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  • How does manufacturing industry in Saudi Arabia develop?

    Discussion in 'The main mechanical design forum' started by vietnam manpower, Aug 12, 2015.

    1. vietnam manpower

      vietnam manpower Member

      Jul 2015
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      The manufacturing sector has expanded widely since the mid 1970s, when the Saudi Industrial Development Fund (SIDF, 1974) and the Saudi Basic Industries Corporation (SABIC, 1976) were established by the government in order to develop high-value industrial activities outside the upstream petroleum sector and thus diversify the economy.

      Saudi Arabia main exports are: machinery, mechanical appliances and electrical equipment (27 percent of total imports), transport equipment and parts thereof (16 percent), base metals (13 percent), chemicals and related products (9 percent) and vegetables (6 percent).
      SIDF provides preferential loans for new industrial development and the modernization of existing development and provides technical assistance to Saudi industry. SABIC’s initial goal was to create value-added industries related to petroleum, so that more of the value chain could be retained in the country and in order to contribute to the overall development and diversification of the economy. The initial focus was on petrochemicals, polymers/plastics, and fertilizers. SABIC has since expanded into metals, taking advantage of the low energy costs in the kingdom for smelting and other activities.
      Unlike the booming upstream petroleum sector, manufacturing has experienced a steady growth. Given Saudi Arabia’s petroleum reserves, the upstream sector will, for the near future, remain at the heart of the Saudi economy, but there has been considerable success in creating a large downstream sector in refining, petrochemical, plastics, and other related industries. Saudi Arabia has made considerable progress in expanding industry unrelated to the hydrocarbons sector, but these sectors are still small, because the kingdom does not generally have a comparative advantage in these areas, except for energy-intensive industries.
      The development of manufacturing sector in Saudi Arabia from 1970 – 2011
      In 1975, the total contribution of manufacturing to the Saudi economy was USD 4.3 billion, but this figure (using constant riyals, the Saudi currency) had risen to USD 29.5 billion by 2010. The sector has grown faster than the overall economy during this period, its contribution to overall GDP increasing from 4.1 percent in 1975 to 12.6 percent in 2010. These figures include oil refining. Even excluding oil refining (but including petrochemicals) growth was considerable: from USD 2.5 billion in 1975 to USD 23.7 billion in 2010.
      Of equal importance was the growth in employment. Total employment in manufacturing increased from about 34,000 in 1975 to about 530,000 in 2010. Even industries that are not large contributors to GDP can be important from an employment perspective. Number of employment also rose in the industrial sector of about 34 thousand workers in 1974 to more than 843 thousand workers in 2013. On the other hand, Saudi Arabia has tended using foreign workers. As of 2008, roughly two thirds of workers employed in Saudi Arabia were foreigners, and in the private sector approximately 90%. For example, food-product manufacturing employs more than 100,000 people, representing 19% of the total labor-producing factories. In parallel invested capital increased from about 12 billion riyals in 1974 to more than 883 billion riyals in 2013.
      Source: http://vnmanpower.com/en/services-categories/manufacturing-manpower.html

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