RIYADH: Saudi Arabia announced the allocation of SR10 billion ($2.66 billion) to activate the Standard Incentives Program for the industrial sector, followed by approval from the Council of Ministers last month.
The announcement was made during the Standard Incentives for the Industrial Sector event on Jan. 11.
According to a press statement, this initiative seeks to spur growth in the industrial sector by accelerating investments and achieving sustainable industrial development in the Kingdom to elevate the competitiveness of the Saudi industries globally.
Developing the industrial sector is crucial for Saudi Arabia as the Kingdom, under its Vision 2030 program, is pursuing an economic diversification journey by reducing its dependence on oil revenues.
“These incentives were developed within the framework of an integrated governmental effort, characterized by collaboration with various relevant government entities, particularly the pivotal role played by the Localization and Balance of Payments Committee,” said Saudi Arabia’s Minister of Industry and Mineral Resources, Bandar Alkhorayef.
He added: “This committee serves as the overarching body for shaping policies, directions, and initiatives that enhance the empowerment of industrial investments and support national talents.”
The press statement added that the incentives program offers coverage of up to 35 percent of the initial project investment, capped at SR50 million for each qualifying initiative.
The program is divided evenly across the project lifecycle, granting 50 percent during construction and the remaining 50 percent during production.
The press statement added that the first phase of this program will target investments in chemical conversion industries, the automotive sector, and machinery and equipment.
The incentives program will be rolled out to other industry segments in subsequent phases in the latter part of this year.
“This program is the first of its kind in the region and aims to enable the manufacturing of products that are not currently produced in the Kingdom. It opens new horizons for high-quality investments and allows both local and international investors to benefit from the unique capabilities the Kingdom possesses,” said Alkhorayef.
He added: “The Standard Incentives Program has been designed to focus on achieving localization and local content targets, as these are fundamental elements for sustainable development.”
The minister further highlighted that through the program, Saudi Arabia aims to empower industries that enhance the utilization of the Kingdom’s natural resources and increase reliance on local talent, contributing to reducing imports, strengthening the balance of payments, and fostering economic resilience.
During the event, Saudi Arabia’s Minister of Investment, Khalid Al-Falih, said that the Standard Incentives Program marks a significant step toward realizing the objectives of the Kingdom’s Vision 2030 and the National Investment Strategy.
“The program seeks to achieve the Vision 2030 goals in the short and medium term, including increasing non-oil exports to 50 percent of the size of the non-oil economy and localizing critical materials essential to the economy,” said Al-Falih.
He added: “Today, the industrial sector contributes to an investment that accounts for 40.8 percent of the gross domestic product. The industrial sector accounts for approximately 30 percent of foreign direct investment.”
Al-Falih further noted that most of the licenses granted by the Ministry of Investment to international companies are in the manufacturing industries sector.
The investment minister added that 571 international companies have opened their regional headquarters in the Kingdom, most of which are industrial firms.
“We will provide these companies with enablers and incentives through various programs. Our role is not just to promote ourselves but also to enable various sectors to be competitive and ensure that all key sectors, as everyone has mentioned — starting with the industrial sector— are indeed attractive for investment,” said Al-Falih.
According to the press statement, Al-Falih said that these incentives, in their current form, are expected to energize the industrial movement in the Kingdom.
The investment minister added that projections indicate that the initiative is expected to generate an estimated SR23 billion annually in GDP from the targeted projects.
During the event, Saudi Arabia’s Energy Minister, Prince Abdulaziz bin Salman, said each sector should understand its role in achieving its objectives.
The energy minister added that the Standard Incentives Program aims to launch economically viable projects, ensuring sustainable development in the Kingdom.
“Through this program, we also aspire to achieve sustainability by launching economically viable projects, creating quality job opportunities for Saudi men and women, and fostering innovation and creativity in industrial sectors,” said the energy minister.
He added: “We believe this methodology, centered on empowering industrial projects, will contribute to the gradual expansion of these investments, broadening the industrial base for both investors and the Kingdom as a whole.”
The energy minister further underlined that these initiatives, in the future, will grow into leading companies that enrich the national economy, diversify income sources, steady the balance of payments, and boost non-oil exports.
Faisal Al-Ibrahim, Saudi Arabia’s minister of economy and planning, said that the program has been developed to grow and deepen the industrial base, which will significantly impact the overall non-oil economy.
“We look forward to seeing non-oil activities increase in number and become more sustainable. Therefore, it is important to design these incentives in a way that does not create additional dependency on them,” said Al-Ibrahim.
He added: “Instead, they should create dynamism in the private sector, enabling it to mature and reach a stage where it grows, continues to produce, and competes sustainably.”
According to Al-Ibrahim, the nation wants to create a dynamic private sector that relies on itself and benefits from the incentives program.
“We measure success through the creation of high-quality jobs, increased productivity, higher non-oil exports, and an overall increase in investment in the Kingdom, leveraging global value chains,” added Al-Ibrahim.
During the event, the Minister of State and member of the Council of Ministers, Hamad Al-Sheikh, said that the objective of the standard incentives program is to equip the industrial sector and investors in the Kingdom.
“The goal is to empower the industrial sector and investors, ensuring clarity regarding application mechanisms, evaluation criteria, and a clear process for prioritization in case multiple investors apply for the same opportunity,” said Al-Sheikh.
Al-Sheikh added that the program aims to encourage new waves of small and medium-sized factories to produce innovative and economically prioritized products for the national economy.
He concluded that the incentives program promotes technology transfer and is expected to improve the trade balance through local production.
