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 Financing of Joint-Venture Projects

 

Since its inception, SIDF has spared no efforts in promoting the implementation of industrial joint venture projects. It firmly believes that Foreign Direct Investment (FDI) is considered an effective tool for the attraction and transfer of modern technologies to the Kingdom and creation of new employment opportunities for Saudi citizens.  In addition,  FDI has a crucial role in providing access for national products to export markets. Therefore, the Fund does not require Saudi partnership in these projects, as it also finances projects that are wholly owned by foreign investors. In this context, SIDF treats wholly foreign-owned projects on an equal footing with projects wholly or partly owned by Saudi investors.

 

The number of joint venture projects approved  by the Fund since its inception up to the end of the FY 1437/1438H (2016) totaled 717 projects, accounting for 24% of total number of approved projects.  The value of loans committed to these JVs totaled SR 53,329 million, representing 39% of the total value of SIDF approved loans. Foreign  partners' capital shares in these projects  represent 34%, 

 

It is worth mentioning that  the ownership of 134 projects of these JVs, for which SIDF provided loans amounting to SR 7,606 million, have  been wholly transferred to Saudi investors who have acquired their foreign partners' capital shares in these JVs,  after  operating successfully and generating enough cash flow to repay their debts in full.

 

The Chemical Industries sector surpassed all industrial sectors in terms of value of loans approved for JVs over the period from SIDF's inception to the end of FY 1437/1438H (2016), due to huge volume of capital invested in the projects in this sector. SIDF's approved loans to this sector accounted for about 52%, followed by the Engineering Industries sector (31%), and the Consumer Industries sector (8%).

 

During the reporting  year 1437/1438H (2016),  SIDF approved 15 loans to contribute in setting up 14 new industrial joint venture projects and expansion of one existing project. The value of these loans totaled SR 4,159 million, representing about 52% of the total Fund's approved loans during the year. eight loans  were provided  to finance projects in the Engineering Industries sector; four  loans to the Chemical Industries sector, and two loans for the Other Industries sectors and one loan for the Building Materials sector.

 

The SIDF-financed joint venture projects during the 1437/1438H (2016) created 10,608 new jobs, representing 51% of the total number of jobs provided by the projects financed by the Fund during the year 1437/1438H (20806 opportunities).