MODON

Saudi Industrial Property Authority

Atlanta

Outline

• Saudi Arabia Economy

• National Industrial Strategy Vision & Objectives

• MODON in Brief

• Investment Incentives

• Our Clients

• Our Industrial Cities

• MODON Supply chain Projects

• MODON’s Infrastructure Projects

Saudi Arabia Economy

1994 - 2009

• One of the world’s 25 largest economies (23rd )

• The largest economy in the MENA region.

• Represents 25% of total Arab GDP

• It has 25% of worlds oil reserves

• The industrial sector: 13% of the GDP. Projected: 20% by 2020.

• Ranked 4th world wide for fiscal freedom.

VisionVision

"A globally competitive industry, based on innovation and acting as a major tool in

transforming national resources into sustainable wealth"

Key strategic goalKey strategic goal

"To increase the contribution of the manufacturing sector to the GDP

to 20% … "

"Manufacturing is our strategic choice todiversify the economy"

Source: KSA Natinal Industrialization Strategy document, Factiva

NIS, manufacturing identified as a key development sectorGoal is to diversify away from oil and gas and develop human capital

Manufacturing as percentage of GDP (2009)

40

30

20

10

0

Canada

2%

Hong Kong

3%

Algeria

5%

Norway

10%

Greece

10%

Turkey

12%

France

12%

KSA

13%

UK

13%

United States

13%

Egypt

16%

South Africa

17%

Ger-many

21%

Japan

21%

Korea

25%

Singa-pore

27%

Thai-land

35%

Reaching NIS strategic goal would position KSA in the league of Germany and Japan

1. Manufacturing defined as all activities under ISIC classification, Code D Note: Manufacturing value added (MVA) measures contribution of an entity to the whole manufacturing GDP of economy. MVA = Manufacturing GDP – taxes + subsidies on manufacturingSource: Nation master; BCG analysis

20% GDP contribution by 2020

NIS strategic goal to be achieved by reaching four targets

Four targets help reach strategic goal of 20% manufacturing contribution by 2020

Four targets help reach strategic goal of 20% manufacturing contribution by 2020 Four targets are interrelatedFour targets are interrelated

GDP 3x

Increasing manufacturing GDP threefold

Manufacturing Saudization

-> 30%

Increasing share of Saudi labor in manufacturing to 30%

Share of techman products

-> 60%

Increasing share of "technology"/value addmanufacturing products

to 60%

Share of exportsin man-> 35%

Increasing share of exports revenues versus domestic

revenues to 35%

Grow Man. GDP

1

2

3

4

1

Employment

Saudi employment

More export oriented sectors

More valueadd sectors

3 4

More Saudi

involve-ment "nice

jobs"

More Saudi

involvement "int'l jobs"

More jobs

More jobs for Saudis

2

Source: KSA National Industrialization Strategy document; BCG analysis

Eight improvement axes identified to achieve NIS targets

DescriptionDescriptionNIS axesNIS axes

• Improve macro-economic policies (i.e., monetary and fiscal policies, wages)• Stabilize micro-economic indicators (to attract local and foreign investments)• improve trade policies and market competition

Overall business environment

• Stimulate industrial diversification and achieve balanced development• Important factors behind industrial development• Stimulate innovation and development by sharing skills

Industrial complexes

• More attention should be devoted to SMEs (i.e., industrial SMEs support, industrial SMEs incubation, business resources center, competitiveness development and industrial modernization center, industrial financing mechanisms)

Business communityand SMEs

• Link R&D efforts with development processes (i.e., linking science and technology network with innovation in industrial companies, linking educational output to labor market needs)

• Promote innovation in small and medium scale industrial facilities

Industrial innovationand productivity

• Ensure the availability of technically and scientifically qualified and well-trained resources• Train personnel to deal with, develop, and maintain modern machinery and equipmentsHR development

• Develop infrastructure in the traditional industrial regions and the new industrial cities/zones• Enhance provision of industrial services and supportive activities (i.e., handling, shipping, storage)

Infrastructure andlogistics support

• Move the Kingdom towards higher technology-content industries• Provide continuing support for the development of existing industries which have earned

successful comparative and competitive advantages (i.e., petrochemicals)

New industryverticals

• Manage the implementation of NISGovernance mechanism

1

2

3

4

5

6

7

8

Source: NIS; BCG analltsis

MODON In Brief

• History Established in 2001. Independent, self-funded public organization.

• Roles Regulate, develop and promote industrial properties

and technology zones.

• Facts Overseas 75 million m2

34.5 million m2 developed during the last 3 years. More than 300,000 Jobs. More than 3,000 factories

MODON In Brief

1970-1975

1976-1990

1991-2000

2001-2007

2008-2010

2010-2015

020000400006000080000

100000120000140000160000

Thou

sand

m2

Increase Industrial Lands to 150 million m2 in 2015

1967 - 1975

1976 - 1990

1991 - 2000

2001 - 2007

2008 - 2010

2010 - 2015

0

20,000

40,000

60,000

80,000

100,000

120,000

140,000

160,000

Investment Incentives

Competitive Advantages

Integrated Infrastructure

Biggest Attractive Market in ME

Governmental Services Centers

Housing & Commercial Centers

Least Rental Rates in GCC

Center of ME

Industrial Cities widespread

Modern Industrial Cities

Incentives

SAR 1 / square meter / year

Electricity rates:

$0.04 / KW

Custom exemption (for equipments &

raw materials)

Government financing up to 75%

Our Clients

Our Clients - International

Existing Industrial Cities

1. Riyadh 1

2. Riyadh 2

3. Jeddah 1

4. Jeddah 2

5. Dammam 1

6. Dammam 2

7. Makkah

8. Madinah

9. Qaseem

11. Al- Ahsa

11. Assir

12. Al- Jouf

13. Tabuk

14. Hail

15. Najran

16. Jazan

17. Rabigh

18. Al-Kharj

19. Ar’ar

Existing Industrial Cities

Cities Under Development

1. Riyadh 3

2. Jeddah 3

3. Dammam 3

4. Al-Zulfi

5. Qaseem 2

6. Al-Baha 1

7. Shaqra

8. Sudair

9. Hafer al batten

Cities Under Development

Cities Under Planning

1. Jeddah 4

2. Salwa

3. Al-Baha 2

4. Military Industries Complex (Al Kharj)

Category #

Existing 19

Under Development 9

Under Planning 4

Factories 3,000+

Labor 300,000+

MODON Statistics

MODON in Pictures

MODON Supply chain Projects – 3PL – Containers terminal– Dry Port– Rail freight

MODON’s Infrastructure ProjectsInternational Codes in Standard & Specification

• Roads ASTM AASTHO

• Utility ACI BS ASA ASCE

Infrastructure projects during the past 4 years

Infrastructure projects within 5 years of future

Study / Survey 80,000,000 $

Development 1,330,000,000 $

Rehabilitation 270,000,000 $

Utilities & services Setup 1,400,000,000 $

Total 3,080,000,000 $

22%

36%

7%

36%

Infrastructure projects in the next 5 years

Thank You

modon.gov.sa

www.modon.gov.sa920000425