1 www.ic.gov.sa Ministry of Commerce & Industry National Industrial Clusters Development Program

Gateway to Saudi Arabia

September 25, 2013

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• Government Agency

• Facilitate investors industrial projects

• Develop industrial clusters key projects

• Industrial strategy and technical advise to Government

Who is the Industrial Clusters Program

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Industrial Clusters Program Mission

Catalyze the development of export oriented and long term globally competitive manufacturing clusters that leverages the Kingdom’s energy, petrochemical and mineral resources for the purpose of significantly contributing to diversifying the economy and creating substantial numbers of rewarding job opportunities for citizens.

Vision “Industrialization is our choice for diversifying our sources of income”

The Custodian of the Two Holy Mosques King Abdullah bin Abdulaziz

Industrial Clusters Program Mission

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Saudi Arabia is Middle East – North Africa’s top Destination for foreign direct investments, and eighth in the World

1st 8th

&

Industrial Performance

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• 1st economy in the region & 19th globally

• 3rd globally in a rewarding tax system

• 12th globally in ease of doing business

• 18th most competitive economy

Saudi Arabia: a Competitive Player in the Global Economy

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1,218

Real GDP SAR, billion

633

92%

2000 2012

Robust GDP Growth

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141 157 165

389

-

50

100

150

200

250

300

350

400

2010 2011 2012 2024

Non oil Industrial output (in 1999 Constant Prices)

13% 14%

14%

18%

x% Industrial GDP as share of total GDP

Target Actual

Billion SR

Robust Industrial Growth

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17.6

186.9

0

20

40

60

80

100

120

140

160

180

200

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011

USD

Bill

ions

Source: SAGIA, UNCTAD

Foreign Direct Investments (Stock) in Saudi Arabia

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Source: FDI Markets, Financial Times, 2012.

Leading Multinationals Investing in the Kingdom

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Industrial Clusters

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Manufacturing

Basic Materials

Natural Resources

• Automotive value Chain • Plastics & Packaging • Pharma and devices • Solar Energy Products • Home Appliances

• Minerals & Metals • Chemicals • Polymers

• Oil • Gas • Minerals

NICDP Focused Clusters Globally competitive industries

Our Target Industrial Clusters

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Foundries

3

1

Stamping Heat Treating

Plating Machining

Processing

Forging

Copper / Brass

A

Zinc / Magnesium

ingots Aggregates

Alloying Agent

Zinc Powder

A

4

5

3

3

3

6

4

3

2

1 The Foundries usually produce one or more metals.

3 2

1

3

3

Alum

inum

Ingots/Liquid

Continuous Caster & Cold Mill

Auto Body Products

Can Stock

Common Alloy Sheet

Building Sheet

Foil Stock

Cable/ Wire

DC Mill

A Liquid / Ingot

Ingot

Liquid

Liquid

Rod

Billet Extrusion

3

Foundries

Pharma

Automotive Appliances Industrial Products

Chemicals Packaging

3

Hot Rolled Plate

Compact Strip Rolling Mill &

Cold Mill Complex

Specialty Alloy Steels

Round Billets

Iron / Steel Foundry

Marine

Hot Rolled Sheet

Cold Rolled Sheet

Galvanized Sheets

Pumps / Valves

Other Castings

Rod / Wire

Tool Steel

Bearings Steel

Specialty Grades (stainless)

Beams

Vessels

Pipes

Small ø Seamless Pipe

Commercial Sheet

HR Products

Large ø Seamless Pipe

Steel Semi Finished (Blooms)

Medium / Heavy Sections

Iron / Steel

Development Planned

Execution Existing

Copper Cathodes

tube Plate

Cable Wire

Copper Rod

Sheet

3 2 1 3

4 5 6

A

Aluminum

Zinc

Primary Metals Road Map

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Alum Rod

Common Alloy Sheet

Foil Stock

Cable Wire

Building Sheet

Bauxite Mining

Aluminum Smelting

Extrusion

Auto Body & Other Sheet

Products

Can Stock

Aluminum Liquid

Industrial Products

Packaging

Transportation

Appliances

Construction

Forging

Heat Treating

Stamping

Machining

Plating

DC Mill

Aluminum Casting

Foundries

Pre-2008: Before Program 2008-2012: Program Activities Program Future Activities End Market

Foil Mill

Aluminum Development Plan

Upstream Industries Semi-finished Industries Conversion Industries End Market

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Current Clusters Projects

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Aluminum • Aerospace components and parts opportunities • Foil mill opportunity

Steel • Steel and galvanized sheets – 2017 • Specialty steel alloys – 2017 • Steel plate – 2017 • Industrial bearings - start operations 2017 • Shipbuilding & offshore structures

Titanium • Titanium metal – 2016 • Advanced machined products - start operations 2016 • Aerospace components and parts opportunities • Medical implants opportunities

Silicon metal and silicones – 2016 Tantalum and Rare earths - 2018

Metal Projects

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Polysilicon • 3,000 tons annually – start of operations 2014 • 10,000 tons annually – start of operations 2015

Wafer

• 1,000 tons annually – start of operations 2014 • 3,000 tons annually – start of operations

Components

• Solar glass - start operations 2014 • Invertors opportunities • Trackers opportunities

Solar Projects

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Vehicle Assembly • Isuzu 25,000 annually commercial vehicles - started 2012 • Land Rover 50,000 annually passenger vehicles - LOI

signed 2012 • Passenger & commercial vehicles opportunities (400,000) • Engine & transmission opportunities

Parts & components • Small plastic parts - start operations 2013 • Under the hood Nylon parts - start operations 2013 • Aluminum & steel stamping - LOI signed 2013 • Aluminum casting - LOI signed 2013 • Seat and harness - LOI signed 2013 • Plastic parts - LOI signed 2013 • Tire opportunities for passenger & truck vehicles • Components, parts & after market spare parts opportunities

Automotive Projects

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Infrastructure

Human Capital Financial Enablers

Enabling Industrial Growth

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• Railways

− The Saudi Land bridge project expected to be operational by 2020.

• Airports

− 27 airports across Saudi Arabia. • Ports

− The largest marine network in the Middle East, consisting of 9 major ports

− 206 berths of various type for industrial and commercial use

Haramain high speed rail Land bridge railway Existing network

Dammam

Madinah Riyadh

Jazan

Hail

Jeddah

Yanbu

KAEC

Korayat

Haditah Hazam Al-Jalamid

Ras Al Khair Jubail

Makkah

Abu Dhabi

Dubai Fujairah

Sohar

Muscat

Duqm OMAN

UAE

KUWAIT

North-south railway GCC Railway

Yemen

Salalha

Abu Hadriyah

Duba

Logistics Infrastructure

Major Airport Sea Port

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• Modon - developed land at 29 industrial cities and ready made factory to small and medium enterprises.

• Royal Commission - developed land at Jubail, Yanbu and Ras Al Khair cities.

• Economic Cities Authority – developed land at King Abdullah Economic City, Jazan Economic City, Prince Abdulaziz bin Mousaed Economic City and Knowledge Economic City in Madinah

Competitive World Class Industrial Infrastructure

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Ras Al Khair Industrial City

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Molten Cruce Example

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Talent development

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7.90

Saudi Labor Force

4.70

Saudi Labor Population

(age 15 and over)

12.55

Saudi Population

19.40

Saudi Labor Force 2024

33%

7%

9%

52%

SAUDI POPULATION & NATIONAL LABOR FORCE, 2011, [million]

SAUDI LABOR FORCE FORECAST BY LEVEL OF EDUCATION, 2024, [%]

High-school Graduates

Diploma Graduates

University Graduates

Below High-school

2011 2024

Labor Force Availibility

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Academic type No. 2012 Graduates 2020 Estimated

Universities 35 170,000 490,000

Vocational Training 162 42,000 130,000

Technical Colleges 50 33,000 55,000

Source: TVTC and Ministry of Higher Education, 2012.

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Technical and Vocational Training Corporation (TVTC)

Specialized Training Institutes:

• Higher Institute for Metals Technology

• High Institute of Plastic Fabrication

• High Institute for Elastomer Industries

Talent and Skill Development

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KSA SUPPORT

Tax incentives • 20% corporate income tax • Special tax deductions for projects

in developing regions.

Low rents and utilities • Land rents: $ 0.3-4/m2 • Gas: $0.75/MM BTU • Elec: $0.026 - 0.069/kWh • Diesel:$ 0.06/liter

Sales support • Govt. procurement favors

local production • Links to existing local

companies

Training new KSA staff • Up to 75% of trainees' salaries for 2 years (HRDF)

Import tariff Exemptions • Spare parts • Raw material • Plant machinery & equipment

Loans • Low cost industrial loans up to

75% of capital and 20 years term (SIDF)

• Export Financing & guarantees (SEP)

Comprehensive Financial Support

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• GCC Customs Union

− Zero duty for intra-trade operations − 6 States Members (Bahrain, Kuwait, Oman, Qatar,

Saudi Arabia, the United Arab Emirates)

• Greater Arab Free Trade Agreement

− Zero duty for intra-trade operations when the national content is at least equal to 40%

− 17 states Members (Algeria, Bahrain, Egypt, Iraq, Kuwait, Lebanon, Libya, Morocco, Oman, Palestine, Qatar, Saudi Arabia, Sudan, Syria, Tunisia, United Arab Emirates and Yemen. Others are in the process of joining

Free Trade Agreements

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Leadership is committed to industrializing the nation.

Significant resources have been directed to enable manufacturing.

Our Basic Materials Producers are taking a proactive role to enable the local

conversion industries.

The Clusters Program is ready to collaborate with the downstream

converters to evaluate investment opportunities.

Summary

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The Kingdom of Saudi Arabia

Your Contact: Turki Al Babtain Mobile: +966 557075555 Email: turki.babtain@ic.gov.sa

Saudi Arabia, land of opportunities