Saudi Arabia unveils 2nd phase of industrial incentives to attract high-value investment

Arab News

5 hours ago

RIYADH: Saudi Arabia has launched the second phase of its standardized industrial incentives program, aimed at boosting competitiveness and strengthening the Kingdom's trade balance, a senior official said.
Speaking at the Saudi Industry Forum in Dhahran, Khalil Ibn Salamah, deputy minister of industry and mineral resources for industrial affairs, said the initiative supports the government's efforts to drive high-value investments in priority sectors.
This comes as Saudi Arabia works to position itself as a regional and global industrial hub. Since its initial launch, the program has drawn more than 1,000 investors. Of the 118 applications received, 12 have reached the final qualification stage.
In his remarks, Ibn Salamah said: 'It gives me great pleasure to announce the launch of the second batch of standardized incentives under this transformative program.'
He added: 'Investors will be able to invest and apply for these new standardized incentives at the beginning of August.'
The initiative, described as one of the most important in the Kingdom's industrial history, extends beyond traditional financing to include direct grants.
These are designed to support factories producing critical goods that are currently imported and not manufactured locally.
Eligible investors under the program may receive up to SR50 million, or 35 percent of the total investment value — whichever is higher.
The deputy minister emphasized the growing role of the private sector in shaping and implementing the National Industrial Strategy, which aims to expand domestic production and promote economic diversification.
'The partnership with the private sector has been a cornerstone in shaping the National Industrial Strategy, and it continues to grow steadily to ensure we meet the goals of our national industrial ambitions. The industrial investor remains an indispensable partner in our development efforts,' he said.
Saudi Arabia currently oversees 61 industrial cities across the Kingdom. Of these, 37 are supervised by the Saudi Authority for Industrial Cities and Technology Zones, also known as MODON, while 18 are private and integrated industrial cities.
Another four are managed by the Royal Commission for Jubail and Yanbu, and several others fall under the Special Economic Zones Authority, including OXAGON in NEOM.
These zones span more than 2 trillion sq. meters, with over 500 million sq. meters already developed or under development. Infrastructure investments across these sites have exceeded SR31 billion, with an expected return of eight to 12 times for every riyal spent.
'This program has already had a significant positive impact this year and is expected to continue doing so in the years to come,' Ibn Salamah noted.
The deputy minister said Saudi Arabia is currently overseeing over 1,900 industrial projects with investments totaling SR380 billion, nearly half of which are based in the Eastern Province.
He noted that conversion industries are expected to account for between 30 and 40 percent of the National Industrial Strategy's overall targets, underlining their central role in expanding the Kingdom's industrial base.
He further highlighted the role of the 'Wafrah' program in boosting local consumption of polypropylene, reporting over 40 percent growth and 27 percent utilization of existing capacities.
Ibn Salamah stated that they are working with the Ministry of Energy to include 20 new materials in the program by 2025, which will significantly impact downstream industries.
The National Industrial Strategy is built around four core enablers supported by over 140 initiatives.
These include maximizing the value of natural resources, securing the availability of raw materials, enhancing the Kingdom's exports, and developing specialized industrial clusters.
It also seeks to empower small and medium-sized factories by encouraging the adoption of advanced manufacturing technologies.
In parallel, the government aims to increase the industrial sector's contribution to the gros domestic product while reinforcing the resilience and efficiency of local supply chains.
Chemicals sector drives growth
Fahad Al-Jubairy. Screenshot
During a panel discussion, Fahad Al-Jubairy, assistant deputy minister for sectoral strategies and regulation at the Ministry of Industry and Mineral Resources, said the chemicals sector represents one of the most vital components of the national economy and is expected to account for more than half of the total economic impact projected by the National Industrial Strategy by 2035.
'The chemicals sector is a vital and strategic component of the national economy. It is one of the twelve key sectors targeted by the National Industrial Strategy — and indeed, it is considered the most critical due to its projected economic impact,' he said.
According to Al-Jubairy, Saudi Arabia aims to multiply the output of specialty and downstream chemicals by four to five times, while boosting the production of basic and intermediate chemicals by over 12 million tons annually over the next decade.
He also emphasized that the chemicals sector is foundational to the development of other industries such as automotive, aviation, construction, and advanced materials — all of which stand to benefit from the availability of locally produced value-added chemical products.
'The growth of the chemicals sector will position the Kingdom where it truly belongs among the world's leading economies — particularly within the G20 — by reinforcing its global leadership across various products and industries, especially petrochemicals,' Al-Jubairy said.
He further noted that the sector's growth will contribute significantly to job creation, increase industrial competitiveness, and open new investment opportunities for entrepreneurs, particularly in small and medium-sized enterprises.
New industrial projects
The forum featured several key announcements aimed at accelerating industrial growth and localization.
Two industrial complexes were inaugurated in the Eastern Province. The first, in Dammam Third Industrial City, will enhance service availability and integration with neighboring industrial zones and export outlets. The second, in Jubail Second Industrial City, targets high-value investments in the chemicals sector and strengthens links with upstream and intermediate feedstock sources.
Both fall under the Specialized Industrial Complexes Initiative, which supports economic diversification, local content, and job creation by attracting advanced manufacturing investments.
A strategic partnership was also announced to establish Saudi Arabia's first tinplate manufacturing plant, in collaboration between the National Industrial Co. and China's Shanghai Donghexin Group.
Additionally, MODON signed major industrial agreements, including a SR40 million contract with Abdullah Al-Shuwayer Sons Heavy Metal Industries, a SR35 million lease with Al-Sharq Polystyrene Factory, and a SR20 billion investment deal with Al Marje Al Hayawi Co. Ltd.