A PIONEER TIRE MANUFACTURING Investment Opportunity In Saudi Arabia

Ministry of Energy, Industry and Mineral Resources National Industrial Clusters Development Program

Be Part of Yanbu Advanced Rubber Valley! An Invitation to be part of the new Yanbu Advanced Rubber Valley by establishing a Pioneer Tire Manufacturing Project covering the strong growth of markets of the Gulf Cooperation Council Countries (GCC)1, Middle East, Africa and beyond.

Further, becoming part of the Valley, the Project will enjoy a reliable and secure supply of high quality strategic materials, access to advanced infrastructure, including international seaports and airports, developed industrial land, highway network, and future rail networks. Importantly, the Valley includes a world-class training facility specializing in Tire and other elastomer industries graduating highly skilled work force. In addition, Yanbu Industrial City is a vibrant and growing seaside community with well-developed housing options, international schools, recreational and community facilities.

Proposition for the Pioneer Project!

Unique pioneer incentives can be enjoyed only by this Project that are on top of the attractive incentives offered to qualified manufacturing Projects in Saudi Arabia. The Pioneer incentives are:

MoEIM loan: Interest free loan upto $135M

SIDF loan: 50% of the project cost (upto $240M)

Reliable supply of locally produced strategic materials at competitive price

In addition to the above Pioneer incentives, Saudi Arabia offers

Long-term soft loan up to 50% total capital investment through Saudi Industrial Development Fund (SIDF)

Free Trade Agreement with Gulf Cooperation Council (GCC) Countries and Greater Arab Free Trade Agreement (GAFTA)2

Duty Exemptions on Material, Component and Machinery used in the manufacturing

Training & Wage support through Human Resource Development Fund (HRDF)

100% foreign investment permitted with repatriation of company profits

Industrial land leasing at competitive cost in world-class industrial cities

Reliable and highly competitive utility cost

Corporate Tax Rate 20%

Strategic Materials Availability!

1)Gulf Cooperation Countries include Saudi Arabia, United Arab Emirates, Qatar, Bahrain, Oman and Kuwait

2) GAFTA Countries include Egypt, Sudan, Iraq, Yemen, Libya, Algeria, Jordan, Syria, Tunisia, Morocco & GCC Countries

TIRE MANUFACTURING INVESTMENT

Item Unit Rate

Land Lease USD/sq.m 1.2

Electricity USD/KWh 0.032

Boiler Fuel Oil USD/Liter 0.033

Boiler Fuel Gas USD/mmBtu 0.75

Process Water USD/m3 1.76

Yanbu Industrial City

The Pioneer Project is for the production and sales of more than 7-8 million branded passenger car tires. The production facility, to be located in the Royal Commission for Yanbu industrial city, is envisioned to start operations in 2019. It will be equipped with state-of-the-art equipment and processes having the highest levels of automation, quality, safety, and environment standards. The Project will immensely benefit from the favorable business environment in Saudi Arabia, and the many attractive financial and non-financial incentives. In addition, a number of unique incentives are being made available for this Project.

TIRE MANUFACTURING OPPORTUNITY

The Project will benefit from long-term contracts for the secure and reliable supply of the synthetic rubber materials and carbon black to be produced in 2015 by the joint venture of well-known global companies Sabic and Exxon Mobil. Further, Sabic will be operating a Central Synthetic Rubber Inventory facility in Yanbu to store strategic materials in climate control conditions to ensure quality and speedy delivery.

0.064

1.96

1.75

Highly Trained Workforce A highly skilled workforce is one of the most important ingredients for success and that is why the High Institute of Elastomer Industries (HIEI) was established at Yanbu in collaboration with the University of Akron Ohio as a leading institute in the rubber industry.

The HIEI 1st graduating class in 2015 of 70 technicians went through a 2.5 years of classroom and hands-on training on state-of-the-art rubber and tire equipment, such as extrusion line, compounding, tire building machines, etc.

Saudi Arabia Overview Population: 30 million, 67% under the age of 30

GDP per capita USD 31,300

Member of G-20 Nations

Largest economy in the Middle East region (IMF, 2013)

19th largest economy in the world (World Bank, 2013)

3rd globally in paying taxes (www.doingbusiness.org)

Stable currency (pegged to USD)

More than 500 Million sq.m of developed industrial land

Highly developed and reliable Infrastructure

Yanbu Industrial City

The Royal Commission for Yanbu City is a world-class industrial city and developed community on the Red Sea with population of 132,000. The City has a newly built international airport and industrial seaport, and it is connected to the national highway network. The City’s number of residential units stands at more than 22,000 units and is growing to meet the robust growth in demand caused by industrial expansion and growth in services. Further, the city has a full range of educational, health and recreational services of high standard and is continuously investing in such community services with the latest being a USD 1.6 Billion waterfront project. Education institutions in Yanbu include American, British, Indian, and Philippine curriculum international schools.

TIRE MANUFACTURING OPPORTUNITY

HIEI – Prototype Tire Building Machine

Yanbu Residential Community

Yanbu Port

TIRE MANUFACTURING INVESTMENT

TIRE MANUFACTURING OPPORTUNITY

Passenger car sizes (14, 15, 16, and 17 inch) account for

80% of the GCC market.

Saudi Arabia is the largest market in GCC at 62% of the

sales by units and a world-scale tire manufacturing plant

in Saudi Arabia would be the first in the region and will

gain a competitive access in the GCC market, GAFTA

markets and Near East and African markets.

Market Preview The GCC is one of the fastest growing markets at

approximately ~ 6% CAGR and is forecasted to reach 41M

tires by 2020. The GCC countries form a common market

with the Saudi market. In 2015 the Saudi market exceeded

14.9M passenger car tires and more than 3.4M for truck and

bus tires. The remaining countries in the GCC market are an

additional 12.3M tires per year.

The GCC market imports all of its tire products with

Bridgestone-Firestone, Yokohama and Hankook

capturing over 33% of the market. Michelin and

Goodyear account for another 10%. The remaining

market share is split among other major tire

companies such as Cooper, Continental, Dunlop,

Kumho, Toyo, Pirelli, Sumitomo, and marginal

quality tire imports.

62%19%

8%6% 3% 2%

GCC Tire Market by Country

Saudi Arabia

UAE

Kuwait

Oman

Qatar

Bahrain

As for quality, GCC Standardization Organization (GSO) applies global standards from Japan, US and Europe in addition to hot weather standards on Elongation, Tensile Strength After Aging. Further, Saudi Arabian Standards Organization (SASO) is implementing Euro Rolling Resistance and Wet Grip Requirements in 2015

5.4 5.7 6.1 6.5 6.8 7.2 7.5

23.6 24.9 26.7 28.1 29.5 31.0 32.5

29 30.6 32.8 34.6 36.3 38.1 40.1

0

20

40

60

80

100

2014 2015 2016 2017 2018 2019 2020

GCC Tires market by 2020(Millions)

Truck & Bus PCR & LT

TIRE MANUFACTURING OPPORTUNITY In Collaboration with:

Mr. Abdallah Hazani

Vice President

PO BOX 65295

Riyadh, 11556

Kingdom of Saudi Arabia

Tel. +966 (50) 5284005

abdallah.hazani@ic.gov.sa

www.ic.gov.sa

Tire Prospectus Edition 2

Publication Date: 3rd March, 2016

For More Information Contact Us at:

ABOUT THE NATIONAL INDUSTRIAL CLUSTERS DEVELOPMENT PROGRAM: The N at ion al Industr ia l Clust er Devel opm ent Program is a Saudi A rabi an Gov ernm ent A ge ncy spec ia l iz in g in dev el op ing new m anufacturin g industr i es . Th e Program focus es on in dustr i al sectors th at l ev erage Saudi Arab ia’s nat ion al resources an d gl ob al t rade.

Disclaimer: While the information is accurate to the best of NICDP’s knowledge and belief as of the date compiled, it is limited to the information as specified. No representation or warranty, expressed or implied, is made regarding the information, or its completeness, merchantability, or fitness for a particular use. The user is solely responsible for all determinations regarding use and there is no endorsement of any product or process. NICDP expressly disclaim liability for any loss or damage that may occur from the use of this information.

Ministry of Energy, Industry and Mineral Resources