1. The Era of New Manufacturing in Saudi Arabia
Presented to: US – Saudi Business Opportunities Forum
Chicago, Illinois
April 28, 2010
Good Morning Ladies and Gentlemen
One of the fundamentals of our economic strength is the petroleum and chemical industries, and forging ahead, we are executing an industrial expansion program that builds on these strengths to create a new economic future. This program 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 honored to be with you today as the United States is the Kingdom’s long term and main economic partner.
So what I will do in the next few minutes is to share with you what we are doing to drive the era of new manufacturing in the Kingdom and invite you to take advantage of the new opportunities.

2. Saudi Arabia is investing in value added manufacturing serving 400 million consumers
Turkey
Iran
Syria
Saudi Arabia
Egypt
Sudan
Oman
Qatar
Kuwait
UAE
Bahrain
Iraq
Pakistan
A center serving over 400 million consumers
Vast oil, Petrochemicals and Mineral resources
Competitive power cost (3.2 cents/KWH)
Rapid growth of young educated Saudi’s
1st economy in the MENA & 23rd globally
7th globally in rewarding Tax system (20% flat tax)
13th globally in ease of doing business
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

3. A multitude of specialized Government and Private agencies committed to make you successful
1. Ministry of Commerce & Industry
Industrial Clusters Program
2. Saudi General Investment Authority
3. Saudi Industrial Development Fund
Industrial loans annual charges
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. Chambers of Commerce
Industrial strategy
Window for Manufacturing
One Step Shop
2.5% $
$1.06
$1.6
Commercial rates
Training & wage support
Export credit & insurance
Window 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.

4. Energy Goods & Services*
The chosen sectors are export oriented & being developed as clusters that are globally competitive
Metals Processing
Energy Goods & Services*
Automotive
Oil & Gas Offshore*
Home Appliances
Solar Energy
At the heart of our Industrialization Strategy, we are creating new industrial 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
Plastics & Packaging
* Initiative championed by Saudi Aramco

5. Supporting businesses and services
The Metals Cluster will produce material & products to serve the new industries and the export markets
Anchor Projects
Aluminum flat rolling mill – 400 k tons
Steel flat rolling mill – 1.75 million tons
Aluminum casting
Steel casting & forging
Aluminum cable & wire
Metals Products
Intermediates
Basic materials
The metals cluster will produce materials and products to serve the new industries and the export markets.
The cluster’s anchor projects are; the 400 thousand tons Aluminum flat rolling mill, $2.5 billion investment. This is our first achievement that is being developed by the recently announced Joint venture between Maaden our mineral company and Alcoa.
The other anchor projects include steel flat rolling mill that will produce plate, and auto and appliances grade steel. The aluminum casting, steel casting and forging the aluminum cable and wire projects.
Moving on to the auto cluster
Supporting businesses and services
s and services
Cluster services
Industry Association
Research & training

6. Supporting businesses and services
The Automotive cluster to capture a significant portion of the fast growing $75 billion market in the region
Anchor Projects
120 k unit Car assembly plants
25 k unit Truck assembly plants
8 million Tire plant
600 k unit Powertrain plant
Tier N
Tier 2
Tier 0.5/1
Auto Companies
Supporting businesses and services
Research & Training
Industry Association
Cluster
Services
Import
our drive is to create an automotive sector that includes cars, trucks assembly plants along with components manufacturing for regional demand and exports. Our approach is developing the cluster targeting global auto companies and global and local companies in the component business to produce lighter energy efficient vehicles.
The anchor projects include 120 thousand car assembly plants, 25 thousand light and medium trucks, 8 million tire manufacturing project and a 600 thousand unit power train plant.
Moving on to Home appliances.

7. Home appliances cluster targets products that are efficient and essential for the quality of life in the MENA
Anchor Projects
Air Conditioning Expansions: 1.5 million units annually
Home Appliances: million units annually
Compressors: million units annually
Appliances Motors: million units annually
So we are targeting the manufacturing of new products and supporting our existing manufacturers that has successfully been growing especially in the air conditioning business..
Our aim is to creat a home appliances industrial base in the bulky products that is growing at 8% annually with energy and water efficient products that are essential for the quality of life in the MENA region.
In addition, we are targeting projects that provide key components to this industry such as compressors and motors that are an important cost factor in the appliances.
Let me now cover the solar cluster.

8. 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

9. 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
(2008, 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…

10. Energy Goods Cluster targeting 30 “Anchor Projects” worth $5 billion investments increasing local sourcing to 70%
4/19/2017
Pipe
OCTG
Valves
Pumps
Specialty Chemicals
Heat Exchangers
Vessels
Compressors
Mechanical Seals
Drill Bits
Well Heads
Subsea Cables
28%
50%
The Energy Goods and Services will be world class export oriented cluster, leveraging the Kingdom’s leading position in the Energy Industry and serving the Industry beyond Saudi Arabia.
…approximately 30 new manufacturing projects are targeted to be “Anchor Projects” for Energy Goods cluster. These projects represent an estimated $5 billion in new investments. When fully realized, this new manufacturing capability will provide the opportunity for our oil and gas companies to increase the level of locally sourced materials to approximately 70%.
22%
Current Locally manufactured
Highly Engineered
Immediate target projects 10

11. The Oil & Gas Offshore Cluster’s targeting platform fabrication and specialized services capabilities
Offshore Exploration & Drilling
Offshore Platform Fabrication
Offshore Submersible Pumps
Subsea Valves & Cables
Surveying
Industrial Marine Services
Pipeline Scrapping & Laying
Environmental Services
The Offshore cluster will focus on developing the required infrastructure to serve offshore oil and gas exploration, drilling and production. The core of this capability will be centered around platform fabrication with additional supporting specialized materials and services. When realized, it is projected that this cluster will represent investments totaling $1 billion.

12. 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 American 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. US companies have been our strategic business partners in the oil and petrochemical industries and we welcome them to be our partners in the new industries.
5. finally, Our record shows that we are reliable, fair and partners for the long term.

13. “To live well, a nation must produce well.”
MEO-NIV SMSM
Contact us
Council of Saudi Chambers Building in Riyadh
Phone: +966 (1)
Fax: (1)
“To live well, a nation must produce well.”
Source: Made in America, Regaining the Productive Edge
In closing, We welcome you in Saudi Arabia and encourage you to contact us.
Thank you.