Saudi Arabia’s industrial development

Saudi Arabia

The Saudi construction sector looks set to expand by 7.8% between 2015 and 2019 as the effort to stay the course of sustained growth is spurred along with an expanding population as well as by an unprecedented economic prosperity.  Supported by government policies, it has boosted a substantial demand for construction material, equipment and services.  Construction projects through private and / or public investments keep increasing in numbers and value.  Saudi Build 2015 this week would be a live demonstration of this dynamics that run parallel with the increasing need for innovative, sustainable and cost-effective building and construction solutions.

Meanwhile , the Ministry of Municipal and Rural Affairs is planning the development of 17 small and medium cities up and down the country,  aimed principally at improving planning, services and infrastructure facilities of its cities and regions alike.

The project will reduce the problems currently facing Saudi cities, including high density of population, increased power consumption, and underdeveloped and disorganized residential districts.

“The project also aims at making all Saudi cities attractive for people to live and work, removing all negatives of the past,” an anonymous government officer was quoted as saying, adding:

“We have selected 17 cities in different parts of the Kingdom for the project on the basis of certain criteria including population, and geographical distribution”.

But if that is not enough, there are also plans for the country, although being the largest vehicles and auto parts importer in the region, to establishing itself as the new automotive hub for the Middle East with a particular tariff-free access to other GCC countries that import some 1.2 million vehicles a year.  This ‘new car’ sales that increased by 6.7 % in 2014, is forecast to reach one million by 2020.  Many believe that the size and wealth of the regional market ought to make it attractive for the international motor industry to come and seek investments.

Nowadays, foreign operators are allowed 100 % ownership of companies, production equipment and projects on top of a whole range of fiscal incentives.  Good low-cost loans from the Saudi Industrial Development Fund and a maximum of 20 % tax on corporate profits are also made available by the government.

The Saudi government in the context of the presently growing demand for cars and commercial vehicles not just through imports is planning to attract Original Equipment Manufacturers to come and settle plants in the country.  It is part of a National Industrial Clusters Development Programme Development that is mainly aimed at kicking off a domestic automotive industry as one of its five priority activity, that is at the centre of a diversification drive.

It ultimately nurturing the idea of possibly feeding the four million cars a year purchased in the MENA.