Gateway to Saudi Arabia www.ic.gov.sa September 25, 2013

Ministry of Commerce & Industry National Industrial Clusters Development Program

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Who is the Industrial Clusters Program • Government Agency

• Facilitate investors industrial projects • Develop industrial clusters key projects • Industrial strategy and technical advise to Government

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Industrial Clusters Program Mission

Industrial Clusters Program Mission

Catalyze the development

of export oriented and long term globally competitive manufacturing clusters

Vision

“Industrialization is our choice for diversifying our sources of income”

that leverages the Kingdom’s energy, petrochemical and mineral resources for the purpose of significantly contributing to

diversifying the economy and creating substantial numbers of rewarding job opportunities for citizens.

The Custodian of the Two Holy Mosques King Abdullah bin Abdulaziz

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Industrial Performance

1st

Saudi Arabia is Middle East – North Africa’s top & Destination for foreign direct investments, and eighth 8th in the World

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Saudi Arabia: a Competitive Player in the Global Economy

•

1st economy in the region & 19th globally

•

3rd globally in a rewarding tax system

•

12th globally in ease of doing business

•

18th most competitive economy

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Robust GDP Growth Real GDP SAR, billion 1,218

633

92%

2012

2000

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Robust Industrial Growth Non oil Industrial output (in 1999 Constant Prices)

Billion SR

Actual

400 350

x%

250

150

389

Target

300

200

18%

13% 141

Industrial GDP as share of total GDP

14%

14%

157

165

100 50 -

2010

2011

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2012

2024

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Foreign Direct Investments (Stock) in Saudi Arabia 200

186.9

180

160 USD Billions

140 120

100 80 60 40 20 0

17.6

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

Source: SAGIA, UNCTAD

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Leading Multinationals Investing in the Kingdom

Source: FDI Markets, Financial Times, 2012.

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Industrial Clusters

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Our Target Industrial Clusters • Manufacturing •• • •

Basic Materials

Automotive value Chain Plastics & Packaging Pharma and devices Solar Energy Products Home Appliances

• Minerals & Metals • Chemicals • Polymers

• Oil Natural Resources • Gas • Minerals NICDP Focused Clusters Globally competitive industries

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Primary Metals Road Map Iron / Steel HR Products

Copper / Brass

Commercial Sheet

Copper Cathodes

3 A

Beams Hot Rolled Plate

Compact Strip Rolling Mill & Cold Mill Complex

Marine

Large ø Seamless Pipe Small ø Seamless Pipe

A

3

Foundries Plate

Sheet

1

tube

3

Cold Rolled Sheet

Plating

Machining

4

Galvanized Sheets

Forging

Automotive

Appliances

Industrial Products

1

2

3

4

5

6

Aluminum

Pharma

Chemicals

Packaging

Existing Execution Development Planned

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Cable/ Wire

6

Foil Stock

3

Building Sheet

3

Common Alloy Sheet

3

Can Stock

A Rod

1

Liquid

Continuous Caster & Cold Mill Liquid

DC Mill

Pumps / Valves

Medium / Heavy Sections

A

Liquid / Ingot 3

Other Castings

Foundries

Processing Heat Treating

Specialty Grades (stainless)

The Foundries usually produce one or more metals.

2

3

3

Stamping

Bearings Steel

Zinc / Magnesium ingots Aggregates

Aluminum Ingots/Liqui d

Steel Semi Finished (Blooms)

Zinc Powder Alloying Agent

Hot Rolled Sheet

Rod / Wire

Iron / Steel Foundry

Cable Wire

Copper Rod

Tool Steel Specialty Alloy Steels

5

Zinc

Vessels

Pipes

Round Billets

4

Ingot

Auto Body Products

1 2

3

Extrusion

Billet

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Aluminum Development Plan Upstream Industries

Semi-finished Industries

Bauxite Mining Common Alloy Sheet Aluminum Smelting

Aluminum Liquid

Conversion Industries Machining

Foundries

Plating

Heat Treating

Forging

Foil Mill

Alum Rod

Cable Wire

Packaging

Industrial Products

Building Sheet Foil Stock

End Market

Transportation

Appliances

Can Stock

DC Mill Aluminum Casting

Auto Body & Other Sheet Products

Construction Stamping

Extrusion Pre-2008: Before Program

2008-2012: Program Activities

Program Future Activities

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End Market

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Current Clusters Projects

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Metal Projects  Aluminum • Aerospace components and parts opportunities • Foil mill opportunity

 Steel • • • • •

Steel and galvanized sheets – 2017 Specialty steel alloys – 2017 Steel plate – 2017 Industrial bearings - start operations 2017 Shipbuilding & offshore structures

 Titanium • • • •

Titanium metal – 2016 Advanced machined products - start operations 2016 Aerospace components and parts opportunities Medical implants opportunities

 Silicon metal and silicones – 2016  Tantalum and Rare earths - 2018

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Solar Projects  Polysilicon

• 3,000 tons annually – start of operations 2014 • 10,000 tons annually – start of operations 2015

 Wafer

• 1,000 tons annually – start of operations 2014 • 3,000 tons annually – start of operations

 Components

• Solar glass - start operations 2014 • Invertors opportunities • Trackers opportunities

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Automotive Projects  Vehicle Assembly • Isuzu 25,000 annually commercial vehicles - started 2012 • Land Rover 50,000 annually passenger vehicles - LOI signed 2012 • Passenger & commercial vehicles opportunities (400,000) • Engine & transmission opportunities

 Parts & components • • • • • • • •

Small plastic parts - start operations 2013 Under the hood Nylon parts - start operations 2013 Aluminum & steel stamping - LOI signed 2013 Aluminum casting - LOI signed 2013 Seat and harness - LOI signed 2013 Plastic parts - LOI signed 2013 Tire opportunities for passenger & truck vehicles Components, parts & after market spare parts opportunities

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Enabling Industrial Growth Infrastructure

Financial Enablers

Human Capital

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Logistics Infrastructure • Railways

Haditah

− The Saudi Land bridge project expected to be operational by 2020.

Hazam Al-Jalamid KUWAIT

Korayat

Abu Hadriyah

Duba

• Airports

Dammam

Yanbu

− 27 airports across Saudi Arabia.

Ras Al Khair Jubail

Hail

Madinah

Riyadh

− The largest marine network in the Middle East, consisting of 9 major ports

Jeddah

− 206 berths of various type for industrial and commercial use

Major Airport Sea Port

Sohar

Muscat

Makkah OMAN

Duqm

Salalha Yemen

Jazan

Existing network

Dubai

UAE

KAEC

• Ports

Fujairah

Abu Dhabi

Land bridge railway Haramain high speed rail

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GCC Railway North-south railway 19

Competitive World Class Industrial Infrastructure • Modon - developed land at 29 industrial cities and ready made factory to small and medium enterprises. • Royal Commission - developed land at Jubail, Yanbu and Ras Al Khair cities. • Economic Cities Authority – developed land at King Abdullah Economic City, Jazan Economic City, Prince Abdulaziz bin Mousaed Economic City and Knowledge Economic City in Madinah

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Ras Al Khair Industrial City

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Molten Cruce Example

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Talent development

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Labor Force Availibility SAUDI POPULATION & NATIONAL LABOR FORCE, 2011, [million]

SAUDI LABOR FORCE FORECAST BY LEVEL OF EDUCATION, 2024, [%]

19.40 9%

12.55 33%

7.90 4.70

Saudi Population

7%

Saudi Labor Saudi Labor Saudi Labor Population Force Force 2024 (age 15 and over)

2011

52%

Below High-school High-school Graduates

Diploma Graduates University Graduates

2024

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Talent and Skill Development Academic type

No.

2012 Graduates

2020 Estimated

Universities

35

170,000

490,000

Vocational Training

162

42,000

130,000

Technical Colleges

50

33,000

55,000

 Technical and Vocational Training Corporation (TVTC)  Specialized Training Institutes: •

Higher Institute for Metals Technology

•

High Institute of Plastic Fabrication

•

High Institute for Elastomer Industries

Source: TVTC and Ministry of Higher Education, 2012.

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Comprehensive Financial Support Training new KSA staff

Tax incentives

• 20% corporate income tax • Special tax deductions for projects in developing regions.

Low rents and utilities • • • •

Land rents: $ 0.3-4/m2 Gas: $0.75/MM BTU Elec: $0.026 - 0.069/kWh Diesel:$ 0.06/liter

• Up to 75% of trainees' salaries for 2 years (HRDF)

KSA SUPPORT

Loans

Import tariff Exemptions • Spare parts • Raw material • Plant machinery & equipment

Sales support

• Govt. procurement favors local production • Links to existing local companies

• Low cost industrial loans up to 75% of capital and 20 years term (SIDF) • Export Financing & guarantees (SEP)

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Free Trade Agreements

•

GCC Customs Union − Zero duty for intra-trade operations −

•

6 States Members (Bahrain, Kuwait, Oman, Qatar, Saudi Arabia, the United Arab Emirates)

Greater Arab Free Trade Agreement − Zero duty for intra-trade operations when the national content is at least equal to 40% −

17 states Members (Algeria, Bahrain, Egypt, Iraq, Kuwait, Lebanon, Libya, Morocco, Oman, Palestine, Qatar, Saudi Arabia, Sudan, Syria, Tunisia, United Arab Emirates and Yemen. Others are in the process of joining

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Summary  Leadership is committed to industrializing the nation.  Significant resources have been directed to enable manufacturing.

 Our Basic Materials Producers are taking a proactive role to enable the local conversion industries.  The Clusters Program is ready to collaborate with the downstream

converters to evaluate investment opportunities.

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Saudi Arabia, land of opportunities Your Contact: Turki Al Babtain Mobile: +966 557075555 Email: [email protected]

The Kingdom of Saudi Arabia

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