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TRANSCRIPT
Outline
• Saudi Arabia Economy
• National Industrial Strategy Vision & Objectives
• MODON in Brief
• Investment Incentives
• Our Clients
• Our Industrial Cities
• MODON Supply chain Projects
• MODON’s Infrastructure Projects
Saudi Arabia Economy
• One of the world’s 25 largest economies (23rd )
• The largest economy in the MENA region.
• Represents 25% of total Arab GDP
• It has 25% of worlds oil reserves
• The industrial sector: 13% of the GDP. Projected: 20% by 2020.
• Ranked 4th world wide for fiscal freedom.
Vision
"A globally competitive industry, based on innovation and acting as a major tool in
transforming national resources into sustainable wealth"
Key strategic goal
"To increase the contribution of the manufacturing sector to the GDP
to 20% … "
"Manufacturing is our strategic choice todiversify the economy"
Source: KSA Natinal Industrialization Strategy document, Factiva
NIS, manufacturing identified as a key development sectorGoal is to diversify away from oil and gas and develop human capital
Manufacturing as percentage of GDP (2009)
40
30
20
10
0
Canada
2%
Hong
Kong
3%
Algeria
5%
Norway
10%
Greece
10%
Turkey
12%
France
12%
KSA
13%
UK
13%
United
States
13%
Egypt
16%
South
Africa
17%
Ger-
many
21%
Japan
21%
Korea
25%
Singa-
pore
27%
Thai-
land
35%
Reaching NIS strategic goal would position KSA in the league of Germany and Japan
1. Manufacturing defined as all activities under ISIC classification, Code D Note: Manufacturing value added (MVA) measures contribution of an entity to the whole manufacturing GDP of economy. MVA = Manufacturing GDP – taxes + subsidies on manufacturingSource: Nation master; BCG analysis
20% GDP contribution by 2020
NIS strategic goal to be achieved by reaching four targets
Four targets help reach strategic goal of 20% manufacturing contribution by 2020 Four targets are interrelated
GDP3x
Increasing manufacturing GDP threefold
Manufacturing Saudization
-> 30%
Increasing share of Saudi labor in manufacturing to 30%
Share of techman products
-> 60%
Increasing share of "technology"/value addmanufacturing products
to 60%
Share of exportsin man-> 35%
Increasing share of exports revenues versus domestic
revenues to 35%
Grow Man. GDP
1
2
3
4
1
Employment
Saudi employment
More export oriented sectors
More valueadd sectors
3 4
More Saudi
involve-ment "nice
jobs"
More Saudi
involvement "int'l
jobs"
More jobs
More jobs for Saudis
2
Source: KSA National Industrialization Strategy document; BCG analysis
Eight improvement axes identified to achieve NIS targets
DescriptionNIS axes
• Improve macro-economic policies (i.e., monetary and fiscal policies, wages)• Stabilize micro-economic indicators (to attract local and foreign investments)• improve trade policies and market competition
Overall business environment
• Stimulate industrial diversification and achieve balanced development• Important factors behind industrial development• Stimulate innovation and development by sharing skills
Industrial complexes
• More attention should be devoted to SMEs (i.e., industrial SMEs support, industrial SMEs incubation, business resources center, competitiveness development and industrial modernization center, industrial financing mechanisms)
Business communityand SMEs
• Link R&D efforts with development processes (i.e., linking science and technology network with innovation in industrial companies, linking educational output to labor market needs)
• Promote innovation in small and medium scale industrial facilities
Industrial innovationand productivity
• Ensure the availability of technically and scientifically qualified and well-trained resources• Train personnel to deal with, develop, and maintain modern machinery and equipments
HR development
• Develop infrastructure in the traditional industrial regions and the new industrial cities/zones• Enhance provision of industrial services and supportive activities (i.e., handling, shipping, storage)
Infrastructure andlogistics support
• Move the Kingdom towards higher technology-content industries• Provide continuing support for the development of existing industries which have earned
successful comparative and competitive advantages (i.e., petrochemicals)
New industryverticals
• Manage the implementation of NISGovernance mechanism
1
2
3
4
5
6
7
8
Source: NIS; BCG analltsis
MODON In Brief
• History Established in 2001.
Independent, self-funded public organization.
• Roles Regulate, develop and promote industrial properties
and technology zones.
• Facts Overseas 75 million m2
34.5 million m2 developed during the last 3 years.
More than 300,000 Jobs.
More than 3,000 factories
MODON In Brief
Tho
usa
nd
m2
Increase Industrial Lands to 150 million m2 in 2015
0
20,000
40,000
60,000
80,000
100,000
120,000
140,000
160,000
Investment Incentives
Competitive Advantages
Integrated Infrastructure
Biggest Attractive Market in ME
Governmental Services Centers
Housing & Commercial Centers
Least Rental Rates in GCC
Center of ME
Industrial Cities widespread
Modern Industrial Cities
Incentives
SAR 1 / square meter / year
Electricity rates:
$0.04 / KW
Custom exemption (for equipments &
raw materials)
Government financing up to 75%
Existing Industrial Cities
1. Riyadh 1
2. Riyadh 2
3. Jeddah 1
4. Jeddah 2
5. Dammam 1
6. Dammam 2
7. Makkah
8. Madinah
9. Qaseem
11. Al- Ahsa
11. Assir
12. Al- Jouf
13. Tabuk
14. Hail
15. Najran
16. Jazan
17. Rabigh
18. Al-Kharj
19. Ar’ar
Cities Under Development
1. Riyadh 3
2. Jeddah 3
3. Dammam 3
4. Al-Zulfi
5. Qaseem 2
6. Al-Baha 1
7. Shaqra
8. Sudair
9. Hafer al batten
Category #
Existing 19
Under Development 9
Under Planning 4
Factories 3,000+
Labor 300,000+
MODON Statistics
MODON’s Infrastructure ProjectsInternational Codes in Standard & Specification
• Roads
ASTM
AASTHO
• Utility
ACI
BS
ASA
ASCE
Study / Survey 80,000,000 $
Development 1,330,000,000 $
Rehabilitation 270,000,000 $
Utilities & services Setup 1,400,000,000 $
Total 3,080,000,000 $
Infrastructure projects in the next5 years