Industry
From The Report: Saudi Arabia 2015
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The abundance of hydrocarbons in the Kingdom has led to a proliferation of downstream petrochemicals businesses. The natural gas that is allocated to producers at a subsidised price forms a significant part of Saudi Arabia’s value proposition to foreign investors. Demand from rapidly expanding markets in Asia, as well as steady sales to established Asian centres, should ensure that the Kingdom’s petrochemicals industry strengthens its position in the medium term. Meanwhile, the country continues to focus efforts on diversifying non-oil growth, with the combined contribution of mining and non-oil manufacturing rising from 7.6% of GDP in 2012 to 8.2% in 2013 and 8.7% in 2014, while the Kingdom’s steel production increased by 15% from 2013 to 2014, the second-highest rise anywhere in the world. Four new economic cities are due for completion by 2020 in line with the country’s 10th Development Plan, which aims to deliver more even distribution of industrial development across the country.

This chapter contains interviews with Mohammed Al Kathiri, Secretary-General, Riyadh Chamber of Commerce and Industry; and Mohanud Helal, Secretary-General, Economic Cities Authority (ECA).

Articles from this Chapter

Overview

Expansion ahead: Ongoing development of six economic cities, with a focus on non-oil growth
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The non-oil private sector is forecast to grow at more than 5% in 2015 and is expected to lead to economic expansion in three directions: vertically in industries drawing on the Kingdom’s hydrocarbons endowment; horizontally in industries that do not rely on oil; and spatially into areas of the country that have grown more slowly than the larger cities. The opening of the $20bn Sadara petrochemicals plant in 2015 is the most prominent example of vertical expansion, along with major growth in refinery…

Interview

Focus on strengths: OBG talks to Mohammed Al Kathiri, Secretary-General, Riyadh Chamber of Commerce and Industry
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Interview: Mohammed Al Kathiri To what extent can Saudi Arabia improve its non-oil trade balance through production of consumer goods? Which areas offer the greatest potential? MOHAMMED AL KATHIRI: Saudi Arabia is the largest economy in the region, a member of the G20, and the most populous country in the GCC. These factors provide Saudi Arabia the ability to expand its economy from overdependence on oil production. Saudi Arabia’s GDP increased by 4.4% in the second half of 2014 while the growth…

Interview

A new kind of city: OBG talks to Mohanud Helal, Secretary-General, Economic Cities Authority (ECA)
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Interview: Mohanud Helal How do Saudi Arabia’s economic cities differ from other economic zones in the MENA region? MOHANUD HELAL: The main difference lies in the operating model, which in Saudi Arabia truly activates public-private partnerships and seeks enhanced private sector participation. This is what makes these economic cities unique. Each of them is formed by a consortium led by a private player – called the master developer – which is primarily in charge of developing the entire…

Analysis

Aiding diversification: Key players are investing further down the petrochemicals value chain
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Falling demand and rising competition for feedstock, alongside a national push to bring the price of raw materials closer to market rates, are combining to put pressure on Saudi Arabia’s petrochemicals industry. The price of petrochemicals dropped to a five-year low at the beginning of 2015 on the back of easing demand across a number of key markets. The operating environment is expected to remain challenging in the coming months, with little to indicate a significant pick-up in global economic…

Analysis

A third pillar: The government is turning its attention to mining and processing to complement hydrocarbons and petrochemicals
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While Saudi Arabia may traditionally have seen the oil fields in its Eastern Province as the source of its wealth, the gold, phosphates and bauxite found in its western and northern regions promise to provide a third pillar of the economy by complementing oil and petrochemicals. Billions of dollars will be ploughed into mining, infrastructure and processing in the next three years, and the plan is to use these developments to create manufacturing industries further down the value chain. MINING…

Analysis

Ready to go: Attracting foreign investment with purpose-built industrial cities
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In its drive to diversify its industrial base and attract inward investment into the Kingdom, Saudi Arabia offers commercial land at significantly discounted rates in zones known as industrial cities. Although there is no prohibition on the construction of made-to-measure factories by businesses moving to one of these industrial cities, there are off-the-peg, ready-made units for light industrial purposes in most parts of the country. MODON: The Saudi Industrial Property Authority ( MODON)…

Analysis

Enhancing food security: Local companies are looking abroad to invest in farmland and agricultural infrastructure
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The Kingdom’s agricultural sector is a little unusual by the standards of emerging markets. Whereas in many countries the major challenge is turning primary production into higher-value end products, Saudi Arabia is faced with the opposite issue. The Kingdom has developed a highly successful processing industry. However, this sector is restrained to a certain extent by a reliance on imports of raw materials. FOCUS ON WATER: Ever since the government made the strategic decision to focus on…

Analysis

High in value, low in intensity: The focus is shifting to organic farming and less water-intensive methods and crops
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Although Saudi Arabia’s policy shift on self-sufficiency and wheat production over the last five years has garnered the most attention, the government has instituted a number of other plans to mitigate the effects of agricultural production on the country’s water reserves. One of the most important moves in this respect has been the emphasis on organic and greenhouse production, methods of farming that will place less of a burden on the water-stressed country. WATER USAGE: Agriculture…