VOICES FROM THE SECTOR: INDUSTRY AND DEFENSE
What major challenges is the manufacturing sector currently facing?
The main issue we face concerns supply chains, including the ports, railways, land and water transportation, and exports hubs. In 2015, we were talking about promoting local industry, content, standards, and products, before it dawned on us that we did not have a good supply chain. King Abdullah Port and Jeddah Islamic Port are active, and Jubail Port is showing some activity, but Yanbu is still not operational. There will be a new wave of supply chain investments to make it bigger and create the necessary infrastructure to move the products. I am in the glass business, so I will not do the logistics myself as it increases my costs; therefore, I need a professional partner who can work at a high level in every aspect of the supply chain.
What role can the private sector play in improving the supply-chain infrastructure?
We need funding from the government to release the operations from the port and give it to the private sector. King Abdullah Port is successfully run by a private company, so we should expand on this success and help other ports and infrastructure across the Kingdom adopt a similar model. Maersk, for the first time, is signing contracts and service agreements for land transport, so JVs are required with the major international names that can make investments. On our side, we can support them, which will enable us to build a professional-quality supply chain network across the country.
What is the paper manufacturing market situation in Saudi Arabia?
The past few years have seen a transformation in terms of regulatory measures, challenges, economic shifts, and government spending. A lot of things were taken for granted, and people now find themselves struggling to do the same things they used to, but at a greater cost. Margins have been squeezed to the lowest this country has seen in a long time, which triggered an appetite for people to change more quickly. The cycle we are going through now is more aggressive than in 2008-09 because it also came with a shift in government strategy from the way it does business to the way it hands out projects; however, every cycle of economic contraction also has longer-term benefits. Decreased government spending also means the banks are being critical of balance sheets and more conscious of potential defaults. Only companies willing to change and be efficient will survive this cycle.
What will boost the industry?
Our sector is strongly linked to consumers and their purchasing power, so it will take a little longer and not show until after summer. Consumer confidence will start getting a boost toward the middle of the year, after which purchasing power will improve.
What are the major opportunities for private-sector engagement in energy?
Energy has always been seen as a commodity that Saudis took for granted, which means there is a significant opportunity for integrating energy resources and utilization. At Saudi Paper Group, we burn gas and make our own electricity, and the company next door does the same with a generation unit. It is time for us to consolidate our energy generation among the companies within the same industry area. This will improve power production efficiency and probably allow the private sector to share the burden of adding more power to the grid.
VOICES FROM THE SECTOR: INDUSTRY AND DEFENSE
TABLE OF CONTENTS
Interview
Mohammed A. Al-Mowkley , Deputy Minister of Water Services, Ministry of Environment, Water, and Agriculture & CEO, National Water Company (NWC)
NWC leads the Kingdom's efforts to preserve water as a non-renewable national resource and drastically reduce the average per capita water consumption.
read articleInterview
Majed H. Al Saadi , Managing Director, Priority Projects Office (PPO), Local Content and Government Procurement Authority
PPO and ECA act as an accelerator for the realization of Vision 2030 by bridging the gap between the private and public sectors and helping the government diversify the economy in the long run.
read articleInterview
HRH Princess Hala bint Khaled bin Sultan Al-Saud C, Chairman, Saudi Law Conference (SLC) organizing committee & Founder,, Burhan Almarifa
Burhan Almarifa is focused on maturing the legal sector, encouraging innovation, and enabling research and development in KSA through knowledge transfer and consultancy.
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