The Era of New Manufacturing in Saudi Arabia Presented to: The Saudi - Italian Business Forum Council of the Chambers of the Saudi Chambers, Riyadh November 6, 2010 Good Morning Ladies and Gentlemen We have been known through the last century for our strength is the petroleum and chemical industries. In this century, we are forging ahead expanding our manufacturing capabilities building on these strengths to create a new economic future. What we are doing is quite challenging and its success requires not only national collaboration but also the collaboration of our economic partners around the world. In this regards, I am pleased to be with you today sharing what we are doing to drive this new manufacturing era taking place the Kingdom and invite you to take advantage of the new opportunities.

Saudi Arabia is heavily investing in value added manufacturing serving at least 400 million consumers Turkey Iran Syria Saudi Arabia Egypt Sudan Oman Qatar Kuwait UAE Bahrain Iraq Pakistan 1st economy in the MENA & 23rd globally 7th globally in rewarding Tax system (20% flat tax) 13th globally in ease of doing business A center serving over 400 million consumers Vast oil, Petrochemicals, Mineral and Metals resources Competitive power cost (3.2 cents/KWH) Rapid growth of young educated Saudi’s Largest free market in MENA region Let me start off with Why Saudi Arabia? We are at the center serving a 400 million consumers. Here, Saudi Arabia is investing the economic rent it gains from oil in educating and training its people, building world class infrastructure and instituting programs to promote value added manufacturing. We are leveraging our vast hydrocarbon resources, expanding chemical production, exploiting our significant mineral resources and utilizing our competitive cost of power to produce advanced materials essential for building competitive manufacturing in Saudi Arabia and the world. We are blessed with a young population where almost 70% of Saudi’s are below the age of 30. and we are investing a quarter of our national budget in educating, training and developing our youth who are the foundation for our sustainable economic development. Saudi Arabia is the largest economy in the MENA region and 23rd Globally. Businesses in Saudi enjoys one of the lowest corporate tax rates globally. We have a single flat tax of 20% on corporate profits. We’ve been striving to improve our business environment and has reached the 13th position out of 181 in the ease of doing business globally in 2009. Last but not least, the Kingdom is the largest free economy in the MENA region. MENA- Middle East and North Africa

Specialized Government and Private agencies committed to make investors successful 1. Ministry of Commerce & Industry Industrial Clusters Program 2. Saudi General Investment Authority 3. Saudi Industrial Development Fund Industrial loans 4. Industrial Land leasing ($per sqm/year): MODON (government) Royal Commission (government) PetroRabigh park (private) Economic Cities (private) 5. Human Resource Development Fund 6. Saudi Export Program 7. Council of the Chambers Industrial strategy New Manufacturing One Step Shop 2.5% annual charges $0.26-0.53 $1.06 $1.6 Commercial rates Training & wage support Export credit & insurance Home for business Many governmental and private institutions have been created over the years to support industrial activities . At the pinnacle, is the Ministry of Commerce and Industry that developed and oversees the implementation of the National Industrial Strategy. And as part of that strategy is the Industrial clusters program which is the catalyst for the formation of new manufacturing industries. The Saudi general investment authority is a one step shop from foreign investment in the Kingdom and has championed the advancement of the Kingdom competitiveness. The Saudi Industrial Development fund, that provides soft loans for industry at charges equivalent to 2.5% annually. A number of agencies that provide developed industrial land at competitive rates ranging from 26 cents to $1.60 per square meter. A human resource development fund that provide supports the cost of companies for training and wages of Saudis. The Saudi Export Program that provides export credit and insurance for non oil exports. And finally, the Chambers of commerce and the Council of the Chambers that is truly the engine of business in Saudi.

Energy Goods & Services* The chosen sectors are export oriented & being developed as globally competitive & sustainable clusters Minerals & Metals+ Petrochemicals^ Automotive Oil & Gas Offshore* Plastics & Packaging Energy Goods & Services* Solar Energy At the heart of our Industrialization Strategy, we are creating new sectors to contribute to meeting the Kingdom’s socio economic aspirations. To identify these sectors, we went through extensive analysis of export oriented industries guided by two broad criteria. The first one, is to create quantity and quality employment opportunities for young Saudis that are joining the workforce at a rapid pace. While the second one, is to leverage our comparative advantages in basic raw materials. The chosen sectors are the metals processing, automotive value chain, home appliances, solar energy, and plastics & packaging. In addition, Saudi Aramco the Kingdom’s flag ship energy company is championing the development of the Energy Goods and services and the offshore services sectors Now our approach to developing these sectors is to create clusters of industry which entails not only building plants but also developing the human capital, the business and services associated with these industries, and building the innovation capabilities. The importance of such an approach is to ensure that we have industries that can be globally competitive and sustainable in the long run. Let me now move to talk about each of our clusters Home Appliances + by Ministry of petroleum, Clusters Program, Maaden, Sabic and private industry ^ by Ministry of Petroleum, Royal Commission J&Y, Sabic, Saudi Aramco, and private industry * by Saudi Aramco, Taqa and private industry

Minerals & Metals Cluster will produce material & products to serve the new industries and the export markets

The Automotive cluster to capture a significant portion of the fast growing $75 billion market in the region

SAUDI ARABIA POLYMER FORECAST Plastic and Packaging is increasing value by becoming a consumer products goods center for the region and beyond SAUDI ARABIA POLYMER FORECAST (thousand tons per year) SAUDI ARABIA POLYMER CAPACITY FORECAST (thousand tons per year) Plastics and Packaging is a natural evolution of our petrochemicals industry which is growing 5 folds reaching 20 million tons by 2013. Our strategic thrust is to grow the plastic & packaging industry targeting higher value added products and becoming a consumer packaged goods (CPG) center for major global brands. The rational for becoming a center is that we already are a location for some of the global branded goods products such as Proctor and Gamble and Unilever , serving not only the local and regional markets but exporting to as far as eastern Europe and central Asia. In addition, we have the chemical base to grow by producing the valuable contents that go into the packaging thus allowing us to export finished products to global markets. Moving on to the Energy goods and services and the offshore clusters that are championed by Saudi Aramco Note: In the right-hand chart, “Others” represent a number of new products such as : SBR, EPR, PBR, Carbon Black, EPDM, PPMA, PA, EVOH, PACN, POM, Carbon Fibers, etc…

A major player in the Solar industry from R&D through manufacturing of products and ultimately export of power The crystalline PV value chain Poly Silicon Ingot Wafer Cell Module System Our national aspiration is to become a major player in the solar industry from research and development, through manufacturing of solar products and eventually the export of power. In the research and Development area, we currently have two world class institutions that are very active in solar research, King Abdulaziz city for science and technology and the recently inaugurated King Abdullah University for Science and Technology. In addition, The Kingdom has recently formed the King Abdullah city for Nuclear and renewable energy. This new city will be the launching pad for a national solar energy industry. On the manufacturing front, we are targeting the bothe the concentrated power technonology and the photovoltaic value chain for both the crystalline and thin film technologies. For the crystalline PV, our approach is to initially build the value chain from polysilicon through ingot, wafers and cells. These products will initially be tagered to the export market. Eventually as local demand increases, we will be well positioned to move into the modules and systems part of the value chain. Currently, we have two polysilicon projects being developed in the Kingdom for a total of 8000 tons and we are working on integrating these projects with ingot and wafer production. We are also working on attracting thin film PV projects, this technology is advancing rapidly and has advantages in the production process and weight factors. The thin-film PV value chain Substrate (e.g. glass) Module System

Leadership committed to industrializing the nation. Summary Leadership committed to industrializing the nation. Significant resources directed to support manufacturing. Focus is on value added manufacturing & services. We welcome Italian companies as strategic partners. We are reliable, fair, & long term partners. Let me sum up with the following 5 points: 1. The Kingdom leadership is committed to industrializing the nation. 2. This commitment is being translated into Significant resources being directed to enable manufacturing. 3. we want our clusters to capture the value added from manufacturing and services and be energy efficient and produce efficient products 4. we welcome Italian companies to be our partners in the new industries. 5. finally, Our record shows that we are reliable and fair and that we partners for the long term.

“To live well, a nation must produce well.” MEO-NIV002-20080126-SMSM Contact us National Industrial Clusters Development Program @ Council of Saudi Chambers Building in Riyadh Phone: +966 (1) 218-8999 Fax: + 966 (1) 218-8911 Email: info@ic.gov.sa www.saudiclusters.com “To live well, a nation must produce well.” Source: Made in America, Regaining the Productive Edge In closing, We welcome you to Saudi Arabia and encourage you to contact us. Thank you.