The sweeping changes announced in Vision 2030 aim at giving rise to a reinvigorated and prosperous private sector, driving growth through broad industrial development. By the time the G20 summit convenes in Riyadh in 2020, four years after the Vision 2030 announcements, the country’s leaders will be able to showcase some of the first results of the new agenda, as detailed in the National Transformation Programme (NTP).

There are high expectations of the individual reforms, as policymakers work to meet key performance indicators (KPIs) outlined in the NTP’s second iteration, dubbed NTP 2.0. However, driving and managing structural change can be challenging, particularly when some of those reforms rely on market forces and on stimulating investors who are typically cautious when confronted by uncertainty. Whether they be Saudi citizens or international businesses, the pace of reform means investors have had to evaluate the value proposition of establishing a business in the Kingdom, as factors such as land availability, labour costs, levies, legal frameworks and fuel prices have all been subject to change. Nevertheless, there are clear opportunities. Mega-projects such as the Sadara Petrochemicals Complex are producing raw materials that can spawn new manufacturing plants, while the consumer habits of a growing, young and affluent population are creating fresh markets for innovative service industries. Furthermore, in 2019 the government indicated a significant increase in capital expenditure, up 20% from SR205bn ($54.7bn) in 2018 to SR246bn ($65.6bn).

Structure & Oversight

Coinciding with the publication of Vision 2030, there was a restructuring of government ministries by royal decree in May 2016, and since then some new agencies and funds have been formed to coordinate and drive certain reforms in the sector. The Ministry of Energy, Industry and Mineral Resources (MEIM) supervises industry and mining as well as oil, gas, petrochemicals and electricity. The minister, Khalid Al Falih, is also chairman of the board of directors at oil company Saudi Aramco. Before the 2016 reshuffle the industry brief was handled by the Ministry of Commerce and Investment (MOCI). The MOCI still exists and is responsible for a range of state services, including the development and oversight of commercial laws, registration of commercial entities, regulation of domestic markets, approval and licensing of government contractors, and oversight of trademarks and intellectual property. The consolidation announced in 2016 underlined the close ties many industries have to the energy sector, but also acknowledged the diversification of Saudi Aramco’s business to include chemicals as well as crude oil and gas.

Prior to recent reforms, a number of supreme councils oversaw many aspects of government policy, but in January 2015 these were folded into a streamlined body called the Council of Economic and Development Affairs (CEDA). CEDA is chaired by Crown Prince Mohammed bin Salman bin Abdulaziz Al Saud, and the 23 places on its board are occupied by leading ministries as well as by members of the Council of Ministers. In June 2016 the role of the Ministry of Economy and Planning was amended to give it responsibility for monitoring and assisting 16 ministries in delivering the objectives of Vision 2030, as well as helping the private sector to play a role in achieving those goals.

Industrial Investment

The Saudi Arabian General Investment Authority (SAGIA) is an essential gateway for all international investment in the Kingdom. SAGIA can provide potential investors with market intelligence; connections to local businesses, such as suppliers; and coordinate site visits and meetings with ministers and other key stakeholders. The Saudi Authority for Industrial Cities and Technology Zones (MODON) is responsible for the development and managing of government-owned industrial land and property. There are 3290 factories and 6161 licensed contracts collectively employing 387,000 people at its existing sites, with investment in MODON’s industrial cities valued at a total of SR500bn ($113.3bn). MODON runs 35 industrial city sites and is also developing two technology zones.

Meanwhile, the Saudi Industrial Development Fund (SIDF) was established in 1974 as a state financial institution to provide medium- and long-term loans to foster the development of industrial projects. SIDF also plays a key role in assisting small and medium-sized enterprises (SMEs) in the Kingdom through Kafalah, the SME loan guarantee scheme. In 2017 a National Development Fund (NDF) was established to oversee bodies including SIDF, the Agricultural Development Fund, the Social Development Bank (SDB) and the Human Resources Development Fund. The Kingdom’s sovereign wealth fund, the Public Investment Fund (PIF), is a major shareholder in many state-owned enterprises, and it has plans to step up its investment portfolio in the country. In October 2018 the head of the PIF told the Future Investment Initiative in Riyadh that the domestic-to-international ratio for its investments was 10:90, but that there were plans to make this 50:50 by 2030, by which time the PIF aims to have increased its total assets from $400bn to $2trn. The PIF and NDF planned to spend SR83bn ($22.1bn) and SR50bn ($13.3bn), respectively, in the country in 2018, in addition to capital expenditure outlined in that year’s fiscal budget.


Industrial policy as outlined in Vision 2030 aims to create economic growth fostered by an education system that is closely aligned to industry’s needs, feeding into a business-friendly society in which entrepreneurs are able to pursue opportunities and create jobs across a broad range of sectors. Cutting government red tape and the privatisation of some government services are also seen as key measures if the country is to attract talent and investment. The NTP has targets for 2020 based around eight themes, two of which have implications for industry, namely, labour reform and bolstering the private sector. The NTP’s chapter on labour reform lists four strategic objectives, eight main KPIs, 10 subindicator KPIs and 24 initiatives, while the chapter on bolstering the private sector has seven strategic objectives, 15 main KPIs, 41 subindicators and 74 initiatives. Employment reforms are designed to enhance the role of women in the workplace, help disabled people find jobs, and improve the Kingdom’s ability to attract and retain talent.

Under the umbrella of Vision 2030, 12 Vision Realisation Programmes were to be developed to deliver on specific aspects of the strategy, among them the National Industrial Development and Logistics Programme (NIDLP). In 2018 new details about the function and scope of the NIDLP were revealed. It was said to be anticipating SR1.7trn ($432.2bn) of investment through measures that would integrate the mining, energy and logistics industries. In April 2018 CEDA took a step towards realising the ambitions contained in Vision 2030 by approving the Privatisation Programme Delivery Plan, which aims to raise SR35bn ($9.3bn) to SR40bn ($10.7bn) by 2020 through the privatisation of five state-owned entities. The National Centre for Privatisation was established to oversee this process. The five areas identified for privatisation were: the Saline Water Conversion Corporation’s desalination assets, including the Ras Al Khair station; four stateowned flour mills; all Saudi sports clubs; Saudi Post; and a number of transport projects.


The non-oil private sector’s contribution to GDP grew each year from 2011 to 2018. At constant prices, its contribution was SR811.6bn ($216.4bn) in 2011 and reached SR1trn ($266.6bn) by 2017, according to data from the General Authority for Statistics (GaStat). In real terms, the private sector’s strongest annual growth in recent years was in 2011, when it reached 8.1%. Following this, growth eased to 5.62%, 7% and 5.38% in 2012, 2013 and 2014, respectively. In 2015, 2016 and 2017 growth dropped to 3.41%, 0.07% and 1.20%, as the impact of the fall in oil prices filtered through to state expenditure.

The private sector’s contribution to GDP at current prices also grew between 2011 and 2017, from SR852.3bn ($227.2bn) to SR1.2trn ($319.9bn). At current prices, annual increases were necessarily larger; growth peaked at 13.52% in 2011, before declining each year to 1.15% in 2016, and then picking up slightly to 1.26% in 2017. By the third quarter of 2018 non-oil private sector growth reached 4.3% year-on-year at current prices and 2.1% in constant prices. This equated to a contribution of SR261.1bn ($69.6bn) at constant prices and SR328bn ($87.4bn) at current prices. In that quarter manufacturing accounted for 12.9% of GDP at current prices. The sector’s contribution can be subdivided to show petroleum refining at 3.8% and other manufacturing at 9.1%. Meanwhile, crude oil and natural gas contributed 30%, while other types of mining and quarrying accounted for 0.4%.


Saudi Arabia’s industrial development has been driven by the need to optimise the value of crude oil and natural gas reserves, and to cater for a population that has grown rapidly over the last 45 years, from 7m in 1974 to 33.4m in 2019. The availability of cheap and abundant crude oil, as well as significant quantities of natural gas, led to downstream development of the refining, petrochemicals and plastics industries, while both oil and gas made the development of heavy metal industries both viable and profitable.

The comparative value of each segment of industry can be illustrated by the export revenue they generate. In 2017 oil and oil-based exports were worth 77% of the total value of exports, or SR640bn ($170.6bn) out of SR831.9bn ($221.8bn). However, goods produced as a by-product of the oil industry accounted for 61% of the value of all non-oil exports. In terms of international export categories, plastic and rubber articles accounted for 33.7% of non-oil exports, while the products of chemical industries generated 27.6% of non-oil export revenue. Base metal exports contributed 7.8% of total non-oil exports. The value of exports, both oil and non-oil, was boosted by rising prices for crude oil and petrochemicals products in the first three quarters of 2018, although prices fell in the final quarter of the year. The country’s largest listed company, Saudi Basic Industries Company (SABIC), saw a 20% increase in gross profits in the first nine months of the year when compared to the same period in 2017. SABIC is the world’s fourth-largest petrochemicals business and had sales of SR128.9bn ($34.4bn) in the first three quarters of 2018, 17.8% higher than the equivalent period in 2017.

The picture was more mixed for listed companies serving the domestic market. Almarai Foods reported a 4.7% fall in operating profit, to SR2.46bn ($6.6bn), and a 7.9% fall in consolidated profit, to SR2bn ($533.2m) in 2018. It partly attributed this decline to rising costs of alfalfa imports and lower sales of milk and juice in light of reduced expatriate numbers in the Kingdom. Savola Group, Almarai’s leading shareholder and a conglomerate with businesses in the food and food retail segment, saw its net profit fall by 99% in the first three quarters of the year, to SR5.6m ($1.5m), down from SR1.1bn ($293.2m) in the same period in 2017. Although rising oil and petrochemicals prices in the first three quarters boosted overall economic output in Saudi Arabia, the industrial sector’s performance against some of the most ambitious targets for 2020 outlined in the NDP were more muted. In the seventh theme of the NDP, focused on enabling the private sector, for example, progress has been patchy. The 2016 baseline and 2020 targets for foreign direct investment (FDI) inflows as a percentage of GDP were 1.3% and 1.46%, respectively, but data for 2017 released by the UN Conference on Trade and Development showed FDI had fallen to 0.8% of GDP. According to the World Bank’s “Doing Business 2019” report, Saudi Arabia made some progress against its NDP target of improving its 2018 score of 62.5 to 79 in 2020, achieving an increase to 63.5, which ranked it in 92nd place out of 190 countries. “Doing Business 2019” measures how easy it is for a locally founded business in Riyadh to start trading and operate effectively in its dealings with government agencies, the legal framework and financial bodies. The report noted the Kingdom improved in seven out of 10 indicators: starting a business, dealing with construction permits, getting electricity, registering property, protecting minority investors, trading across borders and enforcing contracts. Although a bankruptcy law was passed in August 2018, this was not reflected in the country’s 2019 ranking of 168th of 190 for resolving insolvency.


Another key theme of the original Vision 2030 plan is for Saudi Arabia to leverage its location at the crossroads of three continents, and in the process, boost its ranking in the World Bank’s Logistics Performance Index (LPI), from 49th out of 159 in 2014 to 25th by 2030. In 2018, however, its position slipped to 55th. The country’s best performance in the LPI was in 2012, when it was ranked 37th. According to the latest report from the World Bank, the country’s scores on six indicators declined between 2012 and 2018, among them Customs clearance, infrastructure, logistics competence and timeliness.

The World Economic Forum’s “Global Competitiveness Report 2018”, published in October 2018, showed Saudi Arabia’s rank had slipped to 39th out of 140 countries, compared to 30th out of 137 in 2017 and 29th out of 138 in 2016. The report noted that Vision 2030 reforms should increase private sector dynamism once completed and also foster greater innovation capability. In December 2018 Emirates NBD noted that its purchasing managers index (PMI) fell to 54.5 from 55.2 in November. The accompanying report stated that the average PMI score in 2018 had been 53.8, compared to an average of 58 over the previous eight years, the weakest average annual performance in that period. The output score in December was 58.2 compared to the 2018 average of 57.6, and new orders were 58.4, higher than earlier in 2018. Emirates NBD, one of the largest banking groups in the Middle East, reported that new export orders were weak, at 50.3, suggesting domestic demand was driving the bulk of new orders.

Emerging & Target Industries

Although the main economic thrust of Vision 2030 is diversification, consolidation also became a feature of the strategy in 2018, with the news that Saudi Aramco was to acquire the PIF’s majority stake in SABIC for $70bn. The stateowned oil company already has significant interests in petrochemicals, but the move appears to signify an even more meaningful diversification for the company. While the deal would initially raise significant funds for the PIF, the combined company is likely to return to the fold in the near future; the PIF is expected to take control of Saudi Aramco before an initial public offering planned for 2021 in order to use revenue from the sale of a 5% stake to fund new investment in the economy.

Both Saudi Aramco and SABIC have set corporate targets to increase the proportion of goods and services they buy from businesses in the country. In 2015 Saudi Aramco established its In-Kingdom Total Value Added (IKTVA) initiative with the aim of sourcing 70% of its supplies from Saudi businesses by 2021, and at its fourth annual IKTVA Forum and Exhibition in November 2018 it signed deals worth $27.5bn with Saudi firms.

Although SABIC has not published the proportion of supplies it buys within Saudi Arabia, the company did establish a Local Content Business Development Unit in January 2017, and during the course of that year it developed 12 downstream business initiatives and invested SR2.3bn ($613.2m) in 22 new business opportunities. Industrial parks have been built adjacent to both Petro Rabigh and Sadara, Saudi Aramco’s major petrochemicals joint-venture sites, so new downstream businesses can be established to convert a wider range of materials into consumer products, some of which have never been manufactured in the region.

MODON is also focusing on the development of new industries at its industrial parks, and among its recent developments is a 4.5m-sq-metre site designed to capitalise on the phosphate mine in Waad Al Shamal. The site also plays host to the first power plant to use a gas turbine manufactured in the Kingdom, a General Electric (GE) 9E, built at the firm’s factory in Dammam. The Dammam plant is a joint venture between GE and Dussur, formerly known as the Saudi Arabian Industrial Investments Company. The PIF owns 50% of Dussur, and Saudi Aramco and SABIC each hold a 25% stake. The downstream developments being pursued by Saudi Aramco and SABIC are creating opportunities for vertical diversification of the economy, but horizontal diversification is also taking place. In the 2019 budget SR36bn ($9.6bn) of government spending was earmarked for Vision 2030 initiatives in sectors including housing, mining, manufacturing and entertainment. “Military manufacturing and utilities are two non-oil sectors that are likely to grow in the near future,” Abdullah Alkhorayef, CEO of Alkhorayef Commercial, told OBG. “This will mostly be driven by the localisation of Saudi Arabia’s extensive defence relationships with the UK and the US, as well as the unprecedented energy requirements of mega-projects like NEOM,” he added.


In January 2019 local media reported that construction work on the $500bn NEOM city development would begin in the first quarter of 2019, with the first phase due to be completed by 2020 and the seaside city to be fully finished by 2025. An ambitious project set to cover an area almost the size of Belgium, the city’s name is a combination of the Greek prefix neo (meaning “new”) and the letter M, an abbreviation of the Arabic word mustaqbal (meaning “future”). The announcement was a welcome development for industries supplying the construction sector in the Kingdom. In a report on the cement industry published in February 2018, Riyad Capital, a Saudi investment bank, noted production and dispatches of cement peaked at 61m and 60m tonnes, respectively, in 2015, but that from 2014 to 2017 net income fell by a compound annual growth rate of 32%, with revenue down 17%, prices per tonne down 11% and almost SR50bn ($13.3bn) wiped off the value of listed cement companies. In 2018 the downward trend continued; dispatches fell by 4.1% to 45.28m tonnes, the lowest annual volume since 2010.

Construction is already under way at another of the Kingdom’s so-called giga-projects, the entertainment city Qiddiya, a 334-sq-km project being built 40 km from Riyadh. The foundation stone was laid in April 2018, the first phase is due to open in 2022 and final completion is slated for 2035. In the same month the General Entertainment Authority announced that the project would inject $65bn into the Saudi economy by 2030.

Innovation & Research

The World Intellectual Property Organisation ranked Saudi Arabia 61st in its 2018 Global Innovation Index (GII), a fall of six places when compared to the previous year. The GII compared 126 countries and found that, relative to other countries in North Africa and western Asia, Saudi Arabia performed above average in innovation inputs such as human capital and research, infrastructure, market sophistication and business sophistication. Saudi Arabia is ranked 104th in the world in the innovation efficiency ratio, which measures how well inputs into research are translated into outputs; the Kingdom’s ranking declined from 96th in 2017 and 85th in 2016. The country’s overall rank for creative outputs is 83rd, while it is in 115th place for trademarks by origin and 103rd for industrial design by origin. The GII report noted that one reason behind Saudi Arabia’s lower ranking was that there was a lack of available data on, for instance, gross domestic expenditure on research and development (R&D) as a percentage of GDP, which meant a score could not be given for that category. Another aspect of the Kingdom’s innovation ecosystem that might prevent research and good ideas being transformed into new products and services is a comparative lack of venture-capital (VC) funding for start-ups. The IMF noted in August 2018 that Saudi Arabia accounted for 8% of VC investment volumes in the MENA region in 2016. The GII report did highlight that the PIF’s fund of funds has capital of SR4bn ($1.1bn) and that small businesses can raise credit through SIDF and the SDB.


The Kingdom is also set reap the benefits its of international investment in technology and startups. In May 2017 the PIF put $45bn into SoftBank’s Vision Fund, and then in 2018 pledged to match that amount in a second fund also focused on the technology sector. According to an article published in October 2018 on business newssite Quartz, Saudi bodies had spent at least $6.2bn on Silicon Valley investment rounds over the previous five years, equivalent to a dozen investments a year since 2012. From 2008 to 2017 Saudi Aramco made 16 investments in the US, with four of them being in tech; the PIF made six, four of them in tech; Kingdom Holding made two, one in tech; and Riyadh’s Vision Venture Capital made one tech investment. Eight of these Saudi investments in the US were in industrial manufacturing, six were in machine learning and virtual reality, six were in chemicals and materials, three were in aerospace, and two were in leading rideshare platforms Uber and Lyft.

Thus, while smaller start-ups may find funding for innovation comparatively hard to secure, Saudi Arabia’s bigger companies are investing widely in R&D. In its 2017 annual report SABIC noted it had 2150 employees around the world working on 690 research projects at 21 different research centres. In 2017 the company’s scientists and engineers submitted 741 new invention disclosures and 992 new patents were granted. SABIC and Saudi Aramco are also using new technology to develop a $20bn crude-oil-to-chemicals plant at Yanbu, the first of its kind in the industry. The chemicals company Tasnee’s Technology and Innovation Unit developed five titanium products, three petrochemicals products and three plastics products in 2017, and a trading company was established to market and develop new plastics products. The company also worked with NIPRAS Centre in Jubail to test plastic products. The company’s spending on R&D increased from SR124,000 ($33,100) in 2016 to SR132,000 ($35,200) in 2017. Research projects in 2017 included work on the development of a soil enhancer for the rationalisation of irrigation water and a plant to produce basalt fibre.

Tasnee has also using been using new technology to build two new facilities in Saudi Arabia. In the first half of 2019 its subsidiary joint venture with Advanced Metal Industries Australia and Japan’s Toho Titanium will start operating a $500m, 15,600-tonne-per-year titanium sponge facility at Yanbu that uses titanium tetrachloride as feedstock. “We have already started to make trial products,” Mutlaq Al Morished, CEO of Tasnee, told OBG, but the official opening of the plant was delayed by technical issues with the first furnace of the ilmenite smelter that will produce the feedstock.

Investment Incentives

The NTP’s seven strategic objectives for the private sector are: facilitate doing business; attract foreign investment; develop the digital economy; develop the retail sector; increase the contribution of SMEs; increase the contribution of productive households to the economy; and encourage business interest in sustaining the national economy. In addition to these strategies, the government has created new bodies to drive change and help industry. In December 2017 the MEIM announced two key developments for the industrial sector: a new export bank with capital of SR30bn ($8bn) was to be established; and SIDF’s capital, which had been SR500m ($133.3m) at its formation, had increased to SR65bn ($17.3bn). The export bank is to have a particular focus on industry and mining, and will help Saudi companies and international firms operating in the Kingdom to find overseas markets for their products. In July 2018 SIDF increased its lending limits, with more generous terms for investors contributing to the development of cities and promising regions.

MODON has industrial parks in many of these regions. The lending limit for standard projects was increased to SR300m ($80m), while companies working on major city schemes can now borrow up to SR1.2bn ($320m). Listed companies working on projects in Hail, Al Jouf, Tabuk, Jazan, Najran, Al Bahah and Asir can apply for a loan of up to SR1.8bn ($480m) while the limit for private firms working in those areas is SR400m ($106.6m). In addition to these measures, the new rules extend loan repayment periods from 15 to 20 years, while the proportion of the project that can be financed through SIDF was increased from 50% to 75%. SIDF approved SR11bn ($2.9bn) in loans in 2017, a 33% increase on the previous year, 56% of which went to SMEs.

“In order for SMEs to grow, we need to streamline our export-facilitation tools, support leaner manufacturing processes and strengthen private equity investment,” Mohammed Alharthy, CEO of Middle East Fiber Cable, told OBG. “Saudi Arabia is home to domestic companies in multiple sectors that deserve to be recipients of greater strategic investments.”


The government has also been trying to smooth the process of company registration for entrepreneurs in the Kingdom. SAGIA’s Tayseer initiative, representing officials from 20 ministries, was established to drive Vision 2030 reforms to improve the business landscape in the private sector. Tayseer’s goals are: enforce directives to improve the business climate; increase the efficiency of government services; improve communication with the private sector; and increase the Kingdom’s performance in international indices comparing business environments. One of its initiatives is Meras, an e-portal that is designed to enable companies to be formed in one day, along with streamlining all necessary government approvals and fees. In addition, in February 2018 MOCI announced that Saudi women would no longer require permission from a male family member to start a business.


Higher prices for Saudi oil, petrochemicals and plastics products in the first three quarters of 2018 helped boost revenue and improve the balance of trade, but international prices for those commodities declined in the fourth quarter. As of March 2019 the impact of those declines on export revenue for the year was still not fully apparent. However, those sectors constitute the lion’s share of Saudi exports, and price changes thus have a profound impact. The latest GaStat data for November 2018 shows that plastics and rubber articles accounted for 33.8% of non-oil exports, while chemical products constituted 32.2%. Vehicles and transport contributed 7.8%, and equipment and base metals accounted for 8.1% of non-oil exports.

Compared to November 2017 the value of overall non-oil exports increased by 8.4%, or SR1.6bn ($426.6m), but these figures were skewed by a SR1.34bn ($357.2m), or 25.4%, increase in the value of chemical exports. Non-oil exports in November 2018 were valued at SR18.96bn ($5.1bn). However, the increase in oil export prices meant that the contribution to overall export revenue made by non-oil goods declined from 23.5% in November 2017 to 21.3% in November 2018. In the third quarter of 2018 the value of base metal product exports increased by 23.6%, from SR3.9bn ($1bn) in the third quarter of 2017 to SR4.8bn ($1.3bn). Jadwa Investment, a closed joint stock company headquartered in Riyadh, noted this may have been the result of the formation of a SR5bn ($1.3bn) export support initiative by the MOCI that was targeting metal and mining industries. In the third quarter of 2018 Saudi Arabia exported SR58.6bn ($15.6bn) worth of non-oil goods, with SR45.3bn ($12.1bn) going by sea, SR3.7bn ($986m) by air and SR9.6bn ($693m) by land. Total non-oil exports in the period increased by 32.2%. The five leading non-oil export destinations by value were China, the UAE, Singapore, India and Belgium, with these countries accounting for 44.4% of all non-oil exports. China and the UAE’s respective shares for the period were 15.8% and 13.5%.


The labour market in Saudi Arabia has been the subject of structural reform for a number of years, with ongoing attempts to reduce dependence on expatriate labour, particularly in the private sector, and thereby increase Saudi employment. The Nitaqat quote system both incentivises and penalises companies by applying quotas for different economic sectors, and the programme effectively made some retail sectors Saudi-only employers. The NTP’s aim was to reduce Saudi unemployment to 9% by 2020, although this target was relaxed to 10.5% by 2022 by the Ministry of Labour and Social Development. In the first and second quarters of 2018 the rate remained at 12.9%, then dropped slightly to 12.8% in the third quarter. The female Saudi unemployment rate also dropped, to 30.9% in the third quarter. In early 2018 new expat levies were introduced, six months after the implementation of fees on the dependants of expat workers. In July the amount was SR200 ($53.32) per dependant, but this amount is set to increase each year. GaStat data shows a significant differential between Saudi and expat wages, with a Saudi working in the trade sector earning SR4707 ($1250) a month compared to SR1743 ($464) for an expat worker. Figures from the first quarter of 2018 showed that while expats were leaving the country, they were not necessarily being replaced in the workforce by Saudis. The number of jobs in both manufacturing and trade has fallen, although both sectors employed more Saudis in the second quarter of 2018 than they did in the first quarter of 2017. In that time, the manufacturing industry shed 81,422 jobs (8% of the workforce), with 84,199 expats leaving and 2777 Saudis entering. The trade sector lost 177,193 jobs (7% of the workforce), as 229,136 expats left and 51,943 Saudis started. In October 2018 Jadwa Investment estimated that some 1.1m expats had left the Kingdom’s job market since the start of 2017. From the second quarter of 2017 to the second quarter of 2018 GaStat data shows worker productivity in the manufacturing sector increased from SR165,000 ($44,000) to SR178,000 ($47,500). However, while significant numbers of expat workers may be leaving the Kingdom, the number of foreign businesses and entrepreneurs applying to start new ventures is increasing, according to SAGIA, which recorded a 99% increase in the number of licensed investments in 2018. The authority said there was a 103% rise in licensing of wholesale and retailing ventures, and a 74% increase in manufacturing and processing licences.


The continued diversification of downstream industries, as well as government targets for the development of new sectors, are creating new opportunities in the Kingdom. However, when making their calculations, investors are also taking into account the impact of considerations related to labour costs, feedstock subsidies and domestic consumer demand.