Introduction

Saudi Arabia is rapidly emerging as a global hub for manufacturing, driven by ambitious economic diversification goals under Vision 2030. The Kingdom’s strategic initiatives aim to transform its industrial landscape, attract foreign investment, and foster technological innovation. Saudi Arabia’s industrial sector is poised for significant growth, driven by strategic planning, international collaborations, and technological advancements. The government’s commitment to creating a conducive environment for manufacturing businesses, coupled with robust incentives and support makes the Kingdom an attractive destination for industrial investment. By understanding the process and leveraging available resources, businesses can successfully navigate the journey of setting up manufacturing operations in Saudi Arabia. The future of the Kingdom’s industrial sector holds immense promise, with opportunities for innovation, economic diversification, and sustainable growth.

This article gives you an overview of industrial and manufacturing sector in Saudi Arabia, detailing the relevant authorities, incentives, processes, and how Al Taasis can assist in acquiring an industrial license.

Industry Overview

Saudi Arabia’s manufacturing sector is experiencing robust growth, averaging 7.5% annually. It has become the third-largest non-oil contributor to the national economy, supported by government initiatives, modern infrastructure, and favorable regulations. In 2023 alone, the sector saw the issuance of 1,379 industrial licenses, bringing the total number of factories to 11,549 with an investment of SAR 1.55 trillion ($413 billion).

Vision 2030 aims to triple the industrial GDP to SAR 895 billion by 2030, double job opportunities to 2.1 million, and achieve industrial exports worth SAR 557 billion. The sector’s transformation is fueled by advanced technologies such as artificial intelligence, 3D printing, IoT, and smart robotics, positioning Saudi Arabia at the forefront of global manufacturing.

Saudi Arabia’s industrial landscape is characterized by significant investment deals and the establishment of new factories. The Kingdom aims to increase the number of factories to 36,000 by 2035, including 4,000 fully automated facilities. This ambitious plan strengthens the government’s commitment to fostering innovation, optimizing domestic products, and promoting global partnerships.

Relevant Authorities

Several key authorities oversee the industrial sector in Saudi Arabia:

1. Ministry of Industry and Mineral Resources: Responsible for issuing industrial licenses and regulating the sector. The ministry plays a pivotal role in shaping policies and ensuring the sector’s alignment with Vision 2030 goals.
2. Saudi Authority for Industrial Cities and Technology Zones (MODON): Manages industrial cities and provides essential infrastructure. MODON oversees 36 industrial zones across the Kingdom, offering more than 200 million square meters of developed industrial land and supporting over 7,900 industrial, investment, and logistical contracts.
3. Saudi Industrial Development Fund (SIDF): Established in 1974, SIDF provides financial and advisory support to enhance industrial investment. It aims to contribute to the formation of competitive industrial sectors, support strategic initiatives, and foster local production and exports.

Incentives for Industrial Sector

The Saudi government offers numerous incentives to attract foreign investment and stimulate industrial growth:

1. Financial Support: SIDF finances up to 75% of industrial projects and offers multi-purpose loans. These financial incentives are crucial for fostering industrial development and ensuring the sector’s competitiveness.
2. Tax Credits: Up to 50% tax credit on Saudi national payroll and training costs for 10 years. This incentive aims to enhance the participation of Saudi talent in the industrial sector and reduce operational costs for businesses.
3. Land and Infrastructure: MODON provides industrial land and ready-made factories at reduced prices with extended grace periods and expedited approval processes. The authority’s efforts to develop industrial zones and provide essential utilities are vital for the sector’s growth.
4. Investment Initiatives: Special Economic Zones in Riyadh, King Abdullah Economic City, Jazan, and Ras Al-Khair offer additional benefits for investors. These zones are designed to attract foreign direct investment (FDI) by providing tailored incentives and world-class infrastructure.

Government Initiatives for Industrial Sector

To stimulate industrial growth, the Saudi government has launched several investment initiatives:

1. National Industrial Development and Logistics Program (NIDLP): Launched in 2019, NIDLP aims to transform Saudi Arabia into a leading industrial and logistics hub. The program focuses on energy, mining, industry, and logistics sectors, promoting economic diversification and job creation.
2. Operation 300bn: This initiative aims to increase the contribution of the industrial sector to the GDP by SAR 300 billion by 2030. It emphasizes digital transformation and the adoption of advanced manufacturing technologies.
3. Special Economic Zones (SEZs): Established to attract foreign investment, SEZs offer specialized incentives and infrastructure tailored to the needs of various industries. These zones are designed to foster innovation and enhance global competitiveness.
4. Advanced Manufacturing Hub Strategy: Identifies over 800 investment opportunities worth $273 billion, aiming to diversify the industrial sector and create high-value jobs. This strategy underscores the government’s commitment to technological advancement and industrial growth.

Upgraded Industrial License in Saudi Arabia

The Minister of Industry and Mineral Resources announced an enhanced industrial license during LEAP 24. Governed by the Unified Industrial Regulatory Law of the GCC, the new license streamlines industrial activities through three stages: establishment, construction, and production.

The ministry’s spokesperson noted this upgrade follows a Cabinet decision to regulate factories outside designated industrial zones. The process includes:

Establishment Phase: Securing permits and allocations, valid for one year and renewable, without starting production.

Construction Phase: Customs exemptions on machinery and equipment, with a one-year renewal option.

Production Phase: Full operational rights and customs exemptions on inputs.

All phases can be managed via an industrial platform. This initiative aligns with Saudi Arabia’s National Industrial Strategy, aiming to boost investment, diversify the economy, and enhance non-oil exports in line with Vision 2030.

Process of Acquiring an Industrial License

Starting a manufacturing business in Saudi Arabia involves several steps and approvals from various government entities:

1. Legalization and Attestation: Foreign businesses must legalize their documents through the Saudi Arabian Embassy. This step ensures that all company documents are authenticated and recognized by Saudi authorities.
2. Manufacturing License: Al Taasis helps you obtain it from the Ministry of Investment Saudi Arabia (MISA). This license is essential for foreign businesses to operate legally in the manufacturing sector.
3. Commercial Registration (CR): Register the business with the Ministry of Commerce. The CR certificate is a prerequisite for conducting business activities in the Kingdom.
4. Land Contract and Building Permits: Secure necessary permits from the municipality. These permits include land contracts for the manufacturing facility and building permits to commence construction.
5. Final Industrial License: Issued by the Ministry of Industry and Mineral Resources. This license allows businesses to start manufacturing operations officially.
6. Environmental Permits: Ensure compliance with environmental standards set by the General Presidency of Meteorology and Environmental Protection. These permits ensure that manufacturing activities do not harm the environment.
7. Additional Registrations: Obtain labor file opening, tax registration, and other required registrations. These registrations are necessary for the company to hire employees, manage payroll, and comply with tax obligations.

Obtain Your Industrial License in Saudi Arabia with Al Taasis

Al Taasis provides comprehensive support to businesses seeking to establish manufacturing operations in Saudi Arabia. Our services include free consultation, offering expert advice on legal requirements and compliance to help businesses navigate the complex regulatory landscape and ensure they meet all necessary criteria. We assist with document preparation, ensuring all documentation is accurate, complete, and submitted on time. Additionally, we streamline the process for obtaining manufacturing and industrial licenses, facilitating the entire licensing process from initial application to final approval. Furthermore, we provide extended support to help your business grow quickly and efficiently.

Contact us to know more about the prerequisites of your business journey.