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Introduction

 
Although industrialization is relatively recent, in Saudi Arabia, it has witnessed a steady development, during which distinguished accomplishments were achieved. These are attributed to the importance of the industrial sector and the support it receives from the government owing to its role in achieving strategic and economic goals of the country. The efforts exerted by the government for the support of industrial development covered several basic spheres including implementation of required infrastructure, construction of Jubail and Yanbu industrial cities, construction of industrial cities in various regions of the Kingdom, establishment of Saudi Industrial Development Fund (SIDF), and continued provision of other industrial support and incentives. The response and cooperation of the private sector with the governmental plans and efforts have an effective impact on actualization of the industrial development's achievements. In the following, we review, in brief, some of the industrial progress indicators in Saudi Arabia over the past years.
 
 

 
(1) Progress in Number of Factories, Total Finances and Number of Employees
 

The government has attached great importance to industrial development by providing all kinds of supports and facilities to the industrial sector. As a result, the Saudi industry has made significant progress that was clearly manifested in the growth of industrial investment since the establishment of Saudi Industrial Development Fund (SIDF). The following table illustrates the progress in the number of producing factories and volume of their investments and the number of employees between 1974 and 2013, broken down by major sectors.

As indicated in the table, the industrial base in the Kingdom has experienced a wide expansion over the past four decades. The number of operating industrial units has increased from (198) in 1974 to (6,471) in 2013. Parallelly, invested capital has increased from nearly SR 12 billion in 1974 to more than SR 883 billion in 2013. At the same time, number of employees has increased from (34) thousand in 1974 to (843) thousand in 2013.

 
                                  Operating Industrial Units by Number, Total Finances and Employees 1974 – 2013
Industrial Activity Factory No.
Total Finance
(SR Million)
Manpower No.
1974 2013 1974 2013  1974 2013

Manufacture of food products and beverages

39 875 2,028 70,640 7,199 159,107

Manufacture of textiles

 1 88 20 5,473  60 14,678

Manufacture of wearing apparels

2 99 38 1,050 249 12,612

Manufacture of leather & related products

2 37  7 644  50 3,676

Manufacture of wood and of products of wood and cork,
except furniture; manufacture of articles of straw and plaiting materials

4 63 65 973 839 5,474

Manufacture of paper and paper products

9 213 177 11,822  843 31,286

Printing & reproduction of recorded media

18 58 809 2,820 2,594 6,489

Manufacture of coke & refined petroleum products

4 122  364 89,031 3,487 16,684

Manufacture of chemicals & its products

9 629 2,954 426,672 2,429 76,295

Manufacture of basic pharmaceutical products and pharmaceutical preparations

- 32 - 2,960 - 7,836

Manufacture of rubber and plastics products

11 807 522 23,613 1,895 80,905

Manufacture of other non-metallic mineral products

25 1,304 3,771 89,065 3,780 156,214

Manufacture of basic metals

24 247 234 70,077 2,801 45,711

Manufacture of fabricated metal products, except machinery and equipment

9 880 160 25,094 931 99,488

Manufacture of computer, electronic and optical products

2 59 1 2,994 33 8,682

Manufacture of electrical equipment

2 201 127 15,468 464 37,419

Manufacture of machinery and equipment n.e.c.

12 189 808 27,683 4,357 24,973

Manufacture of motor vehicles, trailers and semi-trailers

8 140 78 3,144 622 14,774

Manufacture of other transport equipment

- 11 - 245 0 1,593

Manufacture of furniture

17 321 170 3,423 1,295 25,002

Other manufacturing

- 91 0 9,657 0 13,146

Repair and installation of machinery and equipment

- 5 0 799 0 1,868

Total

198 6,471 12,333 883,350 33,928 843,912
Source: Operational Industrial Projects System (OIPS).

Looking into the sectoral composition of the operating industrial units in the Kingdom at the end of 2013, we note that the Other Non-Metallic Minerals Sector is heading all other sectors in terms of operating industrial units (1,304) representing 20% of total operating ones.  Manufacture of Chemicals & its Products Sector occupied the leading position among the other industrial sectors in terms of  total finances (SR 427 billion) representing 48% of total finances of operating factories, followed by the Other Non-Metallic Minerals Sector with SR 89 billion representing 10% of total investment of operating factories. The Food and Beverages Sector headed all other Sectors in terms of the number of employees (159) thousand representing 19% of total employment in the operating factories.

Providing modern industrial cities is an additional form of support by the government for the national industries. The Ministry of Commerce & Industry, has constructed and developed several industrial cities in the various regions of the Kingdom and provided them with all required services and utilities. To upgrade the quality of services provided by the industrial cities, the Saudi Industrial Property Authority (Modon) was established in 2001, as an independent public agency to supervise the establishment and management of industrial cities and technology zones, in addition to the operation, maintenance and development of these cities in collaboration with the private sector.

 
 

(2) Progress in Industrial Production:
 

Production of the manufacturing industries in the Kingdom has witnessed a steady progress over the past years. As shown by the figure below, total GDP (in constant prices) achieved by the manufacturing industries increased from the level of SR 15 billion in 1975 to more than SR 171 billion at the end of 2013. Also, the growth rate of the manufacturing industries continued to increase throughout this period at an average of 6% per annum, which is considered one of the highest among the other economic sectors. Owing to the substantial growth achieved by the manufacturing industries during this period, the contribution of the sector in the country's GDP has increased from 4.1% in 1975 to 13.5% at the end of 2013. Parallelly, the contribution of the manufacturing industries sector in the non-oil GDP increased from 7.7% in 1975 to 17% in 2013. These rates show the success of the development plans in pushing forward the industrial progress and the fruitful cooperation these plans received from the private sector.
 
 
 
 
 
 

A more important aspect in the development of the manufacturing industries in the Kingdom is indicated by the change that occurred in the sectoral composition of the Saudi manufacturing over the past period, as the share of the manufacturing industries (other than oil refining) in manufacturing GDP increased from (57%) in 1975 (at constant prices) until it reached (87%) by the end of 2013. This trend reflects the dynamism of the Saudi manufacturing industries sector (other than oil refining). In this regard, we refer in particular to the substantial progress and expansion experienced by the petrochemical industries in the Kingdom over the last two decades under the auspices of SABIC.

The Statistics and analysis made by SIDF show that the GDP's mix for the manufacturing industries sector, (excluding oil refining) has been a subject of a substantial growth throughout the past two decades. Since the early nineties, the Chemical Products Sector has been occupying the leading position of GDP's mix of manufacturing industries, (excluding oil refining). Other sectors that have been showing a notable growth include: Machinery and Equipment, Building Material Products, and Food Products. At present, these four sectors contribute the major part of the Saudi manufacturing industries' GDP.

 
(3) Progress in Industrial Exports:

The Kingdom has devoted a great attention to the development of industrial exports, in accordance with the government's comprehensive economic development strategies aiming at expansion of production base and diversification of income sources. Despite the relative recentness of industry in Saudi Arabia, particularly the experience of private sector in the field of exports, Saudi industrial exports have achieved wide steps in this area. The Chemical Industries have scored a great success in penetrating international markets, and gave a positive image of the Saudi products in terms of quality and price. The table below shows the progress made in values and contributions of Saudi industrial exports during the period from 1995 to 2012. 


Progress in Saudi Industrial Exports: 1995 – 2012.     

Year

Industrial Exports (SR' Million)

% of Total Exports

% of Non-Oil GDP

1995

22,558

12.0%

6.7%

1996

21,364

9.4%

6.0%

1997

24,721

10.9%

6.5%

1998

21,131

14.5%

5.5%

1999

19,448

10.3%

4.9%

2000

22,920

7.9%

5.6%

2001

26,547

10.4%

6.3%

2002

27,691

10.2%

6.3%

2003

35,743

10.2%

7.7%

2004

47,566

10.1%

8.7%

2005

60,000

8.9%

9.8%

2006 

70,044

8.9%

10.2%

2007

83,311

9.5%

10.9%

2008

98,710

8.4%

11.4%

2009

84,997

11.8%

9.0%

2010

113,924

12.1%

10.6%

2011

151,125

11.1%

12.4%

​2012

​162,429 ​11.2% ​12.0%
Source:  Central Department of Statistics & Information – Ministry of Economy & Planning
 
The previous table shows that Saudi industrial exports achieved a rapid growth rate over the past years. Value of these exports showed an annual growth rate of 15.3% during 1995-2012, increasing from about SR 22,558 million in 1995 to about SR 162,429 million in 2012. The significant increase in the industrial exports in 2003 and 2005 could be referred to the implementation of the GCC’s unified customs union, and the Kingdom's accession to the World Trade Organization (WTO), respectively. As for the industrial exports ratio to KSA's non-oil GDP, it increased from 6.7% in 1995 to 12% in 2012, indicating the importance of exports as a factor of industrial development.
 
 
With regard to the structure of the Saudi industrial exports, the following figure shows the chemical and plastic exports and other exports during 1995-2012.

 

              
 
 

The above figure shows that the chemical and plastic exports represent about two thirds of the total Saudi industrial exports. These exports have witnessed a rapid growth rate as their value rose from SR 15,621 million in 1995 to about SR 16,698 million in 1997. However, the value of these exports declined to a level of SR 12,718 million in 1999, due to a drop in oil prices. Then, it surged substantially after the development of the oil market and reached SR 124,459 million in the year 2012.

The other exports (non-chemical and plastic) have also enjoyed a significant growth rate during 1995-2012, jumping from about SR 6,937 million in 1995 to 37,970 million in 2012. The following table reflects a detailed picture of the Saudi industrial exports performance during 1995-2012. In addition to the chemicals and plastic sector, as shown in the same table, other exporting sectors include Foodstuffs, Base Metals & Articles of Base Metals, and Electrical Machines, Equipment & Tools. It is worth noting that most of these sectors’ exports achieved high export growth rates.


Saudi Industrial Exports by Major Sectors: 1995 – 2012

Sector Value of Exports
(SR Million)
Annual Growth(%) 
1995 2012 1995 - 2012
Foodstuffs

1,589

12,853

14.3%

Chemical & Plastic Products

15,621

124,459

16%

Base Metals & Articles of Base Metals

2,631

9,223

19.2%

Electrical Machines, Equipment & Tools

851

4,236

14.3%

Other Exports

1,866

11,658

14.9%

Total

22,558

162,429

15.3%

 Source: Central Department of Statistics and information , Ministry of Economy & Planning.
© Saudi Industrial Development Fund. All rights reserved 2013.
Last Update : 26/01/2015 G | 06/04/1436 H