The Big City

How does your organization fit in with the larger goals of the nation?

MODON is responsible for managing, establishing, and promoting industrial cities all over Saudi Arabia. There has been huge growth over the past six or seven years. As of 2007, we had a 40 million sqm area developed over the past 40 years. Thereafter, we commenced industrial city development, and soared to over 163 million sqm by the end of 2013. We have seen the same success in our electricity business, where, as of 2006, the electricity delivered to industrial cities was 1.6 GW, but by 2013 had risen to 5 GW. Meanwhile, GDP has grown from $91 billion in 2007 to $150 billion in 2013, and these figures together confirm the economic development of the country. We have also announced partnerships with international brands such as GE, Schlumberger, Siemens, ABB, and Isuzu, among others. Our approach to industry is one of contribution to the broader economy. There is huge development underway and ever expanding purchasing power in Saudi Arabia, especially in the development of the oil and gas industry, as well as engineering and healthcare. And so we seek partnerships with companies keen to invest in these sectors.

How do you approach international organizations to showcase the available opportunities in Saudi Arabia?

The market share that we have here in Saudi Arabia is one of the largest in the Middle East. Our huge projects, such as the development of transportation, education, and healthcare sectors are of an attractive scale for those companies looking to invest in Saudi Arabia. In the transportation sector, $500 billion has been officially allocated for the development of the railway system. Saudi Arabia also has huge potential in other sectors like manufacturing, construction, services, design, and project management. We fully understand that the foundation for the development of all these sectors is industry. That helps us provide incentives and support for manufacturers to attract them.

Why are planned industrial cities so attractive to companies investing in the Gulf?

In 2007, there were only 14 industrial cities here, but by the end of 2013 there were 32. This huge development reflects the overall pace of development throughout the country. We offer different value propositions for different industrial cities. Those located in the larger cities like Jeddah, Riyadh, and Dammam have fewer incentives than those beyond the main cities. For industrial cities located in the promising cities, our government provides 75% of the capital investment. Other incentives in these industrial cities include competitive price advantages for land. We rent the land rather than sell it, and the price starts from SAR1 per sqm per year. There are other incentives, with prices starting from 10 halala ($0.026) and ranging up to 26 halala ($0.069). There is no taxation of industrial businesses, and this is in addition to tax exemptions on raw materials and machinery. In 2013, we built over 300 ready-made factories. We prepare everything, so that the producer can move right in and begin manufacturing immediately. We are the first organization to provide such ready-made facilities for major investors.

What trends do you see developing in the MENA region in terms of demand for industrial products, and how is your organization responding to those trends?

Exports from Saudi Arabia are on the rise, as local products enjoy a good reputation for quality. To give you an example from the oil and gas industry, five or six years ago most of the equipment for this industry was imported. These days, some of that equipment is manufactured locally. We have a factory under construction with Siemens for the manufacturing of gas turbines. We also opened the first automotive plant in Saudi Arabia, in Dammam, with Isuzu, for the manufacture of light trucks. We are planning to manufacture over 20,000 vehicles over the coming three or four years. These are some examples of how we are working with foreign partners to develop and utilize Saudi Arabia’s industrial potential for the benefit of all parties. Those companies have come because of the value proposition of the upstream petrochemicals industry here, and the available gas in Saudi Arabia is also promising. Furthermore, the incentives I mentioned for land, electricity, government funding, and tax exemptions also make it an attractive investment address. The greatest advantage that Saudi Arabia has to offer, however, is its sheer market size, which of course implies strong demand.