35 INDUSTRIAL CITIES IN KSA

Saudi Arabia 2018-19 | INDUSTRY | VIP INTERVIEW

TBY talks to Khalid Mohammed Al Salem, Director General of Saudi Industrial Property Authority (MODON), on infrastructural development, technology transfer, and plans for the coming year.

This year, the total investment in MODON's 35 industrial cities across the Kingdom exceeded SAR500 billion – totaling more than 6,000 contracts included 3,600 factories and 2,400 entities and more than half a million employed. How have your operations advanced in recent years?

MODON is going through a transformation of the approach of supporting the industry here. In the earlier stage, our focus was on covering the country with industrial cities and using the fund to develop as much as we can. This reflected how the government strived for inclusive development. We are now moving to more innovative and advanced services in our existing industrial cities, towards smart cities. With the global economic slowdown, the industrial sector faces big challenges and hence we need to innovate. Following the new government direction, we are now partnering with the private sector to boost the economy. MODON is not just a developer of industrial infrastructure; rather, we are an all-round service provider and industry enabler to empower the clean industries by innovate new ideas for the industrial investors. We are constructing ready-built factories since 2012 and have launched programs to attract entrepreneurs, SMEs and more women to develop their businesses in our cities. SMEs require different services and we develop the desired ecosystem in dialog with them. For women, we are encouraging investees to develop with the necessary amenities, which includes daycare facilities for children to be more attractive and comfort environment for women. Currently, there are more than 7,000 women working in the industrial cities. Furthermore, we are working on the productivity improvement of our industry partners with programs sponsored by the Ministry of Energy, Industry and Mineral Resources.

How do you utilize technology and digitalization to attract companies to your industrial cities?

We are now streamlining and automating the processes within our organization to provide more efficient services to ease the business for our partners in order to enhance their contribution to achieve the vision 2030 goals in terms of enabling and developing the industry in Saudi Arabia. Currently, operational licenses for companies that want to settle in our cities can be provided within 24 hours. For land allocation licensing, we have established a 10-day timeframe, which reflects our ambition to target a new type of investments—SMEs cannot wait for months to start their businesses. As part of this transformation, we are empowering the management of the industrial cities allowing them to deal with most issues on their own. Once our transformation is done, all licensing, land allocation, and environmental certification can be done in one electronic platform with easy access for investors.

Can you tell us more about incentives, packages, and infrastructural development for activities in the more remotely located cities?

Every region has its own potential for economic development and employment opportunities, and we want to convey that message. We are currently reviewing our pricing policy to make it more promising and attractive for investors. For example, interested parties with an add value business can contact us with their wishes and requirements for their production facilities and we will build accordingly based on our “Built To Suit” program. For the regions, we want to encourage particularly start-ups and SMEs and are working in collaboration with the SME Authority to built incubator centers. We have already constructed one in Dammam, under the Prince Sultan Fund. For other regions, we are coordinating with Saudi Industrial Development Fund (SIDF) for the provision of loans that can be up to 75%. There is now better alignment between the different government authorities as there is one vision and one objective, and an understanding we need to work together. Also, we are studying the unique value propositions of the regions to tailor our approach to its path of industrial development, and we do this in partnership with industrial committees via the chamber of commerce. Our cities in the south and north, for example, have a strong agricultural environment and we can accelerate food-processing industries there. It makes more sense to encourage industries that are close to the hearts of the local populations, and we can help them add value. Another example is logistics, which will work well in our coastal areas, and we are working in closer coordination with the Ministry of Transport to execute our master plan. Also in logistics, we see a large role for the private sector, and we strive for partnerships with them. We already have such projects in Jeddah, Riyadh, and Dammam, and we want to now extend these areas to closer to the country's borders, for example ARAR city. As trade has resumed with Iraq, there are many opportunities ahead.

What is the role of partnerships with multinationals for technology transfer and expansion of value-adding industrial developments?

MODON is working in closer collaboration with the National Industrial Cluster to utilize the access of industrial clusters to international investors. The Ministry of Energy, Industry and Mineral Resources has formulated its ambition to attract more advanced industries and to commit them to localization inside of the Kingdom. This will not happen without a state-of-the-art technology infrastructure, and that is therefore what we are working on, in addition to the incentives packages and enablers that we provide to foreign companies. The ministry is working on the implementation of the National Industrial Strategy, which will further identify the sectors and value chains that we want to target as a country, and how we can do that.

What is your outlook and ambitions for MODON for the coming two to three years?

We are working to make our organization more fit and efficient and to optimize our organizational structure. With our ambition to serve industries better and to work with new industries, we need to first build our internal capacity. Furthermore, digitalization is high on our agenda and we want to make our cities smart enough in terms of security, environment, digital infrastructure, and logistics. Our plants will all have the necessary upgrades for this, as well as an application to monitor cities tracks and trucks around the cities. We are open to suggestions of our industry partners for further enhancement of the work environment. The MODON cities of the future will all have zones for e-commerce, social activities, and accommodation in the form of business hotels. The cities will become ecosystems for work and leisure and we want to attract private investors from a broad range of sectors.