Strategy Note /
Saudi Arabia

Saudi: The National Industrial Strategy – Summary, thoughts and ideas

  • An industrial economy that supports the diversification of the economy of Saudi.

  • The strategy has 136 initiatives including introducing specialized chemicals, plastic and rubber.

  • Offering  financing options and various incentives to investors

Iyad Khalid Ghulam
Iyad Khalid Ghulam

Head of Equity Research

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SNB Capital
20 October 2022
Published bySNB Capital

Summary

The Crown Prince launched the National Industrial Strategy, yesterday, which aims to drive industrial sector growth and achieve the goals set in Vision 2030 through 1) increasing industrial sector flexibility and competitiveness, 2) leading the industrial integration of value chain, 3) benefit from the strength of the Saudi economy, and 4) achieving global leadership in a group of selected commodities by investing in new technologies.

The strategy targets

  • An industrial economy that supports the diversification of the economy of Saudi, developing domestic products and increasing non-oil exports.

  • To triple manufacturing GDP by 2030, increasing industrial exports to SAR557bn. For advanced technology, the strategy aims to increase exports by 6 times.

  • Growing the investments in the sector to SAR1.3trn by increasing the number of factories from 10,700 to 36,000 by 2035f.

  • Creating more jobs. According to the Ministry of Industry, the sector currently has c1.0mn employees.

Initiatives and sectors

  • The strategy has 136 initiatives including introducing specialized chemicals, plastic and rubber.

  • Offering  financing options and various incentives to investors.

  • The strategy identified more than 800 investment opportunities with a focus on 12 industries including : food, pharmaceuticals, medical equipment and maritime industries.

Thoughts and ideas

  • We believe the strategy works hand in hand with other strategies in Saudi to support the industrial sector, such as NIDLP and Shareek Program.

  • Petrochemicals: The sector is expected to be a key beneficiary from the strategy. We expect more investments in the downstream products going forward, particularly from companies with strong balance sheet Such as SABIC, SIIG and Sipchem.

  • Banks: The sector is a key enabler to the growth of the sector. Banks with corporate-tilt are preferred such as Alinma, SABB and RIBL.

  • Construction: We believe construction and services companies will see a strong growth as demand for new facilities increase particularly, for steel, cement and other materials. This include Yamamah Steel, Zamil, Bawan, cement companies among others.

  • Food and Pharma: We believe Almarai and Pharmaceutical Company are the main companies that might benefit from the strategy.