Comprehensive Industrial Strategy and
Future Vision for the Industrial Sector in the Kingdom of Saudi
Arabia.
In accordance with the Royal decree the Ministry of Commerce and
Industry is currently preparing a vision of the Kingdom’s industrial
future up to the year 2020G and a strategy to accelerate development
towards this goal. This plan consists of an integrated program
titled “strategies for enhancing the competitive capability and
diversification of the industrial base in the Kingdom of Saudi
Arabia.” This programme aims to enhance the nation’s competitive
industrial capabilities and promote industrial diversification
within the context of world economy. It will also help to
strengthening the national economy and decrease dependence on a
single basic source of income. The strategy includes three major
components, which are as follows: enhance industrial competitive
capabilities; provide the basic environment and services for the
industrial sector and streamline the legal and regulatory framework
for business.
The industrial strategies developed will guide the formulation and
implementation of the following policies.
Selection of production technologies and diversification of
industrial products on a nationwide basis.
Regional deployment of particular technologies.
Development of the skills needed to support upgrading and
diversifcation of the industrial sector.
Attraction of national and foreign investment to raise
technological intensity and value added in industries.
Building an industrial data base which will monitor and coordinate
inter-industry flows.
Implement a realistic programme to promote adoption of
international standards and improve quality control to facilitate
export promotion.
Encourage further diversification in industries based on existing
comparative advantages and complementary industries.
Promote investment in the infrastructure of industrial cities and
technology zones.
Modernize industrial operations, streamline regulatory procedures
and .streamline management control by means of investments in
state-of-the art ICT.
Promote the development of small and medium industries and
traditional and professional industries.
The challenge is to formulate and implement industrial strategies
that are dynamic and practical and lead to the realization of the
highly ambitious Vision 2020 objective for the industrial sector in
the Kingdom of Saudi Arabia. For this competence levels will have to
be built up rapidly , through accelerated and incessant efforts to
match ongoing developments in the competitive world economic
environments. The Ministry is fully convinced that this could not be
realized without the active cooperation and participation of both
the public and private sectors.
Following is a brief summary of the basic components of the
industrial strategy:
First component: enhancing industrial competitive capabilities:
It is important to improve industrial competitive capabilities and
diversify the productive base to ensure competitive access to world
markets. With ongoing globalization, the Kingdom’s accession to the
World Trade Organization (WTO) and participation in the GreaterArab
Free Trade Area and other local, regional and world economic
activities, such efforts are essential. This objective can be
achieved through the policies formulated above in cooperation with
UNIDO. This programme is designed to take the Kingdom to the
targeted industrial vision for 2020G. The way to achieve this is to
set up a specialized, active network to formulate and implement
policies that build and exchange information related to industrial
capability. This requires first the identification of a preferred
path of evolution of the industrial sector, so as to lay down a
framework of appropriate policies to be implemented.
The Ministry will provide supporting services for the industrial
sector by promoting investment, technological upgrading, support for
small and medium enterprises, application of international
standards, improvement of quality, upgrading of management and human
resources and building business information networks.
Second component: Providing an infrastructure supportive of enhanced
industrial development:
In accordance with the requirements of the industrial sector the
objective here is to provide a permanent, adequate infrastructure to
support superior industrial development through technological
upgrading; this requires the provision of services essential for the
industrial sector. In this respect, the Saudi Authority for
Industrial Cities and Technology Zones has been established to
define a policies framework for the provision of developed
industrial land allotments. The allocation of industrial lands will
be according to the market mechanism based on effective demand with
complete transparency in procedures; rental rates must cover
maintenance and development costs, ensuring that these services are
provided with high quality standards; a partnership between the
private and public sectors is envisaged for allocation of developed
industrial lands with better distribution of roles between the
Authority which formulates policies and regulates and private sector
companines. The private sector is expected t,o provide financial
resources for the development, operation and management of
industrial cities. The Authority assigns the development of
industrial cities services management to development companies from
the private sector through general competitive tenders on a
transparent basis.
This approach is expected to provide a sophisticated industrial
infrastructure through a renewable mechanism which responds to the
demand on infrastructure services required by industrial firms of
whatever size, within steps distinguished with transparency and
competitiveness; this will be reflected in the quality of services
and compatibility of prices, to build Saudi industrial
competitiveness capability.
Third component: Enacting suitable laws and regulations to ensure a
fair, competitive market for industrial products:-
The Kingdom is characterized by open markets and an inflow of goods
at reasonable custom duties. At the same time, most Saudi industries
are considered as emerging industries; it is generally a long and
hard stuggle for such industries to become internationally
competitive. Given that most Saudi industries are in a primary phase
of development, under the present limited tariff structure, profit
margins of such emerging industries are under severe pressure. It is
commonly held that dumping by competing foreign products may be an
obstacle in the way of industrial development. It is to be noted
that there is an increase in dumping in developing country markets
and especially the Kingdom’s markets because of the absence of
anti-dumping regulations, precautionary regulations and other
related regulations which may provide some protection for promising
domestic industrial sectors. In addition to their role in
stabilizing local markets and enhancing credibility and investor
confidence in the Kingdom’s commercial and industrial policies; such
regulations as a whole represent an important incentive to attract
more local and foreign industrial investments. |
