The Law Firm of Hazim Al Madani Attorneys and Legal Consultants

Industry in Saudi Arabia and its impact on the Saudi economy In accordance with Vision 2030

  1. Saudi Economic Environment:

    The Kingdom of Saudi Arabia is one of the most important and attractive investment centers in the world due to economic openness and technical and global developments. Globalization has opened up a lot of developments and challenges.

    The importance of upgrading the international competitiveness of industrial products?

    Upgrading the international competitiveness of Saudi industrial products is necessary, not only to gain competitive market shares in the international export markets but also to maintain and enlarge the market share of the domestic market.

    What are the challenges facing Saudi industries?

    Poor production efficiency and a limited number of companies that can rely on themselves in competitive areas such as skills, technology, initiative, and creativity, in addition to the immaturity of business incubators.

    How to face the obstacles to the competitiveness of industrial products?

    Facing these challenges from the industrial companies in Saudi Arabia by increasing productivity and quality rates to international standards. Hence the importance of production technology and training to hone the skills of employees to improve productivity and employee efficiency to reduce costs, which contributes to an increase in profits and locally and globally growth.

    Economic reforms in Saudi Arabia:

    Saudi Arabia is characterized by its abundance of natural resources and its strategic position which is important to the main trade routes between the three continents. Under the Saudi Vision 2030, many economic reforms have succeeded in creating new business opportunities, increasing the major strategic assets of Saudi Arabia, driving economic growth and diversifying the economy.

    What are the types of industries in Saudi Arabia?

    There are two main types of industries which are:

    • Public sector industries, including military industries, weapons, ammunition, and aviation. Petroleum refining, transportation, exploration industry  and the petrochemical industry, are oil-based industries such as the manufacture of plastics, fertilizers, pesticides, etc.
    • Private sector industries are various and most of them are domestic consumer goods, as part of them are exported to the Arab markets. The most important of these industries are: the industry of cement, dates, soap, washing powders, cement pipes, and food industries.

    What is the National Industrial Development and Logistics program?

    It is the program that aims to transform Saudi Arabia into a leading industrial power and a global logistics platform by maximizing the value of the mining and energy sectors and focusing on the local content and the Fourth Industrial Revolution, so that the program contributes significantly to maximize and diversify the economic impact of the targeted sectors and sustain the growth of these sectors, achieve their leadership and create an attractive investment environment.

    Impact of the National Industrial Development and Logistics Program:

    The National Industrial Development and Logistics Program was launched at the beginning of 2019, believing in the importance of the four sectors of the program (energy, mining, industry, and logistics) and their integration to achieve added value, maximize and diversify the economic impact and create an attractive investment environment.

    The program also pays attention to the local content and the Fourth Industrial Revolution, as they are one of the main sectors covered by the program and the factors supporting them to reach their goals and intended impact.

    The National Industry and Logistics Program has achieved a number of various achievements, such as the launch of the geological survey program, in addition to five new shipping lines and the first locally manufactured fast interceptor boat, the establishment of renewable energy plants, rapid increase in investment in the industrial sector, and support for the localization of the military industries sector and Launch of the “Made in Saudi Arabia” program.

    The program is currently working on developing the infrastructure for its four sectors to be one of the most important factors in increasing the Kingdom’s competitiveness and attractiveness as an ideal destination for investment, in addition to optimal utilization of resources and improving policies and legislation for the sectors to enable the program to achieve its objectives and enable local and foreign private sector investment.

    The program will also focus on improving the trade balance, creating a local industry that competes in the global markets, creating a sustainable competitive advantage based on innovation, stimulating investments and creating job opportunities, optimizing the energy and increasing Saudi Arabia’s logistical interdependence locally and globally.

    What is the route of Saudi exports?

    Exports in Saudi Arabia consist of local commodity exports, which are national exports, and foreign commodity exports, which are re-exports. Exports of local goods or national exports are the exports of all goods that were produced or manufactured locally in Saudi Arabia or all goods that have been modified according to industrial processes that change the form and value of this commodity. 

    Foreign commodity exports or re-exports are the exports of all previously imported goods without any major modifications.

    Types of exports in Saudi Arabia:

    Exports in Saudi Arabia consist of oil exports and non-oil exports. In recent years, focused on increasing Saudi non-oil exports in order to open up to global markets and employ all Saudi economic capabilities in order to improve export efficiency by developing plans and programs, providing incentives to exporters, and improving Saudi products.

    The impact of exports on the Saudi economy and its impact on it:

    Exports and imports have a significant impact on the economy in Saudi Arabia. The activity of exports and imports can affect the gross domestic product and the exchange rate, etc.

    Vision 2030 and its relation to Saudi Arabia’s exports:

    Recently, focused on improving exports in Saudi Arabia through the Saudi Export Development Authority within Saudi Arabia’s vision 2030. The main objective of the Saudi Export Development Authority is to develop non-oil exports and diversify sources of income for the national economy in order to turn Saudi Arabia’s vision of 2030 into Saudi Arabia’s reality of 2030. 

    Is it permissible for a foreign investor to invest in the field of industry?

    Foreign investors can invest in the field of industry and can obtain industrial licenses such as heavy industries and manufacturing industries.

    What is the required capital for an investor to invest in the industry?

    According to the capital which the foreign investor wants to invest, from ten thousand riyals without a maximum capital.

     We can mention what are the advantages for a foreign investor in the industry in Saudi Arabia.

    The foreign investor in Saudi Arabia enjoys the incentives stipulated in Article 18 of the Unified Industrial Regulatory System of the Gulf Cooperation Council countries, which consists of the allocation of a suitable plot of land, leasing of industrial buildings required for the industrial project on encouraging terms in the industrial zones established by the government, the provision of electricity, water, fuel, energy and other utilities.

    Finally, what is the latest change regarding the granting of final industrial licenses?

    According to the bad economic conditions that the whole world is going through, which affects the citizens residing inside Saudi Arabia, the Saudi Ministry of Labor and Development announced the issuance of a license to residents inside Saudi Arabia for only one hundred riyals, according to the statement of the Labor Office in 1442 H and its fees are nine thousand six hundred riyals.

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