KAEC to speed up, broaden investment

Updated 26 January 2016

KAEC to speed up, broaden investment

RIYADH: The developer of one of Saudi Arabia’s biggest industrial city projects says it will speed construction of infrastructure and broaden the range of industries it accommodates as part of efforts to diversify the economy beyond oil.

Saudi Arabia is stepping up efforts to develop alternative sectors to boost exports, create jobs and provide new revenues.
King Abdullah Economic City (KAEC), a business zone on the Red Sea coast near Jeddah, is part of the effort. The zone is being developed by Emaar the Economic City (EEC), a publicly listed firm.
Fahd Al-Rasheed, group CEO of both EEC and KAEC, said construction of infrastructure in the zone, including housing, commercial space, hotels and roads, would accelerate.
While 40 such projects have been developed since the zone was launched in 2005, 170 are planned for the next 10 years, he said in an interview.
Progress in some projects will depend on the rate at which the zone can attract new corporate tenants, as well as the strength of the Saudi economy.
But the emphasis on rapid expansion is typical of the mood among Saudi economic policy makers.
“What used to take two years now takes two months. What took two weeks can take a day,” Al-Rasheed said.
The zone, which includes a port, had 120 industrial tenants at the end of last year after adding 23 in 2015. Tenants include French pharmaceutical maker Sanofi, a venture involving US battery maker Johnson Controls, and producers of building materials.
KAEC has a population of about 5,000 people.
It is roughly doubling every year and is projected to hit 50,000 by 2020, with an ultimate target of 2 million around 2035.
Al-Rasheed said KAEC is now planned to move beyond light industry into tourism.
KAEC also aims to develop a medical center that would attract patients from abroad, and an educational industry providing university and vocational training, he said.
Both sectors were identified as priorities by Saudi economic policy makers this week.
Al-Rasheed did not say where KAEC would find investors for the new sectors, but the government has said it is willing to spend billions of dollars to jump-start growth in new areas by awarding contracts and procuring services from companies.


Saudi defense contractor to invest up to $16 million to further localize services

Updated 18 November 2019

Saudi defense contractor to invest up to $16 million to further localize services

DUBAI: Saudi-based defense contractor Middle East Propulsion Company (MEPC) plans to invest between $13 million and $16 million over the next two years to build test cells for aircraft engines and establish new production lines.
These expansion activities should complement the company’s objective to localize high-tech repairs and combine them in one roof for the Saudi defense ministry, which is a major customer, CEO Abdullah Al-Omari told Arab News.
Instead of sending aircraft engines and engines modules overseas for further servicing, thus take up more time before military assets return to actual service, localization not only cuts the turn-around period but also reduces Saudi government spending for the repairs.
“We have accomplished more than 1,600 engine and engine modules [since 2001, they] have been maintained totally in Saudi Arabia,” Al-Omari said at the sidelines of the Dubai Airshow. “The engines consume 45 percent of what you spend on aircraft.”
The company works on 150 to 160 engines and engine modules every year.
MEPC is the first specialized MRO (maintenance, repair and overhaul) company operating in the Middle East, according to its website. It has invested over $26 million during the previous two years for the localization of its MRO services.
“We used to send these parts to outside, it takes 6 months to 24 months sometimes … in case of the Apache engines, minimum turn around is 24 months,” Al-Omari said, but their localization efforts have greatly improved their capability by cutting the turn-around period to only 150 days.
The speed at which MEPC is able to repair engines and modules, boosts the readiness of Saudi military, Al-Omari added.
The company is in talks with major defense contractors, including Honeywell for the Abrams talks and GE T700 engines, for possible tie-ups to further improve their capability, he said.
“Currently there is a potential with the Kuwait army to provide them with similar services [being delivered to the Saudi defense ministry],” Al-Omari said, and expects that cooperation would start “within the next two years or so.”