Saudi Industrial Development Fund extends loans worth $5.17bln to boost growth

The industrial development fund has the ability and liquidity to support new and existing projects and can play an effective role in realizing the objectives of Vision 2030: spokesman

  
Image for illustrative purposes. A currency exchange trader counts money.

Image for illustrative purposes. A currency exchange trader counts money.

REUTERS/Faisal Mahmood
17 August 2017
JEDDAH — The Saudi Industrial Development Fund (SIDF) has extended loans worth more than SR19 billion during the past two years as part of its efforts to support strategic projects in targeted sectors marked by the Kingdom’s Vision 2030, said Ahmed Al-Quwaiz, spokesman of the fund.

Commenting on a report published in Okaz on its performance, he said the fund has achieved remarkable progress over the past years and is capable of boosting industrial exports. He also praised the government’s continuous support to the fund to carry out its mission effectively.

“The fund will not make any apology for financing viable industrial projects that conform to its lending policies and conditions,” Al-Quwaiz told Okaz/Saudi Gazette. “We’ll continue to finance industrial projects and support-services to strengthen the industrial sector,” he added.

He said the fund wanted to realize the objectives of Vision 2030 initiated by Crown Prince Muhammad Bin Salman, deputy premier and minister of defense, by accelerating industrial growth.

Al-Quwaiz said the fund has achieved an all-time record by extending loans worth more than SR19 billion during the past two years to support strategic development projects.

“The industrial development fund has the ability and liquidity to support new and existing projects and can play an effective role in realizing the objectives of Vision 2030 with government support,” he pointed out.

He said the fund would cooperate with the media to publish important and correct information for the benefit of people and for impressing Saudi and foreign investors in the sector.

There are currently an estimated 5,800 factories operating in the existing industrial cities, with close to 500,000 employees and overall investment of more than SR500 billion. In 2015, the industrial fund, set up in 1974 to grant medium- and long-term loans to encourage industrial development, approved loans totaling more than SR11.4 billion up 94% and the highest amount by value since the fund was set up.

The Vision 2030, which was unveiled in 2016, aims at reducing the Kingdom’s dependence on hydrocarbon products. Historically, oil has generated the majority of Saudi Arabia’s revenues and around 50% of its GDP.

Importance has been placed on projects that will utilize the Kingdom’s raw material wealth, whether petrochemicals, metals or phosphates, and develop a full chain of upstream and downstream opportunities for both local and international firms.

Investment is being channeled into the industrial sector through the opening of economic and industrial cities, as well as the provision of industrial incentives, including soft loans and inexpensive infrastructure such as land, utilities and petrochemical feed stocks.

The Kingdom’s mega economic cities are expected to contribute 20% of the Kingdom’s GDP by 2020, according to the Saudi Arabian General Investment Authority (SAGIA), which was set up in 2000 to be the driving force behind the Kingdom’s investment program.

In 2006, the Saudi government launched the Economic Cities Authority (ECA) as an agency within SAGIA, which was subsequently spun off into a separate entity in 2010.

Each economic city is being fully planned, developed and operated by a master developer from the private sector, with a total of four economic cities currently under construction, each focused on specific industries or opportunities.

The largest, King Abdullah Economic City (KAEC), launched in 2006 and being built by Emaar, can accommodate over 2,500 manufacturers and logistics companies. King Abdullah Port, the first privately-owned and funded port in the Kingdom, began operations at KAEC in 2014 and already has an annual container capacity of around 3m twenty-foot equivalent units (TEUs), with an eventual target of 20m TEUs.

The Prince Abdulaziz Bin Mousaed City in Hail is aiming to become a logistics and transportation hub for the Middle East and should be completed by 2025. PABMEC will also have a separate petrochemical industries district, with an oil refinery, natural gas processing plant and production facilities for pharmaceuticals, rubber, fertilizers, plastics and basic chemicals.

Knowledge Economic City, launched in 2006 in Madinah, is focused on knowledge-based industries like IT and life sciences, while Jazan Economic City aims to utilize its location on the Red Sea coast between major international shipping routes to grow its manufacturing industry.

Saudi Arabia is also developing industrial centers that target certain geographical regions and industrial sectors. The Saudi Industrial Property Authority (MODON), formed in 2001, currently oversees a total of 34 existing and under-construction cities, including sites located in Riyadh, Jeddah, Dammam, Makkah, Qassim, Al-Ahsa and Madinah.

© The Saudi Gazette 2017


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