level, and in higher education which fall under NIDLP, while others were
and vocational training) proposed for SIPP, to be considered during
planning
66 67
4.C Trade-Offs and Interdependencies with Other

Programs
We identified 5 types of interlinkages with other VRPs: (1) Overlaps, (2) Enablers, (3) Each linkage was specifically managed with other VRPs:
Value chain interlinkages, (4) Trade-offs, and (5) Sequence interlinkages (Detailed in
exhibits 4.24). • Dependencies were designed for the interconnection of enablers, value chain
and sequence interlinkages by sharing requirements with other programs to be
We followed up and managed the interlinkages during planning phase to maintain included in their strategies, as well as include other program requirements in
coordination during implementation phase. NIDLP integrated plan (e.g.: financial value requirements were shared with Saudi
PIF program to be included in the fund’s local investment plan)
Interlinkage and Definitions
• Dependencies for overlaps with other programs were discussed and initiative
• A component or sub-component in one ownership was agreed upon (e.g.: Export enabling initiative overlaps with NCPP
VRP should be finalized so that another were discussed and it was agreed that SEDA lead relevant initiatives that would
VRP component could move forward
be overlooked by NIDLP)
• Program trade-offs were addressed by identifying and examining trade-off

impacts on each VRP, and then they were highlighted in the delivery plan (to be
further discussed with SMO)
• Two VRPs have the
• Measures adopted in a VRP hinder/ same objective or have
contradict the achievement of other Sequence overlapping objectives
VRPs
interlinkages
Context
Trade-offs overlapping
overlapping
Value chain Enabler

interlinkage interlinkage
• A VRP offers specific • A VRP supports/allows

output for another another program to achieve its
VRP objectives in a better, faster and
cheaper way (or vice versa)
Exhibit 4.24: Five types of dependencies addressed in the program
68 69
Throughout these lines, we identified integration or dependence points with other

VRPs were (Exhibit 4.25 details these points for each VRP and Exhibit 4.26 shows Major Integration Points with Another Set of VRPs
dependences between NIDLP components and other programs). Each topic was
addressed through a series of meetings throughout planning phase.
Financial Sector National Transformation Fiscal Balance Program

Development Program Program (NTP) (FBP)
(FSDP)
• Align NTP enabling • Manage potential trade-
• Manage trade-off initiatives with NIDLP’s off between promoting
between financial efforts the Kingdom’s financial
status profitability and status and enhancing
adequate financial the industrial sector
allocations attraction capacity
Privatization Program National Company Public Investment Fund Strategic Partnership

Pioneering Program (NCPP) (PIF) Program Program (SPP)
• Leverage privatizations
to build industrial and • Align NCPP pioneering • Align local PIF • Align KSA economic
logistics capacities in KSA company selection with strategy with NIDLP’s relations with NIDLP
• Align government asset NIDLP’s priority sectors development plans priority sub-sectors and
privatization plans with • Align NCPP’s (e.g.: transportation development plans
NIDLP’s plans development plans with infrastructure, capacities) • Leverage strategic
NIDLP’s partnerships to establish
NIDLP industrial sectors
and levers
Housing Program Saudi Image Promotion Hajj and Umrah Program Quality of Life Program
Program (SIPP)
• Identify sub-sectors that • Include sector • Align Quality of Life
would help meet demand • Align with larger scale requirements in Program with foreign
on Housing Program plans to build capacities comprehensive NIDLP talent attraction
• Include NIDLP local within SIPP scheme initiatives
content requirements in
all housing programs
An oil platform in the Arabian Gulf in Dammam
Exhibit 4.25:Major integration points with other VRPs
70 71
National Industrial Development & Logistics Program Components Other vision Interference Enablers’ Current Collected and
realization programs in range linkage status shared views
• Identified gaps between the program and NIDLP

to allocate the 4 key sectors.
Other vision Industry Mining Energy Logistics Enablers Possibilities National Companies High • The overlapping components have been discussed
and solutions are underway in coordination with
realization Promotion
the Strategy Management Office
programs
• The program strategy is a high level (covering all /

Strategic Partnerships High most of the markets with a focus on Africa) and is
Interference Program
broadly aligned with the target markets of NIDLP
in scope
• Continued alignment with the PIFs domestic
investment strategy with a financial
High empowerment strategy and sector-specific
Public Investment Fund
Program strategies.
Enablers’
linkage • Alignment of enabling strategies (4th Industrial
Revolution and Special Economic Zones) with
relevant national transformation program
National Transformation Intermediate strategies and alignment of ownership in
Program coordination with the Strategy Management
Office
Value chain
linkage • Review of program initiatives (impact of VAT
Intermediate / cost increase from energy reforms) and
Financial Balance incorporate potential impact in sector strategies
Program
• Alignment with the financial sector development

Intermediate program and efforts with the financial
Tradeoffs Financial Sector empowerment strategy
Development Program
• The capacity building and development plans

On Hold until of the National Industrial Development and
Saudi Character Intermediate the program is Logistics Program were developed and shared
launched with the National Personal Development Program
Sequence Enrichment Program
for integration
threading
• Ensuring inclusion of housing program
requirements of materials in mining outputs and
construction techniques
Housing Program Intermediate • Currently discussing the support of
Entrepreneurship of
manufacturing efforts between construction
Strategic relations Public Investment Fund National
national companies transformation materials manufacturing and the national
Development of the industry strategy sectors of NIDLP
Financial balance Improve life style Pilgrims guests services
financial sector
Housing Privatization Enhance Quality of Life

• Ensure that the program requirements are
Enriching the Hajj and low included in the logistics strategy
Umrah Experience
Figure 4.26: National Industrial Development and Logistics Program dependencies with other programs - distributed among
components of the program
• Privatization processes for industrial and logistic
We have reviewed the various tasks of multi-vision programs and identified the level low
capacity building in Saudi Arabia are being
discussed through local content requirements
Privatization Program
of interrelationship with the National Industrial Development and Logistics Program, and identification of joint ventures that aspire to
export or grow at international level
where we found a high level of interrelationship with the National Firms Program,
the Strategic Partnerships Program, the Public Investment Fund Program and the • Highlighting the requirements of foreign
low
Saudi Personal Promotion Program To manage Interconnection Quality of Life Program
competencies to ensure that they are included in
the recruitment initiatives
Figure 4.27: Inter-relation between NIDLP and other VRPs
72 73
5.A. Initiatives Portfolio Enablers
The program identified ~330 initiatives distributed across 24 components to be led Logistics Local Content
by +30 entities.
These integrated components are represented by ~300 initiatives… 14 15
Industry
Logistics Local Content
1 4 9 3 1 9 7 43 1 - - 1
Enablers
Machinery and Pharmaceuticals Food Processing Renewable
Equipment Energy Supplies
17 22 19 17
1 - 2 1 - 1 3 1 - 1 - - 1 - 2 -
6 10 9 5 Industry 4.0 Policies, SEZs Financial

regulations, and Enablement
standards
Automotives Aquaculture Oil & Gas Medical 3 10 - - - - 1 4 - 62 1 21 2 4 5 -
Adjacencies Supplies
21 18 23 20
1 - 1 - 1 1 2 1 - 5 1 - - - 3 1
Energy Mining Human Capital Research, Cluster Export Enablement

Development Development & Development
Innovation Support
13b 13a 9
- 2 2 7 - 28 15 - - 3 2 4 - 3 2 1
24
Power Sector Energy Pricing and Machinery and
Integration Subsidy Equipment
Governance and Game Other
1 6 5 1 1 3 1 - 1 15 7 16 Institutional Capabilities Changers
- 6 - - Quick win Pre-requisite
74 75
30
~330
Entities
initiatives
233 56 5 4 8 3 1 2 4
Ministry of Energy, Industry and Mineral Ministry of Ministry of Ministry of Ministry of Ministry of Ministry of Ministry Ministry of
Resources Transport Environment, Economy and Commerce and Health Labor and Social of Finance Commmunications
Water and Planning Investment Development and Information
Technology
Agriculture
50 1 19 4 2 1 1 2
Ministry of Energy, Industry and 5 Ministry of Small and Medium Saudi Food and Human Resources Saudi 4
Royal Commission General Authority
Mineral Resources (Industry Agency) Economy and Enterprises General Drug Authority Development Customs
for Jubail & Yanbu of Civil Aviation
Ministry of Ministry of
Planning Authority Fund Commmunications
Environment,
and Information
10 3 14 Water and
29 1 1 Technology
Agriculture
Saudi Industrial Saudi Geological King Abdullah City Saudi Ports Saudi Arabian Ministry of
Property Authority Survey for Atomic and Authority General Investment Health
(Modon) Renewable Energy Authority
35 21 3 3 1 1
Renewable Ministry of Saudi Health
National Deputy Ministry For Saudi Railways
Energy Project Commerce and Coucil
Industrial Clusters Mineral Resources organization
Development Office Investment
Development
Program
46 5 1 5
King Abdulaziz City Saudi Exports Public Transport
5 for Science and Authority Saudi Standards,
Technology Metrology and
Saudi Industrial Quality Org.
Development Fund
5 8
Ministry of Energy, Industry and Other Entities
Saudi Railway
Mineral Resources - Management of
mining strategy 1 5 1 1 4
The Saudi Local Content Saudi Technology Public Human Resources
34 11 Industrial and Private Sector Development Investment Development
Ministry of Energy, Investments Development and Investment Fund Fund
Industry and Ministry of Company Unit Company
Mineral Resources Transport (Dussur)
2
National
1 Industrial
National Guard Development
Health Affairs and Logistic
Program
Ministry Entity
X Number of initiatives
76 77
6.A. Game Changer
The program identified 9 game changers based on their potential impact and their
key role in fulfilling program aspirations.
List of game changers to be pushed ahead during 2018

Game changing initiatives Initiative ID
• Develop infrastructure to support maritime clusters I-10-04-003
• Develop leading national companies in renewable I-03-24-003

energy industries
• The main project of future battery technologies I-01-01-004
• Automative Development Program (ADP) I-06-14-001
• Launch the accelerated exploration program of M-12-31-009

promising deposits
• Transform the Saudi Industrial Development Fund to N-16-12-008

become the key financial enabler of the Kingdom›s
industrialization
• Centers of Industrial Capacities of the Fourth N-17-07-002

Industrial Revolution
• National productivity programs N-17-13-001
• Initiative of the Environmental System of the Fourth N-17-07-001
Industrial Revolution - Support for Innovation,
Research and Development
• Launch the Custodian of the Two Holy Mosques E-13a-27-717

initiatives for renewable energy in the Kingdom
• Program of competitiveness of the reform of energy E-13b-14-001

prices
• Increase local content in the Saudi economy O-15-10-001
• Improve the import/export procedure (Stage 2) L-14-09-003

• Establishment of the Saudi Export and Import Bank N-16-18-012
(operational phase)
78 79
SECTION 2:
INDUSTRY SECTOR
80 81
SECTION 2.1:
NATIONAL INDUSTRIAL
STRATEGY (NIS)
82 83
We aim to raise the

percentage of local
content for the machinery
and equipment sector by
50%
2. Aspirations
(NIDLP-National Industrial Strategy NIS)
Aerial view of a factory in Ras Al Khair Industrial City
84 85
2.A. 2030 National Industrial Strategy (NIS)

Aspirations
NIS vision aims at building a sustainable, competitive and diversified manufacturing 1. Machinery and equipment
ecosystem based on the private sector in order to achieve benefit for KSA’s economy Develop globally competitive national entities across emerging key technologies
and citizens. and their uses in battery sector.
The strategy will help achieve tangible impact and results for all industrial clusters 2. Develop renewable energy sources
within the scope of work (selected examples, refer to Section 4: Increase Strategic Increase planned renewable energy generation plants in KSA to boost production
Asset Value for more details). capacity.
3. Pharmaceutical industries
Further develop pharmaceutical and biopharmaceutical industries to capture
more local production, while shifting to advanced products to become a leading
Expansion of and innovative country in the MENA region.
supply chains in 4. Medical supplies
chemical sectors Leverage current capabilities and improved local content policies related to
medical supplies to increase localization of medical devices and utilization of
locally sourced materials.
5. Automotive industry
Develop automotive clusters and manufacture cars.
6. Chemicals
• Localize future Saudi supply chain of basic and intermediate chemicals.
• Set and determine priorities for 18 specialized chemical groups to achieve an
overall production value across additives, formulations, catalysts and specialized
chemicals used in refining and processing.
• Double productive capacity of plastic and packaging products.
7. Food industry
Further develop industrial clusters to meet internal demand on local production
exports to new markets.
A factory in Ras Al Khair Industrial City
86 87
2.B 2020 National Industrial Strategy (NIS)

Commitments
• Impact on National Industrial Strategy
NIS aims at stimulating industrial growth through developing primary production

projects, in addition to final products. This represents a major transformation in
industrial policy and methodology, which aimed at driving progressive growth of
production through public investments across the chain value, knowing that the
previous methodology was no longer sufficient. In the future, focus should be on
the end of the value chain (i.e. final products), especially on complex products such
as vehicles and renewable energy sources, as well as medical and aviation supplies.
Cluster growth will result from key manufacturing factors. Therefore, the focus of the
implementation plan in the short term will be to activate these clusters and achieve
the following milestones:
• Vehicles: Secure agreement with a main factory in order to develop vehicle

assembly in KSA.
• Manufacture renewable energy sources: Two primary investments through
companies developing wind and solar energy sources, as well as assembly
products in KSA.
We aim to transform
the Kingdom into a
global logistics center
An aerial photograph of Jubail Industrial City
88 89
(NIDLP-National Industrial Strategy - NIS)
90 91
3.A. Main Challenges (Spain, Greece and Italy). However, given basic industries’ concentration in the
industrial sector, this number does not truly reflect the productivity of other
sector segments, as their productivity reaches around SAR 126,000 per worker.
To achieve these targets, it is important to understand the industrial sector’s current 4. The degree of the economic complexity in KSA, with few available
components and competitiveness, as well as the challenges it faces. Despite existing
diversification opportunities.
strengths and assets, it remains clear that the path to achieve industrial growth
aspirations of Vision 2030 is going to be a hard and complex task on many levels;
KSA’s overall industrial capacities are relatively limited compared to other
countries. Also, Saudi competitive goods are not relatively complex globally
1. Basic industries currently represent a significant and concentrated share with available alternatives, which makes them subject to market volatility and
of Saudi industry market, as growth and exports rely almost completely competitiveness.
on industries that benefit from circumstantial advantages related to
power and raw material provision, knowing that these resources will 5. Many of these challenges are due to transformative industries poor and
deplete over time. declining competitiveness.
KSA established strong foundations across basic industries. These foundations KSA currently has limited competitive advantages in transformative industries,
are the direct result of the country’s circumstantial advantages, especially with strengths in dimensions related to cost of energy, employment, raw
petrochemicals, metals and minerals. This led to a 9% contribution by the materials and local market size. These dimensions are rendered less significant
industrial sector to GDP (real GDP, 2016, except oil refining activities). This figure by changes in technology, transport cost, supply, commercial flows and overall
is much less than the average in G20 and OECD countries. close competition globally. Furthermore, KSA registered poor performance across
key factors of transformative industries such as innovation, ability to attract and
Furthermore, the Saudi industrial sector is heavily concentrated in these basic retain talents, government regulations and logistics.
industries, as they represent 56% of GDP and more than 71% of exports, relying
strongly on KSA’s circumstantial advantages related to energy. Despite KSA’s
efforts to accelerate the development of new industrial sectors, basic industries
still account for 82% of total industrial growth since 2011.
2. Following a period of rapid growth between 2008 and 2011, growth

slowed down and several key indicators took a downward curve.
In the past five years, Saudi industrial sector encountered significant challenges, as
reflected in a number of key performance metrics;
• Transformative industries GDP was almost stagnant with 0.1% growth in 2016.
• Foreign investment significantly slowed down across transformative industrial
sectors.
• Demand on energy increased across the industrial sector (energy consumption
per GDP unit).
3. Industrial sector productivity.
Productivity per worker in the industrial sector (except oil refining activities) is
around SAR 220,000, at par or slightly lower than southern European countries
92 93
• Impact on National Industrial Strategy 3.B. Current Efforts

These challenges result in a number of key impacts that were accounted for in the
development of the NIS and adoption of the approach; Since the development of the 8th Development Plan in 2005 and the NIS in 2009,
the Kingdom has set goals and aspirations to diversify the economy through
• Significant change in competitiveness: there is urgent need for large-scale change transformative industry growth. Despite these aspirations, the supporting
in competitiveness to drive industrial development. This large-scale change is strategies were not implemented for several reasons, mainly the largely fragmented
divided into 3 components: implementation mechanism which was to be carried out by institutions lacking
resources and enablers in line with the size of the required effort and transformation.
1. Protect and preserve circumstantial factors and inherent advantages in local For the past three years, the momentum changed with a set of initiatives that are
market. under implementation or development.
2. Optimal leverage of newly founded advantages such as regional strategic ties and
leadership, sovereign wealth, state-owned enterprises (SOEs) and the ability to
invest capital on the long term in order to generate systemic financial and economic
returns in the future
3. Rapidly enhance key factors affecting future transformative industry
competitiveness, i.e. innovation, talents, logistics and government regulations.
We aim to create
Robust and balanced cluster portfolio: The Kingdom should develop a set of strategic more than 7,000
targets for developing new industrial capacities and clusters.
jobs in the medical
1. The portfolio should be balanced and represent different levels of investment, supplies sector
timelines and impacts to minimize uncertainty and risks.
2. The portfolio should be dynamic and constantly evolving in parallel with market
conditions, successes and lessons learned.
• The active and distinct role of government and public investment: Developing
these clusters will require government participation and supervision through
strategic and targeted investments.
1. Portfolio clusters will require different levels of government intervention (i.e.

policies and initiatives), support (i.e. incentives) and activity (i.e. public investment),
in line with cluster competitiveness and aspirations.
2. Adopting a robust governance and implementation model is crucial to achieve
aspirations, given that the model will aim to streamline complications and minimize
fragmentation in industrial development and policies.
• Dynamic and future-proof approach: Risk-free implementation of the strategy

requires a dynamic implementation approach.
1. Strategy should be updated continuously in line with changing market conditions.

2. Institutions should have required resources, mandate and governance to rapidly
adapt to emerging opportunities, with flexibility in planning, adjusting and
adapting accordingly.
94 95
4. Strategy
(This is a summarized version, please refer to appendix for a detailed version of the strategy)
96 97
4.A. Strategic Pillars 2. Driven by innovative programs like IKTIVA and local content drive through LCPSDU,
the Kingdom is set to leverage its considerable buying power across major state-
owned enterprises to support local production
The “National Industrial Strategy” within NIDLP focuses on several pillars of promising 3. The cluster benefits from a range of favorable factor conditions: e.g. availability
industries that include: of raw materials, a growing upstream metals cluster, energy and industrial land
1. Equipment & machinery 4. Demand for machinery products is set to grow significantly over the next decade
2. Renewable energy supplies in Saudi Arabia and MENA, driven primarily by construction, mining, and metal
3. Pharmaceutical manufacturing processing
4. Medical supplies
5. Automotive
6. Oil & gas adjacent industries
7. Food processing Existing strengths of the industrial equipment & machinery industry of
8. Aviation Indusutry KSA
9. Military industries
4.A.1 Equipment & Machinery Strategy

• Executive Summary
KSA is well-positioned to grow its Industrial Equipment and Machinery sector to Ambitious Strong local Well-established Low cost of
serve fast growing local & regional demand, through leveraging its significant and government-led demand with integration with financing and
concentrated buying power, local content policies that favour domestic production, diversification localization oil & gas, and consistent
and cost competitiveness. plan and strong opportunities metal & mining government
desire to optimize clusters spending
Exhibit 4.1: Existing strengths of the industrial equipment and machinery industry of KSA
• Context and sector attractivness in Saudi Arabia
Equipment and Machinery can be classified in two primary categories for products:
electronic equipment (for example, electric motors and control systems) and However, the sector currently faces a number of challenges that hinder overall
industrial equipment (such as: general purpose equipment – boilers, plastic pipes competitiveness. Chief among these is the lack of market information and supplier
and others – or specialized equipment such as cranes). information that prevents local and foreign investors to invest with confidence in
the Kingdom given future supply and purchasers (state-owned enterprises, EPC and
Industrial Equipment and Machinery is an attractive sector to develop in Saudi Arabia OEMs) to effectively buy resources for the local use.
for four key reasons: Additionally, local content policies have been rarely enforced with limited transparency
necessary to incentivize local suppliers to optimize their local content. Beyond these,
1. There exists significant local demand for Industrial Equipment and Machinery, the cluster faces challenges similar to other manufacturing clusters: restrictions
as estimated local consumption reached SAR 57.5 bn in 2016 with sizeable import in business environment which sets boundaries to attracting talent, especially
substitution potential localization systems, lack of local content policies standardized between clusters,
98 99
complex bureaucratic procedures, and these are all obstacles to cluster development.
As a result, the vast majority of the Industrial Equipment cluster competes on price Production and Import 2012 (Million USD)
with low levels of sophistication, investments in innovation, exports (with the
exception of HVACs). 456 1,587 32 1,520 1,420 571 320
325 246 0.4% 2.9% 0.0% 2,850 1,820 0.0% 0.7% 1,445 710 0.2% 3.1% 1,840 5,979
7.4% 4.2%
Consequently, local manufacturing of industrial equipment and machinery in KSA, 58.0% 16.8% 11.0% 15.6% 18.5% 21.8%
especially the six priority products to develop the cluster, i.e. (1)pumps, (2)compressors,
(3)valves, (4)HVACs, (5)Li-on batteries and (6)3D printers manage to only serve 36% 92.6% 99.6% 97.1% 100% 100% 99.3% 84.4% 95.8% 99.8% 96.9%
78.2%
of local demand only, with the overwhelming majority of this is covered by HVAC
83.2% 89.0% 81.5%
market.
42.0%
Challenges faced by industrial equipment manufacturers in KSA
HVACs
Pumps
Compressors
Valves
Li-on Batteries
Metal Pipes
Engines
Turbines and Blades
Boilers
Switchgears
Wiring Systems
Motors and Generators
Heat exchanger
Other(11 categories)
Total market
Goverment & Regulatory Environment
Imports Local Production
Exhibit 4.3: local import and production share in meeting the demand on industrial equipment in KSA
Talent
Cluster Development
Exhibit 4.2: Operational challenges faced by Industrial Equipment and Machinery manufacturers in the Kingdom
100 101
• Sector aspirations and strategy
Priorities were given to 6 primary segments in the short term to develop the cluster
as listed in Exhibit 4.4 below
Segments KSA Marjet Avg. Profit1 Dynamic Marjet Size Competitors Success Factors Rationale
(Bn SAR) (٪) (B SAR)
Pump 4.5 15% - 30% GCC 9.8

• Product group with highest
• Cost of raw materials import substitution
• Quality potential growth outlook,
Compressors 3.4 15% - 30% GCC 6.8
• Integration with local job creation potential, anf
• Aftermarket services feasibility of manufacturing
in KSA
Valves 6.4 15% - 30% GCC 12
• Product growth with large

demand upside, where KSA
• R&D in energy efficiency
HVAC 7.1 15% - 30% MENA 140.60 can leverage on its existing
• Distribution channel
know-how to create regional
leaders
• Key technology opportunity

Li-ion • R&D
nil 15% - 20% Global 750 where KSA can create
battery • Economy of scale
market leader
• KSA can establish itself as a

• Heavy R&D into new
3D Printing key player in a burgeoning
nil N/A Global 80 technologies
Equipment industry, yet to completely
• Talent
take-off
Exhibit 4.4: short-term and primary chosen exhibits for equipment and machinery cluster
102 103
Furthermore, originally diverse industries in KSA and additional diversification efforts

Priority was given to six main products on the short term to develop the through NIS will help sectors in the future to implement 3D printing technologies
cluster across the value chain; and with KSA’s growth agenda in action and relevant sectors
seeking to enhance their technologies, demand will be high and stable on 3D printing.
• Valves • Compressors • Pumps
Li-on batteries will also be a significant market in the future, especially with new
• HVACs • Li-ion battery • 3D printer emerging technologies. With demand expected to rise sharply on hybrid and electric
vehicles in the next decade and with the automotive industry efforts to meet this
future demand, li-on battery sector will register a significant growth backed by
Valves, compressors, pumps and HVACs were selected after a sorting process based related industries in KSA.
on assessment of product categories across Equipment and Machinery cluster using
three primary criteria, which are: To address current challenges and build the future sources of competitiveness for the
machinery cluster, Saudi Arabia needs to:
• Drive local production & regional exports through local content policies, demand
planning & incentives
• Accelerate competitiveness improvement of local producers through training &

industry 4.0 adoption
Product category Job creation Cost-effectiveness • Acquire technology and know-how in disruptive future industrial equipment
market size and potential and value chain technologies (i.e. 3D Printing)
growth potential
• Establish KSA as a leading global producer in future battery technologies (Li-Ion)
On the other hand, two main areas were identified where KSA can explore
opportunities based on future trends, i.e. li-on batteries and 3D printing machines.
Concurrent growth in supporting industries, alongside thriving new technologies,
will place these two products within the cluster’s potential development.
Growth of this cluster will be fundamentally driven by harnessing the existing

competitive advantages of factor and demand conditions through robust and enforced
local content & production policies, coupled with securing market access within GCC
supply chains, investing in future technologies to build national champions, and
accelerating productivity growth through technology & industry 4.0 adoption.
The competitiveness of pumps, valves, compressors and HVACs is driven by

supporting industries across the Kingdom and the region; e.g. oil & gas companies
drive demand on products, thus ensuring producer continuity. KSA growth agenda
assumes increasing government spending, backing product growth. Similarly, KSA
announced new development projects in construction and industrial sectors, which
would increase demand.
Installation of electronic boards
104 105
In addition to the growing local market, KSA can access many growing markets; thus,
increase the volume of the potential market. Priority products will leverage KSA’s
attractive geographic location, and the program will also ensure continuous support to
develop export sector. Amongst other benefits, KSA provides the following: (please visit
“export enablement” section for more details):
• Significant tax exemptions on exports, including raw material imports which are
manufactured and exported in their end state
• Capital equipment used in producing final goods for export
• Loans, financing, guarantees and insurance for exports through Saudi Export Program
• Allow industrial companies to import/export without any additional permits (i.e. no

need to obtain a detailed “importation/exportation” license)
In parallel, the Kingdom has excellent trade relationships with other countries in the
region and the world:
1. Customs union (including free trade) within GCC region: Kuwait, Bahrain, UAE and
Oman
2. Greater Arab Free Trade Area: Egypt, Iraq, Jordan, Lebanon, Libya, Morocco, Sudan,
Syrian Arab Republic, Tunisia, Yemen and GCC countries
3. European Free Trade Association (EFTA): Iceland, Liechtenstein and Norway
Therefore, export opportunities are significant. For example, export of pumps, valves and
compressors represents ~2% of total exports, and it is expected to increase to 30% by
2025. However, local demand should be met before moving toward exportation to other
countries in the region and the world.
Equipment and Machinery strategy aims to achieve a significant increase in local value
added generated by the cluster, while shifting to more complex products with companies
leading innovation across GCC (Exhibit 8 in appendix shows the cluster’s progress to
include more complex products). To achieve this ambition, Equipment and Machinery
Strategy focuses on four initiatives:
1. Establish and acquire 3D printing technology

2. Cooperate in machinery and equipment manufacturer procurement
3. Future battery technologies main project
4. Local content policy for equipment and machinery cluster
3D Printing
Please go back to 5.1.A for more details
106 107
4.A.2 Renewable energy supplies strategy
• Executive Summary In addition to existing sources of competitiveness, the program will develop new
ones to build a sustainable renewable energy cluster through:
The transformation of Saudi Arabia’s power sector creates opportunities to develop 1. Leveraging public sector demand and procurement policies to foster the
the Renewable Energy equipment manufacturing sector. The sector can serve both development of the cluster locally
local and regional demand, leveraging transport cost advantage and existing value 2. Developing leadership in manufacturing selected renewable equipment
chains. segments, targeted towards markets with similar climatic conditions (hot and
dusty)
3. Building a skilled workforce through targeted technical and vocational training
4. Strengthening the ecosystem of companies, research institutions and other
• Context and sector attractivness in Saudi Arabia agents
Renewable Equipment is an attractive sector to develop in Saudi Arabia for three key The main challenges that the program will work on are:
reasons:
• Increasing transparency on long term renewable programs
1. Strong solar and wind energy potential leveraging which National Renewable • Developing available talent and dedicated training programs.
Energy Program is targeting • Developing local product development capabilities in the field
• Developing financing schemes already in place to support scale expansion
2. Sizeable regional market in MENA with ambitious national targets set by nearby • Developing export credit schemes
countries • Developing strong cooperation between universities and the market
3. Cost competitiveness in manufacturing certain components of renewable • Sector aspirations and strategy
equipment locally (e.g. 8% cost advantage vs imports from China for solar panels
manufacturing)
Renewable Equipment strategy aims, through the program, to significantly increase
the local value addition (i.e. GDP) from the cluster, while moving Saudi Arabia to
• Lower transport cost enjoyed by domestic manufacturers
leadership positioning in solar power and specifically hot weather technologies
• Existing or future value chains such as Glass, Aluminum and Plastics, many of
globally (e.g. investing in Heterojunction cells production in collaboration with
which will be developed further as part of the program
KAUST). To achieve this aspiration, the Renewable Equipment strategy focuses on 3
initiatives:
1. Renewable Energy Auction Optimization

2. Renewables Cluster Local Content
3. Renewables Industrial Champions Program
108 109
4.A.3 Pharma and Bio Strategy
• Executive Summary Company Size Products

KSA is well positioned to grow its Pharma and Bio-pharma sector to serve local and
• Antibiotics, analgesics, vitamins, anti-rheumatics and cough/cold
regional demand leveraging existing ecosystem and proximity to MENA markets. SPIMACO $ 340 M preparations, and OTC.
• Context and sector attractivness in Saudi Arabia • Wound Care, Women Care, Adult Primary Care, Pediatric Primary
Julphar $ 388 M Care, Cardiopulmonary Care, Gastro Care and Pain
Pharma and bio-pharma is an attractive sector to develop in Saudi Arabia for three
key reasons:
• Cardiovascular, anti-infectives, respiratory, muscular disorders, and
Tabuk $ 266 M OTC drugs
1. Local demand justifying production expansion
• ~SAR 30 bn annual Pharmaceuticals sales forecasted for KSA by 2021 (~25% of
MENA’s projected sales) with only ~20% currently met by local production (2016) • Cardiovascular, Derma, Gastrointestinal, Ophthalmology, general
Jamjom $ 201 M medicine, and dietary supplements (OTC)
2. Proximity to countries in MENA with free trade agreements with most • Anti-infectives, Cardiovascular and Diabetes, Central Nervous
3. Presence of existing ecosystem that enables pharmaceuticals manufacturing Hikma $ 192 M System, Gastro-intestinal, Oncology, Respiratory
such as:
Exhibit 4.13: Products manufactured by local manufacturers
• Recognized regulatory system aligned with best practices internationally
• Stable economy with easy access to finance However, the sector today faces many challenges ........ The challenges are some
• Existing manufacturing facilities for generics in KSA organizational problems, for example, non-commitment to long-term buying from
local manufacturers, delayed payment of dues to local manufacturers, as well as
lengthy registration procedures at the Food Authority And medicine
Empower local talents in the
pharmaceutical industry
110 111
Challenges faced by pharmaceutical manufacturers in the Kingdom

Production and Import 2016 (SAR Bn)
Organizational environment
25.5 12.2
Delayed disbursement by the authorities
20% 27%
4.0
0%
80%
Multiplicity of agencies entrusted with the task of localization 73% 2.2
of pharmaceutical industries 100% 12%
1.2
1% 0.5
88% 12% 0.5
99%
88% 100%
Extended registration procedures Total Market Oral Solids Biologics/ Strile Vaccines API Plazma
Biosimilar Injectables
)SI(
Imports Local Production

Organizational environment
Exhibit 4.15: Share of imports and local production in serving Saudi Arabia’s pharma and bio-pharma demand
Source: Quintiles IMS (Note: Doesn’t include Combo drugs/ bio)
Waste capacity
Limited research and development: R & D activities are fragmented between
universities and medical centers, as well as limited financial support
In addition to existing source of competitiveness, Saudi Arabia will need to build new
ones to meets its national security needs, of substituting imports in some critical
Limited knowledge segments to avoid potential shortages. To build new sources of competitiveness for
The need for talent and knowledge to diversify and move to more complex the cluster Saudi Arabia needs to:
products
• Grow existing manufacturing activities in Generics and APIs by securing local
Organizational environment market access and facilitating exports
• Secure local sales through volume commitments and off-take agreements
• Build trained talent pools (e.g. doctors, engineers, technicians etc.)
Regulations and policies • Gradually build R&D capabilities in Biologics through clinical trial facilities and
Local content requirements: Do not apply local content requirements to
government procurement providers
R&D fund
Unpredictability of procurement
Short purchase contracts (about one year), which leads to a lack of
expectation of the volume of demand and therefore limited investment
Figure 6.4: Operational challenges faced by companies specialized in the manufacture of pharmaceutical products in the Kingdom
112 113
• Sector aspirations and strategy 4.A.4 Medical supply strategy

Pharma and Bio-pharma strategy aims to drastically increase the local value addition
from the cluster, while transitioning into more complex products with the objective • Executive Summary
to become a leading manufacturer and innovator in MENA (exhibit 5 highlights how
the cluster will progress across categories). To achieve this aspiration, the pharma KSA is well positioned and has the potential to grow its medical supplies sector to
and bio-pharma strategy focuses on 5 initiatives:: serve local and regional demand leveraging existing ecosystem and proximity to
MENA markets.
1. Vaccine “Bio-Park”
2. Clinical trials & lab development (national command centre)
3. Genercics procurement & production support • Context and sector attractivness in Saudi Arabia
4. Pharma local content policy
5. Plasma fractionation PPP Medical supplies is an attractive sector to develop in Saudi Arabia for four key reasons:
1. Domestic market is large (i.e. ~SAR 9Bn) and growing (~12% p.a.), with significant
import substitution potential (98% of local demand is imported)
Each segment was analysed for attractiveness of manufacturing in KSA
leading to the following “where to play” decision: 2. Export potential to countries in MENA due to proximity and free trade agreements
3. Enabling value chains are well developed in Saudi Arabia –e.g. plastics – and can
provide a supporting ecosystem to develop medical supply industries
• Oral solids and Sterile injectable: Grow manufacturing and expand Generics
offering to become a regional supplier 4. There are established financial incentives offered by Ministry of Health to
enhance sector attractiveness to local and international players, which with some
refinement could induce greater investment in the sector
• API : Focus on APIs with high local consumption through JV or CMO targeting
MENA and EU markets in addition to the local market
• Vaccines: Include only for national security as business is not attractive. Hence,
start as a small scale focussing on niche vaccines needed in KSA & gradually
expand to MENA
• Other Biologics/ Bio similar : Exclude in the short to medium term. However
consider in the long run (2030+) with the aim of becoming an innovation hub
• Plasma: Build a national player through JV or CMO with international player to

preserve national security, targeting KSA & gradually toll manufacturing for
MENA
The application of international standards in the field of medical supplies

Exhibit 4.16: Roadmap for manufacturing pharma and bio-pharma in Saudi Arabia
114 115
Challenges faced by medical supplies manufacturers in KSA:
Financial problems
Company Products Equipmet Devices Consumables IVD
ALshifa Disposable medical Delayed payments

syringes
Damad (JV Disposable medical

with SPMACO, products
OFC2,halyard) Limited access to finance
Enayah (JV with Surgical gowns, accessories,
SPMACO,OFC2, sterilization warps
halyard Health)
jamjoom Hospital Disposable medical High costs

supply (JHS) supplies
Saudi Mais Co. for Disposable medical

Medical Products supplies Intense competition
SPIMACO1 Disposable medical
supplies,
pharmaceuticals. Low tariffs on imported supplies
Unimed Sutures, ligatures and

ophthalmic equipment
1. Saudi Pharmaceutical Industries & Medical Appliances Corporation 2. Olayan Financing Company
Competition with cheap low quality imports
Exhibit 4.18 – Products manufactured by local manufacturers
However, the sector faces basic operations challenges today, which has limited local
Regulations
manufacturers to consumables (exhibit 4.18 lists products currently manufactured
locally) These challenges include financial problems affecting the cash flow, intense
completion affecting margin and unsupportive regulations affecting growth
Lack of local content requirements
(exhibit 4.19 highlights operational challenges faced by manufacturers). Hence, the
medical supplies sector manages to only serve 2% of local demand, most of it in low
technology products such as disposables (exhibit 4.20 highlights share of imports).
Low preferential pricing
Short contracts
Exhibit 4.19: Operational challenges faced by medical supplies manufacturer in the kingdom
116 117
• Sector aspirations and strategy
Production and Import 2015 (SAR Bn) Medical supplies strategy aims to drastically increase the local value addition by the
cluster, while moving into more complex products with companies playing a role
in leading innovation in the MENA region (exhibit 5 highlights how the cluster will
progress to more complex products). To achieve this aspiration, the medical supplies
7.4 strategy focuses on five initiatives:
2% 2.6
3%
1. Clinical trials & lab development
1.7 2. Medical supplies local content policy
4% 3. Medical supplies standards enforcement
1.2
0% 97% 4. Raw material custom exemption portal
98%
0.5 0.6
0.4 0.4 0% 96%
0% 1% 3% 100%
0.4% 0.4% 97% 100%
Total Portable Dental Hospital orthopedics diagnostic consumables Capital

Market Aids /furniture & prosthetics imaging equipment
transport
aid Short-term (ST) Medium-term (MT) long-term (LT)
Top importing 2017- 2020 2020 -2015 2015+
source are the
US, Germany,
20% 6% 7% 24% 2% 15% 8%
Netherlands,
Belgium, and Expand current mfg. Contract mfg. complex Act as OEM owning
China
capabilities products brand & R&D
Local production Imports Imports CAGR (2011- 2015)
Exhibit 4.20: Share of imports and local production in serving Saudi Arabia’s medical supplies demand
Source: BMI Saudi Arabia Medical Devices Report Q2 2017 (Note: Doesn’t include IVD)
Consumables, hospital furniture , dental implants, simple capital equipment, and prosthetics.
Complex capital equipment (e.g. reneal dialysis machines)

In addition to existing source of competitiveness, Saudi Arabia will need to build new
ones to meets its national security agenda, of substituting imports in some critical
segments to avoid potential shortages. To build new sources of competitiveness for orthopedics
the cluster Saudi Arabia needs to:
Protable aids, IVD
• Leverage existing players and local-global collaboration to develop national
champions able to gain scale of economies
• Build skilled workforce through technical and vocational trainings high tech medical supplies
Saudi intellectual property
• Leverage its regulatory reputation to establish world class clinical testing facilities
Ramp-up of talent and R&D
Exhibit 4.21: Roadmap for manufacturing medical supplies in Saudi Arabia
118 119
4.A.5 Automotive strategy • Context and sector attractivness in Saudi Arabia
Automotive is an attractive sector to develop in KSA for four key reasons:

1. Automotive is a job intensive industry and has one of the highest employment
multipliers (exhibit 1 compares employment multipliers by sector)
KSA should develop its automotive sector to take advantage of significant local and
regional demand with no regional production capabilities. The program will develop
2. Developing the sector will create downstream pull for numerous other industries
ICE along with EV as it allows KSA to optimize short term gains while making
(e.g. metals, plastics, chemicals)
calculated bets on EV over the medium term. But, KSA shouldn’t go all in EVs since
there are multiple uncertainties with electrification and only produce to create an
3. There is a significant local and regional demand (KSA’s share is >50% amongst
ecosystem which includes local battery manufacturing. Developing this sector will
GCC), with KSA being the only country amongst top 20 (in terms of demand) to
create jobs while contributing to the GDP.
not have a local/regional production hub
4. Localizing the sector has a dual positive effect on the balance of payments:
reducing imports and increasing exports, specially to GCC
One of the truck assembly plants in the Kingdom
120 121
The program will also take into account the four key global trends that auto industry is
A. Automotive is a job intensive and industrializing industry… witnessing, specifically electrification (exhibit 33 provides more details of these trends).
However the future of mobility is plagued with uncertainties making it hard to predict:
1. No consensus on the future penetration of Electric vehicles in the market (exhibit
Employment multipliers by sector (linkage effects) 4 provides the various predictions)
2. No consensus on the winning EV technology in the future
5.14 • Automotive sector has one 3. Batteries, a core component of EV, are undergoing rapid disruptions with current
4.64
of the highest employment technologies at high risk of becoming obsolete in the future
2.86
multipliers 4. Multiple players are currently entering the mobility space, disrupting the
2.29 • Developing the sector will traditional OEM landscape, thus making it hard to predict which type of player
create downstream pull for will be the future winner
0.94
numerous other industries (e.g.
metals, plastics, chemicals) Yet there are some fundamentals in the sector which still apply and will continue to
Utilities Auto Metals Textiles Agriculture
apply in the foreseeable future
• In spite of these uncertainties, significant portion of components remain
C. But it does not have regional production footprint
unchanged leading to 50% similarity in value of BEV and ICE vehicle (see exhibit
35 for details)
KSA imports, 2015 (%) • Proliferation of the automotive industry heavily benefits from a strong regional
ecosystem
30% 9.6%
Services Motor vehicles
• Localizing the sector has a dual Automotive mega trends
positive effect on the balance
of payments Electrification Connectivity ~37%
1. Reducing imports ~20%-50% Customers would
2. Increasing exports, specially to market share for xEVs switch OEMs for a
GCC by 2030 better connected car
61%
Non-oil goods
Exhibit 4.23: Reasons for developing auto sector in KSA; Source: IHS Automotive (2016), NICDP
Autonomous
driving
Up to ~15% of new Shared mobility
vehicles sold by ~9% of new vehicles
2030 sold by 2030
Exhibit 4.24: Four key global trends in KSA; Source: McKinsey auto practice
122 123
Share of global new car sales ICE unique parts
• Internal combustion engine (ICE) • Exhaust system

(EU, US, CN), 2030
• Fuel system • Transmission
17
29 30 34 37 49 EV unique parts
• Electric Motors • Battery • Power Electronics
83 71 70 66 63 51
Global Strategy HIS Automotive IEA Shell Study Germany Base case Breakthrough
Analytics (progressive) case
Electric Cars Gas Cars
Exhibit 4.25: Various predictions for penetration of EV in auto sector by 2030
EV only Components shared by ICE ICE only

components and EV components:
~$12,800 ~$13,000 ~$2,500
% synergies in value ~50% of EV
Parts price
Exhibit 4.26: Synergies in value between ICE and EV; Source: Strategy Engineers (Jan 2016); J.P.Morgan
124 125
Since KSA is part of a region where there is no ecosystem currently and even locally
there is very limited supplier ecosystem, this will be a big challenge that KSA will need KSA is cost competitive in BEV manufacturing mainly due to localization
to overcome to develop its automotive sector. Additionally, there are other structural of batteries:
challenges which lead to KSA being higher in cost vs. imported cars (exhibit 36 lists
down these challenges)
Major hurdles to KSA’s cost competitiveness in auto • Battery manufacturing is capital intensive automated
industry and not labor intensive
• Opportunity to scale quickly if KSA stimulates sufficient

local demand and encourages exports to countries
Regional Labor Logistics Trade barriers
where partner OEMs are producing EV leveraging
ecosystem competitiveness Lack of an Amongst the lowest
Lack of a regional Higher labor efficient and car import tariffs in 1. Big gap in global supply of batteries, hence manufacturing
ecosystem within costs and lower effective logistics the world capacity needs to increase drastically
KSA productivity infrastructure
compared to other
nations
Exhibit 4.27: Challenges KSA faces in developing its auto sector and corresponding cost disadvantage; Source: NICDP
126 127
• Strategy and sector aspirations In addition to choosing which technology to develop, KSA’s automotive strategy will
rely on a set of key strategy choices incorporating the global trends and local context
Based on these realities, KSA has 3 paths to develop its automotive sector: (exhibit 4.30 provides details on what choice KSA should make along each dimension)
• Develop Internal Combustion Engine (ICE) vehicles only

• Develop both ICE and EV Technology
• Develop EV only
Focus on the mature ‫ﻣﻌﺎ إﻃﻼق‬

ً ‫ﺳﻴﺎرات اﻟﻮﻗﻮد واﻟﺴﻴﺎرات اﻟﻜﻬﺮﺑﺎﺋﻴﺔ‬ ‫إﻃﻼق‬
The strategy recommends KSA to choose option B as it allows KSA to optimize short Launch Launch Leapfrog to the next
and dominant ‫اﻟﻜﻬﺮﺑﺎﺋﻴﺔ‬ ‫ﺳﻴﺎرات‬
ICE Directly
‫ﺳﻴﺎرات اﻟﻮﻗﻮد‬
EV Directly
term gains while making calculated bets on EV over the medium term (exhibit 38 technology ‫ﻣﺒﺎﺷﺮة‬ ‫اﻟﻤﺒﺎﺷﺮة‬ generation
shows a detailed analysis on the various strategy choices KSA has))
Focus geographical markets

What do we need to believe to adopt an option…
EV technology evolution Local demand Risk return appetite ‫ﺞﻴﻠﺨﻟا لودو ﻲﻠﺤﻤﻟا ىﻮﺘﺴﻤﻟا ﻰﻠﻋ‬ Builds on
Builds on local ‫ﻲﻠﺤﻣ‬ ‫ﻤﻴﻠﻗا‬Regional
‫ﻲ‬
Local (import competitiveness to
demand as catalyst to ‫تادراﻮﻟا لاﺪﺒﺘﺳإ‬ ‫ﺮﻳﺪﺼﺘﻟا ﻰﻠﻋ ﺰﻴﻛﺮﺘﻟا‬
substitution) (export export to neighboring
ICE pure • Technology evolution too • Given KSA oil resources, ICE will • Aspiration/ need the industry
focused) markets
uncertain to make an remain most affordable over to create economic
informed bet long term for consumers impact with the
minimum level of
subsidies Focus product markets
ICE + EV • High uncertainty however • Local demand is ICE centered, • Willingness to make
regarding possibility to however gradual adoption of EV an additional targeted
hedge risk through creating in region, hence producing EVs bet on batteries, given Allows to “dilute” Luxury Common ‫اﻟﺸﺎﺋﻌﺔ‬ ‫اﻟﻄﺮازات اﻟﻤﺤﻠﻴﺔ‬
local models Build on local and
a battery innovation locally by leveraging synergies synergies with other impact of low cost ‫اﻟﺴﻴﺎرات‬ ‫ﺗﻘﺮﻳﺒﺎ‬
high and 24% ‫دوﻻر‬
ً range cars‫ اﻟﻒ‬٢٥ ‫ﺳﻴﺎرات ﺑﻨﻄﺎق‬ ‫اﻟﺴﻴﺎرات‬
Low end regional demand to
e co s y s t e m with ICE ecosystem is necessary sectors cars
competitiveness ‫اﻟﻌﺎدﻳﺔ‬ ‫اﻟﻔﺎﺧﺮة‬
cars leverage scale
EV pure • Uncertainties are small and • Local market would massively • Willingness to make a
current technologies will adopt EV in the near future large technology bet
win (~30% market share) due to to take advantage of Degree of localization
significant government support the mover advantage;
convinced of long
term competitive
advantage in exports Assembly and
Assembly only, Low High
٠٤٪ production, allowing
allowing to leverage ‫ﺗ‬Localization
‫ﺾﻔﺨﻨﻣ ﻦﻴﻃﻮ‬ ‫ﻊﻔﺗﺮﻣ ﻦﻴﻃﻮﺗ‬
Localization to create more local
the scale of import ‫(ﻣ‬C/SKD
‫ ﻞﻤﺘﻜ‬/ ‫ﺷ‬ ‫ﺔﺒ‬
)‫ﻞ‬
‫ﺤﻣ ﻊﻴﻤﺠﺗ‬2‫ﻲﻠ‬
‫(ﻜﻣ‬LCBU
‫) ﻞﻤﺘ‬
1
‫ﻤﺘﻜﻣ‬ value; 40% is required
Recomended option countries for parts
to export to Africa
Exhibit 4.29: Analysis of the 3 choices KSA has
Industry structure
Focuses on developing Allows to develop

only the competitive ‫قﻼﻃإ‬ ‫ﻲﻌﻨﺼﻣ ةدﺎﻴﻘﺑ‬ the full range of
components, targeting Supplier
‫ﻗﻮﻟا تارﺎﻴﺳ‬led
‫دﻮ‬ ‫ﻤﻟا‬OEM
‫ا تاﺪﻌ‬led
‫ﺔﻴﻠﺻﻷ‬ manufacturing in
exports to regional (Bottom-Up) )‫(ﺗ‬Top
‫ﻲﻟزﺎﻨ‬Down)
1
‫ةﺮﺷﺎﺒﻤﻟا‬ ( KSA, increasing the
assembly plants complexity of industry
Exhibit 4.30: Key strategic choices for KSA to develop its automotive sector; Source: NICDP Auto strategy
128 129
4.A.6 Oil and gas adjacency strategy
• Executive summary • The chemicals sector faces a number of challenges, including:

Chemical clusters encompass three main segments: (1) basic and intermediate • The Kingdom has yet to develop strong competitiveness in liquid feedstock,
chemicals e.g. bulk petrochemicals, bulk resins and organic intermediates, (2) as it diversifies its raw material feedstock mix and moves to heavier feed.
specialty chemicals e.g. oilfield chemicals, catalysts, adhesives and lubricants, Competitiveness in liquid feed is imperative for growth in a limited gas (ethane)
and (3) conversion products e.g. plastic and rubber products used in construction allocation scenario
material, packaging, wheels, etc. (Exhibit 1)
• Energy price reforms are expected to raise feedstock prices, affecting the
The Kingdom has established itself as a powerhouse in the global chemicals profitability of many players, thus moving from feedstock cost leadership to
sector with several Saudi players being recognized as global leaders in basic and landed cost leadership, including operational and logistics excellence coupled
intermediate petrochemicals (including Saudi Aramco and SABIC among others), with favorable trade agreements that will be the key challenge for the industry
while the country also hosts several sophisticated chemicals clusters that have going forward
distinguished themselves through competitive cost position, driven by the decrease
in raw material prices. The Saudi plastic sector experienced doubled annual growth • Local specialty chemicals market is very small, yet growth is expected to be
during the last decade, making KSA the second largest plastic conversion hub in fuelled by NIS and other Vision 2030 initiatives. To capture this growth, KSA needs
MENA. Simultaneously, specialties and rubber conversion remains a nascent sector to further develop new specialty chemicals manufacturing clusters, talents and
with strong growth potential. attract global players – all factors currently with significant gaps
As Saudi Arabia embarks on diversifying its economy beyond oil and gas and other
industries (in line with Vision 2030 objectives), the sector’s growth will become
even more critical, especially manufacturing and production chemicals (Specialty
chemicals and transformation sector) with low linkage to oil prices.
130 131
Chemical clusters encompass three main segments 1. Basic and intermediate chemicals
The basic chemicals sector has a strong starting point, where KSA is a global
Basic and intermediate competitor with a highly diverse portfolio of product offerings. Leveraging the sector’s
competitiveness from advantageous factor costs and easy access to financing has
helped the Kingdom achieve almost 8% of the global production of basic chemicals.
• Bulk petrochemicals • Bulk resins • Organic intermediates However, the sector faces a number of challenges including the limited sophistication
• Fertilizers • Commodity polymers • Engineered plastics
of domestic supply chain (~64% of goods and services as part of the supply chain
is imported, e.g. pumps and valves), and the need for further upskilling of Saudi
• Organic chemicals
professionals.
The program will focus on growing its basic chemicals industry for the following
Specialty chemicals three reasons:
• Demand for chemicals is growing globally, and in the long run, it will be the fastest
• High performance composites • HPP • Polymeric membranes growing oil-consuming sector, representing ~15% of total global oil demand by
• Precursors and PU • Synthetic rubber • Water soluble polymers
2040, and growing 3x faster than transportation – the second fastest growing
sector globally
• Coatings/adhesives: additives • Coatings/adhesives: resins and
• Antioxidants
pigments solvents
• Several industrial clusters being developed in the Kingdom that can leverage
the output from the basic chemicals cluster, enabling KSA to (1) capture higher
• Biocides • Commodity surfactants • Corrosion inhibitors
value-add from industrial cluster investments, and (2) ensure supply security, e.g.
• Flame retardants • Inorganic fillers • Lubricating oil additives carbon fibre for defense and automotive industries
• Plastic additives • Specialty surfactants • Adhesives and sealants • The sector is already a major economic pillar for KSA, as the Kingdom is already a
• Coatings • Concrete additives • Explosives and blasting agents
global powerhouse and can leverage its current position for quick socio-economic
growth in the sector; promoting the landed cost competitiveness across the main
• Industrial and inst. cleaners • Leather chemicals • Mining chemicals
export markets will maintain the basic chemicals and intermediates as a main
• Oil field chemicals • Paper chemicals • Printing inks KSA economic pillar
• Rubber-processing chemicals • Spec coatings • Synthetic dyes
• Synthetic lubricants • Textile chemicals • Water mgmt. chemicals
• Agro-chemicals • Cosmetic chemicals • Enzymes
• Feed additives • Flavors and fragrances • Food ingredients
• Advanced ceramic materials • Catalysts • Electronic chemicals
• Inorganic bulk pigments • Inorganic specialties • High performance fibers
• Rare earths • Pharmaceutical chemicals
Conversion and processed products
• Plastic converters • Rubber converters • PU converters

One of the chemical factories
Exhibit 4.32: Main product categories of the Chemicals clusters, source: NIS
132 133
2. Specialty chemicals • Growth of various industrial clusters generating more demand for plastic products
(e.g. automotive, home appliances, construction materials)
The specialty chemicals sector is currently served by multiple nascent local companies • KSA has already a well-established sector, with a number of plastic clusters
in addition to global players (exporters to KSA). The sector currently faces a number already developed given that the Kingdom is the largest conversion hub in MENA
of challenges, including a limited and fragmented local market, absence of strong and the largest in GCC
clusters requiring development of the sector, and lack of basic support industries. • There is a strong local initiative underway to develop rubber cluster enabled by
The development of the sector will require attraction of global players with global MEIM, Royal Commission for Jubail and Yanbu (RCJY), NICDP, SABIC, Exxon Mobil,
expertise. and Aramco. There are also several investments that aim at enabling upstream
operation integration
The program will focus on the specialty chemicals sector for the following reasons: • The sector has a high socio-economic impact allowing KSA to capture more value
from its current petro-chemicals industry and create more job opportunities
compared to basic and intermediate industries
• Significant potential to meet the demand growing at 3.6% per year, driven by
increasing local procurement from future and growing industrial clusters
• Basic and intermediate chemicals sector strategy
• Meeting demand on specialty chemicals from other NIS sectors allows KSA to
enhance its socio-economic investment advantages in other sectors The basic and intermediate chemicals strategy focuses on three main pillars:
• Significant socio-economic potential for KSA when compared to basic and • Increasing localization
intermediate chemicals • Improving operations and capabilities
• Growing the output and investment portfolio of basic and intermediate chemicals
3. Conversion and processed products (plastics and rubber) The first strategic pillar focuses on increasing the localization in the KSA basic and
intermediate chemicals supply chain to 70%. Significant local content opportunities
The plastics sector has a number of strengths including potential demand generated have been identified across material and services procurement. Some local players
from other industrial clusters. However, the sector is set to face some challenges, and entities are already pursuing localization initiatives, such as Saudi Aramco and
particularly in the cooperation between sector institutions, access to funding for SABIC concerning direct / indirect activity and service localization. Further cooperation
SMEs and government regulations. Current players still operate in the low-value between government and local entities is required to achieve the set aspiration.
added segment of the plastics industry; as such, the Kingdom still relies on imports
for high value-added products (e.g. certified pipes) The second strategic pillar focuses on the opportunities to improve operations,
capabilities and optimize feedstock allocation. The focus is on capability building
Concerning rubber products, Saudi production is still nascent, but there is a strong along three main dimensions – commercial, operational and technology excellence,
localization initiative that has greatly enabled exploration and production processes. to help KSA optimize existing value chain to maximize GDP.
This initiative must develop converters because of the limited rubber market (absence
of local auto sector and inadequate size of local market) and slow cement activities. The third strategic pillar focuses on further growing KSA’s basic and intermediate
Going forward, these markets will become more appealing as a result of the NIS and chemicals sector. With KSA’s feedstock becoming more reliant on liquids due to
other VRPs, which KSA can leverage to localize some rubber products. limited new ethane being allocated to the sector, new investments will have to rely
more on heavy liquids like Naphtha, or on oil using technologies like COTC. In order to
Strategic a shows the need to increase investments in conversion and processed pursue this, further capabilities need to be built in processing liquids in the Kingdom.
products for the following reasons:
A comprehensive selection process was followed to identify opportunities to grow
• Regional and local mega markets (as observed with the increasing imports of basic and intermediate chemicals; market screening and growth opportunities deep-
plastic products in the Middle East and KSA) dive analysis were conducted
134 135
The selected products were then filtered through three lenses – global export
A detailed analysis process was used to identify new chemicals expansion potential, KSA specific import substitution potential and the potential to
opportunities enable other industrial clusters:
1. Market screening covering 1. The current portfolio is already diversified and covers most relevant chemical
~140 opportunities opportunities, but three new relevant chemicals can be introduced: Polyacrylamide,
Acrylamide and carbon fibre …
• Scanned ~140 major
chemicals for new 2. Potential future growth opportunity (upon transformation of current excess
opportunities in global supply): Benzoic acid, Adipic acid, Acrylonitrile, Isoprene, and Isopropanol
exports and import
substitution and local value 3. Current production growth opportunities to satisfy local and regional needs:
chain integration • Growth opportunity for export of Nylon 6 resin
The result of the screening clearly shows that the sector will reach saturation in
product diversification opportunities. This is why future growth has to focus on
volume growth rather than product diversification.
Within similar products, KSA can plan to optimize value chains, focusing on volume
2. Deep-dive on potential new growth of products with higher socio-economic impact and differentiated grades to
opportunities achieve higher value-add.
• Deep-dive analysis Given the limited outlook on gas reserves, the program will develop capabilities across
conducted on new potential liquids (Naphtha, oil, and liquid gas) to enable future growth. Thus, competitiveness
opportunities covering key via significant projects such as COTC and Naphtha cracking will at least enable KSA to
growth market, risks, barriers maintain its market share globally.
to entry, etc…
Exhibit 4.34: Comprehensive basic and intermediate chemical opportunity identification process; Source: NIS
136 137
• Specialty chemicals strategy • Conversion and processed products (plastics and rubber)
The fourth strategic pillar focuses on developing the specialty chemicals sector in the The fifth strategic pillar focuses on further growing the conversion and processed
Kingdom while leveraging current players to diversify specialties and attract global products (plastics and rubber) capacity in Saudi Arabia, through a number of
players to the Kingdom. opportunities:
Products in the specialty chemicals segment were prioritized through three lenses: • Plastics:
main regional market, KSA specific import substitution and potential to enable other 1. Develop semi-finished export hub (films, sheets, and fibers)
industrial clusters. 2. Reinforce KSA as bulk and semi-finished packaging hub in ME and Africa
3. Localize plastic pipe imports to become leading regional exporter of plastic pipes
26 chemical groups were prioritized based on the assessment and the 3 above lenses, 4. Develop a local player for automotive plastic parts
and the final list of 18 priority chemical groups was set (Exhibit 4.35).
• Rubbers:
18 specialty chemical groups were determined for further study 1. Develop tire industry for local and regional markets
2. Develop mining and cement industry plates and conveyor belts, as well as other
• Construction chemicals • Paints and coatings • Oilfield chemicals sectors
3. Develop rubber hoses for automotive, industry, and others
• Industrial and inst. • Spec. coatings • Catalysts
cleaners
The priority sectors for utilization of conversion and processed products (plastics
• Synthetic lubricants • Surfactants • Lubricating oil additives and rubber) have been identified through four lenses: high regional market
demand, linkage to future industrial clusters, global trade prospects and sustainable
• Adhesives and sealants • Corrosion inhibitors • Plastic additives
development opportunities.
• Water mgmt. chemicals • Mining chemicals • Food ingredients
and polymers
• Flame retardants • Rubber-processing • Pharmaceuticals

chemicals
Exhibit 4.35: Specialty chemical groups identified for further growth; Source: NIS
138 139
4.A.7 Food processing strategy
• Executive summary
The global food and beverage market is growing both globally and locally. This
growth will allow Saudi Arabia to grow its food processing activities in the segments
where competitive advantages exist, as well as tackle certain challenges currently
faced by food processors. A focus on date, dairy, seafood, in addition to positioning
Saudi Arabia as a Halal meat hub, is an essential part of the strategy. Providing
food processors with the adequate support and growing the key sectors, while
maintaining the existing established sectors.
• Context and sector attractivness in Saudi Arabia
The global food and beverage market is expected to grow due to rising populations
and income, despite a decline in the past. Exhibit 4.49 shows the historical and
projected growth of the global sector. Saudi Arabia’s share of this is global sector is
153Bn SAR, with meat and poultry being the largest food sector. Exhibit 50 shows the
breakdown by segment of Saudi Arabia’s food and beverage market.
A farm field in Taif
140 141
Global F&B market SAR Bn Saudi Arabia’s 153 Bn SAR food and beveragr market is substantial with meat/poultry
being the largest food sector
CAGR 17 - 21 Size KSA1, SAR Bn 2015 Description Examples
• Manufacture of dairy
Dairy 17.7 products as milk, cheese, Milk Cheese
6.7% 3.2% 3.8% 4.4% 4,1% 5.0% butter, etc
• Preserving of fruit, nuts,
vegetables (e.g. freezing,
Frutis, nuts, 31.3
canning, drying )i
• Processing of fruit/ Fruits Dates
CAGR 13 - 16 vegetables vegetable/nuts into food
products ( e.g. jams, juices,
etc)i
• Manfacture of straches from
0.0% -5.2% -3,9% -2.9% -3.6% -3.4% rice, potatoes etc
Confectionery, • Grain and rice miling (e.g.
strach product, 33.2 production of flour, rice, Bread Chocolate
wheat, etc )
coffee • Manfacture of bakery
products, cocoa, sugar
Decline mainly driven by market saturation in Growth driven by rising populations and increasing confectionery
Western Europe and North America disposable income of emerging middle class
• Manfacture and processing
of prepared meat and poultry
dishes
45.1 • Opreation of
Meat, poultry salughterhouses and packing Meat
+5% Poultry
-3% p.a. of meat (beef or poultry)
p.a. 7,946 • Production of meat products
7,571 (e.g. sausages, etc)
7,005 6,990 7,193
6,356 6,859
6,364 6,356 2,149 • Preparation, preservation, Cooked
2,036 Seafood 9.9 and production of fish, Caviar
1,868 1,879 1,830 1,928 crustaceans and mollusks fish
1,703 1,684 1,744 604 630
578 566 551 574 • Manufacture of nonalcoholic
518 518 529
beverages and mineral Mineral
Beverages 9.8 Soft drink
water (excluding fruit and water
3,585 3,758 vegerable juices)
3,308 3,304 3,120 3.259 3,413
3,019 3,026
• Manufacture of crude
Animal and and refined oils and fats Sunflower
623 623 559 551 566 589 611 641 668 6.0 from vegetable or animal Olive oil
338 323 281 285 293 300 311 326 338 vegetable oils materials ( e.g. soya bean oil, oil
293 296 285 293 311 330 356 379 405 sun flower oil, olive oil, etc)
2013 14 15 16 2017F 2018F 2019F 2020F 2021F Total 153.0
Source: i1 BM 2015, 2. Source: Euromonitor 2015 data was used as the closest proxy in lieu of BMI as BMI reports are mot available fort the global market; not all data
Dairy Confectionery, strach product, Seafood were available on Euromonitor as the market segmentation is according to NIS market defintion
coffee Exhibit 4.40: Saudi Arabia›s food and beverages market breakdown by segment, Source: Euromonitor, BMI
Meat and poultry Fruits, nuts and vegetables Animal and Vegetable oils
Saudi Arabia’s overall food market is expected to grow across all segments in the coming
1. Food and beverage: Note: market size value for beverages is not available in value (only available in volume on
i
5 years. Although the segment is growing, imports are a significant amount of the
Euromonitor). Source: Euromonitor
consumption, whereas import re-export activities are somewhat limited. The largest
Exhibit 4.39: Global food and beverages market. Source: Euromonitor share of imports are meat and poultry, dairy, fruits, and confectionary products. Exhibit 51
shows the expected growth of Saudi Arabia’s food and beverages market, and Exhibit 52
shows Saudi Arabia’s local production, import, and export breakdown by food segment.
142 143
2017- 2030 composite annual growth rate 120,1

3,8 1,0 0,4 4,2 153,0
8,8 2,8 0,9 6,0
CAGR 17- 21 14,6 9,9
9,6 -10,9
17,7
24,3 9,8
%6 %9 %7 %7 %6 %6 %6
24,8 31,3
34,1 33,2
CAGR 13- 16
43,8 3,0
1,4 7,2
7,9 45,1
11,2
%5 %11 %8 %8 %7 %8 %7 12,0
Local production Imports Exports Saudi market size
%6+
p.a. Dairy Animal and Vegetable oils Seafood Confectionery,
%8+ strach product,
220.250 Meat and poultry Fruits, nuts and vegetables Beverages
p.a. 207.862 coffee
159.638 24.347
183.781 23.090
171.945 21.838 Exhibit 4.42 - Saudi Arabia›s food and beverages market broken down by segment, Source: BMI, UN Comtrade
165.838 20.616 43.328
153.025 19.374 41.013
143.580 19.374 38.726
133.243 17.720 36.483
10.608 34.318
10.188 34.318 43.335 45.730
31.268 41.000
29.687 38.705
26.525 36.379
33.213
36.379 Food processing players in Saudi Arabia face some challenges, especially related to
30.687
28.525 61.049 64.904 resources and regulations.
49.934 53.599 57.256
41.955 45.127 49.934
37.951
120.611 13.448 14.299
8.351 8.542 9.934
10.994
14.139
10.994
14.139
11.803
15.121 16.096 17.100 19.114 Demand conditions • Minimal trade agreements to boost food export
11.810 9 9.783
4.798 5.953 5.981 6.488 6.807 7.454 8.112 8.807 9527
Factor conditions • Scarce arable land and water deficiency
2013 14 15 16 2017F 2018F 2019F 2020F 2021F
• Government subsidy cuts increase cost
• Quality/volume of local raw meat not sufficient
Dairy confectionary starch Seafood Beverages
Meat and Poultry Fruits, Nuts, Vegetables Animals and Vegetable oils Infrastructure and • Shortage in cold chain
Exhibit 4.41: Saudi Arabia›s projected food and beverages market, Source: BMI, UN Comtrade
connectivity
Government • Low border protection from competing product

& Regulatory
Environment
Supporting & Related • Weak agricultural industry which is a key input for
Industries food processing
144 145
• Sector aspirations and strategy Competitive assessment (analysis of relevant factors)

• State of the art technology, based on years of experience in
Research and
the sector
innovation
• Dairy • Advanced manufacturing platforms
• Expertise in efficiency and manufacturing, developed over
Dairy is one Saudi Arabia’s established manufacturing platforms. Saudi Arabia’s Labor productivity years, improving productivity
expertise in efficiency and manufacturing, coupled with developed distribution • Vertical integration improving efficiency
networks and state of the art technology, provides a significantly strong competitive • Developed distribution (cold chains focused) network in KSA
advantage. Accordingly, building on these current advantages and mitigating against Logistics and regionally
energy reforms is essential to grow the local and regional market share. • Logistics as a high regional barrier of entry
• Water and energy intensive
Energy • Disadvantage as a result of water scarcity + expectation of
cost increase in light of reforms
Trends
• More health-conscious Saudi consumers
A Dairy Factory • Increased consumption of fresh milk with the increase of population size
Target products
• Continue production in current portfolio • New product focus: Healthy dairy products
(milk, cream, buttermilk, cheese, etc.) (i.e. lactose-free milk)
Target markets
• Primary focus: Local market • Secondary focus: Regional/ GCC market
specifically for milk and cream
Segment activation strategy
Laissez faire approach while building enabling ecosystem:
• Adopt a ‘laissez faire’ approach as sector is significantly developed
• Focus on healthy dairy to cater to customer healthy tastes (e.g. lactose-free milk)
• Build an enabling infrastructure/ ecosystem to help sector grow
• Support sector investment in renewable energy to offset energy reforms
• Support energy efficiency/ operational improvement as part of broad energy support program
Exhibit 4.43: Dairy segment analysis and relevant recommendations
146 147
• Fruits, nuts, and vegetables Competitive assessment (analysis of relevant factors)

Market (domestic and • Dominant Saudi players in MENA region
Saudi Arabia’s fruits, nuts, and vegetables production is well-established with major export) • Lack of foreign trust in KSA products due to improper labelling
regional players. Even with certain competitive challenges related to logistics and and packaging
natural resources, Saudi Arabia’s dates can allow the sector to develop, especially • Large demand from locals, Hajj tourists, and from other
Islamic countries especially during month of Ramadan
by focusing on higher value-add date products while improving labelling and
Labour productivity • Lack of technical know-how and capital to invest in advanced
packaging standards to counter foreign distrust. In addition, low-value high-volume machinery for date processing to increase productivity and
date product exports can be developed in Islamic countries in Asia, Sub-saharan efficiency
Africa, and MENA. Natural resources • Soil suitable for growth of exclusive dates
• Limited fruit/veg. types can be grown in KSA
Trends
• Increasing demand for high-end premium dates especially in Europe.
Target products
• Higher value-add date products (e.g. • Premium high-end date products
date paste)
• Low-value high-volume date • Fruit juice
products
Target markets
• High-end date products: Europe • Low-value date products: Islamic countries in Asia,
Sub-Saharan Africa, and MENA
Adding more value and improving perception of Saudi products abroad:
• Improve product-labelling and packaging to counter foreign distrust
• Focus on producing higher value-add date products (e.g. date paste)
• Focus on producing low-value high-volume date products
• Grow branding and distribution efforts of fruit juice to expand exports
• Increase availability of capital for advanced machinery
• Improve custom-handling process to reduce delays and damaged goods
Exhibit 4.44: Fruits, nuts, and vegetables segment analysis and relevant recommendations
148 149
• Confectionary, starch products, and coffee

Competitive assessment (analysis of relevant factors)
Saudi Arabia imports a significant amount of confectionary, partially due to large • Heavy reliance on imports of raw material which threatens
local demand especially for chocolate. The segment has large demand across the Natural resources food security, increases costs, and exposes KSA to price
fluctuations
region, and with Saudi Arabia’s relatively cheap labour costs, there is potential for
an expansion of exports and products. Partnering with major exporters to secure Labour cost • Relatively cheap labour costs
raw materials at competitive prices, and expanding the production of chocolate and
Market (domestic & • Export potential due to substantial demand in neighbouring
biscuits can allow Saudi Arabia to increase exports in Asian markets.
export) countries and globally
Trends
• Emphasis on value-led growth via «premiumisation» of confectionary products (e.g. high-end
chocolate)
• Manufacturers turning to «snacking» via miniaturization (e.g. portable yoghurt pots as snacks)
or through new products to satisfy consumers› desire for healthy and convenient products
Target products
• Biscuits
• Chocolates
Target markets
• Local • MENA • Asia

• Securing raw materials while expanding products and export markets:
• Partner with major exporters to secure raw material at competitive prices
• Expand production of biscuits & chocolates
• Focus on «miniature» confectionary convenient for snacking & introduce healthy products
(e.g. sugar-free products)
• Expand export markets to Asia
Exhibit 4.45: Confectionary, starch products, and coffee segment analysis and relevant recommendations
Cultivation of Coffee
150 151
• Meat and poultry

Poultry production is well-established in Saudi Arabia, with strong existing • Leading brands in KSA meat sector include Doux (15.5% of
Market (domestic &
processing abilities. An increase in global demand for Halal products provides an market value in 2016), Watania (3.9%) and Fakieh (3.3%)
export)
opportunity for Saudi Arabia to grow as an exporting hub. Although there are certain
challenges, such as climactic conditions not being suitable for raising livestock or • Heavy reliance on imports of raw material which threatens
food security, increases costs, and exposes KSA to price
growing feeds, the sector can continue to grow through investments in advanced
Natural resources fluctuations
processing machinery and cold chains. Additionally, the promotion of Halal meat is • Climactic conditions not suitable for raising livestock or
required through strong branding and trade agreement activities. growing feeds
• Strong processing activities
Logistics
• Shortage in abattoirs and cold chains
Trends
• Increased global demand for Halal products
Poultry Farm
Target products
• Halal meat • Processed meal segments
Target markets
• Local • MENA

• Expand Saudi-made Halal meat brand while investing in processing:
• Invest in advanced processing machinery and cold chains
• Promote Saudi-made Halal meat to both Islamic and non-Islamic countries through branding
and trade agreements
• Grow processed meal segments
Exhibit 4.46: Meat and poultry segment analysis and relevant recommendations
152 153
• Seafood
Saudi Arabia’s planned investments in aquaculture provide a significant opportunity • MEWA announced an investment of 30 Bn SAR to be made in
Capital
to expand Saudi exports to new markets by investing in fishing and fish processing aquaculture sector over next 15 years
activities including the formation of fishing clusters. The Red Sea and Arabian Gulf Natural resources
• Red Sea and Arabian Gulf are rich in fish, creating potential for
are rich in fish, and there are additional research and development efforts being further industry growth
undertaken by Ministry of Environment Water and Agriculture. In addition, focusing Research &
• SAGIA and KACST investing in aquaculture R&D
on convenience seafood products, such as frozen seafood, can help Saudi Arabia innovation
grow exports by addressing recent consumer trends. • Shortage in cold chains and seafood requires unique handling
requirements
• Medium processing activities available (preserving, packaging
Logistics
etc.)
• Jazan Economic City currently being equipped with fish
processing infra and units
Trends
• Increase in demand for convenience seafood products (e.g. frozen seafood)
Target products
• Seafood products • Convenience seafood products (e.g. frozen seafood)
Target markets
• Local • Europe • Americas

• Expand exports through investments in fishing and fish processing activities:
• Capitalize on existing aquaculture & develop fishing & fish processing activities by forming
fishing clusters
• Expand export markets
Exhibit 4.47: Seafood segment analysis and relevant recommendations
154 155
• Beverages
Saudi Arabia’s beverages segment is mostly met through local production. The Market (domestic and • Influx of pilgrims increases demand for beverages especially
segment should be preserved, and product offerings should adapt to rising health export) as Ramadan falls during hot seasons
consciousness. Examples of such product offerings include sparkling water and
• KSA increased tax on soft drinks which may negatively impact
sugar-free soft drinks. Additionally, it is crucial to improve product packaging and Taxes
sales of soft drinks
labelling of drinks.
Trends
• Rising health consciousness benefits categories like bottled water and sugar-free drinks
Target products
• Healthy drinks (e.g. sparkling water, sugar- • Premium drinks (e.g. glass-bottled water)
free soft drinks, etc.)
Target markets
• Local • Regional

• Maintain manufacturing activities while focusing on healthier drinks:
• Preserve current manufacturing activities
• Focus on healthy drinks (e.g. sparkling water and sugar-free soft drinks)
• Improve packaging and labelling of drinks to make them more sophisticated (e.g. glass
packaging for premium water bottles instead of plastic)
Exhibit 4.48: Beverages segment analysis and relevant recommendations
Bottling of drinking water
156 157
• Animal and vegetable oils

Animal and vegetable oils manufacturing activities in the Kingdom should be Natural • oil is being imported and then refined due to lack of
preserved. Due to lack of agriculture activities, unrefined and refined oil are still resouces agricultural capacity.
imported. KSA is exposed to price risk due to volatility of import price and supply
• heavy reliance on imports exposing KSA to price risk (due 10
risk. Market
volatilty of import prices) and supply risk (relating to import
(domestic and expert)
disruption)
Trends
• Consumers showing perfrence for healthier types of oil, such as olive oil, thereby reducing
usage of products considered unhealthy, such as vegetable and seed oil.
Target products
• Vegetable oils • Animals oils
Target markets
• Local

• Preserve current manufacturing activities
Exhibit 4.49 - Animal and vegetable oils segment analysis and relevant recommendations
An Olive tree in Al Jouf Area
158 159
Activation Plan 4.B. Strategic Considerations

To activate the food processing sector in Saudi Arabia, cluster competitiveness
should be enhanced through investing in enablers to improve competitiveness and The NIDLP strategies and design have been set based on several strategic
drive new areas of growth. To do this, the Kingdom must: considerations within the program scope. Some of them are general considerations
taken within the program and others are related to each program component, as in
• Increase awareness for industrial standards, e.g. food quality standards the case of the promising industry sector below.
• Improve the industrial standards enforcement mechanisms
• Build food parks to connect farmers, processors, packagers, and retailers together Subject Description Decision and implications:
• Develop cold chain logistics through enabling the private sector
• Establish specialized industrial clusters (offering food technology testing Industry
services)
• Enact strategic trade partnerships policies Medical supplies • Choosing short term-focused products • Less complex products were prioritized in
instead of long term took into the strategy to focus on the short term (e.g.:
• Launch media campaign to encourage people to buy Saudi food products consideration Saudi manufacturer consumer goods and hospital furniture);
• Expand food processing training centers to ensure graduates are getting current capacities and readiness focus on more complex products for
sufficient technical and hands-on experience in manufacturing medium and long term (e.g.: orthopedics
and high tech medical supplies)
This will allow Saudi Arabia to: Pharmaceuticals • Selection of products and segments • Several segments were prioritized for
took into consideration national national security reasons, including plasma
security aspects and required and vaccines
• Establish a regional food hub through an increase in competitiveness of clusters capability assessment
to boost exports
• Become a global leader in competitive food segments and put Saudi Arabia on Renewables • Renewables strategy relied on • Focus on manufacturing cell modules-strips
the global map for key food segments such as Halal meat and poultry, seafood, local and regional plans to develop and wind tower components
capacities and leverage local content
dates, and dairy policies
Automotives • The sector considered several strategic • Automotive strategic decisions were taken
options when designing auto sector after deep-dive analysis (detailed in section
strategy, including: 4A. Automotive strategy in Automotive
• Technology selection: ICE vs. EV Strategy appendix). In summary:
• Target market: local vs. regional • Technology selection: dual strategy focusing
• Target products: High quality on ICEs and EVs
luxury vehicles to reduce cost • Target market: regional market focusing
competitiveness vs. small passenger on leveraging strong ties with neighboring
vehicles countries
• Cluster development: Supplier driven • Target product identification: Light vehicles
growth focusing primarily on system (within $20K) according to local demand
development vs. OEM-driven growth • Cluster development: OEM- driven approach
focusing primarily on attracting OEMs due to small supplier system
160 161
Promising Industries Location Selection

We evaluated cluster / location convenience based on…
The current Saudi industrial ecosystem is mainly centered (>80% of plants) in 3
regions: Al Riyadh, Mecca, and Eastern Region. As a result, several implications Proximity to markets
affected socio-economic development in other KSA regions, where disparities show
across many social metrics.
Required Proximity to
Through NIDLP and other VRPs, Vision 2030 encompasses great aspirations to address natural
technical skill
these gaps and develop several KSA regions to benefit KSA as a whole. NIDLP program resources
aims to create a number of opportunities that promote regional development and feedstock
through higher regional contribution to the GDP and private sector jobs creation. To
enable the regions to harness the program without risking Saudi competitiveness in
target industries, 3 major principles should be taken into consideration and balanced: Required
labor
1) Attracting different industrial investments to KSA, while taking into consideration force size
Assessment and Proximity
to common
undeveloped promising industries that require specific conditions. We assessed prioritization lenses
infrastructure
industrial convenience to regions through 9 lenses to assess and prioritize each for each potential
potential location. The 9 lenses as detailed in the following page are: 1-Proximity location
to industrial natural resources. 2-Common industrial infrastructure availability and
leveraging integrated food baskets. 3-Proximity to industrial suppliers. 4-Proximity Proximity
to industrial seaports, especially in import/export based industries. 5-Proximity to Cluster to suppliers
industrial end market. 6-Required technical talent level. 7-Required labor availability. sustainability
8-Location vital assets per industry. 9-Market structure for industry, as approach could
differ when addressing fragmented industries vs. concentrated industries across few Cluster
companies industrial  Proximity
structure to seaports
2) Satisfying social needs across regions, such as employment rates and family
income, in particular the new labor to be added to the Saudi workforce by 2030
3 ) Harnessing internal resources and capacities of the regions (e.g.: natural resources, NIDLP also set the following initiatives to promote harmonized industrial development
skilled labor, etc.), as the program will leverage the individual inherent value of each across different KSA regions:
region; for example, Northern regions are ~500km away from the coastline which
has abundant sea resources, whereas Western regions are close to Africa and have • Develop regional economic development strategy to detail each region’s
access to Europe via Suez Canal and Southern regions have a lot of minerals. advantages and align available opportunities
• Design regional development industrial zones to provide catalytic advantages vs.
other industrial zones
• Provide preferential measures in government procurement operations across
priority regions, as well as a regional investment strategy
• Develop regional investment strategy that would include (1) region-specific funds
and (2) partnerships with international companies in less competitive regions
162 163
The program includes

more than 300 initiatives
implemented by more
than 30 government
entities
5. Existing Initiatives
An aerial view of a factory in Al Jubail Industrial City
164 165
5.A. Initiatives Portfolio
5.A.1 Machinery & Equipment initiatives 5.A.3 Pharma initiatives
Strategic Initiative Initiative Name Leading Entity Strategic Initiative Initiative Name Leading Entity
Pillar/ Number Pillar/ Number
Cluster Cluster
Machinery & I-01-10-001 The local content policy for machinery • Local Content and Private Pharma/Bio- I-04-26-001 Support the procurement and • Ministry of Health
equipment and equipment clusters Sector Development Unit Pharma production of generic drugs
(Namaa)
Pharma/Bio- I-04-16-002 PPP in plasma separation • Public Investment Fund
Machinery & I-01-14-002 Cooperation in the procurement • National Industrial Clusters Pharma
equipment of machinery and equipment Development Program
manufacturers Pharma/Bio- I-04-37-003 Clinical trials and laboratories • National Guard Health Affairs
Pharma development (National Command
Machinery & I-01-01-003 The project of establishing and • National Industrial Clusters Center)
equipment acquiring 3D printing technology Development Program
Pharma/Bio- I-04-10-004 Local content policy for the • Local Content and Private
Machinery & I-01-01-004 The main project of future battery • Ministry of Energy, Industry and Pharma pharmaceutical industry Sector Development Unit
equipment technologies Mineral Resources (Namaa)
Pharma/Bio- I-04-14-005 Biopharmaceutical cluster • National Industrial Clusters

Pharma Development Program
5.A.2 Renewables initiatives
Strategic Initiative Initiative Name Leading Entity 5.A.4 Medical Supplies initiatives
Pillar/ Number
Cluster Strategic Initiative Initiative Name Leading Entity
Pillar/ Number
Renewable I-03-14-001 The local content policy for renewable • National Industrial Clusters
Cluster
energy energy industry clusters Development Program
equipment
Medical I-05-25-001 Apply the standards of medical • Saudi Food and Drug Authority
Supplies devices and supplies
Renewable I-03-27-002 Improve the auction terms of • Ministry of Energy, Industry and
energy renewable energy Mineral Resources
supplies Medical I-05-01-002 Exempt raw materials from tariffs on • MEIM - Industrial Affairs
Supplies the electronic customs exemption Agency
system
Renewable I-03-24-003 Develop leading national companies • National Industrial Clusters
energy in renewable energy industries Development Program
supplies Medical I-05-44-003 Develop the laboratories and clinical • Saudi Health Council
Supplies trials centers
Medical I-05-10-004 Local content policy for the sector • Local Content and Private
Supplies medical equipment and supplies Sector Development Unit
(Namaa)
166 167
5.A.5 Automotive initiatives 5.A.7 Food processing initiatives
Cluster Cluster
Automotive I-06-14-001 Automative Development Program • National Industrial Clusters Pharma/Bio- I-09-13-001 Clusters and cities of the food • Saudi Authority for Industrial
(ADP) Development Program Pharma industry Cities and Technology Zones
(Modon)
5.C. Selecting Game-Changers

5.A.6 Oil and gas initiatives
5.C.1 Machinery & Equipment initiative
Strategic Initiative Initiative Name Leading Entity
Pillar/ Number Strategic Initiative Initiative Name Leading Entity
Cluster Pillar/ Number
Cluster
Chemicals I-08-14-001 The Local Content Program for • National Industrial Clusters
Chemicals Development Program Machinery & I-01-01-004 The main project of future battery • Ministry of Energy, Industry and
equipment technologies Mineral Resources
Chemicals I-08-14-002 Optimal allocation of raw materials • MEIM - Industrial Affairs
Agency
Chemicals I-08-14-003 Program of the National Liquid Oil • National Industrial Clusters 5.C.2 Renewables initiative
Strategy and Investment Program Development Program
Chemicals I-08-17-004 The specialty chemicals infrastructure • Royal Commission for Jubail &
Pillar/ Number
(Industrial Zones) Yanbu
Cluster
Chemicals I-08-17-005 Develop the infrastructure of basic • Royal Commission for Jubail &
Renewable I-03-24-003 Develop leading national companies • National Industrial Clusters
and medium chemical industries Yanbu
energy in renewable energy industries Development Program
clusters
supplies
Chemicals I-08-14-006 The cooperative association of • National Industrial Clusters

the companies working in plastic Development Program
industries 5.C.3 Automotives initiative

Pillar/ Number
Cluster
Automotive I-06-14-001 Automative Development Program • National Industrial Clusters

(ADP) Development Program
168 169
SECTION 2-2:
AQUACULTURE
170 171
2.A. Our Ambitions by 2030
NIDLP seeks to transform the Kingdom of Saudi Arabia into a leading industrial
powerhouse and a global logistics hub in promising growth sectors (with focus on
Industry 4.0), which would generate job opportunities for Saudis, and enhance the
trade balance and maximize local content, including:
Development of the aquaculture sector to be set for the global competition through
utilizing the natural resources with high quality production, increasing its contribution
in GDP to more than 7 times and replacing imports with the local production.
2.B. Our Commitment by 2020:
NIDLP aims to increase all its sectors’ contributions to GDP.

The aquaculture field’s ambitions would be reflected in doubling the investments
and raising the Saudization rate in the sector.
The Red Sea
172 173
Expansion of supply chains

in chemical sectors
Current Situation
(Aquaculture - NIDLP)
The Red Sea
174 175
3.A. Aquaculture key challenges Drivers of higher cost
3.A.1 Aquaculture key challenges

Aquaculture currently faces many challenges, leading to limited private sector 1.Lower feed efficiency
investment with only 1 major player currently (exhibit 1.7 lists sector challenges).
These challenges, coupled with low feed efficiency and a focus on quality, have made
Saudi products ~3x more expensive compared to imports, thus reducing its cost
competitiveness.
Furthermore, the low proliferation rate in the local market is the result of the private 2. More focus on producing high quality ,
sector’s limited participation due to this sector’s several challenges.
Major hurdles for private sector

3.Structural challenges in KSA
Lack of infrastuructures Industry still in its infancy

high capital requirement, hence there is limited local
Exhibit 3.2: Production cost benchmarking across comparable species of KSA vs. countries with highest imports
due to lack of infrastructure knowledge and capabilities Source: CARE Egypt Report, Egypt World Fish center, USAID, FAO, GSTAT, Central Statistics Office of Myanmar
( hatcheries,fish feed mill due to lack of scientific
,etc) outputs specialized in this
sector.
Long licensing lead-time Price driven market

~years on average, local market relies on price,
hampers ability of hence local demand mainly
investors to act fast on for low priced low quality
opportunities imports
The Coral reef in the Red Sea
176 177
3.B.A Aquaculture KSA Aquaculture exports for KSA Aquaculture production

2015,% 2015,%
The Kingdom has been largely seeking to improve the quality of its produce,
developing a biosecurity program in line with international standards. With that, KSA
is aiming to be the first country to earn a nationwide Best Aquaculture Practices (BAP)
certificate. However, with the local market being price-driven rather than quality- 15% 25%
driven, the Kingdom has not been able to capture significant market share locally. As
such, the aquaculture sector’s local share is as low as 4%, while 75% of the production
is exported to quality-driven markets (GCC, East Asia, Europe and USA)
Nevertheless, current efforts are being dedicated to enhance the Kingdom’s share in
the local market:
1. Increasing quality requirements on imports to meet local production standards 8% 58% 75%
will help tackle Saudi market dumping by low-cost producers. KSA has indeed
halted Egyptian imports after their local market share reached 10% in 2016
Total KSA exports: ~30K tons Total KSA production: ~40k tons
2. Finalizing the selection of fish species for aquaculture to minimize production
costs while maintaining high-quality GCC East and SE Asia Export Local consumption
Europe and US
3. Developing a marketing campaign to promote seafood consumption for its health
and national benefits and create brand value for locally produced seafood
Supply source for local seafood consumption for 2015,%
Myanmar Egypt
India 8% 10%
3% Veitnam
14%
GCC
7%
others
30%
Total KSA consumption:~282k tons
Saudi Aquaculture Saudi capture

Fish Farm in the Red Sea
Exhibit 3.3: Challenges for private sector investment and current top producing companies in KSA; Source: MEWA
178 179
We seek to introduce the

Industry 4.0 techniques in
the fisheries sector
4. Strategy
(NIDLP-Aquaculture)

(This is a summarized version, please refer to appendix for a detailed version of the strategy)
180 181
4.A Strategy Pillars • Sector aspirations and strategy

To achieve this aspiration, the aquaculture strategy focuses on four strategic thrusts:
• Executive Summary • Increase feed efficiency and productivity through leveraging the latest
technological advancements in the field (which promise a massive reduction in
KSA is well positioned to grow its aquaculture sector and compete on a global scale, costs).
leveraging its natural endowment and high quality production.
• Focus on six prioritized species, in which the country can capture a competitive
edge (lower feed requirement, suitable for environment, high demand locally).
• Context and sector attractivness in Saudi Arabia • Educate the local market on the superior quality and health benefits of KSA’s
produce compared to imports from low cost countries.
There are 4 reasons that support the aquaculture sector in the Kingdom to be one of
the most attractive sectors: • Follow three farming models: inland fish circulation farming, coastal shrimp
farming, and, marine finfish cage farming.
1. The aquaculture sector is one of the fastest growing food sectors with 6%
annually.
• Activation plan
2. The sector has a large opportunity for the growth as result of the individual’s low
share in having fishes. The activation of the aquaculture strategy relies on five key initiatives (detailed in
section 8.1 – Initiatives)
3. The Kingdom has rich natural resources along with the costal line with 2,600 km
and capacity with 5 tons of fishes. 1. Create anti-dumping measures and build barriers against low quality cheap
imports.
4. The Kingdom is well globally known in having a high quality in line with
international standards for vital security, The Kingdom seeks to support all 2. Boost private sector investments to grow the aquaculture sector through: a)
companies working in this sectors to have certificate of the best aquaculture attracting large foreign players; b) creating local champions, and c) encouraging
practice (BAP). SMEs to create coopetition.
3. Increase R&D investments across the value chain to leverage technological

advancements for improving productivity and reducing costs.
4. Run marketing campaigns on the high benefits of seafood and superior quality of
local produce to increase consumption per capita.
5. Develop an aquaculture-focused infrastructure to create a stronger business case

for private sector investment as well as increase KSA’s overall.
182 183
We strive to raise the fish

and shrimp production
capacity to 15 times the
current capacity
(NIDLP-Aquaculture)
184 185
5.A. Initiatives Portfolio 5.C. Selecting Game-Changers
Cluster Cluster
Aquaculture I-10-04-001 Marketing campaigns for aquaculture • Ministry of Environment, Water Aquaculture I-10-04-003 Develop infrastructure to support • Ministry of Environment, Water
to increase fish consumption and Agriculture maritime clusters and Agriculture
Aquaculture I-10-04-002 Investor attraction campaigns • Ministry of Environment, Water

and Agriculture
Aquaculture I-10-04-003 Develop infrastructure to support • Ministry of Environment, Water

maritime clusters and Agriculture
Aquaculture I-10-04-004 Infrastructure development to • Ministry of Environment, Water

support aquaculture and Agriculture
Aquaculture I-10-04-006 Support research and development to • Ministry of Environment, Water

improve fisheries productivity and Agriculture
186 187
SECTION 2-3:
MILITARY
INDUSTRIES
188 189
2.A Our Ambitions by 2030 3.A Key Challenges

There are several challenges facing the military industries in the Kingdom, most significantly:
Vision 2030 encompassed an ambitious target to localize 50% of military and security
spending covering military systems, equipment, maintenance and repair. Based on 1. Identifying priorities and committing to long term procurement contracts
that, it is expected that the military industries sector will become a key proponent 2. Current capabilities and enablers
to the Kingdom’s economy and will contribute in providing job opportunities for the 3. Coordination between the sector›s ecosystem and supporting functions
Saudi youth, propel the Kingdom’s development as well as achieve 5 key national
priorities:
• Increase military readiness

3.B Current Efforts
• Enhance strategic autonomy There are key efforts to develop the military industries sector that have emerged during the
• Enhance interoperability within and across entities last period that can be summarized below:
• Develop a sustainable local military industries sector
• Increase Transparency and efficiency of spend 1. National Defense Strategy: Develop and launch a new national defense strategy that
will be used as a point of reference for the military industries sector
2. Partnerships: Conclude a series of partnerships and sign agreements with leading
global companies to transfer and localize the technology, coordinate to set up joint
2.B Our Commitment by 2020 ventures in the kingdom and list local companies in the global supply chain
3. Establish an Authority for the Military Industries Sector: Due to the importance and
vitality of the sector, the Council of Ministers approved the establishment of the
We target to further activate the military industries sector and achieve a series of General Authority for Military Industries to serve as the regulatory body responsible
national objectives leading to 2020 that include: for developing the military industries sector and manage its components to achieve
the localization target
• Launch the military industries and technologies strategy 4. Establishment of a Leading National Company: The establishment of the Saudi
Arabian Military Industries (SAMI) that is wholly owned by the Public Investment
• Open the military industries sector for local and foreign investors
Fund (PIF). The Company will effectively contribute to building capabilities and
• Ease the military industries licensing process for manufacturers
localize technologies. SAMI aims at becoming one of the leading global companies by
• Build strategic partnerships with international OEMs combining the latest technologies and the best national talent to provide competitive
• Restructure the military side of the economic offset program products
Saudi army Couger Rotocraft Helicopter
190 191
The Kingdom is the third largest importer of military

equipment in the world. The development of the
military industry sector contributes to achieving
the Kingdom›s strategic objectives to meet a large
proportion of this demand and reduce reliance on
military imports.
4. Strategy
(Military Industries - National
Industrial Development Program
and Logistics)
Typhoon Fighter
192 193
4.A. Strategy Pillars 4.A.2 General Authority for Military Industries

In 2017, the Kingdom of Saudi Arabia was the third highest spending country on defense and
security with a localization level under 5%. This made it clear that there is a great opportunity In line with best practices in developing a military industries sector, the General Authority for
to exploit the military industries sector and increase its contribution to the Kingdom›s Military Industries was established with a mandate placing it at the center of a large ecosystem
economy. that includes: Military entities in the Kingdom, foreign OEMs, local manufacturers, research
institutes, colleges and universities, relevant Government entities, foreign governments and
This sector is composed of 4 main pillars: export markets.
1. Regulation and Legislation The General Authority for Military Industries is assigned with the following mandate:
2. Industry
3. Research & Technology 1. Develop policies, strategies, and regulations for the military industries sector
4. Military Procurement 2. Manage military procurement for military and entities in KSA
3. Issue military manufacturing and export licenses for the military industries sector
4 Develop standard specifications for military industries
5. Develop monitoring mechanisms for military industries
4.A.1 Best Global Practices 6. Manage and develop the military side of the economic offset program
7. Manage R&D operations in the military industries sector including funding & transfer
By looking at global best practices and successful models in developing a military industries
of technology
sector, there are key trends that can be summarized in the below:
8. Align with educational and vocational training entities around military industries
sector requirements
This sector is composed of 4 main pillars:
9. Stimulate the development of the military industries sector and support local
manufacturers
• Strategic Perspective
10. Establish strategic partnerships with both public and private sectors locally
1. Set long-term targets for the industry development and prioritize sectors
and internationally to achieve the authority›s objectives
2. Set up review mechanisms to balance Armed Forces and industry development
needs
• Industrial Perspective
3. Manage specific budget for industry development and coordinate industry
incentives
4. Create win-win offsets agreements to grow industry and technology capabilities
5. Build-up focuses on local demand, then expands into exports markets
6. Develop competitive products to be able to enter export markets
• Technological Perspective
7. Work with foreign partners to grow universities & accelerate up-skilling of workforce
8. Promote research-based plans and identify priority technologies in order to
enhance autonomy in restricted technologies
• Procurement Perspective
9. Long-term planning for military procurement (5-10 years)
10. Prioritization is given for leading local companies

It was also evident from global best practices the existence of a regulatory and supervisory
body that is mandated to manage and develop the sector as well as being responsible for
guiding national companies in alignment with the military requirements.
F-15SA Fighter Jet
194 195
4.A.3 Dual Usage for Military Products and Services 4.A.4 Integrating Military Industries with NIDLP
Capabilities and supply chain requirements to build the military industries sector are
Due to the spillover of usage and applications of various military and civilian products and similar and interlinked with those needed in building civil industries and require common
services, we see the following global trends: raw materials such as metals. These supply chains that are under NIDLP will be provide the
military industries ecosystem with the main materials and inputs as illustrated below:
1. All top 20 global players in military industries focus on both military and civilian
applications (on various levels)
2. More than half of leading defense companies generate +50% revenues in non-military
market segments
4.A.5 The impact of development of Military Indutries on the

National Economy
The development of the military industry sector will contribute to achieving the Kingdom›s
strategic objectives through contributing to a number of economic indicators:
• Gross domestic product • Private sector jobs
• Non-oil revenues • Public sector jobs
• Military exports • Share of domestic consumption
• Government investments • Localization
• Non-governmental investments • Balance of Payments
• Global market share • Research and development expenditure
5. Portfolio of Initiatives
The General Authority for Military Industries is currently developing an integrated strategy for the military sector
that includes industry, research & technology and military procurement and aims at creating a detailed plan for
the sector including key initiatives and associated timeline. These initiatives will be announced during the first
quarter of 2019.
196 197
SECTION 3:
ENERGY SECTOR
198 199
The program aims to
maintain the Kingdom’s
leading position as a
producer of hydrocarbon
materials by enhancing
the productivity and
competitiveness of the local
energy sector and focusing
on both the supply and
demand sides
2. Aspirations
(Energy Sector – National Industrial
Development and Logistics
Program)
200 201
2.A Our Ambitions for the Energy sector by 2030
The program’s strategy for the energy sector aims to:
• Increase the contribution of renewable energy to the energy mix through new
projects and assessment of various sources and advanced technologies in the
field of renewable energy.
• Enhance the competitiveness of the energy sector through the energy efficiency
program and studying the feasibility of restructuring the sector and its governance.
• Create jobs and work opportunities in renewable energy by increasing local
content and training and qualifying the workforce.
• Boost gas production and capacity of the distribution network to match growth
in demand.
• Reduce emissions from burning fuel.
2.B Our Commitment for the Energy sector by

2020
The program will work to increase the contribution of renewable energy to the
energy mix and increase the contribution of the private sector. Several renewable
energy technologies will be assessed and tested in the areas of water desalination
and electricity production. With regards to enhancing the energy sector’s
competitiveness, the program will finalize the current study to restructure the sector
and its governance.
Finally, emissions from burning fuel will be reduced by continually developing oil
refineries and boosting gas production and distribution networks’ capacity to match
domestic demand.
202 203
We aim to diversify the

energy production in the
Kingdom
(NIDLP-Energy Sector)
204 205
3.A. Main Challenges • Controlling air conditioning loads of large subscribers (Phase I). Launched by
the Ministry of Energy, Industry and Mineral Resources, the program managed
• Introduction to the sector to reduce consumption by 46 megawatts in 19 buildings
• Requesting large customers to use their power generators during peak hours
Saudi Arabia has managed to meet very high demand growth in power (~7% • Coordinating with large customers to reduce electrical loads during peak
p.a.), building a large and significant power sector. From 2007 to 2016, generation hours
capacity increased by 95%, making it the third largest capacity growth among
G20 countries. 2. Increasing the efficiency of electricity generation, transmission
Saudi Arabia’s power sector faces the following five key challenges: and distribution operations
1. Inefficient power consumption
2. Supply side inefficiency
In order to increase operational efficiency, the Kingdom invested SAR 70 billion
3. Low private sector participation
to boost the efficiency of electricity generation, reduce the use of diesel fuel and
4. Fiscal burden on the state
improve the infrastructure of transmission lines. This resulted in improving the
5. Limited reliance on renewable energy
system’s efficiency from 31.3% in 2010 to 37.9% in 2016 and reducing consumption
by 13 million barrels of diesel per year in 2016.
3.B. Current efforts
• Introduction to current efforts in the sector 3. Developing a framework for utilization of renewable energy
and nuclear power technologies
Significant efforts have been made in order to support the contribution of the
sector in economic growth rates and increase the number of job opportunities. The Ministry of Energy, Industry and Mineral Resources launched the Renewable
These can be grouped into five areas of focus: Energy Program, which included achieving 3.45 gigawatts in renewable power
1. Increasing the efficiency of energy demand, generation by 2020 and 9.5 gigawatts by 2023. The initiative is being implemented
2. Increasing the efficiency of electricity generation, transmission and distribution by the Renewable Energy Projects Development Office. Work is currently underway
operations, on the nuclear energy program under the supervision of the International Atomic
3. Developing a framework for utilization of renewable energy and nuclear power Energy Agency and in accordance with global best practices.
technologies,
4. Increasing local content and job creation in the electricity sector. 4. Increasing local content and job creation in the electricity sector
5. Reviewing sector governance and market structure.
In order to increase local content and generate jobs, standards have been
1. Increasing the efficiency of energy demand developed to support local manufacturers. Incentives/requirements were also
developed for future investors from the private sector which will be used as
The following specifications have been developed in order to increase energy guidelines to ensure the increase of local content. In addition, the Renewable
efficiency: Energy Program stipulated the localization rate in conditions of tenders.
• Developing specifications for small and large air conditioning units
• Mandating installation of thermal insulation in buildings 5. Reviewing sector governance and market structure
• Developing standards specific to household appliances (refrigerators, freezers,
etc.)
The market structure is being reviewed to enhance the competitiveness of the
sector and increase employment opportunities and private sector participation.
In addition, the Saudi Energy Efficiency Center carried out a number of campaigns
Moreover, the Renewable Energy Program was launched and the Renewable
to raising awareness of the importance of energy efficiency and rationalization
Energy Projects Development Office was established at the Ministry of Energy,
of consumption. The Ministry of Energy, Industry and Mineral Resources also
Industry and Mineral Resources, which is in charge of tenders related to renewable
implemented a number of programs to reduce loads during peak times, which
energy projects.
included:
206 207
We aim to make the

Kingdom an effective
export and re-export
platform
4. Strategy
An aerial view of Al Jubail Industrial City
208 209
4.A. Strategic Pillars 4.A.2 Overview of the Energy Sector Transformation Strategy
The power sector transformation is predicated on five key elements:
4.A.1 Overview of Saudi Arabia’s Energy Sector 1. First, foster power efficiency through the conduct of awareness campaigns,
currently under way; develop and pass laws on power efficiency standards (e.g.
The power sector is one of the largest economic pillars in Saudi Arabia (contributes setting power efficiency standards for purchased air-conditioning units); pursue
to 20% of GDP and represents 0.5% of employment) and an enabler for the wider the ongoing power saving initiatives during peak hours, e.g. the air conditioner
industrialization of the country. Today, the Saudi power sector is the 14th largest electricity saving initiative for major users (first phase), which was launched by
globally with 80 GW of installed generation capacity and an average year on year MEIM and resulted in consumption reduction of 46 MW in 19 buildings.
growth of 8% over the past 5 years . Over the past decade, 766.000 km of transmission
and distribution lines have been installed by the vertically integrated utility to meet 2. Second, increase the renewable energy share in the energy mix, particularly solar
the increasing demand. power. The MEIM has launched the renewable energy program, which aims at
generating power of 3.45 GW by 2020. Saudi Arabia has also launched an IAEA-led
nuclear power program.
3. Third, continue to improve power generation efficiency via the substitution of
diesel generators.
4. Fourth, maximize sector value-add via i) increasing exporting power to GCC

Gas plant 1 countries and ii) establishing criteria to support local manufacturers and
developing incentives/requirements.
5. Fifth, set roles and responsibilities between various sector players, and overall
sector governance framework.
Gas plants 5-1
Oil plant 1
Energy Sector Transformation

Transmission line
1 2 3 4
Energy demand Supply side Energy mix Sector Value add
Exhibit 4.1: Map of power plants sites in Saudi Arabia rationalization efficiency improvement
Source: MEED website, MEIM, ECRA
Source: Global data, ECRA
5 Sector governance and restructuring
Exhibit 5.5: Energy sector transformation strategy underpinned by 5 key pillars
210 211
The program is
committed to increasing
the contribution
of renewable
energy through the
establishment of
various projects, and the
introduction of advanced
technologies and the
encouragement of the
private sector to invest in
energy
212 213
Cluster Cluster
Energy E-13a-01-001 Re-examine the market structure • Ministry of Energy, Industry and Energy E-13a-33-719 The rehabilitation of the human • King Abdullah City for Atomic
Mineral Resources capital needed for the sectors of and Renewable Energy
atomic energy and renewable
Energy E-13a-01-002 Approve the efficiency program for • Ministry of Energy, Industry and
energy generation, and transfer and Mineral Resources Energy E-13a-33-721 Localize needed renewable • King Abdullah City for Atomic
distribution assets energy technologies to support and Renewable Energy
the kingdom’s power and water
Energy E-13a-01-725 The adoption and implementation • Ministry of Energy, Industry and desalination sectors
of the trading system in terms of Mineral Resources
petroleum products Energy E-13a-33-723 National Data Center for Renewable • King Abdullah City for Atomic
Energy and Renewable Energy
Energy E-13a-01-730 Build and develop manufacturing • Ministry of Energy, Industry and
competencies and enblers Mineral Resources Energy E-13b-14-001 Program of competitiveness of the • National Industrial Clusters
reform of energy prices Development Program
Energy E-13a-01-731 License optics companies to practice • Ministry of Energy, Industry and
fiber optics activities Mineral Resources Energy E-13b-47-001 High efficiency air conditioners • Saudi Energy Efficiency Center
Energy E-13a-01-738 Reduce emissions resulting from the • Ministry of Energy, Industry and
use of fuel Mineral Resources
Energy E-13a-01-740 Increase the volume of gas supplies • Ministry of Energy, Industry and
and the expansion of distribution Mineral Resources
networks
Energy E-13a-01-741 Completion of projects to increase • Ministry of Energy, Industry and 5.C. Selecting Game-Changers
refining capacity Mineral Resources
Energy E-13a-01-750 Electrical connection with the • Ministry of Energy, Industry and
Republic of Egypt Mineral Resources
Energy E-13a-01-754 Increase the reliability of the national • Ministry of Energy, Industry and Pillar/ Number
electricity grid Mineral Resources Cluster
Energy E-13a-27-717 Launch the Custodian of the Two Holy • MEIM - Renewable Energy Energy E-13a-27-717 Launch the Custodian of the Two Holy • MEIM - Renewable Energy
Mosques initiatives for renewable Project Development Office Mosques initiatives for renewable Project Development Office
energy in the Kingdom energy in the Kingdom
Energy E-13a-27-724 Deploy the appropriate mechanism • MEIM - Renewable Energy Energy E-13b-14-001 Program of competitiveness of the • National Industrial Clusters
for private sector involvement Project Development Office reform of energy prices Development Program
(Renewable Energy)
Energy E-13a-31-752 Evaluation of alternative and • Saudi Geological Survey

renewable energy sources
214 215
SECTION 4:
MINING
216 217
2. Aspirations
(NIDLP-Mining Sector)
Phosphate Factory in Ras Al Khair Industrial City
218 219
2.A. Our Ambitions for Mining Sector by 2030
It is aspired to have the mining sector become the third pillar of the Saudi industry,
and it will expected to increase its GDP contribution, and build the capacity of human
resources. These achievements will be reliant on the availability of mineral resources,
local demand, and how well global markets are accessed.
2.B. Our Commitments for Mining Sector by 2020
The aspirations for the mining sector are:

• Increase private sector investments, and enhance the service quality of the
(Deputy Ministry for Mineral Resources (DMMR), and Saudi Geological Survey
(SGS)).
• Expedite mining licenses to a set timeframe depending on the type of mining
license.
One of the mining mines in Medina in the Mahd adh Dhahab
220 221
The program aims to

benefit from the kingdom›s
untapped Mineral resources
that is estimated to be
5 trillion Saudi riyals by
developing the mining
system and accelerating
exploration, making the
Kingdom one of the top 10
aluminum producers in the
world and one of the world›s
3. Current Situation top three producers and
(NIDLP-Mining Sector) exporters of fertilizers and
increasing gold production by
An aerial shot of a phosphate factory 10 times.
in Ras Al Khair Industrial City
222 223
3.A. Key Challenges
NIDLP strategy for the mining sector identifies and tackles six 4. Limited social benefits of mineral resources
main challenges:
The social impact of the mining value chain is subpar. The number of Saudi workers
in mining is very low as they turn away from the harsh working conditions, low
1. Under-exploration wages, and inadequate workplace safety measures. Additionally, mining in Saudi
Arabia does not adopt an environment-sensitive approach as required globally,
The challenges facing the sector begin with exploration that is the first step in all which could be the result of a lack of sufficient guidance on how to do it. According
mineral value chains through which deposits are identified that can be developed to a recent study, the local content of the mining value chain stands at 12%. The
into mines. Although the Kingdom has succeeded in increasing its exploration study also showed that environment protection measures were not abided by and
spending since the early 2000s, the sector remains driven by a single player, and total lagged behind international best practices due to lax sanctions and lack of sufficient
exploration spending is significantly below global benchmarks. guidance, which have led the local communities to oppose mining mainly because
To achieve the aspired growth in copper, gold, and zinc mining output (among other of the harmful environmental effects and lack of social and economic benefits.
commodities) through 2035, KSA would need to spend over 7.4 USDb (cumulatively)
on mineral exploration including 5.7 USDb on prospect level exploration pursued by
private sector players. Averaging 317 USDm/year, this growth would entail a more
than 7x increase in annual exploration spending relative to the 2015 baseline.
5. Low revenues
The mining sector is not a main source of revenue if compared to the oil and gas
sector, and to what many leading mining countries generate.
2. Licensing inefficiency
The speed of exploration licensing in KSA is significantly below global benchmarks.
6. Project feasibility constraints and strong global competition
This challenge is not specific to Saudi Arabia; namely, strong competition from
3. Few local developers exporters particularly in Asia. KSA is a major net importer of mineral products from
Access to financing is a critical enabler of exploration as it is an equity-driven, high- Asia, partially a reflection of the challenges wrought by this producer segment. A key
risk/highreturn business for which KSA lacks a domestic capital market. A vast differentiator between Saudi Arabia and other countries is the response. Whereas
majority (98%+) of money spent on KSA exploration has been deployed by Ma’aden other countries have imposed quality standards and even tariff barriers to trade, KSA
and foreign companies, evidencing both the lack of a domestic capital market through has remained relatively passive in its trade relations, allowing exports even when
which to raise funding for exploration by private KSA explorers and the minimal they would appear to constitute dumping as in the steel value chain. The relative
size of a domestic exploration industry outside the National Champion. In contrast, disadvantage in building capital projects in KSA relative to other jurisdictions is a
leading mining jurisdictions literally have thousands of small exploration companies further challenge, as project costs are typically 2x the costs found in China for similar
and provide them access to financing through equity exchanges with regulations projects (e.g., aluminium), thereby depressing financial returns and placing a greater
tailored to the sector. As it stands today, KSA not only has few ‘junior’ miners but also level of capital at risk from market fluctuations in a cyclical industry. Furthermore,
has public equity exchange regulations that prevent such players from listing due many of the value chains are inherently capital-intensive and many local investors
to minimum capitalization rules among other restrictions. To catalyse exploration, are unwilling to place such a large bet. Indeed, the reliance on partially state-owned
accordingly, changes are needed across several enablers. companies for a majority of large ticket investments is a reflection of the absence of
private sector players willing to undertake such investments.
224 225
3.B. Current efforts
The Council of Ministers approved the mining strategy after being reviewed by
relevant stakeholders (including Council of Economic and Development Affairs,
Ministry of Economy and Planning (MEP), Public Investment Fund).
Concerted efforts are currently put in to prepare for implementation, including:
1. Holding alignment and coordination meetings with the Capital Market Authority
to discuss the development of a capital market to allow raising capital for junior
mining comanies.
2. Achieving complementarity with all bodies that depend on the strategy to have
their mineral and mining needs met in the coming years.
3. Integrating the mining sector enablement prerequisites within the plans and
strategies of other relevant bodies, like the Ministry of Transport, Ministry of
Environment, Water and Agriculture, MoEP, etc.
4. Holding alignment meetings with SIDF, KACST and other bodies that can
potentially support the sector’s growth plans..
An aerial view of a copper mine at Jabal Sayid in Medina
226 227
We aim to become one

of the top 10 aluminum
producers globally and
one of the top three
producers and exporters
of fertilizers globally
4. Strategy
A phosphate factory in the city of Waad Al Shaammaal
228 229
4.A Strategic Pillars 4.A.1 Current Situation

Mineral value chains are already an essential part of the Saudi Arabian economy.
From steel reinforcing bars in infrastructure development, to barites in the oil and
Thanks to the significant contributions of relevant government bodies, the
gas sector, to calcium carbonates in chemicals manufacturing, to ceramic tiles in the
comprehensive strategy for the mining and mineral industry sector has been
construction industry, mineral products are already playing a critical role in all sectors
developed over the past three years to ensure alignment with Vision 2030 priorities.
of the Saudi Arabian economy.
The development of the strategy was based on both the optimization of the existing
mineral value chains and a thorough assessment of geological mineral resources
KSA is already globally significant consumer of mineral products being the fourth
using the best available data.
largest net importer globall. Moreover, mineral products will become even more
critical as KSA undertakes an industrialization program aligned with the Kingdom’s
The Kingdom of Saudi Arabia in Vision 2030 set a bold vision for mineral value chains
Vision to have an industrial-based economy requiring mineral-based products.
in the development of the Saudi economy. The government has framed a clear
aspiration whereby mineral value chains would become the third pillar of Saudi
industry by capitalizing on KSA’s mineral endowment and domestic demand to deliver
GDP diversification and growth. To achieve the desired socio-economic development
imperatives, an aspiration was set top-down that was validated bottom-up through
an exhaustive review of potential project opportunities grounded in KSA’s Net imports of mineral products SARb, 2015
macroeconomic, micro-economic, socio-economic, and geological realities.
Importantly, the contribution that mineral value chains could contribute to the
Saudi economy are significantly higher under the accelerated mineral value chain Net imports
development strategy than they would be under the baseline growth scenario-
Iron / Steel 37.4
achieving a rate of growth 2x that in the baseline.
Precious metals 18.9
Basic metals 8.1
Aluminum 1.6
Fertilizers except urea 3.7
Others 10.0
Total 72.3
Figure 4.1: Order of the Kingdom between the importing countries of minerals and import details
An aerial photograph of a phosphate plant in the village of Hazam

Al-Jalamid in the Northern Border region
230 231
Despite being a large consuming country that relies heavily on imports, KSA has
nevertheless already built domestic mineral value chains at scale. In some value
chains, Saudi Arabia is already a significant producer and consumer such as cement
where KSA was the world’s eighth largest producer and consumer in 2015.
GDP Contribution
A majority of GDP impact from KSA mineral value chains derives from midstream
and downstream sectors rather than mining—less than 20% of GDP impact is from
the mining stage of the value chain. 15%
Mining
The scale of net imports would be considerably higher if KSA has not already
developed the minerals sector, including in steel where KSA already had domestic
steel production in excess of 9 million tonnes in 2015.
85%
Midstream/
Downstream
Sector employment Gross experts
4٪ 42,5٪
Mining Mineral products
45,2% 50,8% 57,5%

Mining products Metals Metals
Other contributions
• Sector supplies critical materials requried by major KSA sectors (such as construction, chemicals,
oils and gas).
• Many SMEs operate in downstream industries in particular.
A gold mine in the Sakeebat
Exhibit 4.2: Mining sector baseline
232 233
• 4.A.2 Sources of competitiveness
Looking forward, KSA has three main sources of competitive advantage to grow
mineral value chains to become the third pillar of Saudi Arabian industry: 1) Large Ornamental stones Phosphoric compounds Copper
and growing domestic demand, 2) A rich mineral endowment, and 3) Competitive
Energy Costs. KSA is today a net importer of many products that it could produce
domestically on account of its resource endowment including in precious and base
metals.
Zinc
Gold Magnesium / metal /
oxide
Aluminum
Iron Phosphate/Other fertilizers
Geolegical Ceramics
endowment
Ferroalloys
Glass and Raw Materials

Local Factor cost
Silicones demand advantages
Sodium compounds
Silica
Calcium compounds
Exhibit 4.3: Sources of competitiveness to develop Saudi Arabia’s mineral value chains )Cement(
234 235
KSA’s resource endowment could be 4.9 SAR trillion, with a majority of the upside 4.A.3 Strategy and aspirations
being in precious and base metals. Moreover, KSA has one of the world’s largest
phosphate resources with a total potential mineral endowment of over 7 billion
tonnes. In the midstream and downstream stages of the value chain, KSA is also
competitive including in steel and ceramics. The opportunities for growth in KSA mineral value chains are significant and diverse.
GDP growth would come from eight value chains including steel, fertilizers, base
metals, concrete, aluminium, ceramics, sodium compound, and precious metals.
In addition, KSA also has exciting opportunities for economic growth in several
Total value of mineral resources in the Kingdom (SARb)
specialty metals including titanium, magnesium, niobium, tantalum, and silicon as
well as opportunities to expand in inorganic compounds including phosphorus, silica,
Iron ore Niobium Phosphate Uranium
magnesia, fluorine, calcium, potassium, and alumina. KSA also has upside potential
263 154 143 1,204 263 in various other mineral products including dimension stone, uranium, and various
135 874
68 383 83 Under industrial minerals including bentonite and zircon.
study
Thus, KSA will need to accelerate exploration and mine development while it
Gold Bauxite simultaneously fills key gaps in the midstream and downstream segments of the
value chain. The primary roles for the government in driving this transformation are
859 53
379
41 34 two-fold: Enabler of private sector-led development and, to a lesser extent, acting
173
as a catalyst in key under-developed segments of key value chains to de-bottleneck
their growth.
Copper Silica
The first major transformation required is in sector governance and institutional
Abundant and will local
833
demand for thousands
enablement through effective and efficient regulation. Therein, KSA will decree a new
86 of years Mining Investment Law in the coming months that will Improve investor protections,
26
Enhance state revenue, and Protect local communities. In addition, the government
will also streamline processes including licenses to achieve best-in-class standards
including exploration license turnaround times in 30- 90 days while also making the
Zinc Silver Feldspar Limestone
process more transparent and reliable for investors. KSA will also creating a clearer
Abundant and will local
518 139 67.5 delineation between implementing entities while redesigning their organization
demand for thousands
146 11
41
of years structures, in addition to automating processes.
11 23 NA
1,053 2,403 4,908

bn bn bn
90% Confidence level 50% Confidence level 10% Confidence level
Exhibit 4.4: Potential mineral resource endowment of Saudi Arabia
236 237
In addition, KSA will accelerate exploration, including acting as a catalyst to spur

spending on prospect-level exploration. KSA will undertake one of the world’s
largest pre-competitive geosciences programs over the next five years to enhance
the breadth and granularity of data on the most prospective areas of the country, 1. Accelerating exploration
including geological mapping, geochemical sampling and analysis, and geophysical
data collection. In addition, KSA will make this enhanced dataset along with other
information including information on licenses available on-line through a world-
class National Geological Database. Furthermore, KSA will also co-fund exploration
at a project-level in partnership with private sector investors until 2025 to catalyse
exploration activity.
Another key evolution will come in the form of sustainability. KSA will mandate
specific rehabilitation guidelines for mines while bolstering EHS regulations to 2.Enhancing business case
promote a safer and more environmentally-friendly sector. It will simultaneously viability
act as an investment promoter across the value chain in partnership with the Saudi
Arabian General Investment Authority. Investment promotion will not only focus on
value chain projects but also on boosting local content in the goods and services
supply sector.
The program will also play a key enabling role in infrastructure, talent, and financing.
In infrastructure, KSA will support strategic investments in mining-specific 3.Enhancing industry structure
infrastructure including water pipelines, roads, and electricity grid expansion while to promote sector development
also incorporating mineral value chain project opportunities into its masterplans
for industrial zones. It will also sponsor innovative scholarship programs abroad in
mining-specific disciplines while simultaneously expanding the capacity for mining-
specific education in local universities.
4. Improving value chain social

benefits
5. boosting sector fiscal revenue

contribution
Charcoal
Exhibit 4.7: Strategic pillars of the mining strategy
238 239
4.A.4 Implementation plan 4.B. Strategic Considerations

To achieve this transformation in enabling the sector’s development, KSA will launch a
coordinated strategy implementation plan that includes forty-two priority initiatives Subject Description Decision and implications
to put in place the enablers that will foster sector growth. The major implementing
entities of this strategy will include the Saudi Geological Survey, Deputy Ministry Mining
of Mineral Resources, Deputy Ministry of Industry, operating alongside two new
Minerals that would generate the Prioritizing mineral value chains
entities including a Mining Strategy Department in the Ministry of Energy, Industry,
Selection and prioritization desired economic impact were helps maximize the impact
and Mineral Resources. (detailed below) prioritized when developing the of government support on
mining strategy economic development
The implementation plan will also include specific key performance indicators (KPIs)
that will provide visibility to policymakers and investors on the sector’s development
to guide implementation priorities. • Selection and prioritization
The government’s first set of actions to propel implementation in the first stage. Near- Priorities were set based on the economic feasibility of potential opportunities for
term actions include building a v1.0 National Geological Database to disseminate all selected value chains (52 value chains). Thirty-nine value chains including more
information on KSA’s rich geological endowment while also promoting the sector to than a thousand projects (mining, midstream/downstream) were prioritized. These
investors to quickly accelerate exploration activity. The plan also includes filling key projects will collectively create the desired economic impact, based on which the
capability gaps through external hiring while also undertaking actions to streamline mining strategy initiatives were developed.
key processes including licensing in the near-term.
The future outlook for Saudi Arabian mineral value chain is bright and the sector will Filter 2 :
become the third pillar of KSA Industry alongside oil & gas and petrochemicals. The Financial
impact
benefits of sector development will accrue in equal parts to the government, society, Filter 1:
and investors to ensure the sustainability of the sector’s development. Accordingly, Strategic Filter 3:
the development of the sector will maximize the potential of KSA’s rich geological Relevance Socio economic
endowment for all stakeholders in line with Vision 2030’s aspirations for mining and impact
Comprehensive
mining industries and support to other National Transformation Program objectives. list of inter- Attractive
42 value
nationally and value 52 chains value chains 39 value chain
locally traded chains (~1,200 )projects 1,000~( opportunities
commodities projects)1 for Saudi
across 52 value Arabia
chains
Screen out opportunities with: Screen out opportunities with:

• Limited KSA mineral potential (geological • Unattractive economics
endowment)2 • Limited impact on Saudi Arabia socio
• Limited demand potential or export potential economic development
1 Original list of projects included over 1,200 that has since been reduced; 2 Except where value chain could be sustainable
based on imported ore, e.g., steel (iron ore). SOURCE: CMSP Team
Exhibit 4.8: Methodology for prioritizing the mining sector
Raw gold
240 241
The development of
the mining sector will
generate more than
450,000 direct and
indirect jobs in the
mining sector around the
Kingdom and triple the
local content by 2030.
Aluminum in Ras Al Khair Industrial City
242 243
Cluster Cluster
Mining M-12-01-029 Ensure competitive energy prices • Ministry of Energy, Industry and Mining M-12-31-751 Establishment of a consulting and • Saudi Geological Survey
Mineral Resources geological services company affiliated
to the Authority
Mining M-12-01-745 Adopting and implementing the • Ministry of Energy, Industry and
overall strategy for the mining sector Mineral Resources Mining M-12-31-753 Monitoring of geological hazards and • Saudi Geological Survey
contributing to the reduction of their
Mining M-12-14-019 Support promotional activities • National Industrial Clusters effects and develop a geomedical map
Development Program of the Kingdom of Saudi Arabia
Mining M-12-14-022 Investment in Steel Industries • National Industrial Clusters Mining M-12-34-001 Amend the mining investment • MEIM - Deputy Ministry For
Development Program system and regulations Mineral Resources
Mining M-12-14-023 Develop copper and zinc smelting • National Industrial Clusters Mining M-12-34-002 Amendment and governance of the • MEIM - Deputy Ministry For
plant Development Program licensing process Mineral Resources
Mining M-12-14-024 Encourage the expansion of inorganic • National Industrial Clusters Mining M-12-34-003 Launch new operational models for • MEIM - Deputy Ministry For
compounds production Development Program implementation Mineral Resources
Mining M-12-14-035 Establishment of a metal alloy • National Industrial Clusters Mining M-12-34-004 launching of the capability building • MEIM - Mining Strategy
development center Development Program program to support the executing Department
entities
Mining M-12-14-036 Establish a design institute (ceramics) • National Industrial Clusters
Development Program Mining M-12-34-005 Prepare a delivery unit to accelerate • MEIM - Mining Strategy
the strategy implementation Department
Mining M-12-14-037 Develop marketing materials - • Saudi Geological Survey
intermediate and transformational Mining M-12-34-006 Launch a new financing model to • MEIM - Mining Strategy
industries promote the development of the Department
sector
Mining M-12-31-008 Launch a national geological • Saudi Geological Survey
information program Mining M-12-34-007 Align the mining and energy • MEIM - Mining Strategy
strategies Department
Mining M-12-31-009 Launch the accelerated exploration • Saudi Geological Survey
program of promising deposits Mining M-12-34-012 Amend the mining sector EHS • MEIM - Deputy Ministry For
regulations Mineral Resources
Mining M-12-31-010 Establish a developed national • Saudi Geological Survey
database of accessible geological Mining M-12-34-013 Launch a new EHS compliance control • MEIM - Deputy Ministry For
sciences system Mineral Resources
Mining M-12-31-011 Develop the services provided by the • Saudi Geological Survey Mining M-12-34-014 Launch a new compliance control • MEIM - Deputy Ministry For
drilling sample library system for the financial system Mineral Resources
Mining M-12-31-028 Establish a mining services company • Saudi Geological Survey Mining M-12-34-015 Launch a program to promote • MEIM - Deputy Ministry For
community participation Mineral Resources
Mining M-12-31-034 Establish a center of excellence in • Saudi Geological Survey
mining and metallurgical industries Mining M-12-34-016 Launch the technical guidelines for • MEIM - Deputy Ministry For
the new project Mineral Resources
244 245
5.C. Selecting Game-Changers
Cluster Cluster
Mining M-12-34-017 Develop the Saudi mining sector • MEIM - Deputy Ministry For Mining M-12-31-009 Launch the accelerated exploration • Saudi Geological Survey
information system Mineral Resources program of promising deposits
Mining M-12-34-018 Develop marketing materials - mining • MEIM - Deputy Ministry For
activities Mineral Resources
Mining M-12-34-020 Establish a comprehensive service • MEIM - Deputy Ministry For

center Mineral Resources
Mining M-12-34-021 Establish an exploration incubator • MEIM - Deputy Ministry For

Mineral Resources
Mining M-12-34-025 Activate trade regulations to enable • MEIM - Mining Strategy

the sector Department
Mining M-12-34-026 Expected support services for GCC/ • MEIM - Deputy Ministry For
KSA Mineral Resources
Mining M-12-34-027 Encourage the development of local • MEIM - Deputy Ministry For
suppliers Mineral Resources
Mining M-12-34-030 Modernization of large-scale • MEIM - Deputy Ministry For

infrastructure development plans in Mineral Resources
the Kingdom
Mining M-12-34-031 Establish the shared infrastructure for • MEIM - Deputy Ministry For
the mining sector (SPV) Mineral Resources
Mining M-12-34-033 Guide long-term saudization and • MEIM - Deputy Ministry For
support short-term growth Mineral Resources
246 247
SECTION 5:
LOGISTICS
248 249
We aim to raise the

volume of exports to one
trillion Saudi riyals
2. Aspirations
(NIDLP-Logistics Sector)
Jeddah Islamic Port
250 251
2.A. Our Aspirations for Logistics sector by 2030
Saudi Arabia is strategically located at the crossroads of the East and West along one of The executive committee started implementing the plan over a year ago through
main trade routes in the Red Sea. The Kingdom is also ideally located near the MENA and a roadmap that covers key projects and is currently part of the NIDLP. The roadmap
West Africa regions, with an infrastructure that enables it to serve these markets. This addresses key challenges, from improving customs clearance processes to updating
infrastructure was developed under the supervision and guidance of the wise Saudi the laws, automating services, funding logistics players, developing seaports and
leadership that has always thrived for a better future. Boasting the biggest market airports, and on a broader scale, privatizing logistics assets and reforming various
in the GCC region and one of the largest consumer markets in MENA, Saudi Arabia is entities to ensure their efficiency and competitiveness..
endowed with great ambitions and unique capabilities to achieve development.
KSA set aspirations to achieve its Vision 2030 objectives and become a global
However, the Kingdom has not yet leveraged its natural advantages and large human logistics hub through:
capital. In the logistics sector, the Kingdom underperforms global leading countries
and regional peers in terms of developing and providing for the sector’s needs. In • Providing competitive logistics transport services
2016, KSA ranked 52nd on the Logistics Performance Index (LPI), which indicates • Setting high standards for freight and storage
that there is great room for development in this sector. Vision 2030 identified Saudi • Streamlining booking and tracking systems
Arabia’s capabilities and emphasized the need for immediate action. The concerned • Improving customs procedures
entities were mandated to achieve the ambitious goal of transforming the Kingdom • Achieving integration between national and international transport companies
into a global and competitive logistics hub that can meet local and regional market • Integrating and capturing maximum benefit from existing and new infrastructures
needs, positioning KSA as the preferred destination for logistics companies looking
to invest in the region.
All the relevant entities at the Ministry of Transport (MoT), Saudi Ports Authority (SPA),
Saudi Customs and the Ministry of Economy and Planning (MEP), and others, have
consolidated their efforts to develop a plan and start implementing it. The first step
was to study the current state by assessing several aspects of the Saudi logistics sector
such as the “ease of arranging international shipments,” “clearance process efficiency,”
“infrastructure readiness” and “ability to track shipments.” In order to identify the
challenges, information was collected from multiple previous studies and meetings
with the private sector. In addition, global leading practices were benchmarked with
the aim of developing the required projects for achieving the vision.
The work concluded with a roadmap that includes projects for addressing key
challenges, as well as long-term projects to ensure the sector’s competitiveness
and attractiveness for international and local logistics companies. A cross-ministry
committee approved the roadmap, and an executive committee was formed to
Duba Port
oversee the implementation thereof, while focusing on high-impact projects. To ensure
smooth implementation and communication between the responsible entities.
252 253
The program aims at

creating the factors
and conditions that
contribute to making the
Kingdom a global logistics
center with competitive
advantages, including
improving infrastructure,
transport networks, air,
land and sea ports, and
developing an effective
internal distribution
network.
The Ring Road in Al Baha City
254 255
3.A. Main Challenges 3.B. Current Efforts
The sector faces a number of key challenges that need to be addressed, including: The Kingdom has heavily invested in the transport and logistics sector (SAR +400 bn
in the last 10 years), especially in developing infrastructure projects to develop roads,
International • Provision of logistics through ports and airports (flow of goods): ports, railways and airports. This has resulted in a robust network with adequate
freight lengthy importation process coverage and capacity.
• Provision of logistics through land ports (flow of goods): lengthy
importation process The sector has also done well to improve its operations – capturing a growing share
of the regional freight transit volumes (+90% of the red sea trade, etc.), decongesting
Ports of entry • Lengthy clearance process, whether or not physical inspection cities, streamlining import/export processes (10- 25% reduction in dwell time at most
/customs is carried out ports) and liberalizing air cargo capacity.
• High percentage of freight undergoing physical inspection due
to strict security policies Transport sector strategies have been developed and aligned with National Industrial
Development and Logistics Program. Furthermore, steps have been taken to increase
Quality and • Lack of qualified logistics providers private sector participation through BOT model in JIP and King Abdullah sea port and
efficiency • Lengthy and inconsistent licensing process at the Madinah airport. Significant improvements in governance have taken place
• Lack of regulations related to warehousing standards with consolidation of GACA and Saudi Railways Company (SAR) under the Ministry of
• Complex processes requiring cumbersome red tape for goods Transport umbrella.
transportation
Timelines • Impact of strict government security policies on operational

efficiency
• Inconsistent customs clearance standards across different
border points
Infrastructur • National infrastructure planning requires focusing on a multi-

business ecosystem to manage transport flow and logistics
supply
• Significant backlog across the road network, leading to
inadequate transport infrastructure
• Limited intermodal integration for effective movement of
individuals and goods inside and outside KSA
• Limited intermodal coordination, restricting connectivity and
current infrastructure efficiency
• Regional competition to attract capital (and FDI)
• Private sector’s low appetite for investing in the logistics
sector, which reduces sector profitability and calls for ongoing
government support
Tracking and • Need for an integrated and multifaceted system for tracking
tracing and tracing
• Duplication of data and efforts leading to longer exportation Jeddah Islamic Port
process with export congestion
• Increase in container shipping requires more communication
256 between relevant entities 257
The program aims to

make the Kingdom an
effective platform for
export and re-export and
raise exports to more
than one trillion Saudi
Riyals by 2030.
4. Strategy
Al-Alm roundabout in Baha city
(This is a summarized version, please refer to the appendix for a detailed version of the strategy)
258 259
4.A. Strategic Pillars
In 2015, as part of Vision 2030, the Council of Economic and Development Affairs • Service quality: Saudi Arabia has been introducing reforms to the T&L sector to
(CEDA) mandated the transformation of KSA into a leading logistics hub to enhance service quality and increase private sector participation. Recently, new
reinforce its position in “the Arab and Islamic depth, as a leading investment hub regulations have been drafted concerning road transport and brokers to enhance
connecting three continents”. service standards and enable a higher level of competition. Railway and port
sectors have been restructured to enable independent regulatory control, improve
Subsequently, MoT presided a cross-ministry joint committee that developed operational efficiency and increase private sector participation. The existing air
the 2030 NIDLP. The objectives that were set forth by this strategy focused on freight market was opened to many international companies that will invest in
4 key dimensions: 1) transforming KSA into a logistics hub, 2) promoting ease developing and operating existing and new air freight facilities. A national strategy
/ possibility of living across KSA, 3) enhancing financial sustainability and 4) was developed for SEZs in order to promote the ease of doing business in KSA and
improving public entity performance. attract more investments and trade. Currently, we are targeting several other early
quick-wins to improve the organization and re-exportation at existing zones, and
1. Transforming KSA into a logistics hub. Position KSA as a logistics hub that rehabilitate existing economic zones and cities, upgrading them into SEZs.
supports industrial growth plans, export and re-export operations, and increases
local distribution efficiency, which allows delivery of goods and inputs to the 2. Promoting ease / possibility of living across KSA. Improve ease of living across KSA
population and industrial entities at an optimal cost. This would naturally lead by promoting transport safety, civilian movement and environmental sustainability
to KSA outperforming regional competitors in terms of freight cost and speed. of the T&L sector.
Therefore, this will require enhancing the infrastructure, streamlining operations
and procedures, and improving logistics quality. • Transport safety: the Kingdom will reduce the rate of transport accidents and
• Infrastructure: Saudi Arabia developed an integrated plan for the required develop the enablers required to promote safety culture through transport
infrastructure to enable the transport and logistics sector to connect and safety programs across all transport modes. These programs will enhance safety
expand the economic activity across the Kingdom. This plan includes standards, provide more transparency on the ecosystem’s safety performance
expanding the capacity of key transport and logistics assets, removing and help develop capacities required to prevent accidents.
bottlenecks and fast-tracking growth in goods and passenger movement.
• Urban mobility: the Kingdom seeks to significantly reduce traffic congestion
by improving urban mobility. This will be achieved through investing in public
• Operations and procedures: Saudi Arabia is currently seeking to streamline transport systems in major cities and promoting policies that reduce demand on
customs and other border procedures to reduce import and export time private vehicles and widely increase public transportation usage.
and cost. Some early quick-wins have been achieved to date – reducing time
required to “authorize clearance” from approximately 4.8 days in February • Environmental sustainability: the Kingdom will reduce the environmental impact
2017 to 1.9 days in March 2018. The Kingdom is also focusing on digitizing its of T&L sector by developing energy efficiency standards, setting clear emission
procedures by using electronic systems to track and trace freights, managing level targets and promoting the purchase and usage of ecofriendly vehicles.
entities across ports and airports (port and airport community), as well as
accelerating and managing payments.
260 261
3. Enhancing financial sustainability. The Kingdom will ensure T&L sector financial
sustainability by promoting the exploitation and development of required assets
(infrastructure) and private sector participation.
• Develop and exploit assets: the Kingdom will increase financial and
operational performance of its assets. The cost of ownership will reach
its best level by effectively delivering new assets and efficiently using and
maintaining existing ones.
• Private sector participation: KSA will increase the participation of the private
sector in funding, developing and operating T&L infrastructure by drafting
and marketing concession contracts, and transparent and attractive PPP
opportunities.
4. Improving public entity performance. KSA will implement a new governance

model on the T&L sector, establishing institutions that focus on customer service
in line with changes and developments.
• Governance: KSA will improve sector governance through segregation

between organizational/operational roles and asset ownership. Each
organizing entity will be an independent one that reports directly to MoT. The
roles of independent asset owner entities will be to develop, maintain and
operate infrastructure across all transport modes (either directly or through
concession contracts) and report to MoT.
• Establishing institutions: KSA will improve institutions working in the sector

by promoting cooperation and directing them to focus on performance and
customer needs. These institutions will develop the required capacities and
leverage technological developments that benefit the sector.
King Abdul Aziz Port in Dammam
262 263
• Strategy Key components to turn KSA into a leading logistics hub

The logistics strategy addresses the sector’s challenges in the light of three key
dimensions:
Objectives
1. KSA’s economic aspirations as defined in Vision 2030
Position KSA as an efficient export platform that can
2. Competing with regional peers to play the role of a regional logistics hub set correct estimations and provide capacity and
Export
capabilities required to avoid wastage, in order to
platform support overall national industrial diversification
3. Future trends disrupting the sector, including: strategy
• Increased use of ecofriendly vehicles (e.g. electric vehicles) and

autonomous vehicles Regional
Transform KSA into a regional distribution hub in GCC
platform
and East Africa that offers lower prices and higher
• Use of big data to analyze passenger flow (for re- speed than competitors
exportation)
• Use of ultra-high-speed transportation (especially in rail)
• Automation and allocation of berth management in the maritime

sector
Use a highly branched distribution system that
Local and
allows distributing goods and inputs at optimal cost
• Real-time tracking of goods and people at airports internal
across current and target population centers with
connectivity development plans
The strategy aims to position KSA as a leading regional logistics hub. The Kingdom
needs to transform into an efficient platform for (re-)export and enhance local
internal distribution system.
In order to become a pioneering regional logistics hub, KSA should outperform its
peers in freight speed and cost and provide equal tracking and tracing services
Cost Time Tracking and tracing
14% reduction in export
An export platform cost (from SAR 3,089/TEU
in 2016) 5-day reduction in
1% capacity in tracking and
export time
tracing containers across
(from 7 days in
ports (from 0% in 2016)
2016)
12% reduction in re-export
A regional platform
costs (from SAR 11,214/ TEU
(for re-export) in 2016)
5-day reduction in
100% customs permit
import time
digitization (from 25% in
27% reduction in export (from 7 days in
Internal and local 2016)
cost (SAR 2,294/ TEU in 2016)
connectivity 2016)
264 265
In order to achieve these logistics performance targets, the Kingdom should improve C. Service quality (sector reform) – key initiatives
its physical infrastructure, streamline border procedures and improve logistic services
level. KSA seeks to reform the T&L sector (various transportation modes and logistics) to
improve service quality and enhance private sector participation
T&L sector improvement drivers in KSA:
Initiative Projects / Drivers
A. Infrastructure
Expand the capacity of some T&L sector key assets in order to remove Logistics regulations • Improve and enforce surface freight regulations
improvements • Provide customs broking to players in the industrial and
bottlenecks and stimulate growth of cargo and passenger transport logistics sector
• Improve storage area system
Seaports reform • Review concession contracting framework to enhance its
B. Customs and operations / procedures attraction
Streamline and automate logistics and border procedures in order • Establish an independent regulatory entity
to reduce freight time and cost Railway sector • Integrate and privatize railway operation
transformation • Integrate asset ownership and management
C. Service quality Air cargo capacity • Provide PPP and concession contract opportunities for the
liberalization development and operation of air freight facilities
Improve sector governance and regulations and promote the
participation of the private sector in order to increase logistics and Special Economic Zones • Upgrade existing economic zones and storage areas into SEZs
transport level • Establish new SEZs
Marketing to the private • Organize roadshows to discuss progress and collect
sector perspectives from the private sector
B. Customs and operations / procedures • Organize integrated communication campaign (magazines,
social media platforms)
In addition to improving physical infrastructure, KSA is keen to streamline and Logistics players funding • Implement funding mechanisms (low cost loan programs, loan
automate border crossing procedures and logistics guarantee programs)
Initiative Human capital • Develop higher degree and vocational training programs
developments
Import / Export process streamlining Electronic systems implementation
Key Projects / Drivers

Improve urban mobility, including reduce City congestion level (hours spent in traffic)
congestion
Minimize number of documents required to Allow import entities to track their shipments
import / export goods (progress, location)
Enable import / export documents submission via Develop systems to manage ports and
electronic channels airports players (port and airport community)
Notify customs brokers via electronic channels Apply shipment tracking system
Data electronic integration Implement system to manage and set
shipment dates across seaports
Improve risk management process Implement smart portfolio system to fast-
track payment process
266 267
A set of KPIs was developed for six main strategic objectives, in addition to 2020 • Strategy Integration
targets (see Exhibit 4.4 below)
The logistics strategy – in particular the transport master plan – has been aligned
Targets with the various NIDLP strategies and plans to address sector requirements across
Performance objectives Target metric Baseline 2020 geographies and modes (See Exhibit 69- below).
Considering the future planned projects, the master plan showed that future
Ensure efficient and effective International Logistics 3.16 3.38 transport sector infrastructure competences will be sufficient to cover KSA needs and
internal (within KSA) and external Performance Index (LPI) (52) (38)
(internationally) links to priority score (2015 rank)
program strategy plans (see appendix).
population and value chain centers
Minimize the rate of transportation Fatalities / injuries per 26 20 The Logistics and Transport National Strategy aims at achieving Vision2030
accidents and fatality and create the 100,000 residents
objectives by transforming the Kingdom into a “hub connecting three continents.”
basis for a safety-oriented culture
The Kingdom has so far achieved a number of innovative quick-wins.
Improve urban mobility, including reduce City congestion level (hrs 23.5 15
congestion spent in congestion)
Minimize the sectors negative impact Transport sector energy 1.42 1.32 Logistics and Transport National Strategy objectives
on the environment; in particular reduce consumption: Tons of oil
energy consumption equivalent per capita
Optimize transport assets’ TCO through % of project w/ cost TBD 50% Reduce cost of Enhancing our
effective delivery of new assets and overruns shipping infrastructure
efficient use and maintenance of
% of projects delayed by 60% 50%
existing ones
>20% Streamlining and
Reduce time to
Increase private sector participation in % private sector 4% 10% import/ export
by automating our
processes
delivering and operating transport assets participation in
development & operation
Exhibit 4.4: Strategic objectives and KPIs
Increase supply chain Reforming our
transparency sector
Enhance livability by • Upgrading transport safety

• Improving urban mobility
• Advancing environmental sustainability
Enhance fiscal • Efficiently developing, using and maintaining our
sustainability by assets
• Increasing private sector participation
Improve public • Reforming our sector governance
entitiesperformance by • Building performance-and customer-oriented culture
• Developing capabilities for future-proofing
268 269
NTLS early wins 4.B. Strategic Considerations

Processes are being streamlined…
In the past, there was no alignment between the transport mode strategy and new
Import
Import dwell transport assets strategy, which led to sub-optimal intermodal integration and
Documents needed for clearance time
time (days) undermining the development of advanced logistics capabilities in the Kingdom.
(days)
import export One of the key initiatives of the 2030 National Transport Strategy supporting this
new approach is the development of a transport sector inclusive multi-modal
February master plan. The public transport master plan highlights the overall direction toward
12 8 14 4,8 developing the transport network in the Kingdom. This plan development was the
2017
result of coordination between transport institutions, taking into consideration
March
2 -60% 2 -54% 6.4 -75% 1.9 -83% existing modal plans from a broader perspective vis-à-vis the overall benefit of the
2018
country and socio-economic development.
And digitalized...
% of declarations submitted prior % of declarations submitted

to vessel arrival electronically
+327% 280%
February
2017
11% 25%
March
47% 95%
2018
Port Community System Implementation
Regulations are being reformed…
Bonded zones Customsbrokerage Trucking
And privatization is growing
Railway operation Sea Port terminals Air cargo
270 271
All future expansion plans were collected, and their frameworks were developed
to determine the optimal impact of future transport network in KSA.
The logistics sector development plans were mapped to different components of the
NIDLP framework:
• Mining:
Vision 2030 expects mining sector development to become the third pillar of the
economy by leveraging available reserves, the largest in the GCC region. Current
Roads Airports and future mining sector development relies on efficient and effective transport
modes to support and promote a competitive chain value. There is alignment on
• 10+ current mega projects • Build 5+ airports
• Develop / expand 25+ main • Airports will be licensed by
infrastructure requirements, including roads (an additional network of 2,200-
roads GACA 3,200 km in length), rails, seaports, new airdromes and industrial lands..
• Develop / expand 60+ • Expand 20+ airports
secondary roads
• Develop / complete 6+ ring • Industry:
roads The Kingdom increasingly focuses on boosting local industrial activities to diversify
its economy and support employment locally. Key players’ (such as “Modon” and
Interfaces RCJY) industrial activities development and future expansion plans were analyzed
19 multi-modal intersections in order to understand future demand on transport and define interventions. In
for freight railroads addition to infrastructure requirements, specific sectors, including food industry,
will benefit from the development of the distribution network (focus on cold
Expand 3 air freight terminals chain) in KSA and the region..
2 new air freight terminals
• SEZs:
SEZs help in addressing a number of sector-related functions, which could
include building a seaport and storages for car carrier trailers to promote logistics
efficiency and build logistics hubs..
Railways Seaports • Industry 4.0:

Alignment with subject-matter initiatives and use cases to unlock the potential
• 2,000+ km rail lines planned • A planned increase in seaports of logistics sector (15+ use cases including smart containers, smart transit flow
for freight and passengers capacity to handle containers management, ports with technical assistance and customs digitization).).
• 20+ passenger railway with more than 55+ mn TEU
stations planned across the • A planned increase in seaports
Kingdom capacity to forward ~30 • Local content:
million tons of dry and bulk
Consolidating and integrating local content initiatives and opportunities across
freight
• A planned increase in seaports the logistics sector (such as rail and metro projects equipment).).
capacity to forward 5 mn tons
of general freight
Source: MoT- Road Agency, Saudi Railway Company, Saudia, GACA, SPA
272 273
Increase the contribution

of the logistics sector in
GDP by about 160 billion
Saudi Riyals
Jeddah Islamic Port
274 275
Cluster Cluster
Logistics L-14-02-010 Develop the human capital in the field • Ministry of Economy and Mining L-14-08-001 Provide efficient, effective and • Saudi Ports Authority
of logistics Planning integrated port network Transport,
to link the national economy to the
Logistics L-14-05-006 Pre-feasibility study for the • Ministry of Transport global market
application of Hyper-Loop technology
in Saudi Arabia Mining L-14-08-002 Ensure a safe environment for people, • Saudi Ports Authority
property, shipping and handling
Logistics L-14-05-007 Improve logistic services legislations • Ministry of Transport effects on Communities surrounding
cooperation with other agencies
Logistics L-14-05-013 Improved urban mobility, including • Ministry of Transport
reduced congestion Mining L-14-08-003 Port Infrastructure Development • Saudi Ports Authority
(Phase 2)
Logistics L-14-05-014 Rationalize the total cost of • Ministry of Transport
ownership of transport assets Mining L-14-08-004 Design and apply appropriate • Saudi Ports Authority
through effective delivery, efficient concessions and contract structures
use and maintenance of new assets for rationalization total cost of ports
ownership
Logistics L-14-05-015 Involve the private sector in the • Ministry of Transport
provision and operation of transport Mining L-14-08-005 Maintain solid and sustainable • Saudi Ports Authority
assets financial safety: Ensure that the local
port authorities are able to finance
themselves as such financially
Logistics L-14-05-017 Building a high-performance, service- • Ministry of Transport
fortified
oriented cooperative organization
Mining L-14-08-006 Create and manage a safe and • Saudi Ports Authority
Logistics L-14-05-018 Create an external organization • Ministry of Transport
effective organization that promotes
capable of monitoring and selective
a comprehensive and transparent
adoption of technological changes in
culture that supports teamwork
favor of the sector
and provide an opportunity for
the central administration and the
Logistics L-14-05-034 Ensure the efficiency and • Ministry of Transport seaport institutions to contribute to
effectiveness of internal links (within enhancing the competitiveness of the
the Kingdom) and external links port
(international) centers of population
density and important industries
Mining L-14-08-007 Strengthen customer service focus • Saudi Ports Authority
within central management and sub-
Logistics L-14-05-448 Support the implementation of the • Ministry of Transport port institutions
national transport strategy initiatives
Mining L-14-08-008 Integration of stakeholders in the • Saudi Ports Authority
Logistics L-14-05-449 Preparation of an integrated strategy • Ministry of Transport preparation and implementation of
for the transport sector and its the strategy
governing structure
Mining L-14-08-009 Enhance innovative solutions to • Saudi Ports Authority
Logistics L-14-05-454 Optimize the cost of road life cycle • Ministry of Transport facilitate operational efficiency at
and improve performance each port
276 277
Cluster Cluster
Logistics L-14-08-011 Use of electronic systems in the sector • Saudi Ports Authority Logistics L-14-41-004 Achieve the highest levels of aviation • General Authority of Civil
- Port Community System safety, including full commitment Aviation
international safety standards
Logistics L-14-08-447 Organizational reform and • Saudi Ports Authority
institutionalization of the Saudi Ports Logistics L-14-41-005 Adopt global best practices in • General Authority of Civil
ecosystem technology and innovation to improve Aviation
sector performance and customer
Logistics L-14-08-453 An integrated port optimization • Saudi Ports Authority experience
program
Logistics L-14-41-006 Liberalization of air cargo ground • General Authority of Civil
Logistics L-14-08-457 Generate revenues from Saudi Ports • Saudi Ports Authority services sector and increase its Aviation
Authority lands capacity
Logistics L-14-08-460 Port infrastructure development • Saudi Ports Authority Logistics L-14-41-007 Reduce dependence on public funding • General Authority of Civil
program through increased participation and Aviation
improvement strategic partnership
with the private sector
Logistics L-14-09-003 Improve the import/export procedure • Saudi Customs
(Stage 2)
Logistics L-14-41-008 Reaffirm the role of the General • General Authority of Civil
Authority for Civil Aviation as the Aviation
Logistics L-14-09-441 Develop land ports • Saudi Customs
regulator for aviation focused on
policy, regulations and compliance
Logistics L-14-15-009 "Communicate with the private sector • Saudi Arabian General
inside and outside the Kingdom Investment Authority
Logistics L-14-41-009 Integrating the development of the • General Authority of Civil
"
aviation sector with other modes of Aviation
transportation in the Kingdom
Logistics L-14-39-003 "Study the feasibility and the • Public Transport Authority
economic model of the rail land
Logistics L-14-41-010 Improve overall customer experience • General Authority of Civil
bridge project
at the airport Aviation
"
Logistics L-14-41-011 Design and apply appropriate • General Authority of Civil

Logistics L-14-41-001 Create air links to support broader • General Authority of Civil
concessions and contract structures Aviation
economic growth Aviation
for rationalization total cost of assets
ownership
Logistics L-14-41-002 Facilitate religious tourism to develop • General Authority of Civil
the aviation sector in Saudi Arabia Aviation
Logistics L-14-41-461 Stimulate economic growth through • General Authority of Civil
the air transportation industry Aviation
Logistics L-14-41-003 Aviation Sector - Support Saudi • General Authority of Civil
airlines, including new ones, to boost Aviation
Logistics L-14-41-463 Develop logistic services at airports • General Authority of Civil
employment in the sector and provide
Aviation
additional options for passengers in
terms of service and prices
Logistics L-14-41-465 Construct and expand airports to • General Authority of Civil
meet the growth expectations of air Aviation
traffic
278 279
Cluster Cluster
Logistics L-14-41-468 Develop customer services and • General Authority of Civil Logistics L-14-45-008 Diversify sources of funding to reduce • The Saudi Railways Company
facilities at airports Aviation dependence on public funding / (SAR)
increase participation of the private
Logistics L-14-41-471 Develop programs to reach the • General Authority of Civil sector in the provision of rail services
international standards for aviation Aviation
safety and security Logistics L-14-45-009 Develop a global business model to • The Saudi Railways Company
deliver high-efficiency rail services (SAR)
Logistics L-14-41-482 Apply global best practices in • General Authority of Civil / Saudi Railways Organization:
technology and innovation Aviation Reorganization of the Saudi Railways
Organization and the Saudi Railways
Company in one rail organization
Logistics L-14-41-483 Improve the performance of • General Authority of Civil
government entities operating at Aviation
airports Logistics L-14-45-010 Promote a customer-centric culture • The Saudi Railways Company
by providing high-quality railway (SAR)
services / Saudi Railways Organization
Logistics L-14-41-484 Improve the efficiency of Saudi • General Authority of Civil
airspace usage Aviation
Logistics L-14-45-011 Apply global best practices in • The Saudi Railways Company
technology and innovation to improve (SAR)
Logistics L-14-42-005 "Restructure and repair railways • Saudi Railways Organization
Sector performance
"
Logistics L-14-42-455 Improve railway safety • Saudi Railways Organization
Logistics L-14-42-459 Increase cargo capacity • Saudi Railways Organization
Logistics L-14-45-001 Linking economic activity centers • The Saudi Railways Company
in the Kingdom effectively and
efficiently through the development
(SAR) 5.C. Selecting Game-Changers
of a strategic railway infrastructure
Logistics L-14-45-003 Integration of rail services with • The Saudi Railways Company Strategic Initiative Initiative Name Leading Entity
each other and with other modes of (SAR) Pillar/ Number
transport to ensure effective logistics Cluster
operations in the Kingdom
Logistics L-14-09-003 Improve the import/export procedure • Saudi Customs
Logistics L-14-45-004 Quest to run the fastest rail network • The Saudi Railways Company (Stage 2)
in the Middle East and North Africa / (SAR)
Saudi Railways Organization: Ensuring
safety within the rail network system
Logistics L-14-45-007 Maximize the return on assets, • The Saudi Railways Company
including the rationalization of (SAR)
the total cost of ownership / Saudi
Railways Organization: Maximize
the revenues of the Saudi Railways
Organization from various sources to
reduce dependence on public funding
280 281
SECTION 6:
LOCAL CONTENT
AND ENABLERS
282 283
SECTION 6-1:
LOCAL CONTENT
284 285
Improving the productivity and

competitiveness of the local
energy sector by reducing the
usage of liquid fuel
(NIDLP-Local Content)
286 287
3.A.1. Key Local Content Challenges

The key challenges for enhancing the local content in the kingdom are summed up
in four themes:
1. The first theme revolves on not including the texts that guarantee the increase
of local content in the government contracts in the governmental competition
and procurement system or including them in a non-binding or easy-to-override
manner, as governmental procurement will be one of the most important
enablers to increase local content.
2. The second theme includes the concern arising from the additional cost if
local content is preferred. This was clearly seen through several meetings with
governmental entities and companies, as their fear of an increase in the financial
costs was evident. After reviewing previous experiences, it was realized that the
increase in prices might last for a short time. It is not expected to last for a medium
or long-term limit. This increase will be regulated by identifying an upper limit
for the local content preference. A part of these costs will revert to the budget
through the Zakat and taxes, as the amount of preference for the local content
will enhance the financial cycle of the additional amounts and other amounts
that will benefit the national economy.
3. The third theme is related to facilitating business practices. An increase in the

special requirements in each contract might make it more complicated, especially
for small and medium-sized enterprises, to do business with governmental
entities. The impact of this complexity could only be reduced by targeting major
governmental contracts that exceed SAR 100 million. As a result, small and
medium-sized enterprises will not be affected by these additions and will directly
benefit from the increase in the demand on local services and products provided
by major companies.
4. The fourth theme covers the competitiveness of the companies that will benefit
from the local content policies in case they completely rely on this feature as a
single competitive advantage (such as the competitiveness between foreign
and local companies). Given that the price preference is limited to a particular
percentage, foreign suppliers will have an opportunity to compete. This in turn
would motivate foreign suppliers to increase their local content by buying some
Oil storage station
local products or services.
288 289
3.B. Current Efforts

As for the private sector, the Local Content and Private Sector Development Unit has
signed strategic partnerships with eight major companies to raise their awareness
and provide the necessary tools for increasing the local content in their affiliated
3.B.1. Current local content efforts companies and sectors. The unit reviewed the mechanisms of local content preference
and gave suggestions for developing them. It also presented the mechanisms used
Saudi Arabia Vision 2030 aims at creating an economic reform in terms of local
for measuring the local content. The Local Content and Private Sector Development
content. In this regard, the Local Content and Private Sector Development Unit was
Unit will provide necessary solutions regarding its local content tools. The unit will,
established to lead the march of transformation in this field. The Local Content and
in general, implement incentive programs to encourage companies to increase their
Private Sector Development Unit created a framework, in which the demand on local
contribution in the local content. Finally, awareness campaigns and initiatives that
content represents a fundamental pillar, by developing a comprehensive approach
would enhance the locally-manufactured and high-quality goods, will be launched
that is based on involving the governmental and private sectors as well as individuals
to encourage families and individuals to direct their consumer spending towards the
to enhance the local demand on local goods and services.
goods and services of a high-quality local content.
There are also some ongoing endeavors in some sectors that have contributed to the
For this purpose, the efforts of the unit will cover various aspects including driving,
growth of the industrial sector in the Kingdom including the fisheries strategy that
coordinating and monitoring, developing policies, offering economic incentives,
was established by the Ministry of Environment, Water and Agriculture, but later was
raising awareness, training and providing supporting instruments (for instance: the
stopped and integrated with the program. There are also the works implemented by
local content portal and training procurement-related specialists).
the Saudi Military Defense Company in the military defense sector in the Kingdom.
These works represented a baseline for the sectors plans and their integration
with the program (despite the fact that the Saudi Military Defense Company is still
working on the development of the comprehensive strategy of the sector). Saudi
Aramco launched the «IKTVA» program for the local content. The program aims
at motivating the national supply chains. It also launched the Wa’ed Investment
Fund that comes under the same category. The two projects were integrated within
the NIDLP industrial equipment strategy. A number of local content initiatives are
currently being implemented in Saudi Arabia in the field of chemical industries
such as the empowerment initiatives that were adopted by a number of major local
companies.
At the level of macro-economy, the Local Content and Private Sector Development Unit
developed a definition and a methodology for the local content to assess the current
situation and identify the targets of the comprehensive economy. A methodology was
also developed to measure the local content in companies and contracts. As for the
governmental entities, the unit aims at increasing their local content by developing
the targets of the local content and activating the local content preference in the
governmental procurement system, as the unit will communicate with the Ministry
of Finance to submit its comments regarding the increase of the local content. On
the other hand, the Local Content and Private Sector Development Unit has become
an excellent center for providing help and support in local content issues for all the
programs that are related to the vision.
Logistics map of the Kingdom of Saudi Arabia

290 291
Improving the
productivity and
competitiveness
of the local
energy sector
by increasing
the efficiency
of power
consumption
4. Strategy
(NIDLP-Local Content)
(This is a shortened version. Kindly refer to the supplement to view a detailed version of the strategy)
292 293
4.A. Local Content Strategic Pillars
• Introduction
NIDLP success mainly depends on using the local demand to establish the strategic
competitiveness feature for priority industries. This is why the local content is
considered one of the enablers to achieve the targeted rates of contribution to the
Gross domestic product (GDP), create new job opportunities in all the industrial
sectors, and generate demand in these sectors and other economic sectors for their
enhancement and development.
The Local Content and Private Sector Development Unit (Namaa) was established
to support all economic institutions and reconcile the efforts exerted in the local
content and the Saudization opportunities in the various economic sectors.
• The contribution of the local content

Saudi Arabia Vision 2030 has set ambitious objectives for oil and non-oil sectors local
content. These objectives depend on the methodology that is based on spending.
Local content objectives of each of the program’s sectors were identified based on the
remaining cash methodology and the expenditure methodology in the local content.
Analysis and study of plant samples
294 295
• 4.A.3 Strategy
• Ghana aims at achieving • Prior to the Agreement on • The Kazakh Government sets
The local content strategy was developed to benefit from the following: a local content of 80% by the European Economic Area, Norway an 85% of local content for the
2020 for the groundwater used to prioritize national suppliers. labor force, a 20% for products
• Previous scientific experiences in this field and the resulting lessons (as seen in development projects Today Norway has succeeded in and a 10% for services
exhibit 4.1) developing its capabilities in the
advanced maritime platforms
• No labor force technologies through initiatives that • The Russian Government sets
• The revision of the direct and indirect aspects of intervention and the regulations are needed enhance supply chains. a 70% of local content for tools
and equipment and an 80%
but local content
internationally-implemented regulations to develop and preserve the local conditions to buy local for labor force localization
content (as seen in exhibit 4.2) service and products are
required as long as the
• Program for enhancing price difference does not
• Small and medium-sized the growth of the small exceed 15% compared to
enterprises support through and medium-sized the imported materials.
procurements enterprises
• Governmental program for

local content procurement
• Campaign for promoting
national products
• National companies’
entrepreneurship
• Conditions of the local program
content in governmental
procurements • Technology localization
• Incentives for companies strategy
• Small and medium-sized
enterprises programs
• Industrial
complexes • Identifying a 25% of the
development foreign labor force from
program • There are no direct • Local content regulations (including the total labor force costs.
regulations for the labor force conditions). Employing a Companies are committed to
labor force. There is 75 - 85 % of nationals, depending on the achieve a 35% of local content
cooperation between period during which the operator stays from products and services
the industrial and in the country
academic sectors to • Western Australia’s
• A 90% direct employment in production
• Amendment of the develop local labor regulations require a local
and operation, divided into 82% in direct
procurement regulations forces. Brazil developed content ranging between 40-
• Policies for the operators • Promotional campaign services companies, 73% in supporting
to support the local a national plan to build 50% (including the cost of the
in the oil & gas sector to for national industries services companies, and 82% in local
content a labor force in line labor forces). The government
enhance the local content • Local content in the companies. This percentage is expected
• Incentives for companies with the projects plans is looking into increasing this
(research and development) procurements of the oil & to increase in the coming years
for 5 to 10 years. percentage to 60%
gas sector
• Business platform
• Small and medium-sized enterprises
support through procurements
• Promotional campaign for national Direct regulations Indirect regulations No regulations
industries
Exhibit 4.2: An overview on the locla content regulations at the international level
Exhibit 4.1: International experiences in developing the strategy
296 297
Consequently, we developed a local content strategy that would increase the local • Current efforts to promote the local content
content with various economic elements, encourage the localization of opportunities
and contribute to the establishment of a local supplier base to help sectors achieve
their goals.
We are currently working on pushing for the expansion of the local content through
These roles have been developed in accordance with: the afore-mentioned aspects. We succeeded in identifying different levels of readiness
in all the roles.
1. The role of the public sector that aims at increasing the local content in the Role/Intervention Description Readiness
public spending through:
Goverment Governmental • Including conditions of the local content in
procurements procurement operations by providing the local
• Developing local content objectives
content plans, the local content points and
• Including the conditions of the local content in the governmental competition performance monitoring
and procurement system
Policy development • Including conditions of the local content in the
VRPs and working with the various governmental
2. The role of the private sector entities to develop policies that aim at supporting
the local content
• Establishing strategic partnerships with pioneering companies in industry to
help them implement the local content programs and improve their companies Private Partnerships with • Attracting pioneering industrial companies and
sector pioneering industrial coordinating the efforts of the local content
and sectors companies companies
• Launching the financial incentives program to encourage companies to increase
the percentage of their contribution in the local content Content Pioneers • Establishing the Content Pioneers Council
Council
3. The role of individuals Private sector • Dividing the incentives into three categories:
incentives financial incentives, removing barriers and
• Emphasizing people to direct their spending towards buying locally-manufactured obstacles, and honoring
products and national services, through national campaigns, initiatives and
Individuals Local content mark • Developing a methodology to put the similar
others and launching services and products under one category in the
a promotional local content earned points system (such as color
4. Common enablers campaign for the coding, a high-medium-low classification, labels,
“Made in Saudi or through the Saudi Standards, Metrology and
Arabia” products Quality Organization
• Training the work teams specialized in procurements
• Developing a special e-tool for the local content Awareness and • Launching awareness and marketing campaigns to
• Supporting major projects marketing campaigns improve the image of the increasing local content
products and introduce the economic benefits for
the consumption of the local content products
Localization opportunities have been identified in the various priority sectors (such as
electrical tools, industrial tools, renewable energy tools, medical supply, medicines, Enablers Training on the local • Providing training on the terms of the local content,
consumables in the mining sector, and services). content main performance indicators, assessment and tools
Local content portal • Developing the local content portal that includes
a local content calculator and a guidebook for
suppliers
Supporting contracts • Supporting governmental entities in the local

of major projects content in the contracts of major projects
Exhibit 4.3: A list of the various efforts for expanding the local content
298 299
• Government procurements
Increasing the local content with the procurements of Aramco and other public Consequently, the local content embedding mechanism in the different elements
entities. This is considered one of the most important pillars in the program to of the government procurements processes were clarified (Exhibits 4.5 clarified the
enhance the demand on local industries. Therefore, ambitious objectives have been aspects in which the elements of the local content could be embedded)
developed for the various ministries to increase their contribution in the local content.
Performance
Preparation/ Procurement Contract
Bids and applying
Main Considerations pre-submission assessment awarding
requirements
• The baseline and the targets have been calculated in accordance with the Intervention • Dissemination • Registration • Technical • Embedment • Embedment
government spending in each sector and the local content points for each sector points of the local in the local and financial of the local of the local
• The targets of the local content have been discussed and reviewed with each content content portal assessment content content
objectives and in the coming of the local plan in the assessment
government entity calculation phases as a content competitions process in the
• Calculations have been made based on the data of the Ministry of Energy, mechanism on condition for contracts performance
Industry and Mineral Resources government submitting assessment
entities bids • Imposition of
• Data for Aramco and the Ministry of Defense were collected directly from them penalties and
fines upon
breaching the
Exhibit 4.4: Baseline and targets of Aramco and the government entities obligations
of the local
content
Guiding
models
An official embedment of the elements of the local content in the government tendering and
procurement system
Exhibit 4.5: Integration of the local content in the procurement processes ½
300 301
To embed the elements of the local content in the government procurements, the Article 4:
government procurement system should include the following articles: Namaa can recommend obliging contractors with government entities to adopt a
specific percentage of the local content out of the total value of the contract.
Article 1: Reasons for adding the Article:
Namaa shall be responsible for issuing the necessary recommendations on the local Given the fact that the methodology of implementing the local content in the
content calculation mechanism, how to apply it and follow up with its implementation. government procurements requires a legal obligation for the contractors regarding
It is also responsible for establishing a list of the products that should be provided by the submitted percentage in the local content plan, there should be a legal text that
local producers. allows the government entity to implement this methodology.
Article 2: Article 5:
Namaa shall be responsible for issuing the necessary recommendations to determine Namaa can recommend obliging government entities to allocate a percentage of the
the size of the local content in the technical and financial assessment and adopting total value of their contracts for the local content.
all that is related to the local content in competition documents, prequalification Reasons for adding the Article:
documents, contract forms, and contractor evaluation models.
As part of the data collection and analysis phase, Namaa identified the percentage
Article 3: of the local content contribution in the total procurements of government entities in
Namaa shall be responsible for issuing the necessary recommendations to extend the past years. On the other hand, Namaa specified the targets for each government
the duration of the contracts framework agreements that include opportunities to entity in terms of the percentage of the local content contribution in the total
increase the local content and Saudize industry and technology transfer. procurements of each entity in an attempt to achieve Namaa’s objectives, especially
that developing such targets would encourage government entities to allocate a
Reasons for adding Articles 1, 2 and 3: percentage of their procurements for the local content and achieve the maximum
Since its establishment, Namaa has been working on finding a strategy to develop benefit from government spending.
the local content through working in harmony with several entities, reviewing several
international and local experiences to benefit from them and ensure reaching a Article 6:
clear implementation methodology and strategy to develop local content through Namaa’s recommendations that are mentioned in the articles 1,2,3,4, and 5 are
government procurements. It is therefore appropriate that Namaa is the entity referred to the minister of finance for approval. In case the minister refuses Namaa’s
responsible for the aforementioned tasks to ensure that this methodology will not be recommendations, he will write a report explaining the views and arguments of the
affected by the decisions of other entities, which could weaken the role of the local two parties and then refer it to the Council of Economic and Development Affairs
content in government procurements, thus negatively affecting the objective behind that will look into it and direct the ministry of finance into taking the right decision.
the establishment of Namaa in the first place. The methodology of Namaa aims at
specifying the size of the local content during the financial assessment phase of the Reasons for adding the Article:
submitted offers. The competing parties shall submit a local content plan as part Given the fact that Namaa is the entity responsible for the governance of the local
of their submitted bids, including the competitor’s local content percentage. This content and the mechanisms for increasing it in various economic sectors, and
methodology urges competitors to develop a plan that includes a high percentage that it conducted detailed studies on the suitable mechanisms for increasing the
of local content to ensure a high chance of winning the competition. It is worth local content in government procurements and the best ways for implementing
mentioning that Namaa currently has all the supporting tools to start implementing them, we believe that the said unit is the concerned party. Given the fact that the
the local content in the government procurements, however, the new government ministry of finance is the responsible entity for the rationalization of procurements
tendering and procurement system should be issued with these articles included costs, then the minister of finance should be the one responsible for approving
to establish a legal tool that would allow the implementation of the local content these recommendations. In case the minister refuses to approve Namaa’s
methodology in government procurements to achieve Namaa objectives in particular, recommendations, he will refer them along with the reasons behind his refusal to
and Vision 2030 in general. the Council of Economic and Development Affairs to avoid conflicts between the
duties of the Ministry of Finance and those of Namaa.
302 303
We contacted a number of entities to accelerate the implementation of this initiative: • Industrial partnerships
• Ministry of Finance: The ministry held a meeting to align the approaches and In the private sector, we launched partnership programs with pioneering industrial
embed the conditions of the local content in the new government tendering companies in the Kingdom to contribute to the efforts of the local content (starting
and procurement system. The meeting resulted in agreeing on linking Namaa’s with eight companies in the first phase, with a plan to expand to reach 100 companies
local content portal with the platform of the National Government Procurement in the coming phases). The partnerships include four main aspects (as shown in
Electronic System (Etimad), an affiliate of the Ministry of Finance. exhibit 4.6) that aim at annually achieving about SAR 30 billion in the local content
of these eight companies by 2020.
• Ministry of Economy and Planning: The ministry was tasked with increasing the
local content in all the government operating expenditure projects in Medina.
Partnerships with pioneering industrial companies include four categories
• Ministry of Health: The ministry agreed with eight suppliers on procurement pilot
projects for the local content.
Methodology Baseline and Training Procurements
targets
• Ministry of Transport: The ministry agreed with the four largest suppliers on
procurement pilot projects for the local content upon awarding the contract.
• Policy Development
Having access to the Helping in the local Conducting training Embedding local content
tools and explaining the content baseline of the on the tools of the conditions in the
In addition to the government tendering and procurement system, Namaa embeds methodology of the local company and suppliers local content (such as companies’ procurement
the conditions of the local content in VRPs and business management programs and content introductory workshops) contracts
coordinates with government entities to develop policies that would impact the local Developing the baseline
Allocating the local and the targets for
content, especially: content methodology suppliers
based on the company’s
• Namaa provides guiding principles and quality assurance mechanisms for the needs
baseline and objectives of the local content in various VRPs.
Pioneering industrial companies have been classified for the first phase
• Namaa holds continuous talks with different government entities (such as the
Ministry of Labor and the Small and Medium Enterprises General Authority (to Primary list (8 The primary list includes eight Saudi companies for
develop and enlist the local content in the new polices. companies) the first phase of local content partnerships such as
SABIC, Saudia, Maaden, Saudi Electricity Company,
First Phase Zameel Steel, Savola Group, Bahri, and Saudi Telecom
• Local content assists in recognizing the Localization opportunities Company (STC).
Complete list A second list that includes around 100 pioneering

Saudi companies (mostly pioneering national
Second Phase (around 100 companies) that will be classified for partnerships in
companies) a later phase
All other Other small companies will be targeted through

companies specific incentives
Exhibit 4.6: Scope of the local content partnership program

304 305
• Private Sector Incentives Program • Local content sign
In addition to the partnership program, we developed an incentives program for the At the individual level, we plan to prepare and launch campaigns under the logo
private sector to enhance the local content. The incentives program is divided into “Made in Saudi Arabia”. These campaigns aim at increasing awareness, affecting
three categories: the consumption patterns of individuals, and encouraging the purchase of locally-
manufactured products to increase the demand on national products (details are
• Financial incentives such as export promotion, low-cost training, research and shown in exhibit 4.7)
development cost recovery and low taxes
4.A Launching “Made in Saudi Arabia” campaign
• Barrier removal including the easy access to funding, the simple licensing and
registration process, and the easy legal procedures Description • Developing the “Made in Saudi Arabia” initiatives for specific
products that met the minimum conditions of the local content
• Honoring of pioneering companies in the local content through media campaigns while focusing on specific locations
and awards for the local content best practices. • Working on three initiatives by the Ministry of Economy and
Planning, Saudi Export Development Authority, and Nama›a Al
Munawara
Purpose • Increasing the local demand on national products and reducing

the imports of finished products
• Improving the image of the Saudi product outside the Kingdom
and increasing foreign spending on Saudi products
Made in Saudi Arabia
Made in Medina
Made in Mecca
5.B Increasing the awareness of the national product and affecting the individual’s
consumption pattern
• Raising the awareness of consumers of national products

• Achieving pride in national products through raising the awareness of
consumption
• Promoting companies that manufacture national foods and products
• Encouraging the production of local food and beverages and consumption
products
• Launching a marketing campaign for specific products at the regional level
Exhibit 4.7: Individuals’ Role
306 307
• Enablers • Local content gateway

We are mainly working on developing and providing interrelated enablers for the We are working on developing a local content portal to provide implementation
various public entities to raise the employees’ understanding of the aspects of the support services for different public and private entities in calculating their percentage
local content and their ability to implement these enablers (exhibit 4.8) of contribution in the private local content (exhibit 4.9).
Training on local content model
• Understanding the definition of the local content, baseline, targets, Local content calculator
1
role of Namaa, and the private sector development • Establishing the local content calculator to facilitate the
calculation of the local content points for companies and
• Understanding the challenges related to the government manage contracts
2 procurements processes and defining the major performance
indicators for local content and the local content points
Reports and follow up
• Implementing and assessing using key performance indicators for • Developing follow-up instruments for managing
3 procurements in government entities
the local content in government procurement competitions
• Empowering government entities to follow up the
• Understanding and supporting the dissemination of the local progress and the local content points
4
content tools with an expanded scope of procurement processes • Preparing reports for government entities and policy
makers
Local content library

• Establishing guidelines to develop local content objectives
Implementing these objectives through two training models • Developing data on the local content indicators in the
sector and at the national level
• Developing local content training material
Direct training on the local content
• Providing the main training content for procurements Suppliers guideline

teams in government entities • Developing a guideline that gives information about the
local content points (explaining the methodology and the
training course)
Local Content Ambassadors Program
• Assigning trained ambassadors to conduct local content

training courses, act as the pioneers of the local content • Local Content and Private Sector Development Unit (Namaa)
and lead change in the government entities • Working with the Ministry of Finance to develop the local content portal
using the best international practices
Training experts and specialists will conduct the training courses Exhibit 4.9: Local content portal
Exhibit 4.8: Local content training
308 309
• Localization Opportunities • Impact

In addition to Namaa’s efforts, NIDLP enhances local content growth through the Localization
of the value chains for some industrial sectors (as shown in the Sectors’ Strategies section in Local content will positively contribute to most macro-economy indicators; however,
this document) To achieve these objectives, the program’s strategies identified a number of it will negatively affect competitiveness in case of not being carefully implemented.
initiatives that would enhance the national aspect in various sectors. The following table lists Namaa will continue to work closely with the private sector to ensure the management
these initiatives and identifies their role in the program’s plan. of trade-offs in line with the right offers and reduce negative effects.
Initiative Theme Impact Explanation
Strategy Initiative name Expected impact
number
Competitiveness • Having local companies depend on government procurements
Renewable 1-03-27-002 Improvement of auction Saudizing the international manufacturers of
in case of the absolute preference, would result in reducing their
Energy Supplies terms on renewable energy original equipment and indirectly Saudizing the
main suppliers in Saudi Arabia competitiveness. This can be avoided by specifying the price
preference so that non-local content will have an opportunity to
Medicine 1-04-10-004 Local content policy for Supporting medicine/vital medicine compete.
pharmaceutical industry manufacturers to develop their products
through a value-added chain Easy business • Increasing the amount of required information will make
performance business performance in Saudi Arabia more complicated. This
Medical 1-05-10-004 Local content policy for the Helping the medical equipment and supplies can be avoided by targeting only major government contracts
Equipment and medical equipment and manufacturers to develop their products that exceed SAR 100 million
Supplies supplies sector through the complete values chain
Government • Giving a price preference for the local content increases the cost
Human Capital N-21-14-009 Human capital development Increasing the percentage of Saudization in the
Development program for industrial mining sector by 50% spending of the contracts on the budget. This can be avoided by identifying
clusters and linking the percentage of preference to the local content.
Moreover, a part of these costs will revert to the budget through
Support for N-23-14-004 Development of the Increasing the number of small and medium- zakat and taxes given the fact that the local content’s money will
Industrial clusters’ supply chain sized enterprises in priority clusters by three circulate in the national economy
Clusters times
Development
Non-oil GDP • Increasing the demand on products and services of a high local
growth content
Machinery and 1-01-10-001 Local content policy for Establishing legislations to enhance the
Equipment machinery and equipment purchase of the equipment made in Saudi
clusters Arabia Nationals • Increasing the employment of Saudis, as the local content
employment enhances spending on Saudi employees
Renewable 1-03-14-001 Local content policy for the Saudizing first-category international
Energy Supplies renewable energy industrial manufacturers of original equipment in Saudi
Foreign • Enhancing the investment appeal in the Kingdom for local content
clusters Arabia
investment preference thus encouraging foreign companies targeting the
Saudi market to expand the local value chain
Oil & Gas 1-08-14-001 Local content program for Increasing the percentage of Saudization from
Related chemicals about 36% during the current time to 70% by
Industries 2021 Balance of • Enhancing the investment appeal in the Kingdom for local content
payments preference thus encouraging foreign companies targeting the
Local Content O-15-10-002 Business linkage platform Increasing the number of small and medium- Saudi market to expand the local value chain
sized enterprises in priority clusters by three
times Exhibit 4.10 : The impact of the local content on the macro-economy indicators
Mining M-12-34-027 Encouraging the Enhancing the development of the mining

development of suppliers value chain by local suppliers through
facilitating the indirect purchase contracts and
encouraging joint projects with major local
companies
Mining M-12-34-033 Directing the Saudization Achieve 50% Saudization rate in the sector by
process over the long term 2025
and supporting growth over
the long term
310 311
4.B. Strategic Considerations – Local Content
• Calculation Definition and Methodology

Countries use different definitions and methodologies to calculate local content that
varies depending on the local context and aspirations of the country. We reviewed
several regional and international definitions for the local content and looked into the
previous study that the Ministry of Energy, Industry and Mineral Resources conducted
to find a definition for the local content. As a result, we defined the local content as
the total spending in the Kingdom of Saudi Arabia through the participation of the
Saudi elements in the labor force, goods and services, assets, and technology.
As for the local content calculation methodology, the local content is calculated by
taking into account the total amount of money spent on several elements including
employees’ salaries, research and development, local goods and services and others.
A local content portal is currently being developed for competitors to use in the
government projects to enter their own local content information. The portal will
provide the necessary information about the local content in various projects,
ministries, and economic sectors, thus allowing us to conduct more analysis and
identify the opportunities for increasing the local content.
Crushers in a mining site
312 313
The Financial
Empowerment Initiative
has three main pillars:
5. Existing Initiatives identifying funding needs,
identifying gaps in the
(NIDLP-Local Content) current financial system,
and recommending changes
and new products / entities.
314 315
Cluster Cluster
Local Content O-15-10-001 Increase local content in the Saudi • Local Content and Private Local Content O-15-10-001 Increase local content in the Saudi • Local Content and Private
economy Sector Development Unit economy Sector Development Unit
(Namaa) (Namaa)
Local Content O-15-10-002 Business Links Platform • Local Content and Private
Sector Development Unit
(Namaa)
316 317
SECTION 6.2:
FINANCIAL ENABLEMENT
318 319
3.1 Main Challenges
• Financial Enablement 4. Logistics
Some challenges in the current financial system affect NIDLP sectors, and they mainly This sector faces some challenges funding infrastructure projects, including:
relate to the following: • Lack of a “Central Coordinating Authority” to supervise infrastructure projects
and their requirements.
1. Financial enterprises • Limited infrastructure projects liquidity, given the high capital expenditure
2. Financial products requirements.
3. Sectors • Lack of economic feasibility of infrastructure projects in some of assets (like
railroad projects in the Kingdom).
• Limited priority given to the funding of infrastructure projects through PPPs in
3.1.A Sector Challenges: the Kingdom.
Certain NIDLP sectors face some challenges in obtaining needed funding, which is in
some cases related to the nature of the sector and the risks involved..
As for the support services sector:
• The Saudi Industrial Development Fund supports the support services projects
1. Agriculture and Aquaculture in industrial cities only, and there is no desire for commercial banks to finance
new support services projects without selling agreements that guarantee clear
The sector faces several challenges, such as: cash flows for the project. Investors find it difficult to obtain financing for support
• High number of tangible risks, like poultry being affected by diseases services outside industrial cities.
• Debtors’ inability to provide enough guarantees in most cases
• Limited financial skills and potential leading to applicants providing substandard
feasibility studies
• Inability to evaluate project feasibility because of poor practices related to
financial statements reporting
2. Military Industries
• This sector is facing challenges in obtaining funding from commercial banks in

the Kingdom because of some legislations and regulations relevant to funding
military companies.
3. Mining
• There are some challenges in funding exploration and mine development,

as capital markets, especially in the Kingdom, are not adapted to high-risk
exploration companies presently lacking cash flows due to the regulations that
are unsuitable for companies with no positive cash flow (for example, pre-project
companies)
320 321
3.1.B Financial Products Challenges 3. Increasing regulatory gaps in the financial sector, which are the focal point of the
Financial Development Program in the kingdom.
Some initiatives relevant to certain financial products were determined, such as:
4. Contribution of the Saudi Industrial development Fund in providing loans to a
1. Absence of a single party that focuses on providing export funding to support the wide variety of different industrial sectors, including the projects of a strategic
Kingdoms’ exports through different funding solutions and products. cachet that may constitute a high risk, thus requiring the increase of the level of
reserves and revenues to deal with such projects.
2. Limitation and ineffectiveness of the private sector and venture capital
participation in funding investments, as a result of shortage in supportive and
suitable exit opportunities, in addition to the barriers in funding acquisition
with borrowed funds. The unavailability of market data has led to a decrease in
the number of deals in the sector, as well as a reduction in private property and
venture capital transactions in the Kingdom. 3.B. Current Efforts
3. Not focusing on small and medium-sized enterprises, given that the commercial
loaning focuses on construction and contracting investments that are mainly Challenges faced by the financial system in the Kingdom are addressed through a
available for large enterprises. Funding small and medium sized companies is number of programs and authorities with which the NIDLP continuously cooperates
also hindered by high tangible risks and unawareness of finance options for small and coordinates to unify efforts and maximize benefits resulting from various
and medium sized enterprises, as well as the banks’ limited ability to deal with projects and initiatives.
small and medium-sized enterprises.
The Financial Development Program determined a number of initiatives, especially
4. Difficulty in securing required funding for long-term-capital-needs projects, regulatory ones, to face challenges relating to market debt capital and enhance
especially with the absence of long term deflection that banks can associate to. private equity system and capital investment funds. The small and medium-sized
enterprises strategy has also determined a number of initiatives to increase financial
5. Unavailability of working capital funding offers to projects, especially in their support and reach these enterprises, such as the development and expansion of the
early stages. role of the Kafalah Program.
NIDLP has also determined, through financial enablement, a number of initiatives

to address some different challenges, mainly transferring the Saudi Industrial
3.A.3. Financial Companies Challenges development fund into the main financial source for the industrialization in the
Kingdom. The transformation requires aligning the fund strategy with the program’s
These challenges include:
financial requirements, allowing it to be the main financial supporter of the program
sectors, as well as establishing and launching the Saudi Arabia Exim Bank. Some of
1. Concentration of public equity financing institutions on large companies in some
the initiatives relate to regulatory issues and facilitating measurements to obtain
controversial sectors, which prevents the development of other sectors and small
funding, especially for small and medium-sized enterprises; or to the activation
and medium-sized enterprises.
and facilitation of the mining sector finance, especially in the exploration stages
and primary projects; or to studying and evaluating the ideal model for funding
2. Unavailability of a unified record for debtors and bonds in the kingdom, which
infrastructure projects in the kingdom.
limits the banks’ will to give loans as a result of the lack of information about
assets guarantee and financial performance.
322 323
4. Strategy
(NIDLP-Financial Enablement) Support and empower the
private sector with an estimated
105 billion Saudi riyals
(This is a shortened version. Kindly refer to the supplement to view a detailed version of the strategy)
324 325
4.A. Strategy Pillars
The Financial Enablement Program aims at securing suitable financial products
for the sectors targeted by NIDLP through relative institutions, based on a suitable
governance model. Therefore, The Financial Enablement Program will focus on three
areas:
1. NIDLP financial needs, including the determination and restriction of the financial
enablement needs of every sector within the program.
2. Determining existing gaps in the current financial system at the level of all sectors
and the system as a whole, in addition to coordinating with other different
initiatives and programs related to developing and enhancing the financial
system in the Kingdom to ensure the unification of efforts and better results.
3. Providing recommendations on the new required products, authorities, and
changes in the system (like regulations) in addition to the development of the
required implementation plan which includes clear initiatives to fill mentioned
gaps.
326 327
Supporting the increase

in non-oil exports with a
capital of SR 5 billion
(NIDLP-Financial Enablement)
328 329
Cluster Cluster
Financial N-16-12-008 Transform the Saudi Industrial • Saudi Industrial Development Financial N-16-12-008 Transform the Saudi Industrial • Saudi Industrial Development
Enablement Development Fund to become the key Fund Enablement Development Fund to become the key Fund
financial enabler of the Kingdom's financial enabler of the Kingdom's
industrialization industrialization
Financial N-16-12-746 Amend the mandate of the Saudi • Saudi Industrial Development Financial N-16-18-012 Establishment of the Saudi Export • Saudi Exports Development
Enablement Industrial Development Fund Fund Enablement and Import Bank (operational phase) Authority
Financial N-16-14-005 Clusters development fund • National Industrial Clusters

Enablement Development Program
Financial N-16-14-010 Industrial support and financial • National Industrial Clusters

Enablement incentives Development Program
Financial N-16-18-011 Establishment of the Saudi Export • Saudi Exports Development

Enablement and Import Bank (establishment Authority
phase)
Financial N-16-18-012 Establishment of the Saudi Export • Saudi Exports Development

Enablement and Import Bank (operational phase) Authority
Financial N-16-21-002 Regulations and procedures for • Small and Medium Enterprises
Enablement accessing capital General Authority (Monshaat)
Financial N-16-21-004 Improve working capital • Small and Medium Enterprises

Enablement General Authority (Monshaat)
Financial N-16-31-009 Establish a national fund for • Saudi Geological Survey

Enablement exploration services
Financial N-16-32-001 Funding of infrastructure projects • National Industrial

Enablement Development & Logistics
Program
Financial N-16-34-007 Amendment of secondary market • MEIM - Deputy Ministry For

Enablement regulations Mineral Resources
330 331
SECTION:
RESEARCH,
DEVELOPMENT
AND INNOVATION
332 333
3. A. Main Challenges 3.B Current Efforts
The weak capacity to lower the lifecycle of products and market them at competitive As part of the efforts to set up NIDLP strategies and initiatives, the various tasks of
prices is among the challenges facing the national industrial sector in the kingdom, the programs to fulfill the kingdom’s Vision 2030 were reviewed to determine the
as innovative international capabilities are growing, supported by high technical high level of correlation among them. The programs include National Companies
skills. This issue requires investing in RDI to boost production and enhance the Promotion Program, Public Investment Fund Program, Strategic Partnerships
competitive capabilities of the kingdom. Future industrial development in the Program, National Transformation Program, Saudi Character Enrichment Program,
kingdom needs a new approach based on speeding up innovation to preserve the and The Housing Program. This requires exerting efforts to define the role of the RDI
current characteristics and creating new ones by supporting technical innovation ecosystem in implementing all the strategies and initiatives for Vision Achievement
and developing a national RDI ecosystem, and mobilizing the human capital. The Programs, and the importance of interrelation among the system’s initiatives.
National Industrial Development and Logistics Program verifies this orientation
through a strategy for RDI, and executing it as one of the program’s enablers, as well Concerning the efforts to support and develop the RDI ecosystem to fulfill the
as utilizing it to exhibit out new competitive capabilities in the execution of its own vision’s objectives, the initiative of supporting scientific research and development
energy, industry, mining and logistics initiatives. has been adopted in the universities supervised by the Ministry of Education as part
of the National Transformation Program. The initiatives of King Abdul-Aziz City for
However, initiatives relating to RDI strategy face several challenges that could Science and Technology have been already adopted in the National Transformation
take their toll on the execution of their programs and fulfillment of their goals. Program in 2016. Through these initiatives, KACST has been able to adjust its very
Developing the weak policies, regulations, and legislations of the RDI ecosystem and own programs to those in the second phase of The National Plan for Science,
the related regulations, is among the primary challenges that could impair support Technology and Innovation, and has managed to even replace it. Considering the
for investing in the system and impair the coordination and cooperation among number of initiatives for the RDI strategy that exist as enablers in the NIDLP a high
its components. Other main challenges also include the limited and unsustainable national committee will ensure consistency between them in order to manage RDI
financial support needed for implementing the initiatives for RDI. This is attributed to at a national level. Ultimately, the purpose would be to optimize all efforts and serve
the lack of awareness of the industrial sector and decision makers of the importance national objectives.
of investing in the RDI ecosystem, the weak capacity to foresee and define the
promising technologies that need development and competitiveness boosting, and
the absence of a long-term roadmap for NIDLP sectors, which in turn would ensure
the conformity between the RDI strategy from one hand, and the programs of its
initiatives from the other.
Moreover, the RDI ecosystem faces other challenges, most importantly the non-
existence of national programs to distribute and allot the state budget’s specialized
budgets for research and development programs and coordinating among the
programs, the non-existence of a system for the assessment of the performance of
the research, development systems and the effect this has on the national economy,
including conducting special surveys, the non-existence of a national plan according
to which all the government’s sectors and the private sector operate, and that results
in specified policies and programs aimed at developing technical human resources
and national innovative capabilities.
334 335
The R&D and innovation
strategy will be a driving
force for achieving the
ambitious 2030 vision
goals by supporting the
private sector in general
and the small and medium
enterprises in particular.
4. Strategy
(NIDLP-RDI)
336 337
4.A. Research, Development & Innovation

Strategic Pillars
• Preface • Research, Development and Innovation Lifecycle
The RDI lifecycle is comprised of three main stages: research, development, and then
Research, development and innovation are considered a key enabler for the NIDLP. innovation. The cycle starts by doing the basic researches and ends with innovating
This means that the RDI abbreviation strategy will act as a supporting impetus for and manufacturing products that have a high added value..
the fulfillment of Vision 2030 ambitious goals.
The RDI abbreviation strategy, when successfully implemented, will have a positive First Stage: Research
impact on the kingdom’s competitive and productive capabilities, by producing and
developing new products, operations and services that would boost growth in the At this stage, universities and research centers from the public and private sectors
kingdom and push up its ranking through the following targets: conduct the basic researches that aim at generating knowledge, regardless of the
feasibility of its application. The results of these researches are intangible until after a
• Improving the ranking of the kingdom in The Global Competitiveness Index while, and often their scope is natural sciences, mathematics, physics, among others.
• Increasing the contribution of the small and medium-sized enterprises to the Hence, basic research are a long-term strategic investment that aims at developing
GDP a number of scientific skills necessary to boost the ranking of the kingdom among
• Increasing non-oil government revenues other countries leading in the fields of science, technology, and innovation.
• Increasing private sector contribution
• Increasing the share of non-oil exports in GDP Second Stage: Development
• Increasing direct foreign investments in GDP
• Strengthening the kingdom’s position among economies worldwide National research institutions aim at the development stage to perform developmental
• Increasing dependence on local capacities in industry, energy, mining and logistics researches that aim at generating knowledge. However, these researches are oriented
• Enhancing the participation of women in the workforce towards practical goals and based on performing experiments to solve existing issues
• Improving ranking of the Kingdom in Logistics Performance Index and developing new products, operations, or services. Therefore, developmental
researches empower the Kingdom to establish and develop national industries and
services capable of competing at national and international levels, which would in
turn elevate the national developmental and industrial capacities and enhance and
diversify the kingdom’s sources of income.
338 339
Third Stage: Innovation • Introduction

This stage focuses on developing the Kingdom’s innovative capacities to uplift its The RDI strategy comprises the following:
competitiveness in marketing the outputs of research and development. During this • Group of compatible policies and programs to improve the research, development,
stage, coordination and partnerships among the research and development entities and innovation enablers.
and the private sector companies, are ensured in order to produce and manufacture • Programs to enable and detect collaborative links among acting entities that
the prototypes developed in the past stage. form the RDI ecosystem
• Roadmaps and special programs for RDI to upgrade targeted sectors
Exhibit 1 illustrates the RDI lifecycle, technology readiness level in each of the stages, • Governance framework meant to formulate policies and systems, and overlook
and the role of various entities in implementing them. the implementation of the strategy
Research Development Innovation Scope of Research, Development and Innovation Strategy
R&D Enterprises
Technology transfer National It includes all the RDI efforts and activities to develop the national industry and
facilitators Champions logistics in:
• Governmental entities
• Industrial entities
• Academic institutions
• Business sector
Incubators and
Measuring Success of Research, Development and Innovation Strategy
National research
centers accelerators
Outputs of Planning Phase:
• Properly-defined policies and regulations
• Directed initiatives and programs
• Ambitious and feasible main performance goals
• Appropriate budgets
• Effective contribution from partners
Research centers in Technical Parks Small and medium-
universities sized enterprises Outputs of Execution Phase:
• Growth of advanced technology exports
• Growth of RDI outputs
• Improvement of the kingdom›s ranking in The Global Competitiveness Index
Technical
Readiness Level |1 | 2 | 3 | 4 | 5 | 6 | 7 | 8 | 9 |
340 341
• Research, Development and Innovation Strategy 1. RDI Enablers

Enablers are the key elements of the RDI ecosystem, and they should be developed
The RDI strategy aims at developing a consistent ecosystem for RDI that would in order to attain an effective national system. The enablers of RDI include
boost the competitive capabilities of the national industry and logistics. This could expenditure, human capital, infrastructure, and the regulatory framework.
be achieved through a coherent system comprised of a number of enablers, active The RDI strategy aims to improve the enablers through formulating a group of
entities, and sectors in need of governance, in order to improve and uplift the consistent policies and implementing a number of reformatory programs and
competitiveness of the system’s outputs. Exhibit 2.2 illustrates the elements of the initiatives that include adopting a program to prompt industrial companies to
RDI strategy, which is comprised of the following:: carry out RDI activities.
Governance (National Committee for RDI) 2. RDI Actors

The RDI ecosystem is comprised of a number of actors that perform specific
and distinct roles to ensure ecosystem performance. These actors include: RDI
institutions, technology transfer facilitators, local firms, government entities,
Sectors and international owners of technology. The RDI strategy aims to enable actors
in the RDI ecosystem and align their activities with those of related parties to
Energy Logistics Mining Industry guarantee the coordination of all exerted efforts through several programs, such
as the program of the grid of offices concerned with national technology transfer.
Actors
3. RDI Sectors
RDI Technology Local Governmental International NIDLP focuses on four main sectors: energy, logistics, mining and industry. The
institutions Transfer Firms entities Technology RDI strategy targets putting forward roadmaps and strategies for RDI sector-
Facilitators Owners specific to improve each sector competitive capabilities, such as the program to
develop and nationalize shipping control technologies in the logistics sector.
Enablers 4. Governance
The RDI strategy aims to form an independent national committee concerned
Expenditures Human Infrastructure Regulatory with governing RDI, formulating policies and regulations, supervising the
Capital Framework entire ecosystem, enhancing the coherence and coordination of its policies, and
evaluating the implementation progress of its initiatives and assessing their
Research, Development and Innovation Ecosystem
outputs.
Research Development innovation
Research, Development and Innovation Outputs
342 343
• Research Development and Innovation Enablers • Promote science, technology, engineering and mathematics (STEM) awareness
among children, youngsters, fathers and mothers.
Enablers are the main elements in the RDI ecosystem, which ought to be developed • Address low woman participation in the fields of sciences, technology, engineering
to form an effective national system. The RDI enablers include expenditure, human and mathematics.
capital, infrastructure and the regulatory framework. In Exhibit below, it represents • Qualify and retain national talents through several training programs.
an evaluation of the status quo of the RDI enablers in the Kingdom of Saudi Arabia. • Provide financial and tax incentives to attract international talents and encourage
The status quo of the expenditure, human capital, and infrastructure enabler proved Saudi Arabia them to work in R&D.
to be poor, while the framework enabler was extremely poor.
3. Infrastructure
Evaluation of the status quo of the RDI enablers.
Infrastructure in the RDI ecosystem can be conceptually viewed follows:
• Research and Industrial Labs: Exhibit 4.12 shows the distribution of core
Expenditure laboratories across the Kingdom, where there are two core laboratories, the first
in Riyadh region and the second in the Western Province. There are also seven
Human capital supercomputers distributed across the Riyadh region, and the Eastern and
Western provinces. The Eastern Province is also home to the Kingdom’s only
ideation lab..
Infrastructure
Primary research laboratories in Kingdom of Saudi Arabia
Regulatory
Makkah Region
Core labs – KACST
Riyadh Region
Aziz – KAU
Core labs – KACST
1. Expenditure Shaheen – KACST
Sanam – KACST
Shaheen 2 – KACST
It refers to the sustainable funding of RDI. It has several sources include government
funding, private sector funding, grants, and endowments, among others. It is known
that there is a close relation and a direct correlation between the gross expenditure
on RDI activities, and economic growth and prosperity. Consequently, based on Eastern Province
international benchmarking, and considering the importance of sustainable funding Faris – Saudi Aramco
for RDI, we recommend the following: Makman – Saudi Aramco
• Offering incentives like grants and tax incentives to encourage industrial companies Makman 7 – Saudi Aramco
to undertake RDI activities.
• Measuring the economic impact of the output by the RDI ecosystem output in the
Kingdom.
Visual labs Supercomputers Core labs
2. Human Capital
Exhibit 4.12: Research laboratories in the Kingdom of Saudi Arabia
It is known that that there is a strong link between a country’s GDP and developing its
Exhibit 4.13 shows the distribution of industrial labs across the Kingdom where there
human capital. Consequently, based on international benchmarking, and considering
are 11 testing labs in each of the Riyadh region, Eastern and Western Provinces, and
the importance of human capital and their substantial effect on the RDI ecosystem,
Al Madinah region. There are 10 fabrication laboratories in Riyadh, the Eastern Region
we suggest the following:
and the Western Region. The Eastern Region hold the only prototyping laboratory.
344 345
Industrial laboratories in the Kingdom of Saudi Arabia 4. Regulatory Framework
Madinah Region It refers to the legislations, regulations and procedures related to supporting and
SAUDI LABS LTD – Madinah strengthening the RDI ecosystem. The include for example the following:
Eastern Province
TCR Arabia – Yanbu Saudi Labs Ltd – Khobar
• Intellectual property policies and laws
Azzaz Test Lab – Khobar
Riyadh Region • Technology transfer agreements policies and regulations
GCC Electrical –
SAUDI LABS LTD – Riyadh Dammam • Revenue sharing between inventors and employers policies and regulations
SAUDI LABS LTD Tcr Arabia – Dammam • Policies and regulations that allow government researchers to set up startups to
N2 – Riyadh market their intellectual property
Tcr Arabia – Jubail
PL Fablab KSA – Riyadh • Dispute resolution policies and regulations
Fablab Arabia – Jubail
Fablab Arabia – Riyadh
Bright Up – Khobar
• Visas for RDI activities policies and regulations
Fablab Arabia –
Dhahran
Makkah Region
Fablab Arabia – Qatif
SAUDI LABS LTD – Jeddah
Mustaqbal Fablab – Based on international benchmarking, and considering the importance of the
SAUDI LABS LTD – Jeddah Qatif
Azzaz Test Lab – Jeddah TAPC KFUPM Lab lab framework in the RDI ecosystem, we put forward the following recommendations:
Fablab Arabia – Jeddah
• Define clear regulatory guidelines around the IP ownership and drafting
KAU labs – Jeddah Modelling lab Fabrication Labs Testing labs technology transfer agreements.
Exhibit 13: Industrial laboratories in the Kingdom
• Develop and enforce a clear revenue sharing scheme between the employer and
• National research and industrial networks: These are specialized networks that aim
inventor.
at fulfilling the needs of data communication and electronic services for primary and
industrial researches, in order to enhance the quality of RDI ecosystems. The Kingdom
• Allowing researchers in R&D institutions to establish startups, in aims to market
of Saudi Arabia has founded MAEEN – Saudi Research & Innovation Network to raise
the efficiency of R&D activities by providing high-speed and highly-qualified data
their intellectual property.
transfer among network users, and by enabling them to benefit from its applications
and services. • Develop a set of protective dispute resolution regulations.
• Open data: The Kingdom ranks 74th as per the Open Data Barometer, and 132nd
according to the Open Data Inventory. • Provide several tax incentives, financial subsides, and lower visa and residency
application requirements to parties engaged in innovation activities.
The infrastructure enabler of the Kingdom’s RDI ecosystem faces several challenges that
should be addressed in order to advance this system, which suffers from a low number
of research laboratories in Kingdom regions, and from the poor equipment of existing
ones. MAEEN is also under-equipped, and open data in the Kingdom is scarce and of a
low quality. Consequently, based on international benchmarking , and considering the
importance of infrastructure in the RDI ecosystem, we recommend the following:
• Setting up more national specialized and advanced innovation laboratories, and
equipping them with high-speed computers to meet their needs
• Establishing and enhancing the services of testing, fabrication, and prototyping
laboratories across the Kingdom, and enhancing their formative and industrial
capabilities
• Developing the National Research Network and connecting it to major international
networks
• Developing and activating an open data platform
346 347
• Research Development and Innovation Actors

The RDI ecosystem comprises a number of actors. Each performs key roles that are Exhibit 16 offers an assessment of the Current status of the RDI ecosystem factors in
essential to the overall performance of the RDI ecosystem. These entities include the Kingdom.
R&D institutions, technology transfer facilitators, local firms, government entities,
and international technology owners. Exhibit 4.15 shows non-exclusive examples of a
number of RDI actors in the Kingdom, whereby these entities perform different roles
in the RDI ecosystem.
RDI ecosystem enablers in Saudi Arabia
The RDI ecosystem comprises a number of actors that perform different
roles in the system
Actors
R&D institutions
R&D Technology Local Government International

institutions transfer firms entities technology Technology transfer facilitators
facilitators owners
R&D Enterprises
Technology transfer National Ministries and
Enterprises
Local firms
offices Champions authorities
Government entities
International technology owners
National R&D Incubators and

SMEs
Centers accelerators
University R&D
Technology Parks Local SMEs Universities
Centersat
Exhibit 15: The RDI ecosystem comprises
348 349
• R&D institutions • Technology Transfer Facilitators

R&D institutions like universities and research centers perform basic and Technology transfer facilitators support developing the promising outputs of R&D
developmental researches in various sectors like energy, mining, transportation institutions and their owners through SMEs. Technology transfer facilitators include:
and logistics, oil and gas, advanced materials, building and construction, health,
communication and information technology, defense and security, space, • Technology transfer offices, which are very limited in the Kingdom. Exhibit 17
aeronautics, agriculture and aquaculture, water, environment, nuclear sciences, etc. shows that currently there are only four active technology transfer offices located
R&D institutions are grouped as follows: at each of KACST, KFUPM, KAUST and RPD Innovations. It is known that these
offices play a key role in the RDI ecosystem, as they help R&D institutions apply
• Research centers at Saudi universities like KSU, KFUPM, KAUST, etc. for and receive patents for their research outputs and contribute to marketing
• National research centers like KACST, KAPSARC, King Faisal Specialist Hospital and and commercializing the latter.
Research Centre, etc.
• Research centers in major national companies like those in SABIC, Aramco, Saudi
Electricity Company (SEC), etc. There is a small number of technology transfer offices in the Kingdom of
Saudi Arabia
It is known that research institutions play a key role in the RDI ecosystem as they
aim at performing primary and development research in order to develop prototypes RPD KACST
that can be manufactured and marketed. They also seek to qualify human cadres Innovations
and national talents through various educational and training programs, and strive
to sign agreements with international research institutions for joint R&D activities.
R&D institutions interact with other RDI ecosystem actors as follows:
• Coordinating with local and international R&D institutions to jointly conduct

research and develop inventions
• Disclose inventions to technology transfer offices and discuss with them the
potential for inventions
KFUPM
KAUST
Non-Exclusive Examples
Exhibit 17: Technology transfer offices in the Kingdom
Technology transfer offices interact with other actors in the RDI ecosystem as per the
following:
• Coordinate with patent offices to apply and complete patents requests for the
outputs of research institutions.
• Coordinate with industrial technology development corporations to commercialize
and market their invented technologies.
350 351
• Incubators and accelerators, which are well-dispersed in the Kingdom. Exhibit • Technology parks, which are well-dispersed in the Kingdom. Exhibit 19 shows
18 shows that there are many incubators in various regions in the Kingdom, like that there are six technical parks in three different regions; the Central Region -
Prince Mohammed bin Salman Incubator for Digital Information, King Salman home to Riyadh Valley Company, the Eastern Province - home to Dhahran Techno-
Youth Center (KSYC) and Badir Program for Technology Incubators. It is known Valley, and the Western Province - home to Wadi Makkah Company, Wadi Jeddah
that incubators and accelerators play a key role in the RDI ecosystem, as they Company, and Taif Techno Valley. It is known that technology parks play a key role
encourage and support inventors in the Kingdom’s technical fields and help in the RDI ecosystem, as they seek to attract domestic and international R&D
entrepreneurs develop agreements with international tech owners. companies by providing financial incentives and a strong business network,
among others. They also help R&D institutions market their inventions and
products.
Technology incubators and accelerators are spread around KSA without
location or sector alignment. Technology parks are located in three different regions in the Kingdom of
Saudi Arabia
Eastern Province Central Region
Western Province Central Region
Western Province
Eastern Province
Exhibit 18:Tech transfer incubators and accelera
Exhibit 19: Technology parks in the Kingdom
Incubators and accelerators interact with other actors in the RDI ecosystem as per
the following: Technology parks interact with other actors in the RDI ecosystem as per the following:
• Support and embrace Saudi entrepreneurs and business owners who wish to • Coordinate with R&D institutions to help them market their products and
establish startups. inventions.
• Coordinate with entrepreneurs and help them negotiate with domestic and • Help entrepreneurs and SMEs provide their own technical and innovative needs.
international tech owners to sign MoUs and agreements, among others.
352 353
Technology transfer facilitators in the Kingdom face several challenges that should Local firms in the Kingdom face several challenges that should be addressed in order
be addressed in order to upgrade the performance of the RDI ecosystem that suffers to improve the ecosystem. Exhibit 4.20 shows that there are limited RDI activities
from the limited dispersion and meager impact of technology transfer offices. It in the local industrial firms, moreover, the majority of RDI activities conducted by
also suffers from the poor efficiency of incubators and accelerators that are spread national champions take place overseas.
around KSA without location or sector alignment. In addition to the weak capabilities,
impact, and value-created by technology parks. Considering the importance of
technology transfer facilitators for the RDI ecosystem, we suggest the following
recommendations to improve their role and boost their efficiency: Limited RDI activities at local industrial companies
• Increase number of technology transfer offices by establishing new ones at
several local universities.
• Adopt the best international practices that help place incubators nearby industrial
clusters in order to maximize productivity.
• Make use of international expertise to enhance the capabilities of technology
parks in the Kingdom through:
- Incentizing global companies to open their R&D centers in the parks.
- Creating innovation hubs specific to key industries.
• Local Firms
National firms in the RDI ecosystem in the Kingdom could be divided into two groups:
• National champions like Saudi Aramco, SABIC, STC, Ma’aden, and Saudi Technology Non-exclusive
Development and Investment Company – TAQNIA. examples
• Local SMEs like Telfaz11, Enwani, and FalconViz.
It is known that firms play a key role in the RDI ecosystem, as they conduct feasibility
studies to determine the possibility of manufacturing and marketing the outputs Exhibit 20: Research, development and innovation activities by local industrial firms
of research institutions in the Kingdom. They also seek acquiring and developing
advanced and promising technologies in the Kingdom before distributing them Thereby, the RDI strategy aims at pushing major national champions to stimulate their
throughout local markets. local research and developmental activities in order to support the RDI ecosystem in
the Kingdom. To this end, we put forward the following suggestions:
Local companies interact with other actors in the RDI ecosystem as per the following: • Motivate pioneering national companies to undertake research and developmental
• Provide financial support for R&D institutions and utilize their research-and- activities at a local level
knowledge-driven facilities. • Adopt best international practices to boost the manufacturing capabilities of
• Coordinate with technology transfer offices to study business opportunities to local companies
market the outputs of research institutions. • Motivate local companies to form industry-driven consortia between local R&D
centers and industrial firms. in order to resolve pressing industrial issues
354 355
• Government entities It is known that international technology owners play a key role in the RDI ecosystem, as
Government entities include ministries like the Ministry of Energy, Industry and they seek to cooperate with R&D centers to conduct researches on new technological
Mineral Resources, and Ministry of Economy and Planning, in addition to executive ideas. They also aim at selling their promising and advanced technologies to local
authorities, the likes of Saudi Arabian General Investment Authority and the Saudi companies in order to market and commercialize them at a local level.
Food and Drug Authority. The government entities also include legislative and judicial
entities like the Royal Court, Consultative Assembly, and Supreme Judicial Council. International tech owners interact with other actors in the RDI ecosystem as per the
Government entities play a key role in the RDI ecosystem, as they partner with other following:
actors to formulate RDI policies. They also draw their own long-term roadmaps to • Coordinate with national R&D institutions to conduct joint researches on
enable R&D institutions in the Kingdom to conduct studies that comply with their promising and advanced technologies.
goals and roadmaps. • Negotiate with other actors like R&D institutions and local companies to sign
with them tech transfer MoUs and agreements.
Government entities interact with other actors in the RDI ecosystem as per the
following: Exhibit 4.12 shows that there is a limited number of international technology owners
• Coordinate with R&D institutions to make use of their human cadres and research undertaking RDI activities at a local level, mainly because of the difficulty to attract
capabilities. these global entities to the Kingdom and have them stay. Considering the need for
• Involve local firms in developing long-term sector specific roadmaps and strategies solutions, we put forward the following recommendations:
for government entities. • Offer financial and tax incentives, and procedural facilities to attract multi-national
companies to the Kingdom to undertake research and developmental activities.
• Acquire promising and advanced technologies and invest in their development
and localization.
• International Technology Owners
International technology owners possess intellectual products like patents
and technologies prototypes, among other technology transfer facilitators and
mechanisms. Promising technologies are transferred via agreements between their
A few number of international technology owners undertake RDI
owners and entities interested in acquiring them, like R&D institutions and local
activities at a local level
companies. International technology owners could be divided into three main groups:
• Leading International universities such as MIT, Stanford University, Harvard
University, University of Cambridge and University of Oxford
• Major international companies such as Google, Apple, Amazon, Huawei, Boeing,
and Lockheed Martin
• International SMEs such as Carbonics and Solar Junction.
Non-exclusive
examples
Universities Companies
Exhibit 21:
International
technology
owners
356 357
• Research, Development and Innovation Sectors • Energy Sector

The RDI strategy aims at carrying out basic, development and innovation research in Energy is considered the main factor behind the development of the Kingdom and
a number of the Kingdom›s main strategic sectors. This enables them to establish its economic growth. The Kingdom’s power capacity is 88 GW and serves around 8.6
and develop a national industries and competitive logistics services at a global level in million consumers. The strategy aims at activating the role of RDI as primary enablers
the near and long terms, a matter which will lead to the Kingdom›s global leadership for founding pioneering industries in the field of energy and raising the efficiency of
in some of these sectors. It will also increase the Kingdom›s self-reliance in other transferring and localizing priority energy technologies. These technologies can be
strategic sectors and increase the economic diversification. grouped as follows: renewable energy, energy storage, air conditioning, combustion
techniques, and energy design and simulation.
Based on several previous studies and multiple discussions with decision makers
and various stakeholders in the Kingdom›s concerned bodies, the National Industry • Water Sector
Development and Logistics Program focuses on four key sectors: energy, logistics, Fresh water is a source of survival and growth, and one of the most important elements
mining and industry. Considering the universality of the industry sector, the RDI strategy of human settlement, especially in the Kingdom of Saudi Arabia known for its harsh
has divided the industry sector into the following sub-sectors: water, agriculture and desert environment. This is why the Kingdom strives to adapt water resources to
aquaculture, environment, health, information and communication technology, oil ensure the country’s growth and stability, and the sustainability of its resources.
and gas, advanced materials, construction, nuclear science, space, aeronautics, and The RDI strategy in the water sector aims at activating the role of researches and studies
defense and security. and boosting the efficiency of the transfer and localization of priority technologies
for water treatment and desalination. These technologies can be grouped as follows:
The research, development, and innovation strategy also grouped these sectors water management, water supply networks management, modeling and simulation,
under three main themes: desalination, water treatment, wastewater reclamation, membrane technology, and
water conservation.
• First theme – Global Leadership: This includes sectors in which the Kingdom
has competitive advantages such as energy, water, logistics, mining, advanced • Logistics
materials and oil and gas. Logistics are a key driver for the development and economic growth of the Kingdom.
• Second theme – Self-reliance: This includes those sectors with large government The country’s logistics market is considered the most important in the GCC and MENA
expenditures such as health, ICT, agriculture, aquaculture, environment, building, regions
construction ad nuclear science. The strategy aims at activating the role of logistics in RDI as primary enablers to
• Third theme – National security: This theme includes security and military sectors transform the Kingdom into a regional logistics hub and boost the efficiency of the
such as space, aeronautics, defense and security. transfer and localization of priority logistics technologies. These technologies can
be divided as follows: multimodal transport, infrastructure planning, supply chain
management, development of techniques such as modeling and simulation, drones,
automated stores, autonomous cars, and smart tracking systems.
• Mining Sector
The Kingdom of Saudi Arabia aims at diversifying and developing its economy and
revenues by utilizing its major potentials in mining. NIDLP strives to make the mining
sector the Kingdom’s third economy pillar after oil and gas, and to raise its added
value.
The RDI strategy aims at improving and developing industrial products in the mining
sector. This in turn contributes to enhancing the Kingdom›s economic and investment
competitiveness, and activating the role of logistics in RDI, as primary enablers to
transfer and localize priority mining technologies. These technologies can be divided
as follows: integration and monitoring, modeling and simulation, geophysical and
geochemical exploration, alloy products, mining robots, spectro-mining technologies,
358 359
and drilling and excavation technologies. equipment; command, control and surveillance; decision support; development
of open-source software; e-services; cloud computing and computer networks;
• Advanced Materials Sector electronic health and telemedicine; cybersecurity; and AI and robotics.
The Kingdom seeks supporting its economy, increasing its revenues and enhancing its
competitive status among countries worldwide by utilizing its massive potentials in • Agriculture and Aquaculture Sector
the advanced materials sector. Hence, the Kingdom has promoted RDI in several fields The agriculture and aquaculture sector is the most important pillar of the Kingdom’s
related to the sector, as the RDI strategy aims at transferring and localizing priority national economy, and major component of food security. The sector consumes 90%
technologies for advanced materials, which could be divided as follows: metals and of the Kingdom’s water supplies, and receives major backing; still, the Kingdom
alloys, coatings, glass and ceramics, petrochemicals and polymers, semiconductors, imports most of its food needs.
among others. The RDI strategy aims at transferring and localizing priority agriculture and
aquaculture technologies, which could be divided as follows: agricultural evaluation,
• Oil and Gas Sector agricultural management, modelling and simulation, plant production, animal
Oil and gas are key energy and industry actors that are important to the Kingdom’s production, natural resources, food and feed, soil and irrigation, agricultural systems,
economy. Therefore, it has become inevitable to focus efforts on innovating new plant protection and animal diseases.
and advanced technologies in order to develop these sources, which in turn would
diversify the Kingdom’s economy and enhance its revenues. It is known that oil and • Environment Sector
gas exploration technologies have significantly advanced in recent times, which Countries around the world face growing environmental challenges because of
in turn underlines the importance of conducting advanced scientific researches, population growth and the accelerating industrialization and urbanization. Thus,
especially in the Kingdom – the world’s largest oil producer. finding environmental techniques became a necessity to narrow down and treat the
The RDI strategy aims at transferring and localizing priority technologies for the oil aftermath of these activities. The Kingdom has prioritized tackling environmental
and gas sector, which could be divided as follows: advanced production, modeling problems and establishing an advanced environmental industry capable of enhancing
and simulation, unconventional resources, enhanced oil recovery, smart chemicals, the Kingdom’s competitiveness in the global market.
sand monitoring, smart fields, carbon sequestration and isolation, and shale gas The RDI strategy aims at transferring and localizing priority environmental
resources. technologies, which could be divided as follows: pollution monitoring and risk
assessment, modelling of sources breakdown, green solvents, monitoring of global
• Health Sector warming, and utilization of industrial waste.
The health sector is one of the Kingdom’s main sectors, as its local expenditure
reaches 25% and imports amount to 65%. This significantly contributes to increasing • Building and Construction Sector
the future rate of local content leakage value. The building and construction sector in the Kingdom has undergone a substantial
The strategy aims at transferring and localizing priority health technologies, which change over the last few decades, as architectural and concrete structures replaced
could be divided as follows: public health, health ethics, health economics, genome the traditional building methods. Moreover, the economic development helped
techniques, detection of infectious diseases, pharmacy, medical devices, regenerative support and revive the sector. Nonetheless, in the present time, the building and
medicine, and stem cells technology. construction sector in the Kingdom is facing new challenges, mainly the demand for
smart and low-cost buildings with a limited environmental impact, which requires
• Communication and Information Technology Sector the development of technologies to rationalize energy and water consumption and
The communication and information technology sector is highly important and a adopt the concept of sustainable and environment-friendly buildings.
key driver for enhancing productivity and stimulating economic growth in many The strategy aims at transforming and localizing priority building and construction
countries around the world, as well as a primary enabler for other technologies. technologies, which could be divided as follows: building automation, building
Hence, the Kingdom has placed high importance on this sector and has been keen on information modelling, high-performance buildings, facilities and projects
boosting its scientific content and developing its software and applications. management, advanced building materials, advanced electromechanical systems,
The strategy aims at transferring and localizing priority technologies for smart technologies, air conditioning systems, thermal insulation materials, and 3D
communication and information technology, which could be divided as follows: printing.
operational analysis and algorithms; modeling, simulation and measurement
• Nuclear Sciences Sector

360 361
The Kingdom of Saudi Arabia seeks establishing a sector for nuclear sciences and • Governance
their peaceful uses, in line with Vision 2030, the national plans and strategies,
development of the necessary infrastructure and the rehabilitation of the local There are several present initiatives concerned with supporting and developing the
competencies required for the development of this sector. The RDI strategy aims national RDI ecosystem, such as the RDI strategy that acts as an enabler for NDC, and
at transforming and localizing priority nuclear sciences technologies, which could the initiative to support scientific research and development at universities, which is
be divided as follows: nuclear technology assessment, modeling and simulation, supervised by MoE in line with NTP. The RDI strategy, as part of the National Industrial
nuclear regulations, nuclear reactors, nuclear material processing, ion therapy, Development and Logistics Program, includes a key initiative aimed at forming an
medical isotopes, accelerators, nuclear technology for agriculture, nuclear radiation, independent and permanent national committee called the National Committee for
nuclear waste management, and nuclear medicine. Research, Development and Innovation to govern RDI activities in the Kingdom. The
committee would be given the necessary powers to develop policies and strategies
• Space Sector related to RDI at the level of the Kingdom, develop the necessary plans and programs
The Kingdom of Saudi Arabia seeks establishing a strong and sustainable national for their implementation, coordinate with all components of the RDI ecosystem, and
space sector by cooperating with international centers and entities and transferring evaluate the outputs of its initiatives and programs.
and localizing space technologies. The space sector will play a pivotal role in enhancing
and protecting the interests of the Kingdom and its vital sectors, contributing to the Forming the National Committee for RDI is very important to overcome the challenges
diversification and growth of the Saudi economy, enhancing national specialized facing the RDI ecosystem in the Kingdom. It also helps in filling the gaps arising from
competencies, developing advanced scientific and technological capabilities, and the lack of sufficient powers to establish the necessary governance framework for
establishing the role of the Kingdom at the regional and international levels. policy harmonization, implementation of plans and activation of legislation.
The strategy aims at transferring and localizing priority space technologies, which
could be divided as follows: definition and analysis of the space mission, orbital hole
layout and rotation, earth-observation payloads, communication payloads, satellite
platforms, launch of satellites, and ground equipment and ground handling.
• Avaition Sector
The aeronautics sector is of a highly importance and a key asset for supporting
economy and driving development of countries worldwide. As a result, the
Kingdom of Saudi Arabia spares no effort in boosting its status in the aeronautics
sector by promoting RDI in several aeronautics-related businesses. It has been also
transforming and localizing several technologies in the sector, which could be divided
as follows: modelling and simulation, systems engineering, aeronautics network
analysis, aeronautical structures, avionics, payload, freight, aeronautics industry, and
independent systems.
• Defense and Security Sector

Considering the importance of the defense and security sector, the Kingdom of Saudi
Arabia has paid it a particular attention and has been keen on promoting advanced
scientific researches in many related fields. The RDI strategy aims at transforming
and localizing priority defense and security technologies, which could be divided as
follows: assessment of defense policy, planning and evaluation capability, modeling
and simulation concept, radar, electronic warfare, laser and optics, robotic systems,
defense electronics, weapons and missiles, and cyber warfare.
362 363
Self-reliance in the
production of plasma
derivatives
(NIDLP-RDI)
364 365
Cluster Cluster
Research, N-18-07-001 Stimulate spending on research, • National Committe for RDI Research, N-18-07-012 Strengthen research, development • King Abdulaziz City for Science
Development development, and innovation Development and innovation capacities in the and Technology
& Innovation ecosystem & Innovation mining sector
Research, N-18-07-002 Train the necessary human resources • King Abdulaziz City for Science Research, N-18-07-013 Strengthen research, development • King Abdulaziz City for Science
Development to support research, development and and Technology Development and innovation capacities in the and Technology
& Innovation innovation & Innovation industrial sector
Research, N-18-07-003 Development of the research, • King Abdulaziz City for Science Research, N-18-07-014 Establish a national committee for the • National Committe for RDI
Development development and innovation and Technology Development governance of research, development
& Innovation infrastructure & Innovation and innovation
Research, N-18-07-004 Develop legislation and procedures to • National Committe for RDI Research, N-18-07-687 Regulatory framework to promote • King Abdulaziz City for Science
Development support research, development and Development open source and free software and Technology
& Innovation innovation & Innovation
Research, N-18-07-005 Support national research, • National Committe for RDI Research, N-18-07-688 Enhance equipment and facilities • King Abdulaziz City for Science
Development development and innovation Development necessary for the development of and Technology
& Innovation institutions & Innovation local content
Research, N-18-07-006 Develop technology transfer • National Committe for RDI Research, N-18-07-689 Smart system for monitoring • King Abdulaziz City for Science
Development intermediaries to support research, Development greenhouse gases across the Kingdom and Technology
& Innovation development and innovation outputs & Innovation
Research, N-18-07-007 Strengthen the participation of • National Committe for RDI Research, N-18-07-690 High-efficiency clean fuel production • King Abdulaziz City for Science
Development local companies and institutions to Development and Technology
& Innovation support research, development and & Innovation
innovation
Research, N-18-07-691 Technical Leadership Development • King Abdulaziz City for Science
Research, N-18-07-008 Strengthen the participation of • National Committe for RDI Development Program to support local content and Technology
Development government entities to support & Innovation
& Innovation research, development and innovation
Research, N-18-07-692 Technical consulting program • King Abdulaziz City for Science
Research, N-18-07-009 Attract global technology owners to • King Abdulaziz City for Science Development and Technology
Development support the transfer and localization and Technology & Innovation
& Innovation of advanced technologies
Research, N-18-07-693 Encourage the younger generation to • King Abdulaziz City for Science
Research, N-18-07-010 Strengthen research, development • King Abdulaziz City for Science Development get involved in the areas of science and Technology
Development and innovation capacities in the and Technology & Innovation and technology
& Innovation energy sector
Research, N-18-07-694 Product development program to • King Abdulaziz City for Science
Research, N-18-07-011 Strengthen research, development • King Abdulaziz City for Science Development establish local suppliers and Technology
Development and innovation capacities in the and Technology & Innovation
& Innovation logistics sector
366 367
Cluster Cluster
Research, N-18-07-695 Technology incubators and • King Abdulaziz City for Science Research, N-18-07-706 Localization and transfer of energy • King Abdulaziz City for Science
Development accelerators program and Technology Development technologies and Technology
& Innovation & Innovation
Research, N-18-07-696 Research and development support • King Abdulaziz City for Science Research, N-18-07-707 Localization and transfer of • King Abdulaziz City for Science
Development program for national research and Technology Development information and communication and Technology
& Innovation institutions and centers & Innovation technologies
Research, N-18-07-697 Program to raise the manufacturing • King Abdulaziz City for Science Research, N-18-07-708 Localization and transfer of water • King Abdulaziz City for Science
Development capacity of SMEs and Technology Development technologies and Technology
Research, N-18-07-698 Industrial innovation centers program • King Abdulaziz City for Science Research, N-18-07-709 Localization and transfer of oil and • King Abdulaziz City for Science
Development and Technology Development gas technologies and Technology
Research, N-18-07-699 Workshops program for prototype • King Abdulaziz City for Science Research, N-18-07-710 Localization and transfer of transport • King Abdulaziz City for Science
Development development and Technology Development and logistics technologies and Technology
Research, N-18-07-700 Rationalization of energy • King Abdulaziz City for Science Research, N-18-07-711 High-protection memory device • King Abdulaziz City for Science
Development consumption through light emitters and Technology Development to store information and digital and Technology
& Innovation for buildings and roads & Innovation signature for secure government
transactions
Research, N-18-07-701 Manufacturing and developing • King Abdulaziz City for Science
Development the encrypted tablet for the use of and Technology Research, N-18-07-712 Low-cost communication network for • King Abdulaziz City for Science
& Innovation government agencies Development Internet of Things (IOT) applications and Technology
& Innovation
Research, N-18-07-702 Reduce water leakage by monitoring • King Abdulaziz City for Science
Development the water pipeline system and Technology Research, N-18-07-713 Big Data Platform for strategic • King Abdulaziz City for Science
& Innovation Development planning and Technology
& Innovation
Research, N-18-07-703 Localization and transfer of building • King Abdulaziz City for Science
Development and construction technology and Technology Research, N-18-07-714 Artificial satellite communication • King Abdulaziz City for Science
& Innovation Development system to prompt applications and Technology
& Innovation electronically to government agencies
Research, N-18-07-704 Localization and transfer of mining • King Abdulaziz City for Science
Development technologies and advanced materials and Technology Research, N-18-07-715 National Enterprise Resource Planning • King Abdulaziz City for Science
& Innovation Development (ERP) system and Technology
& Innovation
Research, N-18-07-705 Localization and transfer of health • King Abdulaziz City for Science
Development technologies and Technology
& Innovation
368 369
SECTION 6.4:
THE INDUSTRY 4.0
370 371
• Main challenges in the industry 4.0:

Eventually, adopting these technologies by present and future industrial investors is
the main pillar on which the success of the industry 4.0 is built. In the meantime, this
adoption is facing some challenges. For example, industrial companies lack interest
in this issue because they either are unaware of its existence and implementation
process, or are not convinced with its effectiveness and need or are inadequately
funded to upgrade the production equipment, which is currently more expensive
than conventional equipment, to the level of the industry 4.0. They might also be
concerned about the limitedness of human resources that are qualified to deal
with these technologies, and the weakness of the communication architecture and
information security needed to activate these systems with sufficient protection and
reliability.
3.B. Current Efforts
• Current efforts in the industry 4.0

King Abdulaziz City for Science and Technology (KACST) has established an innovation
center for fourth-generation manufacturing. It comprises a bunch of the fourth-
generation manufacturing technologies, including: digital manufacturing tools,
digital reverse engineering tools, augmented reality tools, advanced casting tools
and three-dimensional printing tools. The center also has an advanced computer
program for product lifecycle management including engineering drawing,
engineering analysis, digital manufacturing and files management. It also provides
the subscribers from start-up companies in the center services, with an online access
to the Product Lifecycle Management Software and some manufacturing tools.
Furthermore, the center offers an online training program at its headquarters, on the
usage of the afore-mentioned tools and programs. The Ministry of Energy, Industry
and Mineral Resources is developing a National Industrial Strategy, which includes
centers that aim at improving the productivity of factories while focusing on the
adoption of the fourth-generation manufacturing technologies.
Use of laser technology in industrial processes
372 373
The allocation of a
financing program
worth 3 billion Saudi
Riyals to accelerate
the implementation of
investments in the Fourth
in the Kingdom and
increase the competitive
advantage of existing
local industries
4. Industry 4.0 Strategy

(NIDLP-Industry 4.0)
374 375
4. A. Pillars Of The Industry 4.0 Strategy
• Overview and scope 13. Predictive maintenance

14. Remote Monitoring and control
The program of developing national industries and logistics aims at developing 15. Augmented reality
various industries and encouraging the local production of the energy, mining, 16. Digital Performance management
logistics and industry sectors. Part of the program mission is to develop an industrial 17. Digital quality management
strategy for the new industrial era, known as “The industry 4.0” to implement the 18. Product Lifecycle Management and Digital Simulation
kingdom’s plan for the NIDLP sectors. 19. Automation of Knowledge Work
20. Track-and-Trace
King Abdulaziz City for Science and Technology had been assigned to be the entity 21. Smart energy consumption
responsible for leading and coordinating activities among the various concerned 22. Scheduling and Shift Planning
parties. It identified the enabling mechanisms for the industry 4.0 and suggested
strategic themes and key initiatives that would allow the adoption of the industry An initiative was added to support the establishment of a technological system
4.0 in the kingdom. aiming at encouraging companies manufacturing original tools, by granting them
tax exemptions and offering investment support, to build factories and research and
development centers in the kingdom.
• What is the industry 4.0?
The technologies of the industry 4.0 can be implemented in multiple sectors including
The industry 4.0 is based on implementing a group of modern technologies on the the industry, energy, mining and logistics sectors. In order to encourage companies
production value chains that would increase production efficiency and establish to adopt those technologies, some foundational elements must be provided, such as
new business models that are consistent with the targeted transformational regulatory frameworks, financing, education and infrastructure.
achievements.
This new model will be a primary source for future competitiveness. The traditional
The industry 4.0 focuses on future sectors and includes a wide group of the following distinguishing elements in operational excellence (like the application of lean
advanced technologies in modern robotic applications: manufacturing, outsourcing and automation) will disappear as the leading companies
in the industry sector will seek new opportunities for a better performance. The
1. 3D printed products industry 4.0 will replace the traditional mechanisms that are currently being on
2. 3D printing tooling the production value chains. This will have the companies give a second thought to
3. 3D scanning of parts their work implementation methodology to meet the new prospects of operational
4. Automated Guided Vehicles/Robots/ Carts efficiency.
5. Flexible machines
6. Collaborative robots The first industrial revolution was based on steam, steam power generated by
7. Robots water and production through mechanical mechanisms (in the 1860s). Then came
8. Vision systems (for quality control) the second industrial revolution that was all about workforce distribution and
9. Packaging automation benefitting from electricity and large-scale production (in the 1870s). After that, came
10. Analytics Driven Quality Management the third industrial revolution that relied on electronics, computers and automation
11. Yield, Energy, Throughput Optimization in their initial levels (in the 1970s). The industry 4.0 will be built on smart technology
12. Analytics Driven Demand Forecasting elements embedded in the traditional systems (around year 2010).
376 377
The industry 4.0 is based on the scientific revolutions and the latest The industry 4.0 is based on the scientific revolution and on cutting-edge
technologies that distinguish countries: technologies. It offers threefold the added value for countries.
• Scientific revolutions are directly connected to data (for example, the number of Scientific Revolution
sensors has increased from 4.2 billion in 2012 to 50 billion in 2017), networking
(more than 50 billion machines will be connected to networks by 2025), computing
power (the computing power for each millimeter square chip has multiplied
as much as thousand times in the last seven years) and robots (growth in the Computing
Data Networking Robots
number of industrial robots is estimated to reach 63% between 2015- 2019) Power
• These scientific revolutions were the cornerstone for a new model of technologies
such as data, computing power, networking (big data, internet and cloud Sensors: The number of More than 50 billion The computing power Industrial robots have
sensors has increased machines are to be of every millimeter of increased by 63%
computing), data analysis, artificial intelligence (digital transformation and from 4.2 billion in 2012 to connected to networks chips has increased by a between 2015 and 2019
advanced analysis), transformation from the digital world to physical one 50 billion in 2017 by 2025 thousand times over the
(advanced robots and 3D printing) and machine interaction with humans (touch last 7 years
interaction/ virtual reality/ augmented reality).
• This new model is conveyed as a new value to the countries that focus on
Industry 4.0 Innovations
upgrading the competitiveness of their current sectors by lowering costs,
increasing productivity and safety, and providing a competitive edge to empower
Data, Computing Power
new sectors and establish an environmental system for the technologies of the and Networking From Digital to Physical
industry 4.0. (Big data, internet of things (Advanced robots and 3D
and cloud computing) printing)
Technologies
Data Analysis and
Artificial Intelligence in the Human-Machine Interaction
(Digital transformation
and advanced analysis)
industry 4.0 (Touch interaction and virtual
reality/ augmented reality)
Value
Developing the competitive

advantage of existing sectors Productivity Cost Safety
The latest technology used in

the Fourth Industrial Revolution Finding a competitive advantage Establishing an environmental
to empower new sectors system for industry 4.0 technologies
378 379
• Context and Basis Countries have devised national initiatives to tackle the major challenges hindering
the industry 4.0 transformation. These challenges are:
• Lack of knowledge among companies and individuals of industry 4.0 opportunities

We have studied benchmark models on the industry 4.0 strategy in the largest 10 • Lack of vision for seizing these opportunities and developing a roadmap for the
industrial countries (classified according to the actual market share of the global industry 4.0 transformation
industrial sector for 2015). 8 countries have been identified to launch a industry 4.0 • Insufficient competencies and limited accessibility to local and global ones
national strategy and initiatives. • Lack of appropriations to finance the industry 4.0 transformation, whether
financial grants for research, development and innovation, or loans for upgrading
equipment and machines
Launching
Country Industry 4.0 initiatives
year
Considering the above challenges, countries launched the industry 4.0 program in
order to achieve three main goals:
China Made in China 2025 2015
• Increasing the competitive advantage for existing industries
United States The first initiative by the Digital 2012 • Expanding existing value chains and developing new ones
Manufacturing and Design Innovation • Developing the environmental system for industry 4.0 technologies
Institute, The National Human
Genome Research Institute Leading Economy 1 Automation in 2018 (%) 2 Optimistic 2030 3
Japan Industrial Value Chain Initiative 2015 Japan 6.2% 54%
Industry 4.0
Germany 2011 Germany 6.2% 48%
Brazil No strategy adopted yet - United States 5.7% 45%
South Korea Creative Economy 2014 China 1.7% 40%
India No integrated strategy between public - Main Ideas

and private sectors
Automation is affected by various factors: The Kingdom of Saudi Arabia can aim at
• Availability of technological techniques tapping into 100% of its potentials by:
Italy Smart Factory Cluster 2012
• Economic health of a country • Implementing all sorts of economic use
• Rate of industrial technology adoption • Supporting adoption through financing
France The New Era of French Industry 2013 and incentives
leading economies will adopt • Developing the industry 4.0 technology
automation by around 45%. domestically
Russia Advanced Manufacturing Technologies 2017 1-Leading economies refer to the main industrialized countries that enjoy the highest levels of automation readiness (innovative environment,
educational policies and labor market policies) 2-Defined in terms of the manpower layoff percentage 3- Visualizing an adoption scenario/
optimistic adoption Source: McKinsey & Co, The Economist, interviews with experts
380 381
In addition to aforementioned, the level of the government intervention varies

according to goals and countries. The following exhibits present some examples: The level of the government intervention varies according to
goals and countries
The level of the government intervention varies according to
goals and countries Goals Picked Examples Chinese Example
1. Applying of financial instruments to support priority industries

1
Goals Level of government intervention including:
Increasing • Financial support up to SAR 5.6 billion in 2016 for smart industries projects
competitivity • Loans from state banks with preferential conditions (deferred payment)
Low High • Government-supported funds (780 state funds in 2015 worth SAR 1.3
in existing
1 industries trillion)
• Reduction of corporate taxes by 1525%- for some priority industries
Increasing
(advanced technologies)
competitivity in
existing industries • Encouragement of private sector fund expansion to invest in private
ownership shares and venture capitals and to support the industry 4.0
2 2. Encouraging government procurement of local industries and
products (information technology, renewable- energy powered
Expanding existing value busses and biopharmaceuticals)
chains and developing
3. Offering pioneering solutions in industrial events (the 18th China
new ones
International Industry Fair)
4. Devising a 30 month strategy with the help of 150 experts
3
Developing the
environmental system for
2
industry 4.0 technologies Expanding 1. Developing a detailed roadmap for ten priority sectors* including
existing the new generation of information technologies, high-tech control
Exhibit 4.4: Level of government intervention
value chains and equipment, robots, aviation and space equipment
developing new
ones
1. Launching funds to acquire foreign tech companies (China-Sweden

3 Technology and Innovation Fund worth SAR 5.5 billion, Canyon
Bridge Capital that suggested acquiring the American company
Developing the
Lattice Semiconductor specialized in manufacturing electronic
environmental
chips, and Haiyin Capital that launched the industry 4.0 portfolio
system for
(flying cars))
industry 4.0 2. Planning to reach around 40 industrial innovation centers by 2025,
technologies as well as the establishment of engineering innovation centers in
institutes of higher education, and training college students
3. Encouraging cooperation between tech companies and colleges
(Haier Group, Tsinghua University and Fraunhofer Institute who
collaborated to launch Haier Intelligence Institute)
* It includes naval engineering equipment, manufacturing high-tech tankers, advanced railways equipment, energy-
saving mechanisms, new energy methods, electric equipment, agricultural machines and equipment, new materials,
The use of robots in industrial processes biopharmaceuticals and advanced medical services
382 383
Government intervention level varies according to goals and Government intervention level varies according to goals and
countries countries
Goals Selected Examples French Example Goals Chosen Examples American Example
1 1. Applying several financial instruments including: 1 1. Taking a limited number of initiatives:

• Loan offerings to small and medium-sized enterprises • Aiming at training around 5 million university students*
Increasing investing in the industry 4.0 equipment (around SAR 14 Increasing throughout the five coming years (including advanced
competitivity billion for 2 years) competitivity in industries training)
in existing • Tax incentives (around SAR 11 billion) existing industries • Updating the educational curriculum of community
industries • Finance of ownership shares for the development of colleges (around SAR 1.8 billion, half of which are allocated
industry 4.0 businesses (around SAR 19 billion) to advanced industries)
2. Having more than 2000 small and medium- sized • Investing in the next generation of robots through NASA’s
enterprises benefit from the industry 4.0 elaborate projects (around 260 million SAR)
roadmap and presentation, by the help more than 300
industry 4.0 experts, as well as organizing more than 2300 2
events to encourage the industry 4.0, within a theme
Expanding existing • Nothing special
entitled Industry Week
value chains and
3. Establishing an integrated electronic platform that
developing new ones
specifies the details of more than 30 approved projects,
more than 7 educational models for basic techniques and 1. Launching the National Network for Manufacturing
detailed step-by-step tools for applying the industry 4.0 3
Innovation (NNMI) that
to small and medium sized enterprises. Developing the • comprised 9 institutes in year 2017 (Digital
environmental system Manufacturing and Design Innovation Institute
2 for industry 4.0
(DMDII)**)
technologies
Expanding 1. Seeking to apply 9 industrial technologies in conformity • 45 more institutes are expected to join by 2025, with
existing with existing strengths, data economy, smart food allocated funds amounting to SAR 7.5 billion of the State
value choices, digital trust, smart devices, future medications, budget.
chains future means of transportation, transportation by 2. Allocating up to SAR 37 billion per year from taxes to
and ecofriendly means, smart cities and new resources support research projects (not all are industry 4.0
developing projects)
new ones
3 1. Offering financial grants for technical support (around *In manufacturing, infrastructure, cybersecurity and healthcare sectors
SAR 8 billion between years 20132016-) to support **Includes some other institutes specialized in industrial materials, energy, manufacturing, innovations and technology
Developing the industry 4.0 research, development and innovation
environmental system projects and using innovations commercially
for industry 4.0
2. Partnering with Germany, founding the French-German
technologies
Institute for Industry of the Future, enhancing PPPs
between technology providers and state universities
(Healthcare camp and smart electric energy city)
384 385
• Strategy The first countries to switch to the industry 4.0 have developed strategies based
on a few foundational elements supporting and stimulating this orientation
Foundational Countries that
Advantages of global experiences
Considering the Kingdom’s state and ambition, its Industry 4.0 Strategy will focus Elements implemented that
on increasing the competitive advantage of current value chains and developing the • Launching a promotional brand for the industry 4.0
environmental system for industry 4.0 technologies to achieve the following: national strategy
• Organizing several local and international exhibitions to
support the switching to the industry 4.0, attract talents
1. Increasing the competitive advantage in existing industries within the sectors of Awareness and join efforts via an electronic platform
the NIDLP
2. Expanding existing value chains and developing new ones • Investing in refining talents of national personnel by
reshaping public and higher educational curricula, in
3. Mitigating the impact of major reforms in the fields of energy, natural gas and addition to upgrading qualifying the existing labor force
system of labor and workers • Encouraging practical application and vocational
Competency and training for students to fill market gaps in terms of
4. Developing the environmental system for industry 4.0 technologies Education talents.
5. Creating new high-skill jobs that attract the national labor force
• Investing in institutional accreditation to build
The Kingdom’s vision of the industry 4.0 can be summarized as follows: confidence in the industry 4.0 system, support the
leading role all along the value chain and offer further
Institutional clarification for local and global actors
“The industry 4.0 seeks to increase the competitive advantage in industries existing Accreditation
in the Kingdom of Saudi Arabia, expand existing value chains, mitigate the impact of
major reforms in the fields of energy, natural gas and system of labor and workers, • Specifying the most important laws (data law,
locally develop the technical suppliers system and create new high-skill jobs that accountability law, intellectual property rights and
incentives) that are influenced by the industry 4.0, and
attract the national labor force.” working on the legal aspects related to the industry 4.0
Legal Frameworks
• Perceiving them as one of the main axes to activate the

work ecosystem, especially in government-run models
(China), in which the governments use various forms of
support (loans, financial grants and funds) to achieve
Financial incentives multiple goals (industry 4.0 transformation, research,
development and innovation and growth)
• Manufacturing requires advanced communication

infrastructure and high levels of information protection
Networks, Data and to guarantee production viability in the industry 4.0
Cybersecurity
• Focusing on research, development and innovation

to build a competitive advantage for target sectors or
technologies (France), and to enable implementing
Research, Development research, development and innovation in the country
and Innovation (China)
• Providing laboratories for industry 4.0 technologies

to use the latest technologies or to produce industrial
prototypes
The latest virtual reality glasses used in medical field • Holding training courses that combine theoretical and
practical education materials
Incentives • Developing laboratories that simulate work models that
are consistent with industry 4.0 production lines
386 Table 4 387

These elements can be summed up in the following diagram: Concerning the Kingdom, the industry 4.0 goals can be achieved via two groups of initiatives. The first group is to build a set
of foundational elements that establish the work system. The second is to establish capacity-building centers that encourage
The objectives of the industry 4.0 can be met through a group of major elements adopting industry 4.0 technologies, as well as the establishing the national productivity program. The latter supports the private
underlying the work ecosystem and encouraging further application of this concept industrial sector, in order to speed up the productivity increase process, by applying industry 4.0 technologies to transform 50-
100 existing factories. These initiatives are further explained and summarized in the following table:
Initiative Elements Details of Initiative

Goals • Public education: Adding out-of-class materials and activities as well as summer programs
allocated for the industry 4.0
Competency and
• Vocational education and higher education: enhancing materials on the industry 4.0, making
1 2 3 Education
them available through open source e-learning and encouraging this career path in professional
events
Increasing the competitivity Expanding existing value Mitigating the impact of
• Retraining the existing labor force with the help of fourth industrial generation capacity-
of existing industries chains and developing new major reforms in the fields Labor Force Development building centers, universities and vocational colleges with support from Human Resources
ones of energy, natural gas and Development Fund (HRDF)
system of labor and workers • Establishing a promotional title for the industry 4.0 like (smart manufacturing), to encourage
adopting it and join efforts of the stakeholders
• Establishing a digital gateway for the industry 4.0 information and creating a forum that
Awareness
4 5 bridges between stakeholders across Kingdom
• Holding promotional events for the industry 4.0, such as exhibitions, conferences and
Developing the Creating new high-skill workshops
environmental system for jobs that attract the Institutional
• Setting standards of compliance to the requirements of the industry 4.0
• Granting certifications of industrial revolution requirements compliance those interested in
industry 4.0 technologies national labor force Accreditation
receiving financial incentives to adopt the industry 4.0 technologies
• Developing all legal frameworks regulating the industry 4.0 technologies to increase users trust
Competency Awareness Institutional Legal Framework and protect all parties; such laws include: laws of responsibility for self-propelled machines and
data breach laws, etc.
and education accreditation
Proper Communication
• Securing adequate network coverage for all industrial cities and NIDLP sector sites
Research, Infrastructure for the
• Securing local cloud computing services sufficient to cover the needs of the NIDLP
Development Industry 4.0
& Innovation
Policies and Measures for • Providing cybersecurity measures and necessary policies to protect users of the industry 4.0
Cybersecurity technologies
Foundational Capabilities Centers • Establishing a short-term fund to finance the national productivity program, in aims at
facilitating adopting the industry 4.0 in 100 existing factories
elements Financial incentives
• Guaranteeing preferential incentives to encourage adopting the industry 4.0 technologies
initiatives through the main Saudi Industrial Development Fund program
Establishing National Laboratories
environmental Transformation
productivity
for the Technology National productivity
• Transforming 100 existing factories into models emulated in the application of the industry 4.0
system for the demonstration technologies using the short-term fund affiliated to the Industrial Development Fund
Academies Acquisition program
industry 4.0 program of technology
Contributes to
• Choosing ideal factories covering high priority industrial sectors in various geographical regions
accelerating
Environmental system- • Encouraging local production of industry 4.0 technologies by prompting companies to establish
knowledge
attracting international development centers and factories in the Kingdom
transfer, settling companies • Offering, for example, temporary tax exemptions, investment support, low-priced lands, etc.
and developing
industry 4.0 • Establishing a government venture capital fund for direct investment in local companies that
Industry 4.0 Environmental system-
develop industry 4.0 technologies
techniques equity financing
Incentives • Supporting local entrepreneurs, starting from establishment and reaching sustained growth
Increases the Environmental • Establishing a financial grants program to support local developers of fourth industrial generation
transitioning rates to the system- supporting technologies
industry 4.0 innovation, research and • Establishing a program for purchasing industry 4.0 foundational technologies from international
Legal frameworks development sources, and offering them to local developers to complete developing their products
• Establishing government centers for building industry 4.0 capacities to encourage adopting its
technologies in the Kingdom, these centers include:
Financial Networks, data • Centers for technology demonstration (demonstrating each technology on its own, in addition to
Environmental system-
incentives and cybersecurity capacity-building centers
integrated production lines)
• Transformation academies (offering training, building models, and consultation for SMEs)
• Research, development and innovation centers (building centers for developing industry 4.0
Exhibit 4.5: Goals technologies and applications)
388 389
Cybersecurity is a key element in the industry 4.0. An initiative was devised especially NIDLP sectors were classified according to the manufacturing processes, in aims at
for the cybersecurity of the program. Appropriate measures and policies are to be assessing the industry 4.0 cost and impact at the level of each model.
developed in aims at implementing the initiative. These measures include the
following elements: Manufacturing NIDLP Sector3 Capitalization1 of #
Rationale Archetypes
1. Governance and coordination type )And sub-sectors( )Billion SAR( companies
2. Preventive measures (policies and regulations) Industry
3. Awareness (specifying the necessary infrastructure and identifying weaknesses…) 4.0levers have
varying impact • Chemicals
4. Recovery and response plan (cybersecurity elasticity, national response…) 403 671
230
173
depending • Pharma
)35%( )9%(
5. Efficient information exchange plan on the Chemicals
manufacturing and pharma
• Impacts and Aspiration process
We studied both new and old industrial assets while assessing the possibility of • O&G adjacent
industries
adopting the industry 4.0 • Downstream mining
Archetypes • Other manufacturing
Assets Methodology were defined - Cement
Transferring existing factories to the industry 4.0 based on - Metal Products 496 4,002
• Studying all industrial companies recorded in the industrial database of the Ministry common - Wood chips & panels )43%( )53%(
of Energy, Industry and Mineral Resources manufacturing - Starch
Existing industrial processes Basic - Non-Metallic Mineral
• Assessing the operating income and technological cost of transferring the existing materials
assets (Brownfield) - Ropes and nets
industrial base to the industry 4.0 - Plastics
• Determining major initiatives driving existing automation operations Continuous - Paper
Manufacturing - Rubber
Ensuring new factories are compliant with the industry 4.0
• Estimated impact of new factories in line with the growth of NIDLP by 2030
New industrial assets • Estimating the operating income and technological cost of integrating the industry 72 957
(Greenfield) 4.0 technologies in factories • Food processing )13%(
)7%(
• Introducing new regulations and legislation to encourage the use of the industry 4.0 Food &
technologies in new factories (to be done in a phased manner) Beverage
We began with the current industrial landscape NIDLP sectors

were mapped
• Other manufacturing 7 96
- Textiles
in the Kingdom of Saudi Arabia to archetypes
Textiles
)1%( )1%(
Target Sectors
89 8
• Utility providers
)8%( )0.1%(
More than 7000 existing factories Other
continuous
• Machinery &
equipment
More than 40 industrial regions • Automotive
• Airplane industries 46 786
• Military industries )4%( )10%(
Advanced • Medical supplies
More than 100 industrial activities Discrete industries • Other manufacturing
Manufacturing - Electrical and electronics
• Other manufacturing
26 1.095
More than SAR 1 trillion of capital value - Furniture
)14%(
- Apparel )2%(
Basic
industries
390 391
According to each model, we calculated the annual operating income improvement

and the total technological cost based on industry 4.0 use cases. We have estimated
the annual income improvement and the technological cost of each model based on
pre-industry 4.0 cases. The annual income improvement was estimated according to
the rate of increase in revenue and decrease in costs in past cases:
Industry 4.0 use cases:

• 3D printing
Advanced • Flexible machines (CNCs)
industries • Robots
• Augmented Reality
• Yield improvement
Basic • Predictive maintenance
industries • Digital performance mgt
• Vision systems
• Analytics Driven QM
Food & • Digital QM
Beverages • Smart energy consumption
• Automation of knowledge work
• Packaging automation
Chemicals • Smart energy consumption
and pharma • Analytics driven demand forecasting
• Remote monitoring and control
• Robots
Basic • Augmented Reality
materials • Remote monitoring and control
• Vision systems
• Smart energy consumption
Textiles
• Digital QM
• Augmented Reality
Other • Predictive maintenance
continuous • Digital performance
• Analytics Driven Demand Forecasting
Evaluating impact
• Improving the annual operating income of the existing assets
• Total required technological cost
Adoption rate GDP growth rate Use of modern technology in gene preview
2018-2030 2018-2030
392 393
Operating income improvement as % of archetype revenue

Continuous manufacturing Discrete manufacturing
Advanced Basic Chemicalsand Food and Other

Industry 4.0 levers Industries industries Pharma
Basicmaterials
Beverage
Textiles
continuous
3D 1. 3D printed products ---------------------------------------------------------------------------------------------------------------------------

scanningand 2. 3D printing tooling ---------------------------------------------------------------------------------------------------------------------------
Printing 3. 3D scanning of parts ---------------------------------------------------------------------------------------------------------------------------
4. Automated Guided Vehicles/Robots/Carts ---------------------------------------------------------------------------------------------------------------------------
5. Flexible machines (CNCs) ---------------------------------------------------------------------------------------------------------------------------
6. Collaborative robots ---------------------------------------------------------------------------------------------------------------------------
Machinery/ 7. Robots (Traditional) -----7%

------------------7%
---------------------------------------------------------1%
-------------------1%
------------------------
automation 8. Vision Systems (For Quality Control) ---------------------------------------------------------------------------------------------------------------------------
9. Packaging Automation ---------------------------------------------------------------------------------------------------------------------------
10. Analytics Driven Quality Mgmt ---------------------------------------------------------------------------------------------------------------------6%
------
11. Yield, Energy, Throughput Optimization -----2%
------------------2%
-------------------3%
-------------------2%
------------------2%
-------------------3%
-------------------------
12. Analytics Driven Demand Forecasting ---------------------------------------------------------------------------------------------------------------------------
13. Predictive maintenance -----1% ------------------1%
-------------------1% -------------------1%
-------------------1%
-------------------1%
------------------3%
------
Advanced 14. Remote Monitoring and control ---------------------------------------------------------------------------------------------------------------------------

Analytics 15. Augmented reality (AR) ---------------------------------------------------------------------------------------------------------------------------
2% 2% 1% 1% 1% 2% 2%
16. Digital Performance management ---------------------------------------------------------------------------------------------------------------------------
17. Digital quality management ---------------------------------------------------------------------------------------------------------------------------
3% 2% 1% 2% 3%
18. Product Lifecycle Management and Digital Simulations ---------------------------------------------------------------------------------------------------------------------------
19. Automation of Knowledge Work ---------------------------------------------------------------------------------------------------------------------------
Digital
20. Track-and-Trace ---------------------------------------------------------------------------------------------------------------------------
Management
21. Smart energy consumption ---------------------------------------------------------------------------------------------------------------------------
22. Scheduling and Shift Planning ---------------------------------------------------------------------------------------------------------------------------
Size of bubble indicates operating income improvement (%)

Low impact in 2030 improvement areas High impact improvement areas
1-Includes both brownfield and greenfield projects

Source: Industry database from MEIM, MODON, MGI, HIS, Expert interviews
394 395
Applying the industry 4.0 not only affects the GDP, but also offers new job opportunities • Integration and Requirements
to highly-skilled individuals in the national manpower. The following table shows an
example of the construction sector:
The Kingdom’s privileged industry status The industry 4.0 is expected to have an impact on all NIDLP sectors (according to the
following explained details)
• The Kingdom has a limited industrial base, yet it aspires to an industrial expansion
that will lead to creating jobs
• Applying the industry 4.0 is expected to lead to: Foundational Applying Industry 4.0 case technology
0.5% (30%) Impact
1. Replacing workers in low-skilled and occupied jobs with non-Saudis. Elements model
2. Providing highly-skilled and special jobs (data scientists, digital interference
• Replacing coordinate measuring • 50-80% improvement in quality control
designers) that shall attract national talents and increase Saudi women’s machines (CCM) with 3-D scanning precision and 100% increase in number of
participation in the labor market. machines to provide high-precision measurements
quality control • 30-40% average cost saving, 20-30%
The industry 4.0 impact on local jobs • Using an online digital twin increase in production and 75% decrease
technology connected to all in malfunctions
Industry
sites via the internet, allowing
• Creating highly-qualified jobs for nationals working in the NIDLP sectors (data comprehensive monitoring of
scientist, big data analyzer, automation engineer) operational performance
We have estimated the annual income improvement and the technological cost of • Applying preventive maintenance • 70% decrease in work interruptions
each model based on pre-industry 4.0 cases. The annual income improvement was according to the current state caused by transmission malfunction, and
of equipment, and offering a 340 thousand dollar saving through
estimated according to the rate of increase in revenue and decrease in costs in past notification of critical aspects based proactive malfunction prevention
cases: Mining
on sensor data • Freight costs reduced to 40%
• Using an autonomous vehicle fleet
Opportunities in the mining sector that improves
Context Baseline FTEs Industry 4.0 levers
(automated FTEs) routes and reduces waiting time
• Automation of
loading system and • Installing smart meters that reduce • Sweden has installed 1 million smart
unloading procedure energy demand meters that reduced energy demand by
Boiler cap 22 • Advanced analytics 11 50٪ • Using digital signage in around 3%.
and tank for welding
optimization performance management, in • 18% increase in asset utilization over 18
• Conducted • Digital performance order to provide clear information months
site visit at management and improvement opportunities
ceramics Energy (general equipment performance,
Heater 5 4 80٪ malfunction analysis and quality
manufacturer • Robotics for anode
unit assembly losses)
(Basic
assembly • Automation – vision
industries line systems
archetype) • Using robots to pick products • Amazon saved around 30-40% of the cost.
and focused off the shelves and give them to • 20% improvement in productivity, 5%
• Robotics (for manual employees instead of having the cost savings in supply chain processes
on water
assembly and latter go search for them in the coordination of and 5% improvement in
heater plant 10 to remove parts 8 warehouse on-time delivery
-Boiler cap Packing from conveyor and 50٪ • Making fact-based decisions via an
forming line package)
• Advanced analytics automatic platform that models
-Heater unit – real-time line purchasing, supply, stock and
Logistics
-Packing line balancing tracking (internet of things, cloud
computing and analysis)
37 23 62٪ 1. A device used for measuring the actual mass of an object 2. A real time demonstration of production processes
Total
3. Such as the transmission temperature and vibration
• SAR 1.5 M Opex savings

396 • SAR 3M technology cost 397
• ~2 year payback period
• ~80%+ productivity increase
Exhibit 4.8:
• Game Chaning Elements Industry 4.0 capacity-building centers work on three main motivational factors at the
same time. These factors are:
1. Technology labs for experimenting the industry 4.0 technologies including the
The national productivity program and the industry 4.0 capacity-building centers primary industrial models
initiatives are hoped to play a vital role in implementing the industry 4.0 technologies • Exploring, experiencing and learning by employing the industry 4.0 technologies
all across the Kingdom, through: • Developing and producing small amounts of the primary industrial models by
using the available technology from pioneering companies in each and every
1. Helping companies understand the industry 4.0 technologies by providing live field of the industry 4.0 fields
examples
2. Empowering entrepreneurs in companies to identify the opportunities of 2. Training Academy combining theoretical and practical education models
benefitting from the Industry 4.0 • Providing training at various levels that suit the executive administration, middle
3. Training the human cadres that will be responsible for designing and developing management, and regular staff levels by using both theoretical and practical
the transformation plans for the Industry 4.0 in companies education
4. Bringing industrial technology suppliers and beneficiaries together under one
roof 3. Production lines display labs that use the industry 4.0 technologies
5. Implementing the industry 4.0 technologies and the operational excellence • Displaying production lines that simulate actual factories and clarify the benefits
principles in existing factories of transforming from conventional production methods to the Industry 4.0
The industry 4.0 innovation center at King Abdulaziz City for Science and Technology
Studying the best international practices suggests presenting similar production in Riyadh already has a industry 4.0 capacity-building center. This center must
patterns for local industries at capacity-building centers and bringing together all expand its activities to simulate the best international models. Similar centers are
the concerned entities, which are: set to be established in other areas in the Kingdom in collaboration with Modon and
the Industrial Clusters Program.
1. Technology partners
2. Final users (major companies, SMEs, and startup companies) The national productivity program that was presented as part of the National
3. Research institutes Industrial Strategy, aims at helping industrial companies in achieving the highest
4. Concerned industrial and vocational organizations productive efficiency rates by implementing the operational excellence principles
5. Concerned government entities and the industry 4.0 technologies in 100 existing factories, thus turning them into
a beacon for other factories, and encouraging other manufacturers to implement
these principles and technologies.
398 399
Invest more than 3 billion

Saudi riyals to accelerate
the fourth industrial
revolution in the Kingdom
(NIDLP-Industry 4.0)
400 401
5.A Initiatives Portfolio
Cluster Cluster
Industry 4.0 N-17-07-000 Initiative of the Environmental System • King Abdulaziz City for Science Industry 4.0 N-19-20-003 Institutional Accreditation Initiative of • Saudi Standards, Metrology
of the Fourth Industrial Revolution - and Technology the Fourth Industrial Revolution and Quality Organization
Equity Financing
Industry 4.0 N-19-28-002 Manpower Development initiative for • Ministry of Education
Industry 4.0 N-17-07-001 Initiative of the Environmental System • King Abdulaziz City for Science the Fourth Industrial Revolution
of the Fourth Industrial Revolution - and Technology
Support for Innovation, Research and
Development
Industry 4.0 N-17-07-002 Centers of Industrial Capacities of the • King Abdulaziz City for Science
Fourth Industrial Revolution and Technology
Industry 4.0 N-17-12-001 Financial Incentives Initiative for the • Saudi Industrial Development 5.C. Selecting Game-Changers
Fourth Industrial Revolution Fund
Industry 4.0 N-17-13-001 National productivity programs • Saudi Authority for Industrial Strategic Initiative Initiative Name Leading Entity
Cities and Technology Zones Pillar/ Number
(Modon) Cluster
Industry 4.0 N-17-14-001 Initiative of the environmental system • National Industrial Clusters Financial N-17-07-001 Initiative of the Environmental System • King Abdulaziz City for Science
- for the Fourth Industrial Revolution - Development Program Enablement of the Fourth Industrial Revolution - and Technology
attracting international companies Support for Innovation, Research and
Development
Industry 4.0 N-17-28-002 Awareness initiative for the Fourth • Ministry of Energy, Industry and
Industrial Revolution Mineral Resources Financial N-17-13-001 National productivity programs • Saudi Authority for Industrial
Enablement Cities and Technology Zones
(Modon)
Industry 4.0 N-17-28-004 Initiative of Legal Frameworks for the • MEIM - Industrial Affairs
Fourth Industrial Revolution Agency
Industry 4.0 N-17-28-005 Initiative of the Fourth Industrial • Ministry of Communications

Revolution infrastructure and Information Technology
Industry 4.0 N-17-28-006 Initiative of the electronic security • Ministry of Communications

policy and measures for the Fourth and Information Technology
Industry 4.0 N-19-00-001 Initiative of Competencies and • Ministry of Education

Education of the Fourth Industrial
Revolution
402 403
SECTION 6.5:
EXPORT ENABLEMENT
404 405
(NIDLP-Export Enablement)
Ras Al Khair Industrial City Port
406 407
3.A. Main Challenges Development of the Kingdom’s total/overall exports (2000 -2016, SAR
billion, %)
• Key challenges to Export Enablement

There are several challenges that must be tackled through the export value chain,
namely:
1,475
1. Insufficient potential and capabilities of exporting goods, services and re- 41
54 1,309
exported products. 115 47
14.6% 1,193
2. Export environment that inhibits increases in exports, services, and re-exports.
35 49
3. Uncompetitive access to international markets in terms of exported goods and 134
56 964
services.
4. Insufficient promotional activities. 40 830
833 43
5. Substandard enabling environment 60
53 74 )7%(
41 95
66
1,266 (8%) )11%(
465
28 1,068
289 807
268 706 1,053 614
15 18 )74%(
415
266 239
2000 2002 2004 2006 2008 2010 2012 2014 2016
Services Non-oil Plastics and chemicals Oil
Exhibit 3.1: Growth of Saudi exports 2000- 2016 AD
3. B. Current Efforts
Considerable efforts are currently being deployed to enhance enabling exports in the
Kingdom through the comprehensive value chain, including:
• Accelerating the establishment of a Saudi export bank by benefiting from the

Saudi Export Program
• Facilitating the import/export operations via the Saudi customs
408 409
4. Strategy
(NIDLP-Export Enablment)
Jubail Commercial Port
(This is a brief version of the strategy. Please refer to the National Exports Strategy for more details)
410 411
4.A. Exports Enablement Strategy Pillars • Current Status of Sector

The growth of international trade has lost momentum in the past few years, after it
had witnessed substantial growth in the beginning of the 21st century’s first decade.
• Executive Summary As a result, numerous countries, such as the Unites States, China, Germany, Japan,
have launched initiatives and investments to counter the stagnation and recover the
• The national exports analysis based on the country’s apparent comparative figures recorded in the past decade.
advantages shows a lack of competitivity with regards to non-oil products
The Saudi economy has faced the same difficulties as its overall exports have
• Five key challenges facing the export system must be tackled in order to achieve significantly plummeted since 2012 due to the drop in oil prices. Non-oil exports
the very ambitious objectives of Vision 2030 account for one third of the Kingdom’s total exports.
• The National Exports Strategy is to address these five challenges through the
comprehensive export value chain, which will pave the way for the achievement
of Vision 2030 goals Development of the Kingdom’s total/overall exports (2000 -2016, SAR
billion, %)
• Thanks to a strong methodology, the National Exports Strategy prioritized 172
commodities across 10 sectors, 5 service groups and 48 targeted markets. It
was also correlated with other strategies pertaining to NIDLP (particularly the
National Industrial Strategy)
• Within NIDLP framework, the export enabling strategy located 6 initiatives, 3 of

which are overseen by external governmental entities (such as the Ministry of 13.4%
1,475
Commerce and Investment, Customs, etc.). The other 3 initiatives fall under the 41
supervision of the Saudi Export Development Authority and entail enhancing 54 1309
export environment efficiency, developing Saudi facilities export capabilities, 115 47
1,193
promoting exporters and their products, as well as creating export opportunities 14.6% 35 49
for them. 134
56 964
40 830 815
• The National Transformation Program features 15 initiatives that will indirectly 833 43 60 116
affect non-oil exports. Their implementation requires cooperation with other 53 )7%( 61
competent parties 41 95
1,266 66 )11%(
• The National Exports Strategy was made consistent with relevant stakeholders 465 1,053 (8%)
and VRPs 28 807
289 268 706 1,068 614 638
15 18 (74%) (74%)
415
266 239
2000 2002 2004 2006 2008 2010 2012 2014 2016 2017
Services Non-oil Plastics and chemicals oil
Exhibit 4.1: Growth of Saudi exports 2000- 2016 AD
412 413
Several challenges must be tackled through the export value chain, namely: • Strategy Overview
1. Insufficient potential and capabilities of exporting goods, services and re- The National Export Strategy provides a comprehensive method to achieve Vision
exported products: The lack of capabilities in the manufacturing and services 2030 objectives. It focuses on determining priority products across commodities, re-
field, and the unavailability of the infrastructure to support the local needs and exports, services, in addition to locating key markets and main strategic pillars to
exports. successfully implement it.
2. Export environment that inhibits increase in exports, services, and re-exports:

Priority Requirements Strategic pillars of export activation
The challenges that are facing the commercial environment as the Kingdom falls
behind other countries when it comes to the cost of exporting and importing Export capabilities and
Commodities Trade facilitation
prospects
products, and the time needed to do so.
• Developing sectors • Strengthening
3. Uncompetitive accessibility to international markets in terms of exported goods Growth in the revolving around export supplies and
manufacturing sector exports infrastructure
and services: The limited opportunities to access markets due to the limited
will boost the growth of • Enhancing the • Improving
network of commercial agreements signed between the Kingdom and priority commodity exports capabilities of commercial systems
markets. exporters and policies
Re-exported products Market Accessibility Exports promotion
4. Insufficient promotional activities: The weak global presence in the international
market caused by insufficient promotional activities and brand dissemination. • Access to markets:
• Developing channels
Covering the
to reach foreign
Geographical commercial
5. Substandard enabling environment: The gaps in several main enabling factors in clients
characteristics will be a agreements market
• Building a reputation
the export environment, namely obtaining export financing, and establishing an catalyst for exports • Protecting local
for the country and
organizational environment. productions from
its industry
Saudi restrictions
National Services Export enablers
Export • Increasing the
Strategy availability of • Increasing the
financial enablers participation of the
Exports will rely on tourism for exporters public and private
and travel, transport, and • Forming a sectors
financial services qualified workforce • Ameliorating the
equipped with the data quality and
necessary skills for participation
this industry
Priority markets
Exhibit 4.2: National Export Strategy Framework
414 415
• Developing an intelligence infrastructure capable of providing important In a bid to achieve the National Export Strategy, 10 initiatives have been determined as
information on exports, including the export of commodities, re-exports and follows (the initiatives in bold letters are owned by the Saudi Export Development Authority
services – a total of 3):
• Creating financing products and enhancing the standards of providing financial
services in private financial institutions 1. First challenge: Insufficient potential and capabilities to export goods,
services and re-exports and the initiatives that address this challenge are:
• Developing the export capabilities of Saudi facilities
• Ensuring the alignment of industrial sector growth initiatives with export growth
The priority commodities list was made consistent with the main stakeholders. In
objectives
addition, the service groups considered prioritary are: travel, transport, financial
• Ensuring the alignment of services sector growth initiatives with export growth
services, wired and wireless communications, computer and information services,
objectives
and construction. This category is currently being addressed by numerous vision-
• Developing free trade zones
focused programs, which were also aligned with these services.
With regards to re-export, the Ministry of Transport and the Logistics Services Strategy 2. Second challenge: Export environment that inhibits increase in exports,
have been contacted to align previous efforts in order to attain set objectives. services, and re-exports and the initiatives that address this challenge
are:
The priorities of targeted markets were also identified based on the Market • Reviewing and previewing the changes that have to be introduced to the regulatory
Attractiveness Index (MAI), which takes into account the demand on commodities framework to support exporters
in targeted markets, Saudi Arabia’s share in the exports to these markets, the ease • Facilitating import/export operations
to reach and access them, and the amount of targeted commodities exported to the • Looking into the opportunities of reducing logistical costs to targeted export
markets. markets reduce logistic costs to reach targeted markets and establishing
• Container Allocation System to link exporters to logistic services providers
The list of targeted markets was made consistent with main stakeholders, and five
pillars were determined to achieve the National Export Strategy: 3. Third challenge: Uncompetitive capacity to access international markets
for exported goods and services and the initiatives that address this
1. Export Capabilities and Potential challenge are:
Developing export-oriented sectors and enhancing exporters’ capabilities. • Protecting local productions against harmful practices in local and international
markets
2. Trade Facilitation • Strengthening the coverage of priority markets through new trade agreements
Strengthening export supplies and infrastructure, and improving trade regimes
and policies.
4. Fourth challenge: Insufficient promotional activities and the initiatives
3. Market Accessibility
that address this challenge are:
• Promoting exporters and their products, as well as finding them export
Covering the commercial agreements market and protecting local productions
opportunities
from restrictions.
• Linking the development grants to foreign countries with contracts that could
help companies access their markets
4. Exports Promotion
Developing channels to reach foreign buyers and build a good name for the
country and the industry. 5. Fifth challenge: Substandard enabling environment and the initiatives
that address this challenge are:
5. Export enablers • Improving export environment efficiency
Enhancing the availability of funding possibilities for exporters, increasing PPPs, • Establishing and launching the Saudi Export Bank
forming a qualified workforce equipped with the skills necessary for this industry,
and ameliorating data quality and participation
416 417
The national export strategy initiatives are interlinked with a large number of entities Activation Plan
and programs achieving Vision For this purpose, the national export strategy has
been aligned with the strategies of both within and outside the program, thereby The Strategy located 6 initiatives to guarantee its successful execution, 3 of which
reducing the number of initiatives under the responsibility of the Strategy 15 to 6, 3 of are owned by the Saudi Export Development Authority (SEDA), and 3 by other
them are owned by the Saudi Export Development Authority and 3 are owned from governmental authorities. The initiatives owned by SEDA are the following:
other parties related to the program such as the establishment of the Saudi Import
Bank which will be included under the financial enabler 1. Improving export environment efficiency
In addition to the initiatives of the National Export Strategy, ten initiatives under the The initiative aims at increasing exporter satisfaction with the export environment in
National Transformation Program will have an indirect impact on non-oil exports. the Kingdom, addressing challenges hindering the competitiveness of Saudi exports
They might affect the exports of commodities, services and re-exports. These and ameliorating communication channels with the private sector to understand its
initiatives and their owners are highlighted in the below Exhibit 5. needs. It also seeks to instill the export culture and help exporters obtain logistics
support services and qualified human competencies in this sector.
Initiative name Initiative owner Initiative name Initiative owner
Setting a practical
framework for the alignment National Program to Increase 2. Developing Saudi facilities export capabilities
NTP1 NTP9
of graduates with the labor Competitiveness Increasing facility capability and potential to access international markets and
market’s needs
enhance the competitiveness of their products, in terms of the export process such
The Kingdom as a
Launching three branches as export plans, international marketing, packaging, shipping, selling and collection;
NTP2 NTP10 of the Saudi Center for
destination for Muslims
Commercial Arbitration increasing facility knowledge of export topics and requirements, as well as export
Endorsing and implementing
procedures, policies and needed capabilities; helping facilities identify targeted
Establishing a center for Halal
NTP3 the conditions of petroleum NTP11
certification
markets to export their products, and know the export demands of these markets.
products trade
NTP4
Securing funding for the
hospitality projects and the NTP12
Building an electronic 3. Promoting exporters and their products as well as finding them export
relevant tourism projects
platform for date trade
opportunities
Recovering from the Promoting Saudi products and facilities across international markets using various
Commercial exhibitions center
NTP5 customs the subsidy value NTP13
at Jubail Industrial City means to raise awareness of Saudi productions and industries, and improve people’s
for exported goods
perceptions. Additionally, securing proper opportunities for these facilities and
Setting up a strategy to
linking them with potential buyers in targeted countries.
NTP6 NTP14 Business incubators program
upgrade the railway network
4. B. Strategic Considerations
Leading a business incubator
for information technology NIDLP strategies and architecture were determined taking into account numerous
in the Kingdom through
a governance model that
strategic considerations within the program. Some of them were general
NTP7
Increasing the capacity of
railways
NTP15 provides the necessary considerations taken at the level of the program, while others were specific to each
requirements, stimuli and
performance indicators for
National Industrial Development and Logistics Program component in aims at
upgrading incubator quality supporting exports, as highlighted below.
and outcome efficiency
Topic Description Decision and outcomes

Adding professionalism to
NTP8
the logistics sector
Export • The National Export • 172 products were prioritized and made
support Strategy prioritized a group consistent with priority sectors in the
Exhibit 4.7: The initiatives of the National Transformation Program that will indirectly affect non-oil exports
of products and targeted National Industry Strategy.
These initiatives might contribute to the achievement of the National Export markets on which the • 48 markets were prioritized based on
Strategy thanks to their direct impact on non-oil exports. Consequently, a governance Kingdom should focus. the goods demand in targeted markets,
operating model has been designed to take into account the need to follow up on the and accessing them was facilitated.
progress made in the initiatives with an indirect impact on non-oil exports.
418 419
Jeddah Islamic Port
(NIDLP-Export Enablment)
420 421

Pillar/ Number
Cluster
Export N-20-06-005 Anti-dumping and trade protection • Ministry of Commerce and

Enablement Investment
Export N-20-14-003 Commercial manufacturing policy • MEIM - Industrial Affairs

Enablement Agency
Export N-20-14-004 Strategic partnerships for industry • National Industrial Clusters

Enablement Development Program
Export N-20-18-734 Improve the environmental efficiency • Saudi Exports Development

Enablement of exports Authority
Export N-20-18-742 Develop exporting capacities for • Saudi Exports Development

Enablement Saudi establishments Authority
Export N-20-18-743 Promote exporters and their products • Saudi Exports Development
Enablement and create export opportunities for Authority
them
422 423
SECTION 6.6:
HUMAN CAPITAL
DEVELOPMENT
424 425
Building centers to
raise the capacity
of national human
resources to
accelerate the
adoption of the
5. Existing Initiatives Fourth Industrial
(NIDLP-Human Capital Development) Revolution
426 427

Pillar/ Number
Cluster
Human N-21-12-011 Saudi Industrial Development Fund • Saudi Industrial Development

Capital academy Fund
Development
Human N-21-14-001 Industrial workers company • MEIM - Industrial Affairs

Capital Agency
Development
Human N-21-14-004 Industrial workers portal • MEIM - Industrial Affairs

Capital Agency
Development
Human N-21-14-005 Workers council in industrial sectors • MEIM - Industrial Affairs

Capital Agency
Development
Human N-21-14-009 Human Capital Development Program • National Industrial Clusters

Capital for Industrial Clusters Development Program
Development
Human N-21-14-010 National Industrial Leadership • MEIM - Industrial Affairs

Capital Development Program Agency
Development
Human N-21-29-002 Industrial colleges • Technical and Vocational

Capital Training Corporation
Development
Human N-21-34-006 Establish a mining industrial union (or • MEIM - Deputy Ministry For
Capital authority) Mineral Resources
Development
Human N-21-34-007 Expand the scope of scholarships • MEIM - Deputy Ministry For
Capital related to the mining sector Mineral Resources
Development
Human N-21-34-008 Expand the scope of scientific • MEIM - Deputy Ministry For
Capital academic programs in the Kingdom Mineral Resources
Development
Human N-21-36-003 Industrial apprenticeships • Human Resources

Capital Development Fund (Hadaf)
Development
428 429
SECTION 6.7:
SPECIAL ECONOMIC
ZONES (SEZs)
430 431
A special economic zone is a delimited, secure area under single administration with If implemented successfully, SEZs can have both static and dynamic economic
special incentives and regulatory regime. spillovers.
The concept of Special Economic Zones (SEZs) has evolved over time, resulting in a Static benefits Dynamic benefits
variety of different models, from Free Trade Zones which are primarily geared towards (Direct benefits of SEZs) Benefits resulting from the static effects
supporting trade activities (import/export) to Enterprise Zones which are mostly

located in underdeveloped urban or rural areas with a focus on the domestic market. Create employment opportunities
and generate income Indirect job creation
SEZs around the world offer similar incentives package, but countries can play on the Diversify and
level of the incentive (e.g. 100% vs. 50% exemption) and the length of the exemption increase exports Local skills upgrade
(e.g. 10-year vs. 20-year corporate tax holiday).
Increase foreign
exchange earnings Technology transfer
The standard incentives cover:
Increase the Urban and regional
• Customs duties exemption on import/export inflow of FDI development
• Zone-specific immigration policies
• Removal of quotas on foreign workforce Growth governmental
• Foreign control of businesses across sectors revenues
• Corporate tax holidays and other fiscal incentives
• One-stop-shop for all administrative processes (e.g. company registration, etc.) Exhibit 1.1: Static and dynamic benefits of SEZs
These incentives are usually supplemented by high-quality multi-modal infrastructure It is noticed that the direction of investments of global companies are largely
(sea, air, rail, and road) and bespoke services catering to investors/sectors specific impacted by the availability of special economic zones and the incentive packages it
needs (e.g. pre-built warehouses, plug-and-play utilities, etc.). offers. As the economic zones are widely spread nowadays in many countries around
the world, it showcases the importance to establish special economic zones in KSA to
help attract distinct and diverse investments.
Application of welding process
432 433
The program aims to

establish special zones
in outstanding and
competitive locations,
taking into account the
relative advantages of
the various regions of the
Kingdom.
(NIDLP - Special Economic Zones)
434 435
3. A. Key challenges: 3.C. Why does the Kingdom need SEZs?
The Special Economic Zones in the Kingdom face several challenges related to three We have identified three main reasons why the Kingdom needs to develop Special
topics: Economic Zones:
1. Governance 1. Improve KSA’s cumbersome regulatory environment:
• The independence of Special Economic Zones existing is not enough to take • KSA overall competitiveness & attractiveness are on the decline. SEZs could
decisions from other governmental bodies and institutions. be a key enabler to remove bottlenecks and accelerate reforms in a controlled
• There is a need for a specialized body to resolve disputes (with the aim of manner
overcoming the challenges in judicial systems)
• Developing the level of coordination between the different special economic 2. Reduce leakage to neighboring countries:
zones in the Kingdom
• The Saudi market is served by companies located in neighboring countries
2. Regulations where they benefit from SEZs with highly competitive business environments
• The Saudi market is served by companies located in neighboring countries 3. Support the development of KSA industrial and economic cities:
where they benefit from SEZs with highly competitive business environments
• EZs have been identified as a key enabler by multiple zone developers for
3. Support the development of KSA industrial and economic cities: achieving economic diversification and attract high-profile investors
• SEZs have been identified as a key enabler by multiple zone developers for
achieving economic diversification and attract high-profile investors
3. B. Current efforts:
The National Strategy for Special Economic Zones has been set in the Kingdom
to identify the requirements for raising their competitiveness and providing the
governance mechanism and legislative framework. The project aims to launch
trial projects for the special economic zones to get fast gains and to improve the
performance of number private areas in the kingdom.
436 437
3.C.1: Improving the legislative system in the Kingdom to eliminate obstacles
The challenges identified by KSA zone developers/regulators (i.e. Modon, Royal

Commission for Jubail and Yanbu, Economic Cities Authority, etc.) and investors
translate into a series of requirements to improve KSA’s business environment.
SEZ-related requirement building blocks:
SEZ-related requirement building blocks

One-stop-shop • Delegation of gov’t authorities for admin processes1
Tax incentives • Corporate tax exemption or reduction
• 100% repatriation of capital, profits, and dividends
Visas & labor • Zone specific labor laws (gradual

Saudization, hiring, mobility, sponsors, etc.)
• Zone-specific immigration/visa policies
Foreign own • Foreign control of companies & ownership of land
Financ incentives • Customized incentives adapted to specific industry
Customs • Import and re-export duties exemption

regulations • Unlocked restrictions for transshipment of goods
Customs operations • Lean customs operations and inspections

• Bonded corridor between zones (e.g. sea-air)
Zone autonomy & • Empowered decision making entity at zone level

coordination • Improved cooperation among zones
Dispute resolution • Mechanism for commercial dispute resolution
Operations Regulations Governance
Exhibit 3.1: SEZ-related requirement building blocks
438 439
3.C.3 Support the development of KSA industrial and economic

3.C.2 Reduce leakage to neighboring countries cities
The Saudi market is served by companies located in neighboring countries where Existing and future zones will now be focused on developing KSA priority sectors as
they benefit from SEZs with highly competitive business environments. identified by the Vision Realization Programs.
KSA is surrounded by SEZs with attractive incentives, while KSA industrial and
economic cities have limited differentiation from the “base economy”. Sectors potentially benefiting from Special Economic Zones
INDUSTRIES
Standard regional SEZ offering
Administration One-stop-shop solution for all administrative processes
Customs 0% customs duties on import/export in the zone1
Logistics Mining Energy Industry
No restrictions on transshipment of goods
Tax incentives 0% corporate tax2
0% withholding tax on remittances of profits abroad 9 NIS1 priority clusters to potentially benefit from SEZs:
Visas & labor Visas & labor Zone-specific labor laws (no limitation on foreign
workforce)
Pharma & Specialty
Foreign ownership 100% foreign control of businesses across sectors Automotive bio-pharma Chemicals
Quality-of-life Westernized social norms
Dispute resolution Common law as a base for commercial dispute resolution Machinery Plastics &
Medical supplies
1. Import duties still apply for import from the zone to the base economy; 2. Duration of the tax holiday varies between & Equipment conversion
countries. Source: MEP SEZ Team analysis
Exhibit 3.2: Regional SEZs and standard regional SEZ offering
Food Building
Renewables processing materials
SERVICES
Digital & Professional Social Tourism,

Media Services Services Entertainment
& Leisure
• ICT • Financial • Financial Services • Hospitality

• E-commerce Services • Trading Services • Resorts
• Filmmaking • Trading • Consultancies • Theme parks
• Broadcasting Services • Etc. • Outdoor
• Etc. • Consultancies recreation
• Etc. • Etc.
Exhibit 3.3: KSA priority sectors
440 441
Some of KSA zones are already seeking SEZ status to support the development of
new clusters or expand along their value chain. Exhibits 2.3.2 and 2.3.3 shows a list of Zone Zone objectives Target sectors
zones that are willing to achieve SEZ status to better deliver on their objectives with
a focus on seeding new sectors. Petro Rabigh • Center for specialty • Specialty chemicals
chemicals with and advanced
affordable feedstock and materials
Potential candidates for KSA SEZs proximity to port
Zone Zone objectives Target sectors Intl. • National complex for the • Maritime industries
Maritime development of maritime • Marine financial
ILBZ1 • Advanced logistics center • E-commerce industries and services services
to support e-commerce • Technology
and technology products
KAUST1 • Center for advanced • Advanced Research
education and scientific & Development4
KFIA2 • Advanced logistics and • Pharma & bio- research
services center with a pharma
competitive air-freight • MRO (aviation)
KACST2 • Technical oases • Knowledge-based
solution
supporting knowledge- industries4
based activities with a
KAEC3 • Advanced manufacturing • Logistics focus on SMEs
hub for export leveraging • Food processing (for
King Abdullah Port export)
KAFD3 • Financial and • Finance, Consulting,
professional services Insurance, and
Jazan • Manufacturing hub • Plastics and center for KSA and the Engineering
leveraging a strategic conversion Middle East
partnership with China • Machinery and
equipment
Industries Services
(aligned with NIS target clusters)
Auto-City • Dedicated city4 for • Automotive

Exhibit 3.5 Potential candidates for KSA SEZs (2/2)
localizing automotive
OEMs5 and their supply
chain
Industries Services
(aligned with NIS target clusters)
Exhibit 3.4 Potential candidates for KSA SEZs (1/2)
442 443
The program strategy

includes various types
of special economic
zones, serving regional
and global investors
in the sectors of trade,
logistics, manufacturing
and financial services, as
a platform to serve the
global markets
4. Strategy
One of the train stations in the Waad Al Shaamaal City
444 445
4.A. Strategic Pillars 4.A.1 Mandate

KSA has been developing a number of economic cities and industrial zones to improve
its competitiveness and support its economic diversification since the 1970s. From
The National Strategy for Special Economic Zones is addressing the start, some of these economic cities were planned as special economic zones
the following questions: with attractive benefits (such as 100% foreign control of businesses, no restrictions
on foreign employees, etc.). However, the existing zones currently have very limited
• How do we define Special Economic Zones (SEZs)? differentiation from the base economy.
• Why does the Kingdom need SEZs?
• What is the National Strategy for SEZs?
• What is the implementation roadmap for the development of KSA SEZs?
Two work streams where pursued in parallel. The first one was dedicated to the
design of the strategy itself, while the second one was focused on the development
concrete proofs of concept.
Overall project approach for National SEZ strategy
Mandate
Economic Cities Bonded & Re-Export Zones
• King Abdullah EC (KAEC) • Jeddah (LogiPoint)
• Knowledge EC (KEC) • Dammam (SDES1)
Scope of regulations/ What are the regulatory carve-outs pertaining to SEZs? Royal Commission for Jubail & Yanbu
• Jubail Diplomatic Quarter (DG)
• Yanbu King Abdullah University of Science &
• Jazan EC (JEC) Technology(KAUST)
SEZ archetypes Governance Operating model
• Ras Al Khair (RAK) Entertainment City
Draft of SEZs regulatory texts
Modon Industrial Zones ITCC2

KSA’s SEZ requirements
Airports King Abdullah Financial

SEZs impact assessment
archetypes What what is the national How will zones • King Khalid Airport (KKIA) District (KAFD)
are the different governance for be approved, and • King Fahad Airport (KFIA) Aramco Energy Industrial
archetypes fit for SEZs (structure, monitored? How • King Abdulaziz Airport (KAIA) City (EIC)
KSA’s development composition, R&R)? will the zones be
objectives? ?operated Exhibit 4.2: Mapping of existing and future Giga-projects (i.e. Red Sea, NEOM,
economic/industrial zones and Al-Ula) are out of scope
1. Saudi Development and Export Service Company LTD.; 2. Information Technology and Communications Complex.
Proof of concept Source: MEP SEZ Team analysis
Shortlisting of locations Proof of concept

A future-proofed strategy for the development of special economic zones would help
What are locations best suited tWhat would be the target the existing zones in achieving their socio-economic development objectives, as well
for concept testing? sectors & investors? as pave the way for new zones in the future.
What would be the
eco. impact? This strategy aims to provide the tools for existing and future zones
to become globally competitive SEZs
Exhibit 4.1: Overall project approach
446 447
Overall, special economic zones could directly contribute to achieving eight Vision 4.A.2 The scope of work of laws and regulations
2030 level 2 objectives, with a focus on seeding economic diversification, improving
regulations, and generating employment. Special Economic Zone regulations should exclusively under the jurisdiction of their
respective regulator, as illustrated in Figure 4-3 below
Regulatory Bodies of Special Economic Zones

Seed economic Improve Generate
diversification regulations employment
• Solely responsible for regulations
3.1 Grow contribution of 5.2 Improve performance of 4.2 Ensuring equal access to job • Mature Special Economic Zones only have exclusive jurisdiction over around
the Private Sector to the government apparatus opportunities
40 – 60 laws
economy SEZs will help defining and SEZs are globally increasing
SEZs will help in attracting testing business-friendly women participation in the • The thousands of other laws fall under the jurisdiction of the authority
FDIs, hence increasing private regulations labor market overseeing the primary economy
sector contribution • This approach allows freedom to develop regulations while assigning some authority
to the primary economy
3.3 Unlock potential of non- 4.3 Enable job creation through
oil sectors SMEs and micro-enterprises
SEZs will develop value SEZs will help supporting start- A clear approach must be developed to enhance the effectiveness of joint efforts
propositions catering to ups, innovation clusters, and and mutual recognition
services and industries SMEs
3.5 Position KSA as a global 4.4 Attract relevant foreign

logistic hub talents for the economy
SEZs development is one of SEZs will help attracting foreign The strategy identified how to transition to Special Economic Zones in the Kingdom
the 14 key initiatives of the talent by seeding new sectors
logistics hub
by assessing the level of exceptions to be granted to the zone (limited exceptions vs.
full exceptions). The strategy also identified an initial list of Special Economic Zones
3.7 Grow non-oil exports to be established, which will help to physically test the Special Economic Zones
SEZs are a key enabler to concept in the Kingdom.
localize export-oriented Vision 2030 level 2 objectives
industries Rational for SEZs development In order to meet the requirements of investors and developers, and in accordance
with international benchmarks, regulatory bodies responsible for Special Economic
Exhibit 4.3: Alignment with Vision 2030 objectives Zones should have exclusive jurisdiction over particular necessary regulatory aspects
Source: KSA Vision 2030, Vision Realization Programs, MEP SEZ Team analysis
in order to achieve their objective.
When developing the strategy, four core principles have been considered: Some optional legislation may also be developed under the jurisdiction of the regional
regulator, depending on the concentration and size of that region.
1. Existing rights of current zones/investors will not be disrupted
2. Existing zones will have the choice to opt-in to become SEZs
3. SEZ applicants will have to build a case to be granted an SEZ status
4. The strategy will focus on minimizing competition with base economy
448 449
Must have Optional (depending on zone focus(
Municipal regulations Social infrastructure

• Master plan preparation, approval and control • Education
• Zoning • Healthcare
• Construction permits • Housing (2nd homes)
• Land registration office
• Land registration office Utilities & physical infrastructure
Visa regulations1 • Power
• Residential and employment • Water & wastewater
• Tourism • Telecoms
• Information and communications technology, real estate brokerage, financial • Airports

services, consulting, games, etc • Seaports
• Roads
Sector-specific regulations
• Rail
• e.g. for maritime, financial services, media, pharma,
leisure and entertainment • Fencing
1. Subject to Ministry of Interior security clearance. Source: MEP SEZ Team analysis
Exhibit 4.6: Must have and optional areas of regulations for SEZ regulators
Business regulations
• Company incorporation
• De-regulation of small businesses
• Tax and duties exemption
• Labor laws (e.g. Saudization)
• PPPs
• Intellectual property
450 451
4.A.3.2 KSA SEZ archetypes

KSA Special Economic Zones would offer a regulatory regime at the crossroads of 3. Single Purpose Zones (SPZ) will aim to seed specific industries/locations requiring
industrial/economic cities and giga-projects. highly customized regulations (e.g. media zone, financial services zone, tourism
destination, etc.). Such zones will be quite distinctive, depending very much on the
Industrial and Special Economic sector they will support. As such, they will each have unique regulatory starter packs,
economic cities Zones which are able to address their sector-specific requirements.
Main locations/projects
Development objectives Incentives
• Logistics Bonded • Develop advanced logistics • Base economy +

Zones (LBZ) • platforms in customs free • Customs free
areas
• Manufacturing • Develop a global hub • MFTZ standard

Free Trade Zone for exportoriented founding law (pre-
(MFTZ)
Advanced infrastructure Advanced infrastructure manufacturing and trade approved)
Illustrative offering
Dedicated municipality Dedicated municipality • Service Free • Become the go-to destination • SFTZ standard
Trade Zone (SFTZ) for services and talented founding law (pre-
Customs free environment
individuals approved)
Fiscal incentives
• Single Purpose • Seed specific industries/ • Ad-hoc regulatory
Gradual Saudization Zone (SPZ) locations with highly approval process1
customized vehicles
High-level value-chain focus Illustrative

Limited zone empowerment Full zone empowerment
Extraction
1. King Abdullah Economic City. Source: MEP SEZ Team analysis. Exhibit 4.8: Segmentation of KSA zone offerings
Three Zone archetypes have been designed to support the development of KSA • MFTZ Processing
priority sectors:
1. Manufacturing Free Trade Zones (MFTZ) will aim to become global hubs for export, Assembly
manufacturing, and trade, by supporting export-oriented manufacturing activities
(e.g. food processing, specialty chemicals, etc.). A suitable location for an MFTZ is a
• LBZ Logistics
duty- free area in direct proximity to an airport or a seaport where efficient and cost-
competitive logistics solutions can be provided.
Services
• SFTZ
2. Service Free Trade Zones (SFTZ) will aim to become the go-to destinations for & R&D
professional services (e.g. engineering consultancies, information & communication
technologies, etc.) and talented individuals. A suitable location for an SFTZ is a SPZs will focus on localizing entire value-chains with link to base economy
business park in direct proximity to a large pool of talent and to local demand, while
offering a high quality of life (education, healthcare, entertainment, etc.) 1. In coordination / With approval of base economy regulator (e.g. Ministry of Finance for Financial Services Zone ,
Ministry of Health for Healthcare City, etc.), but once a new zone authority is created, it is empowered as a new regulator.
Source: MEP SEZ Team analysis Exhibit 4.9: KSA SEZs segmentation
452 453
For each archetype, we listed potential target sectors and identified which locations
could be suitable candidates for SEZs.
Potential sectors and locations for the development of SEZs
Logistics Bonded Zones Service Free Trade Zone (SFTZ)
KEC
Logistics Trading services
Jubail Dammam KKIA
Reverse logistics R&D
BRZ
Warehousing ICT
Yanbu
Fulfillment KFIA Consultancies KFIA
Maintenance & Repair Architecture & Design KAEC
Etc. Etc.
KAEC
KKIA KAUST
Talent driven
Base economy
KAFD
Logi
point KAIA KAIA
ITCC
DQ
Manufacturing Free Trade Zone (MFTZ) Single Purpose Zone (SPZ)
Automotive Media KKIA

Jubail RAK
Food processing Healthcare
Pharmaceuticals Education
(Aramco)
Medical supplies KFIA Financial services Energy
Yanbu
Renewables SE Riyadh etc. Industrial
manufacturing City
KAEC
Etc.
KAEC
KAIA
KKIA Highly customized
CAPEX driven KAUST
JAZAN
KAFD
Source: MEP SEZ Team analysis Exhibit 4.10: Spatial mapping of KSA SEZ archetypes
454 455
4.B Governance 4.B.4 KSA’s governance framework roles and responsibilities

We determined that the balanced governance model (Option 2) is best aligned with
the aforementioned design principles and as such best suited for KSA.
4.B.1 Global benchmarking of SEZ governance frameworks
4.B.4.1 SEZ Authorities
We benchmarked 10 SEZ governance frameworks, including international and
regional countries, to extract best practices for the development of KSA SEZs. Each Special Economic Zone should be regulated autonomously by an SEZ Authority,
which should have most of the regulatory powers.
Each SEZ Authority will be headed by its own Board of Directors in charge of overseeing
4.B.2 KSA’s governance framework design principles the development of the SEZ by conducting performance reviews and supervising
company licensing.
By leveraging a comprehensive pool of resources (global benchmarks, stakeholder It is important to note that a single SEZ authority could regulate several Special
engagement, experts interviews, and independent legal review), we extracted three Economic Zones.
key principles for the design of KSA’s SEZ governance framework:
• As an illustration an Airport SEZ Authority could regulate an SEZ in King Khalid
• Autonomy: Create independent SEZ Authorities, financially and administratively International Airport (KKIA), King Fahd International Airport (KFIA), and King
autonomous, to locally regulate, manage, and oversee zone development Abdulaziz International Airport (KAIA).
• Supervision & coordination: Create empowered central national entity to steer
the development of KSA SEZs, delineate powers of each zone and act as a center
of policy excellence
• Interfacing with base economy: Seek expertise from key industry owners and
other government stakeholders for continuous alignment/interoperability with
the base economy
4.B.3 KSA’s governance framework options assessment

We identified three distinct national governance models with varying degrees of
zone level autonomy, and assessed them against the three key design principles.
Balanced govermance
A national authority would act as the central regulator for the development of all
Special Economic Zones.
A branch office of the national authority would be created in each zone, with only
limited empowerment and autonomy at zone level
456 457
The SEZ Authorities’ roles and responsibilities include: • National policymaking

• Define certain SEZ regulations, including starter pack of incentives
• Zone-level regulations • Provide regulations templates to be applied in the different zones
• Develop municipal regulations, including master planning, zoning, • Center of excellence (back office functions)
construction permits, etc. • Assess socioeconomic impact of the national SEZ program
• Develop and implement sector-specific regulations at zone level, e.g. exempting • Support the creation of a commercial arbitration center
media companies from base economy restrictions • Mandate support services (i.e. visa processing) on behalf of individual zones
• Full licensing shop (one-stop-shop) • Central coordination

• Coordinate at a macro level with base economy leadership
• Offer a one-stop shop, e.g. work permits issuance, visas issuance, company • Coordinate between archetypes and zones
incorporation, etc.
• Decision-making is at the zone level, rather than having to receive approval at 4.B.4.3 Advisory Committees
the national level
• Entire regulatory toolkit is delegated to location regulator The NSEZ Supervisory Board will comprise archetype-specific Advisory Committees,
which will act as a platform to seek consensus between base economy and SEZs.
• Developer coordination Advisory Committees will include representation from relevant base economy
stakeholders (including existing industrial zones), SEZ authorities/developers, and
• Coordinate with zone developer: the private sector (domestic and international investors).
• Collaboration on zoning and master planning The Advisory Committees’ roles & responsibilities include:
• Investor attraction
• Supervision of developer’s activities • SEZ approval process
• Review each application and submit feedback to the NSEZ Supervisory Board
The SEZ authorities should aim to create financially viable operating models by
developing corporatized environments. • Advisory role
• Advise the NSEZ Supervisory Board on strategic issues related to respective
specific clusters
4.B.4.2 National SEZ Supervisory Board • Recommend appropriate regulatory changes/updates for each of the
archetypes
The National SEZ Supervisory Board (NSEZ SB) will drive the approval process, support
national policymaking, provide back-office services, and act as the central coordinator • Base economy and archetype coordination
for the development of SEZs in the Kingdom.
The NSEZ SB could leverage the existing board of Economic Cities Authority (ECA), • Coordinate at sector level among zones and base economy
as it is chaired by the Chairman of the Council of Economic and Development Affairs • Share key learnings as to how to improve base economy regulations
(CEDA) and comprised of other key members of the government.
The NSEZ SB’s roles and responsibilities include: The proposed governance model also accommodates “giga-projects” such as NEOM,
which could benefit from sharing of best practices.
• SEZ approval process
• Check completeness of SEZ applications and conduct economic review

• Conduct strategy review of SEZ applications
• Recommend SEZ status of SEZ applicant to Country Leadership
• Grant SEZ license upon final approval from Country Leadership
458 459
4.C Operating model
4.C.1 Development models The different models will translate into different organization structures between
zone authority and zone developer. In all models, a Board/CEO would oversee the
There are four development models that can be used when creating SEZs, ranging zone authority and the zone developer.
from fully government-led to fully privately-led developments.
For government-led developments, both the zone authority and the zone developer
would be two units of the same government entity.
Government-led Model Privately-led
For privately-led development, the zone authority and the zone developer would be
Development clearly distinct entities, still overseen by a Board of Directors.
Fully government- Public private Tender to private Fully privately-led
model led partnership sector
Government-led Privately-led
RCJ plans, RCY enters in a Modon plans an A private sector
develops, and JV with private SEZ, and
Illustrative operates an SEZ investors to tenders
entity plans,
develops, and Fully Public private Tender to private Fully
cases on a specific plot create an SEZ in development and operates an SEZ government-led partnership sector privately-led
in Jubail Jazan operation to a
private entity
Board / CEO
Conception Government entity Government entity
Authority
Government
Functions
Development Government entity Private sector

entity Private sector
Private
Operation sector Developer
Regulation National SEZ Supervisory Board + SEZ Authority

Government organizations
All models will follow the same approval process to be granted an SEZ status
No private organization Semi-private developer model Private
in place via JV or tender developer
Source: MEP SEZ Team analysis
Exhibit 4.11: SEZ development models
Exhibit 4.12: Simplified organization structure of the various operating models
460 461
4.C.2 Tools to minimize competition with base economy 4.C.3 SEZ approval process
One of the most important element when starting to develop special economic A critical element is that all zone applicants will have to go through a stringent
zones in the Kingdom is to ensure they will not compete with the base economy but approval process to be granted an SEZ status. This approval process will ensure that all
rather focus on being competitive with neighboring countries. As such, we designed SEZs have a solid business case by demonstrating their ability to seed new economic
six safeguards that will minimize the risk of cannibalization with the base economy activities and attract additional investment.
and limit the potential loss of fiscal revenues:
Process key characteristics

Tools to limit cannibalization
• When applying, zone sponsors will provide acomprehensive business plan that
• Create strict approval process • SEZ applicants will have to includes:–Value proposition–Financial feasibility –Technical feasibility
build a case to be granted an • An independent, yet standard economic review will be conducted for each application
• The application is reviewed by all relevantbase economy stakeholders
SEZ status • The business case must be in align with KSA objectives and create a net-positive
impactIndependent
• Start small before expanding • SEZ status will only be
granted for small plots Source: MEP SEZ Team analysis Exhibit 4.14: Approval process for the creation of new zones
(~3 km2) before the zones
gradually expand For the creation of a new zone, applications must flow through a three-tiered approval
process, ensuring thorough review by relevant entities.
• Restrict sectors from SEZs •Resource-based sectors (e.g.
Upstream Oil & Gas, etc.) will
be restricted from SEZs
• Performance review/audit • Zone performance will be

audited against initial targets
(e.g. FDI, export, sectors, etc.)
• Control through Zone Board • Board of each SEZ authority

will be comprised of relevant
government representatives
• Limitation of operation • SEZ company licenses will

restrict company operations
within the zones
SEZs will focus on attracting FDIs to seed new sectors and localize export-
oriented activities
Exhibit 4.13: Tools to limit cannibalization
462 463
An aerial view of an aluminum factory in Ras Al Khair Industrial City
464 465
Cluster Cluster
Special N-19-02-159 Prepare a free zone to attract export • Ministry of Economy and Special N-19-13-018 Securing a water source and • Saudi Authority for Industrial
Economic oriented industries Planning Economic establishing a drainage station in the Cities and Technology Zones
Zones Zones industrial city of Jizan (Modon)
Special N-19-02-161 Study the establishment of • Ministry of Economy and Special N-19-13-019 Complete infrastructure works at the • Saudi Authority for Industrial
Economic specialized economic zones Planning Economic industrial city in Al Kharj Cities and Technology Zones
Zones Zones (Modon)
Special N-19-13-009 Constructing and equipping service • Saudi Authority for Industrial Special N-19-13-020 Complete infrastructure works at the • Saudi Authority for Industrial
Economic buildings in a number of cities Cities and Technology Zones Economic industrial city in Medina Cities and Technology Zones
Zones (Modon) Zones (Modon)
Special N-19-13-010 Develop Assir Industrial City • Saudi Authority for Industrial Special N-19-13-021 Build and equip mosques at a number • Saudi Authority for Industrial
Economic Cities and Technology Zones Economic of cities Cities and Technology Zones
Special N-19-13-011 Update and develop security systems • Saudi Authority for Industrial Special N-19-13-022 Complete infrastructure works at the • Saudi Authority for Industrial
Economic at key industrial cities Cities and Technology Zones Economic first industrial city in Qassim Cities and Technology Zones
Special N-19-13-012 Complete and update the • Saudi Authority for Industrial Special N-19-13-023 Complete infrastructure works at the • Saudi Authority for Industrial
Economic infrastructure at the second industrial Cities and Technology Zones Economic second industrial city in Qassim Cities and Technology Zones
Zones city in Dammam (Modon) Zones (Modon)
Special N-19-13-013 Complete infrastructure works at the • Saudi Authority for Industrial Special N-19-13-024 Rehabilitation of infrastructure in the • Saudi Authority for Industrial
Economic industrial city in Dhurma Cities and Technology Zones Economic second industrial city in Riyadh Cities and Technology Zones
Special N-19-13-014 Complete infrastructure and rain • Saudi Authority for Industrial Special N-19-13-025 Complete infrastructure of the Third • Saudi Authority for Industrial
Economic water drainage works at the third Cities and Technology Zones Economic Industrial City in Riyadh Cities and Technology Zones
Zones industrial city in Dammam (Modon) Zones (Modon)
Special N-19-13-015 Establish and equip civil defense • Saudi Authority for Industrial Special N-19-13-026 Complete infrastructure works in the • Saudi Authority for Industrial
Economic stations in a number of cities Cities and Technology Zones Economic second phase and the logistics zone in Cities and Technology Zones
Zones (Modon) Zones the industrial city in Sudair (Modon)
Special N-19-13-016 Implementation of infrastructure • Saudi Authority for Industrial Special N-19-13-027 Develop Taif Industrial City • Saudi Authority for Industrial
Economic works with the new expansion, Cities and Technology Zones Economic Cities and Technology Zones
Zones construction of sewage station, (Modon) Zones (Modon)
securing of water source and
purification plant in the industrial city Special N-19-13-028 Complete developing Wa'ad Alshamal • Saudi Authority for Industrial
of Hail Economic City Cities and Technology Zones
Zones (Modon)
Special N-19-13-017 Complete infrastructure and rain • Saudi Authority for Industrial
Economic water drainage works in the second Cities and Technology Zones
Zones and third industrial cities in Jeddah (Modon)
466 467
Cluster Cluster
Special N-19-13-029 Complete and update the • Saudi Authority for Industrial Special N-19-17-645 Crisis Management and Security • Royal Commission for Jubail &
Economic infrastructure at the industrial city in Cities and Technology Zones Economic Systems Development in Jubail Yanbu
Zones Jeddah (Modon) Zones Industrial city
Special N-19-13-727 Ras Abu Gamys area • Saudi Authority for Industrial Special N-19-17-646 Crisis Management and Security • Royal Commission for Jubail &
Economic Cities and Technology Zones Economic Systems Development in Ras AL Khair Yanbu
Zones (Modon) Zones Industrial City
Special N-19-13-728 Initiative to develop an industrial city • Saudi Authority for Industrial Special N-19-17-647 Crisis Management and Security • Royal Commission for Jubail &
Economic at Hotat Bani Tamim Cities and Technology Zones Economic Systems Development in Yanbu Yanbu
Zones (Modon) Zones Industrial City
Special N-19-13-729 Initiative to develop an industrial city • Saudi Authority for Industrial Special N-19-17-648 Digital transformation of Jubail and • Royal Commission for Jubail &
Economic at Duba Cities and Technology Zones Economic Ras Al Khair cities Yanbu
Zones (Modon) Zones
Special N-19-13-747 Industrial oases initiative • Saudi Authority for Industrial Special N-19-17-649 Shift to asset management at Jubail • Royal Commission for Jubail &
Economic Cities and Technology Zones Economic Industrial City Yanbu
Zones (Modon) Zones
Special N-19-13-748 Ready-made products to support • Saudi Authority for Industrial Special N-19-17-650 Shared Tank Iso shared storage at • Royal Commission for Jubail &
Economic entrepreneurs and owners of small Cities and Technology Zones Economic Yanbu Industrial City Yanbu
Zones and medium enterprises (Modon) Zones
Special N-19-13-749 Development of two logistic cities • Saudi Authority for Industrial Special N-19-17-651 Investment fund to redeem costs • Royal Commission for Jubail &
Economic Cities and Technology Zones Economic Yanbu
Zones (Modon) Zones
Special N-19-17-034 Industrial integration development • Royal Commission for Jubail & Special N-19-17-652 Economic Center at the Jubail • Royal Commission for Jubail &
Economic program in Yanbu Industrial City Yanbu Economic Industrial City Yanbu
Zones Zones
Special N-19-17-037 Development of basic equipment for • Royal Commission for Jubail & Special N-19-17-653 Program to increase self financial and • Royal Commission for Jubail &
Economic the marine and mining industries at Yanbu Economic administrative efficiency Yanbu
Zones Ras Al Khair Industrial city Zones
Special N-19-17-643 Develop and protect the environment • Royal Commission for Jubail & Special N-19-17-654 Cool areas in the center of the city and • Royal Commission for Jubail &
Economic at the Jubail Industrial City Yanbu Economic at water fronts in Yanbu Industrial Yanbu
Zones Zones City (Cooling District)
Special N-19-17-644 Development and empowerment • Royal Commission for Jubail & Special N-19-17-655 Equip and develop colleges and • Royal Commission for Jubail &
Economic studies for manufacturing industries Yanbu Economic institutes at the Jubail Industrial City Yanbu
Zones Zones
468 469
Cluster Cluster
Special N-19-17-656 Equip and develop colleges and • Royal Commission for Jubail & Special N-19-17-670 Developing the value-added and basic • Royal Commission for Jubail &
Economic institutes at the Yanbu Industrial City Yanbu Economic industries in Jubail Industrial city Yanbu
Zones Zones
Special N-19-17-657 Operate the Jubail Industrial City • Royal Commission for Jubail & Special N-19-17-671 Developing value-added • Royal Commission for Jubail &
Economic airport commercially Yanbu Economic manufacturing industries in Ras Al- Yanbu
Zones Zones Khair Industrial city
Special N-19-17-659 Development of basic equipment for • Royal Commission for Jubail & Special N-19-17-672 Develop and protect the environment • Royal Commission for Jubail &
Economic residential areas in Yanbu Industrial Yanbu Economic at the Ras Al Khair Industrial City Yanbu
Zones City Zones
Special N-19-17-660 Develop residential areas at the Jubail • Royal Commission for Jubail & Special N-19-17-673 Localize the renewable energy • Royal Commission for Jubail &
Economic Industrial City Yanbu Economic industry at the Yanbu Industrial City Yanbu
Zones Zones
Special N-19-17-661 Develop residential areas at the Ras Al • Royal Commission for Jubail & Special N-19-17-674 Localize the rubber industry at the • Royal Commission for Jubail &
Economic Khair Industrial City Yanbu Economic Yanbu Industrial City Yanbu
Zones Zones
Special N-19-17-662 Develop creativity and innovation • Royal Commission for Jubail & Special N-19-17-675 Localize the spare parts industry for • Royal Commission for Jubail &
Economic centers at the Yanbu Industrial City Yanbu Economic basic and desalination industries at Yanbu
Zones Zones the Yanbu Industrial City
Special N-19-17-663 Multi-Modal Logistics Hub at Yanbu • Royal Commission for Jubail & Special N-19-17-676 Provide residential units at the Jubail • Royal Commission for Jubail &
Economic Industrial City Yanbu Economic Industrial City Yanbu
Zones Zones
Special N-19-17-665 Developing, equipping, rehabilitating • Royal Commission for Jubail & Special N-19-17-678 Provide residential units at the Yanbu • Royal Commission for Jubail &
Economic and maintaining public facilities in Yanbu Economic Industrial City Yanbu
Zones Jubail Industrial city Zones
Special N-19-17-666 Developing, equipping, rehabilitating • Royal Commission for Jubail & Special N-19-17-679 Provide residential units at the Ras Al • Royal Commission for Jubail &
Economic and maintaining public facilities in Yanbu Economic Khair Industrial City Yanbu
Zones Ras Al Khair Industrial city Zones
Special N-19-17-667 Developing, equipping, rehabilitating • Royal Commission for Jubail & Special N-19-17-680 Industrial gas network and the • Royal Commission for Jubail &
Economic and maintaining public facilities in Yanbu Economic leasing of industrial pipe corridors in Yanbu
Zones Yanbu Industrial city Zones Yanbu Industrial City
Special N-19-17-669 Develop and protect the environment • Royal Commission for Jubail & Special N-19-17-655 Equip and develop colleges and • Royal Commission for Jubail &
Economic at the Yanbu Industrial City Yanbu Economic institutes at the Jubail Industrial City Yanbu
Zones Zones
470 471
Cluster Cluster
Special N-19-17-681 Industrial steam network at the • Royal Commission for Jubail & Special N-19-17b-677 Provide residential units at the Jizan • Royal Commission for Jubail &
Economic Yanbu Industrial City Yanbu Economic City for Basic and Manufacturing Yanbu
Zones Zones Industries
Special N-19-17-682 Jubail and Yanbu Company for • Royal Commission for Jubail & Special N-19-46-001 Economic Cities Regulations • Economic Cities Authority
Economic Industrial City Services Yanbu Economic
Zones Zones
Special N-19-17-683 Yanbu Smart Industrial City • Royal Commission for Jubail & Special N-19-46-002 Development of business models in • Economic Cities Authority
Economic Yanbu Economic economic cities
Zones Zones
Special N-19-17-684 Mining industries port at the Yanbu • Royal Commission for Jubail & Special N-19-46-003 Attract investments in economic cities • Economic Cities Authority
Economic Industrial City Yanbu Economic
Zones Zones
Special N-19-17-685 Logistics hub at the Jubail Industrial • Royal Commission for Jubail & Special N-19-46-004 Activation and development of a • Economic Cities Authority
Economic City Yanbu Economic national strategy for special economic
Zones Zones zones
Special N-19-17-686 Commercial exhibition center at the • Royal Commission for Jubail & Special N-19-46-005 Development of regulations and • Economic Cities Authority
Economic Jubail Industrial City Yanbu Economic standards in economic cities
Zones Zones
Special N-19-17-755 Developing the infrastructure of the • Royal Commission for Jubail & Special N-19-46-006 Development of governance systems • Economic Cities Authority
Economic automotive city in Jubail Industrial Yanbu Economic and automation of government
Zones Zones services
Special N-19-17b-036 Develop key installations at industrial • Royal Commission for Jubail & Special N-19-46-007 • Economic Cities Authority
Economic zones in the Jizan City for Basic and Yanbu Economic
Zones Manufacturing Industries Zones
Special N-19-17b-658 Develop key installations at • Royal Commission for Jubail &
Economic residential zones in the Jizan City for Yanbu
Zones Basic and Manufacturing Industries
Special N-19-17b-664 Develop and equip public facilities • Royal Commission for Jubail &
Economic in the Jizan City for Basic and Yanbu
Zones Manufacturing Industries
Special N-19-17b-668 Develop and protect the environment • Royal Commission for Jubail &
Economic at the Jizan City for Basic and Yanbu
Zones Manufacturing Industries
472 473
SECTION 6.8:
POLICES,
REGULATIONS AND
MEASURES
474 475
3.A Major Challenges
Having a national quality & standards infrastructure is vital for the growth and There are 8 main challenges facing the Kingdom as it relates to quality standards
sustainability of manufacturing industries. In 2014, Saudi Arabia ranked low in quality and specifications, which directly impacts the National Quality Infrastructure (NQI),
certification. The Kingdom has issued 2.7 ISO 9001 quality certificates per one billion considered as a key enabler for the National Industry Development and Logistics
dollars of GDP. Services Program’s sectors. These challenges are:
1. Lack of technical capabilities to set optimal industrial specifications in line with

the national interest
2. Weak governance and institutional capabilities to address policy trade-offs and
enable effective decision-making
3. Lack of capabilities and coordination among stakeholders to ensure a robust and
legal framework from policy setting to enforcement and penalties
4. Limited enforcement of standards at all levels (Customs, Ministry of Energy and
Industry, Civil Defense, all ministries in terms of procurrement practices etc.)
5. Lack of awareness amongst local SMEs and capabilities to implement international
standards processes & systems
6. Lack of contribution in developing new international standards
7. Weak involvement of the private sector, which leads to a lack of coordination
between the sector and SASO
8. Limited standards protecting local companies from low quality international
products
3.B Current Efforts
Several entities are tasked with addressing these challenges. Among those entities
and programs are:
• Saudi Standards, Metrology and Quality Organization (SASO): Sets regulations

and policies for national standards, safety measures, and environmental testing
• Ministry of Commerce and Investment: Acts in coordination with SASO to enforce
set standards, primarily through market suveillance
• Saudi Customs: Ensures the compliance and enforcement of custom laws at the
borders
• Saudi Food and Drug Authority (SFDA): Ensures safety of food and drugs in all
listed products across the value chain
Local talents while working in the laboratory • Ministry of Energy, Industry and Mineral Resources (MEIM): Ensures that factories
enforce set regulations
476 477
SASO has addressed two of the aforementioned challenges. It has established several
technical standard committees to tackle the lack of technical capabilities. It has also
established SABER sustem to help authoritive entities ensure standard compliance.
Quality infrastructure is critical to productivity and growth of SASO also carried out several standards across various sectors that were implemented
manufacturing industries to different degreess. For example, health and safety standards were adopted by
80%, technical standards by 65%, and organizational governance standards by 35%.
Entities Description
Various types of standards exists tailored for different objectives
• Sets regulations for national standards,
SASO safety measures, and environmental
Standard Adoption of
Description
testing type standards1
• Set out systems for health and safety
Health and
management and the minimization 80%
safety of operational risk
• Acts in coordination with SASO in order to
MCI enforce set standards, primarily through
• Help companies achieve cost
market surveillance Quality effective and quality assurance
76%
managment methods through a system of
continual improvement
• Ensures compliance and enforcement of
Saudi customs
custom laws at the borders • Set out the technical characteristics
of a product or a production process,
Technical allowing efficient application and
65%
replication
• Ensures safety of food and drugs in all
SFDA • Enable companies to identify and
products across the value chain
control their environmental impact
Environment and improve their environmental
63%
performance
• Ensures enforcement of regulation by
MEIM • Provide best practice guidelines in
performing factory audits Code of practice the implementation of a process or 60%
procedure
Key entity Supporting entities SASO is acting as the custodian of quality
infrastructure in Saudi Arabia • Provide systems for the effective
Management management of specific functions 51%
within organizations
• Provide guidance on effective

Organizational 35%
structures and practices for the
governance governance of organizations
1. % for the UK economy – all sectors, % utilization by standard type

Source: The Economic Contribution of Standards to the UK Economy
478 479
4. Strategic Pillars Components and objectives of quality infrastructure:
1. Governance
Bolstering the NQI will contribute to meeting the needs of the public sector,
companies and consumers. • Setting a regulatory framework to ensure public interest
• Setting a quality policy to boost the local economy
• Public sector: NQI will work as a mechanism to support pertinent trade and
industrial policies to ensure compliance with mandatory technical requirements 2. Quality infrastructure institutions
set by standards
• Companies: Adopting intenrational quality systems improves performance • Enforcing regulations
competency, cuts business costs, boosts product quality, and provides the • Ensuring accurate measurements
opportunity for export and productivity • Promoting compatibility to build trust between sellers and buyers.
• Consumers: NQI will help ensure product safety and will protect consumers from
fraud and conterfeit products 3. Quality infrastructure services
Why Quality Infrastructure: QI is critical to the • Promoting quality to raise awareness

• Conducting a conformity assessment through tests and inspections
growth and sustainability of manufacturing industries
• Caliberation and varification to ensure compliance with standards
Enhances organizational efficiency, boosts

4. Enterprises
trade and facilitates innovation
• Upgrading enterprises by manufacturing goods that comply with international
standards
• Upgrading value chain by requiring the whole value chain to comply with the
Improves
quality of the final product
productivity
Reduces amount Reduces the time to market
of time at borders for products, promotes
Reduces Enhances 5. Consumers
and decreases their the diffusion of products
probability of rejection economic innovation and levels the innovation
distance playing field between big
• Raising awareness by demanding safe and high-quality products
Quality and small companies
• Building capacity by sharing feedback with consumers
Infrastructure
Local products can be Enhances the quality
sold in other countries Enables Improves of products, reduces
with minimum international the variety of goods
modifications while competitiveness to an optimal cost
market access
being recognized for level, facilitates inter-
their quality Builds trust operability of products
across the and facilitates inter-firm
value chain exchange of information
Promotes compatibility between products

and processes and boosts confidence
between suppliers, clients and consumers
Source: The Economic Contribution of Standards to the UK Economy, NIS 2030 Team Analysis
480 481
The National Industry Development and Logistics Services Program, through

the National Industrial Strategy, defined four strategic pillars related to policies,
Quality infrastructure ecosystem comprised of five key components standards, and mechanisms, namely:
1. Increase coordination and involvement of the private sector:
• Encouraging the involvement of the private sector in all phases of developing,
adopting, and initiating standards
• Coordinating with the private sector and other priority stakeholders to protect
industrial sectors from unjust practices and boost their competitiveness
2. Raise awareness and increase penetration of standards:
Quality Quality
Governance Enterprises
• Raising awareness of both the private sector and consumers of the benefits of
infrastructure infrastructure Consumers
institutions services standards and their impact on quality
• Achieving a higher propagation of international standards such as ISO
• Regulatory • Enforcement of the • Quality • Enterprise • Awareness rising by
3. Defining the legal framework and enhance mechanisms for its enforcement:
framework to regulations promotion to upgrading by demanding safe and
ensure public • Metrology to raise awareness creating goods high quality products • Defining the required legal framework to abide by according to standard
interest ensure accurate • Conformity that comply with • Capacity building by regulations
• Quality policy measurements assessment international sharing feedback from
• Bolstering regulations for enforcement and coordination means among key
to stimulate • Standardization to through testing, standards consumers
the economy provide confidence in certification • Value chain stakeholders, including SASO, MCI, and Customs
and fulfill buyers and users and inspection upgrading by 4. Address National Quality Infrastructure capability gaps:
government • Accreditation to carry to ensure forcing entire
• Building human and institutional NQI capabilities, as well as complete and ensure
responsibilities out specific tasks that products value chain to
meet specified respect quality its continuous development
requirements of the final
• Calibration product
and verification Four overarching recommendations emerged to address existing gaps in Quality Infrastructure
to ensure
compliance
with standards
SASO is undertaking a major Quality infrastructure effort

Increase coordination and Raise awareness Define legal Address Quality
involvement of private and increase framework and Infrastructure
SASO's vision and mission Existing initiatives sector penetration of enhance mechanisms capability gaps
standards for enforcement
• «Achieve regional leadership Quality Private Sector Standards SABER
as a scientific reference body Infrastructure Workshops supports for - Ensure private sector - Increase awareness - Define required - Build capabilities
Vision
in the fields of standardization Strategy and Forums SMEs involvement across all of both private sector legal framework with around Quality
and conformity assessment». stages of standards' journey, and consumers on appropriate penalty Infrastructure for policy
including when standards are the benefits of having mechanisms makers, law enforcers,
set, launched and enforced quality standards - Enhance enforcement law makers, regulators
- Coordinate with private - Achieve higher mechanisms and to ensure that the
• «Elevate the standards and Technical Health, National Protection
sector and other stakeholders penetration of coordination between Quality Infrastructure
the quality of products and Standards Safety and Product Safety of local
to ensure standards in place international key stakeholders ecosystem is
services… Committee Environment Program industry
protect priority sectors standards, such as ISO including SASO, MCI and understood, optimized
• … To protect the consumer Committee from unfair
Mission
standards in KSA Customs and enforced

and… competition
• … To strengthen the
competitiveness of the Pain points
national economy"»
Limited participation in new Limited standard Lack of protection of Lack of optimal
standards implementation local industry standards
Source: Quality Infrastructure – Building trust for trade Source: NIS 2030 Team Analysis
Ineffective customs Lack of involvement of Weak legal framework Lack of efficient
private sector decision making
482 483
Source: NIS 2030 Team Analysis

The Program has defined four initiatives to enable industries through NQI. The first
and foremost initiative is determining standards for industrial clusters, and this will Specifications for industrial clusters:
help raise awareness on standards across the sectors and among consumers. The
second initiative is keen to raise awareness on industrial standards and support The aim of this initiative is to identify the ideal specifications for each of the
SMEs. As for the third initiative, it will carry out building the NQI by addressing the industrial clusters by balancing the needs of the consumer and those of the local
institutional capabilities in terms of industrial standards. Finally, the fourth initiative producer. It also aims to develop quality standards and apply them to the different
is concerned with establishing various cluster development councils in the private industrial clusters. Among the expected outcomes of the initiative will be Improved
sector. profit margins and increased knowledge of the quality of the industrial products.
The reason for the identification and implementation of this initiative, in cooperation
with the Saudi Standards, Quality and Metrology Organization and the Saudi Food
Four main initiatives to enable manufacturing industries through quality and Drug Authority, is due to several factors, the most important of which is the
infrastructure limited participation of the private sector in setting specifications and the lack of
protection for local manufacturers.
Awareness of industrial specifications:
Define legal The aim of the initiative is to increase awareness of and attention to quality standards
Increase coordination Raise awareness and framework Address Quality due to the current lack of awareness in these aspects. This will be done through
and involvement of increase penetration and enhance Infrastructure capability marketing and educational campaigns conducted in cooperation with the Council
private sector of standards mechanisms for gaps
of Saudi Chambers which feature several workshops, intensive promotion of success
enforcement
stories and transparency of specifications.
a c
Standards for Industrial Clusters Industrial Standards Enforcement Improvement
Institutional capacities for industrial standards:

b d
Industrial Standards
Cluster Development Industrial Standards
Councils
Awareness & SME SABER program
Institutional Capabilities
This initiative aims to build and develop technical capabilities in the public sector to
Support ensure effective design of quality standards and provide quality training programs.
It also aims to increase the number of rejected products at the port due to non-
Technical Standards compliance with quality standards.
King Abdulaziz Award HSE initiative
Committee
Private Sector Legal metrology

Workshops and forums initiative
Quality Infrastructure initiatives Other NIS enabler initiative Existing initiatives

Game changing initiative
484 485
Implementing policies
that meet the objectives
of the Kingdom›s
vision of supporting
Saudization and economic
development
(NIDLP-Polices, Regulations and Measures)
A factory in Yanbu Industrial City
486 487

Pillar/ Number
Cluster
Policies, N-22-14-005 Standards for industrial clusters • National Industrial Clusters

Regulation Development Program
and
Standards
Policies, N-22-20-001 Awareness of industrial standards • Saudi Standards, Metrology

Regulation and Quality Organization
and
Standards
Policies, N-22-20-002 Build the institutional capacities • Saudi Standards, Metrology

Regulation of entities overseeing industrial and Quality Organization
and standards
Standards
Policies, N-22-20-003 Support and awareness of small • Saudi Standards, Metrology

Regulation and medium enterprises on the and Quality Organization
and application of industrial standards
Standards
Policies, N-22-20-004 Support the implementation of • Saudi Standards, Metrology

Regulation industrial standards and Quality Organization
and
Standards
488 489
SECTION 6.9:
SUPPORTING THE
DEVELOPMENT OF
INDUSTRIAL CLUSTERS,
SMALL AND MEDIUM-
SIZED PROJECTS
490 491

One of the most important Vision 2030 objectives is to increase the contribution of
small and medium-sized enterprises (SMEs) to the GDP, as the logistic and industrial
sector represents one of the promising sectors to achieve this objective. Various
challenges that SMEs face in this sector were identified. They include coordination
and organization of supply and demand, lack of funding for emerging projects, poor
capacities of SMEs, and paucity of data in the sector, making it difficult for these
enterprises to operate on a regular basis.
Thetable below gives a general summary on the most important challenges that
SMEs face in NIDLP related sectors:
3.B Current Efforts

As SMEs could be one of the most important engines of economic growth, NIDLP
seeks to coordinate with the concerned pioneering entities, namely the SMEs General
Authority (Monshaat). Relevant entities work on solving the challenges facing SMEs in
all sectors through a number of the below-mentioned initiatives. These initiatives aim
at increasing the percentage of contribution of SMEs in the GDP through motivating
and supporting entrepreneurs and business owners. The entities also work on a
number of other strategies, mainly the SMEs industrial supply chains strategy in the
industrial sector. This strategy resulted in establishing several challenges for SMEs,
which would be solved through several initiatives with relevant sectors.
Gold mine in Bilghah
492 493
4. Strategy
(NIDLP-Cluster and SME Development
Support)
494 495
4.A Strategic Pillars Initiative

Initiative Sub- What will the program offer
number category to SMEs in this initiative
Automotive Development 1-06-14-001 Automotive Providing investment opportunities
SMEs support depends on a number of strategic pillars that were established to Policy (ADP) and supporting SMEs in establishing
concentrate support and development efforts. These pillars include the demand supply chains and value added in the
automotive industry
enhancement pillar that is affiliated with the industry and logistics sector. This
pillar focusses on finding demand for the locally-manufactured products. The easy Developing Smelting process M-12-14-023 Mining Ensuring the transfer of the added
for Copper and Zinc value along the supply chain of
business pillar helps business owners and entrepreneurs to do business easily and copper and zinc products with
regularly. The funding pillar ensures the availability of funding sources for emerging maintaining the competitive
projects and existing institutions, in addition to the provision of products for the advantage in the cost for local
manufacturers compared to
industrial sectors such as working capital loans. The business support pillar provides imported products
necessary training and support for business owners. Finally, we have the innovation
Establishment of Saudi N-16-18-011 Financial Providing financial solutions and
and technology adoption pillar that contributes to the development of technical services to support Saudi exports,
Arabia Export-Import Bank enablement
facilities to increase the competencies of the provided products and services and use (Establishment phase) as the majority of the banks’
innovative methods. beneficiaries are SMEs
Program for increasing local O-15-1-001 Local Establishing supporting tools

SMEs play a vital role in empowering and boosting the whole business environment content in the Saudi economy content and infrastructure to support the
Saudization of the industry and
that NIDLP aims at developing. The program’s strategy focusses on establishing a supply chains and create investment
strong, local, logistic and industrial power. SMEs are considered one of the basic opportunities for SMEs that are
elements needed to enhance the whole industrial and logistic environment, as they considered the main enabler for
Saudization
are capable to contribute in different logistic and industrial sectors. SMEs are thus
involved in all the initiatives enlisted under the umbrella of NIDLP. Accordingly, we Competitiveness program for E-b13-14-001 Energy Supporting SMEs in establishing
reforming energy prices pricing and supply chains and value added in
will discuss in the below sections, the program’s most important initiatives for SMEs, metal industries (with a competitive
support
in addition to the initiatives that were specifically developed to increase the level of advantage)
SMEs’ contribution in the GDP from 20 to 35%. Local pharmaceutical 1-04-10-004 Medicine Supporting local medicine
production policy manufacturers to develop through
4.A.1 Individual sectors initiatives the value-added chain, as the
pharmaceutical sector represents
one of the priority sub-sectors in the
SMEs are expected to play a vital role in all the sectors described as priority sectors SMEs’ supply chains strategy
in NIDLP. However, they are expected to play a more important role in certain sectors Local medical equipment and 1-05-10-004 Medical Helping local medical equipment and
rather than others. The below table presents 17 of the program’s initiatives that are supplies policy Equipment supplies manufacturers to develop
directed at specific sectors which are the closest to the SMEs community. Monshaat and Supplies through the whole value chain, as
the medical equipment and supplies
will support these initiatives in a way that ensures: sector represents one of the priority
sub-sectors in the SMEs’ supply
chains strategy
• Taking SMEs into consideration while establishing policies and regulations
• Providing an opportunity for SMEs to benefit from the existing economic Local chemicals program 1-08-14-001 Oil and Ensuring the transfer of the value
gas related added along the supply chain of
opportunities in the sectors affiliated with NIDLP chemicals with maintaining the
industries
• Harmonizing the efforts of developing other SMEs in the Kingdom competitive advantage in the cost
for local manufacturers compared to
imported products
Local machinery and equipment 1-01-10-001 Machinery Supporting SMEs in establishing

clusters policy and supply chains and value added
Equipment in the machinery and equipment
industry and identifying investment
opportunities
496 497
4.A.2 Enabling Initiatives

Initiative Sub- What will the program offer
Initiative
In addition to the aforementioned initiatives, each focusing on a specific logistic or
Cooperation in machinery and 1-01-14-002 Machinery Facilitating the purchase of industrial sector, 13 inter-sectoral enabling initiatives that are of a great importance
equipment manufacturers’ and machinery and equipment for SMEs for the SMEs community were also identified. The below table lists these initiatives.
procurements Equipment Monshaat will support these initiatives to ensure their development in a way that
Local renewable energy industry 1-03-14-001 Renewable Identifying investment opportunities meets the needs of SMEs.
clusters policy energy for SMEs
supplies For more information about the below initiatives, please refer to the relevant booklet.
Competitive energy prices M-12-01-029 Mining Ensuring the transfer of the
competitive advantage in terms of
cost along the supply chains and the
added value of SMEs in the mining Initiative Sub- What will the program offer
sector Initiative
Investment in steel industries M-12-14-022 Mining Ensuring the transfer of the added
value along the supply chain of Developing export N-20-18-742 Export Increasing the knowledge of
ironworks with maintaining the capabilities of Saudi facilities support facilities regarding the topics
competitive advantage in the cost and requirements, policies and
for local manufacturers compared to
Constructing ready-built N-19-13-748 Special procedures and needed capabilities
imported products factories and business Economic of export, and helping them in
incubators Zones identifying the target markets
Encouraging local suppliers M-12-34-027 Mining Supporting local suppliers in for exporting their products and
development enhancing the development of the exploring the markets’ export
mining value chain that mainly requirements
comprises SMEs
Technical Consultation N-18-07-692 Research and Identifying investment opportunities
Campaigns for attracting I-10-04-002 Aquaculture Unifying efforts and involving the Program innovation for facilities and linking them to the
investors program in the events of facilities platform, as the main users of the
zones are SMEs
Communication with the private L-14-15-009 Aquaculture Unifying efforts and involving the
sector inside and outside the program in the events of facilities Program for enhancing the N-18-07-697 Research and Constructing ready-built factories
Kingdom manufacturing capabilities innovation and business incubators to support
of SMEs entrepreneurs and owners of SMEs
Developing the supply chain of N-23-14-004 Industrial Saudizing the consultancy services
clusters clusters provided for the targeted entities
development through establishing technical
support capabilities for SMEs
Food industries cities and 1-09-13-001 Agriculture Providing infrastructure and shared
clusters and food common facilities for local factories
industries
Establishing an exploration M-12-34-021 Mining Establishing new small Saudi
incubator companies through residency
initiatives
Business incubators and N-18-07-695 Research and Supporting the construction of

accelerators program innovation small and medium-sized technical
enterprises that have a large
growth rate to help in creating
job opportunities and diversifying
national economy
498 499
Another set of enabling initiatives for SMEs has also been identified. These initiatives
Initiative Sub- What will the program offer that are inspired from the supply chains strategy that was developed by Monshaat,
Initiative
number category to SMEs in this initiative are complementary to the enabling initiatives found under the NIDLP umbrella.
Industrial Innovation Centers N-18-07-698 Research and Promoting innovation and These initiatives cover the following sub-components:
Program innovation entrepreneurship, as this initiative
creates innovative and pioneering
facilities that have a competitive • Procurements enhancement: Cooperating with major national companies to
advantage and growth potential, review the supply policies and requirements and enhance SMEs’ access to the
helps existing facilities in finding available opportunities
innovative solutions and transferring
technology in a way that enhances
their competitiveness at the local • Classification indicator: Publishing an index with the 100 biggest Saudi companies
and international levels, thus in terms of contributions to local SMEs growth
enhancing growth opportunities,
builds capacities in value-added
fields and provides investment • SMEs’ supply chains portal: Establishing the Supply Chains Center to Saudize and
opportunities ensure the industry sector stability
Saudizing rubber industry in N-19-17-674 Special Making the rubber industry sector
Yanbu Industrial City Economic one of the priority sub-sectors in the • Guidelines for investors: Preparing material for helping investors identify
Zones SMEs supply chains strategy
investment opportunities
Cluster Development N-23-01-001 Attract Identify and detail the investment
industrial opportunities for the priority clusters • SMEs alliance: Establishing an alliance to help SMEs enhance their purchase
investment power and benefit from the economies of scale
Develop a marketing plan to attract
the targeted investors. Create
an investment plan for local and
international investors
Harmonizing with the program N-23-01-002 Industrial Supporting and motivating SMEs
of supporting major national clusters to empower them with the supply
industrial companies development chains of major national companies
support
Business linkages platform O-15-10-002 Local content Providing demand for local
manufacturers and facilitating the
linkage of procurements among
major companies, government
entities and SMEs, is one of the
initiatives of the supply chains
strategy.
500 501
(NIDLP-Cluster and SME Development
Support)
Aluminum factory in Al-Baitha
502 503

Pillar/ Number
Cluster
Cluster N-23-01-002 Alignment with the Large National • MEIM - Industrial Affairs
and SME Industrial Companies Support Agency
Development Program
Support
Cluster N-23-01-003 Specialized infrastructure for • National Industrial Clusters

and SME industrial clusters Development Program
Development
Support
Cluster N-23-01-006 Competitiveness of national building • MEIM - Industrial Affairs

and SME costs Agency
Development
Support
Cluster N-23-01-720 Develop and localize industrial and • Ministry of Energy, Industry and
and SME service opportunities, and support Mineral Resources
Development private sector partnerships
Support
Cluster N-23-01-735 Industrial Development Center • Ministry of Energy, Industry and

and SME Mineral Resources
Development
Support
Cluster N-23-14-001 Attract industrial investments • National Industrial Clusters

and SME Development Program
Development
Support
Cluster N-23-14-004 Develop supply chain for clusters • National Industrial Clusters
and SME Development Program
Development
Support
Cluster N-23-14-005 International supply chain • National Industrial Clusters

and SME connections Development Program
Development
Support
Cluster N-23-14-736 Developing strategic industrial sectors • National Industrial Clusters

and SME with national security dimension Development Program
Development starting with the pharmaceutical
Support sectors
504 505
SECTION 6.10:
GOVERNANCE
506 507
(NIDLP-Governance)
508 509

Pillar/ Number
Cluster
Governance N-24-01-002 Industrial development institution • MEIM - Industrial Affairs

Agency
Governance N-24-01-733 National Center for Industrial • Ministry of Energy, Industry and
Information Mineral Resources
Governance N-24-14-001 Cluster Development Council • National Industrial Clusters

Development Program
Governance N-24-14-003 Analysis center for industrial and • MEIM - Industrial Affairs
exploration information Agency
Governance N-24-14-005 Deploy the National Industrial • National Industrial Clusters

Strategy Development Program
510 511

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National Industrial

Development & Logistics

Delivery Plan 2018-2020

Table of Contents SECTION 6: LOCAL CONTENT AND ENABLERS

1.A. Description of National Industrial Aspirations

The program focuses on four key sectors:

Industry Mining Energy Logistics

It also focuses on designing and providing the required enablers,

Policies and Financial Infrastructure Industrial

SEZs and Research and Other enablers

• Energy Comprehensive cooperation with various stakeholders/teams to leverage

1.B. Direct Level 3 Objectives 1.C. Indirect Level 3 Objectives

3.1.1 2.4.3 2.4.1

6.2.1 4.3 3.3.2

Local content 4.1.3 3.7.2 3.7.1

Enablers 4.1.6 4.1.5 4.1.4

Exhibit 1.4: Direct level 3 objectives mapped to NIDLP 4.1.7 4.3.1

Exhibit 1.5: Indirect level 3 objectives mapped to NIDLP

3.A. Main Challenges

We aim to transform the

An aerial view of a factory in Al Jubail Industrial City

4.A. Strategic Pillars

We aim to generate more

In parallel, international trends reduce the Kingdom›s competitive advantages by

Accordingly, in an attempt to achieve the targeted growth and adapt to changes in

• Leverage / maximize natural resources revenues

Oil refining plant

• First Industrial Development Wave

Previous approach to achieve industrial development

Focus on hydrocarbon Government support, Foreign workforce

Exhibit 4.1: Kingdom›s historical growth approach

1. Provide companies with an «enabling system» to compete effectively at the

3. Leverage / maximize natural resources revenues Realize / Develop selected industries

Policies, regulations, and standards

Exhibit 4.3: NIDLP components distributed on the 4 strategic pillars

Natural • Mining strategy

Taxes • SEZs strategy

• Industry sector • Energy pricing

Relative disadvantage Relative advantage

The NIDLP targets Saudi sectors replete with natural resources.

Great untapped potential

Oil and gas related industries

Renewable energy and manufacturing industries

Exhibit 4.6: untapped sectors with big potential

The high demand can be exploited to increase competitiveness • NIDLP Design

Desalination Mining Energy Logistics

Automotive Gas supply development

Military industries 17 Productivity and Industry 20 Export Enablement

4.B. Strategic Considerations

1990 2000 2010 2015 1990 2000 2010 2015

Japan USA China China Japan USA China China

Italy China Germany Germany Italy China Germany Germany

UK France South Korea India UK France South Korea India

Russia UK India Italy Russia UK India Italy

Spain Spain France France Spain Spain France France

Mexico Mexico UK Russia Mexico Mexico UK Russia

China South Korea Russia UK China South Korea Russia UK

Australia India Spain Mexico Australia India Spain Mexico

Netherlands Indonesia Indonesia Spain Netherlands Indonesia Indonesia Spain

Japan USA China China

Below are six of these trends

Russia UK India Italy

China South Korea Russia UK

Australia India Spain Mexico

High-skill workers shortage

Total shortage 38- 41 13

Low-skill workers surplus

Total surplus 89- 94 10

of supply of skill cohort % of demand for skill cohort %

Long-term government interest rates in select developed economies, %