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 Industrial Development in Saudi Arabia



Industrialization in Saudi Arabia 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 government plans and efforts have an effective impact on the actualization of the industrial development achievements. In the following, we review 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 support 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 and investment volume of producing factories and the number of employees between 1974 and 2016, broken down by major sectors.


Operating Industrial Units by Number, Total Finances and Employees 1974 – 2016

Industrial ActivityFactory No.
Total Finance
(SR Million)
Manpower No.
1974201619742016 19742016
Manufacture of Food Products 23 790 73.4 58,922 122 151,311
Manufacture of Beverages 17 224 59.7 27,149 208 51,534
Manufacture of Textiles 1 97 0 6,917 0 17,882
Manufacture of Wearing Apparels 4 114 3.9 1,238 187 14,754
Manufacture of Leather & Related Products 1 32 0.6 526,8 9 2,602
Manufacture of Wood and Cork, Except Furniture 4 92 43.8 1,296 175 7,432
Manufacture of Paper and Paper Products 12 254 153.4 13,372 846 35,684
Printing & Reproduction of Recorded Media 9 43 56 2,642 18 5,827
Manufacture of Coke & Refined Petroleum Products 2 150 300 123,278 3,202 23,866
Manufacture of Chemicals & Chemical Products 12 738 1,804 532,430 1,578 93,022
Manufacture of Basic Pharmaceutical Products - 40 - 5,239 - 9,741
Manufacture of Rubber and Plastics Products 9 103 107.4 26,767 522 95,083
Manufacture of Other Non-Metallic Mineral Products 24 1,623 1,499 102,227 1,813 198,095
Manufacture of Basic Metals 2 333 3.6 74,187 29 69,567
Manufacture of Fabricated Metal Products 32 1,097 133 23,927 600 118,331
Manufacture of Computer, Electronic and Optical Products 3 52 27.8 2,931 217 10,185
Manufacture of Electrical Equipment 7 232 2.4 18,321 40 39,984
Manufacture of Machinery and Equipment N.E.C. 9 224 9.1 36,783 5 35,785
Manufacture of Motor Vehicles, Trailers and Semi-Trailers 7 153 6.3 2,893 25 14,132
Manufacture of Other Transport Equipment 1 10 0.1 1,052 0 4,6663
Manufacture of Furniture 22 323 39.4 3,132 509 26,357
Other Manufacturing 4 74 24.5 1,937 91 11,894
Repair and Installation of Machinery and Equipment 1 3 0.2 10,9 13 141

Source: Ministry of Energy, Industry, and Minerals



As indicated in the table, the industrial base in the Kingdom has expanded widely over the past four decades. The number of operating industrial units has increased from 206 in 1974 to 7,741 in 2016. Parallelly, invested capital has increased from nearly SR 4.3 billion in 1974 to more than SR 1.1 trillion in 2016. At the same time, the number of employees has increased from around 10 thousand in 1974 to more than 1 million in 2016.

Looking into the sectoral composition of the operating industrial units in the Kingdom at the end of 2016, we note that the Other Non-Metallic Minerals sector is heading all other sectors in terms of operating industrial units, with a number of 1,623 factories, representing 21% of total operating ones. Manufacture of Plastics, Chemicals and Chemical Products sector occupied the leading position among other industrial sectors in terms of total finances at about SR 532 billion, representing 50% of total finances of operating factories; followed by Manufacture of Coke & Refined Petroleum Products sector, with SR 123 billion, representing 12% of total investment of operating factories. The Other Non-Metallic Minerals sector headed all other Sectors in terms of the number of employees, at 198 thousand workers, representing 19% of total employment in the operating factories.

(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 32 billion in 1974 to more than SR 310 billion at the end of 2016. Also, the growth rate of the manufacturing industries continued to increase throughout this period at an average of 5.6% per annum, which is considered one of the highest among 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 3% in 1974 to 12% at the end of 2016. Parallelly, the contribution of the manufacturing industries sector in the non-oil GDP increased from 15% in 1974 to 22% in 2016. 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: General Authority for Statistics 
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 32% in 1974 (at constant prices) until it reached 69% by the end of 2016. This trend reflects the dynamism of the Saudi manufacturing 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 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 mix of manufacturing industries, (excluding oil refining). Other sectors that have been showing a notable growth include Machinery and Equipment sector, Building Material sector, and Food Products sector. At present, these four sectors represent the major part of the Saudi manufacturing 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 the expansion of production base and diversification of income sources. Despite the relative recentness of industry in Saudi Arabia, particularly the experience of the 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 given 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 non-oil industrial exports during the period from 1995 to 2016.

Progress in the Saudi Non-Oil Industrial Exports: 1995 – 2016


Industrial Exports (SR' Million)

% of Total Exports

% of Non-Oil GDP


 Source:  General Authority for Statistics.


The previous table shows that Saudi industrial exports achieved a rapid growth rate over the past years. The value of these exports showed an annual growth rate of 9.3% during 1995-2016, increasing from about SR 22,558 million in 1995 to about SR 145,911 million in 2016. The significant increase in the industrial exports in 2003 and 2005 could be attributed 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 6.6% in 1995 to 8.1% in 2016, 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 1995-2016.


 Source: General Authority for Statistics

The above figure shows that the chemical and plastic exports represent more than two-thirds of the total Saudi manufacturing 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 104,519 million in the year 2016. The other manufacturing exports (non-chemical and plastic) have also enjoyed a significant growth rate during 1995 - 2016, rising from about SR 6,937 million in 1995 to 41,392 million in 2016.