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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, Investment and Number of Employees

The government has attached great importance to the 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 2011, broken down by major sectors. 
 
    Number of Operating Industrial Units and Size of their Investments and Number of Employees 1974 – 2011
Industrial Activity Factory No. Finance
(SR Million)
Manpower No.
1974 2011 1974 2011  1974 2011

Manufacture of food products and beverages

39 785 2,028 42,117 7,199 122,589

Manufacture of textiles

 1 95 20 5,469  60 16,620

Manufacture of wearing apparel; dressing and dyeing

2 84 38 980 249 10,031

Tanning and dressing of leather; manufacture of luggage, handbags, saddlery, harness and footwear

2 44  7 622  50 3,946

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

4 64 65 3,062 839 8,241

Manufacture of paper and paper products

9 168 177 8,440  843 25,173

Publishing, printing and reproduction of recorded media

18 114 809 3,921 2,594 10,479

Manufacture of coke, refined petroleum products and nuclear fuel

4 97  364 200,802 3,487 27,893

Manufacture of chemicals and chemical products

9 555 2,954 82,399 2,429 64,120

Manufacture of rubber and plastics products

11 542 522 12,741 1,895 49,460

Manufacture of other non-metallic mineral products

25 815 3,771 54,749 3,780 91,273

Manufacture of basic metals

24 305 234 40,984 2,801 44,318

Manufacture of fabricated metal products, except machinery and equipment

9 462 160 13,705 931 50,014

Manufacture of machinery and equipment n.e.c.

12 216 808 6,708 4,357 28,417

Manufacture of office, accounting and computing machinery

- 5 - 660 - 2,704

Manufacture of electrical machinery and apparatus n.e.c.

2 146 127 12,359 464 26,830

Manufacture of radio, television and communication equipment and apparatus

- 20 - 1,015 - 2,854

Manufacture of medical, precision and optical instruments, watches and clocks

2 18 1 350 33 1,052

Manufacture of motor vehicles, trailers and semi-trailers

8 132 78 2,226 622 12,278

Manufacture of other transport equipment

- 18 - 712 - 1,692

Manufacture of furniture; manufacturing n.e.c.

17 346 170 11,148 1,295 34,279

Recycling

- 48 - 1,851 - 3,616

Total

198 5,043 12,333 507,020 33,928 637,879
Source: Operational Industrial Projects System (OIPS).

As indicated in the previous 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 (5,043) in 2011. Parallelly, invested capital has increased from SR 12 billion in 1974 to about SR 507 billion in 2011. At the same time, number of employees has increased from (34,000) in 1974 to (638,000) in 2011.

Looking into the sectoral composition of the operating industrial units in the Kingdom at the end of 2011, we note that the Other Non-Metallic Minerals Sector is heading all other sectors in terms of operating industrial units (815) representing 16% of total operating ones.  The Refined Petroleum Products sector also occupied the leading position among the other industrial sectors in terms of  size of investments (SR 201 billion) representing 40% of total investments of operating factories, followed by the Manufacture of Chemicals & Chemical Products Sector with SR 82 billion representing 16% of total investment of operating factories. The Food and Beverages Sector headed all other Sectors in terms of the number of employees (122,589 workers) representing 19% of total employment in the operating factories.

Providing modern industrial cities is an additional form of support 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 theses cities in collaboration with the private sector. Table below shows total areas and developed areas of the existing industrial cities in the Kingdom.

Here we have to note that the figures in the following table do not include areas of the two major industrial cities of Jubail & Yanbu, in addition to industrial cities of the oil refineries that are belonged to ARAMCO.  The two industrial cities of Jubail & Yanbu are considered strategic locations for hydrocarbon and energy intensive industries to develop and exploit the Kingdom’s natural advantage by higher rates of economic efficiency. Areas under the two industrial cities (Jubail and Yanbu) are estimated at (115) and (161) square kilometers respectively, including a number of basic industrial plants, secondary industrial plants, supporting industrial plants, as well as full-service residential compounds that include housing, schools, hospitals, clinics, recreation centers, roads and other necessary utilities.

Developed and Total Areas of Existing Industrial Cities in Saudi Arabia

Industrial City Developed Area (M2 000) Total Area (M2 000)

Riyadh

18,500 21,000

Jeddah

14,500 45,000

Dammam

38,000 76,200

Al Hassa

1,500 1,500

Qassim

1,500 5,500

Zulfi

1,000 18,000

Shagra

1,000 9,600

Sidair

12,000 260,000

Makkah

730 730

Madinah

2,500 10,000

Al Kharj

5,500 100,000

Assir

2,600 2,700

Taif

3,000 11,000

Al Jouf

750 3,000

Aarar

1,000 2,000

Tabuk

1,400 4,000

Hail

1,000 2,500

Najran

800 6,500

Jazan

1,000 39,500

AlHai’er

2,000 5,000

AlBaha

1,000 3,000
Total 111,280 626,730

Source: Saudi Industrial Property Authority (Modon).
 

(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 124 billion at the end of 2011. Also, the rate of the manufacturing industries' growth continued to increase throughout this period, at an average of 6% annual growth rate, which is considered 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 13.3% at the end of 2011. Parallelly, the contribution of the manufacturing industries sector in the non-oil GDP increased from 7.8% in 1975 to 18.3% in 2011. 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.
Source: SAMA – Annual Report # 48
 
 

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 (82%) by the end of 2011. 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 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 penetration of international markets, and gave a positive image of the Saudi products in terms of quality and price. The table below shows the growth of the values and contributions of Saudi industrial exports during the period from 1995 to 2011.


Progress in Saudi Industrial Exports: 1995 – 2011.     

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%

9.4%

2005

60,000

8.9%

10.8%

2006 

70,044

8.9%

11.6%

2007

83,311

9.5%

13.0%

2008

98,710

8.4%

14.3%

2009

84,997

11.8%

11.5%

2010

113,924

12.1%

14.2%

2011

151,125

11.1%

16.4%

Source:  Central Department of Statistics & Information – Ministry of Economy & Planning

The previous table shows that Saudi industrial exports achieved a rapid growth over the past years. Value of these exports showed an annual growth rate of 15.7% during 1995-2011, increasing from about SR 22,558 million in 1995 to about SR 151,125 million in 2011. The significant increase in the industrial exports in 2003 and 2005 could refer to the implementation of the GCC unified customs union, and the Kingdom's accession to the World Trade Organization (WTO), respectively. As of the industrial exports ratio to KSA's non-oil GDP, it grew from 6.7% in 1995 to 16.4% in 2011, indicating the importance of the exports as a factor of industrial development. 

With regard to the structure of the Saudi industrial exports, the following figure shows the petrochemical exports versus other exports during 1995-2011. 

 

              Source: Central Department of Statistics and information, Ministry of Economy & Planning

The above figure shows that the petrochemical exports represent about two thirds of the total Saudi industrial exports. These exports have witnessed a rapid growth as their value grow 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 drop in oil prices. Then, it surges strongly after the development of the oil market and reached SR 114,898 million in the year 2011. 

The other non-petrochemical industrial exports have also experienced a good growth during 1995-2011, jumping from about SR 6,937 million in 1995 to 36,227 million in 2011. The following table reflects a detailed picture of the Saudi industrial exports performance during 1995-2011. In addition to the petrochemical sector, as shown in the same table, other exporting sectors include Food Industry, Basic Metals Industries, and Machinery and Equipment Industry. It is worth noting that most of these sectors achieved high export growth rates.


Saudi Industrial Exports by Major Sectors: 1995 – 2011

Sector Value of Exports
(SR Million)
Annual Growth(%) 
1995 2011 1995 - 2011
Food Products

1,589

12,605

15.0%

Chemical & Plastic Products

15,621

114,898

16.4%

Basic Metals & Fabricated Industries

2,631

8,395

19.7%

Machinery & Electrical Equipment

851

3,944

14.7%

Other Products

1,866

11,283

15.6%

Total

22,558

151,125

15.7%

Source: Central Department of Statistics @ Ministry of Economy & Planning .
© Saudi Industrial Development Fund. All rights reserved 2013.
Last Update : 14/04/2013 G | 04/06/1434 H