Currently, the hydrocarbons sector accounts for approximately 75 per cent of revenues, 50 per cent of gross domestic product (GDP) and 90 per cent of export earnings, according to oil producers’ group Opec. About 40 per cent of GDP, which stands at $746bn, originates from the private sector.

Saudi Arabia’s economy is ranked 82nd most open in the 2013 Index of Economic Freedom published by the UK’s Heritage Foundation think tank. It comes eighth out of the 15 countries included from the Middle East and North Africa. The country leads Opec and joined the World Trade Organisation in 2005. Foreign direct investment inflow was about $12.2bn in 2012, according to UNCTAD.

Saudi Arabia has already established numerous economic cities, with industrial output comprising more than 90 per cent of the kingdom’s non-oil exports. Sectors include petrochemicals, plastics, metal, construction materials and electrical appliance manufacturing.

Jubail Industrial City focuses on hydrocarbons and is home to most of the kingdom’s heavy industry. Located in the Eastern Province, the city hosts petrochemicals and fertiliser plants, oil refineries and steel works. Yanbu Industrial City also facilitates large-scale oil refining and petrochemicals production, and is within reach of the Suez Canal.

Ras al-Khair Minerals City is currently under construction and, when complete, will comprise a fertiliser complex, aluminium smelter and conversion facilities, and a sea port. The city is expected to export 4.3 million tonnes of mineral derivatives a year. Also being developed is a $7bn oil refinery at Jizan Economic City, with the capacity to process 400,000 barrels a day.

The largest of the six new economic cities being built is the $27bn logistics-focused King Abdullah Economic City in Rabigh, which will be linked by high-speed rail to nearby Jeddah, Medina and Mecca. The kingdom announced the launch of King Abdullah City for Atomic and Renewable Energy (KA-Care) in 2010.

Almost 30 economic cities are operated by the Saudi Industrial Property Authority (Modon).

Fast facts

  • Saudi Arabia’s six new economic cities are being built at a cost of $60bn.
  • The new cities are expected to contribute $150bn to the economy.
  • When complete, Ras al-Khair Minerals City will export 4.3 million tonnes of mineral derivatives a year.
  • The logistics-led King Abdullah Economic City is costing $27bn to build.

Jubail Industrial City

Jubail is the largest industrial city in Saudi Arabia, and the biggest industrial centre of its kind in the world. Located in the oil-rich Eastern Province on the Gulf coast, it is primarily aimed at energy-intensive industries. Jubail produces about 7 per cent of the world’s petrochemicals.

The Royal Commission for Jubail & Yanbu (RCJ&Y) runs the city, which accounts for 70 per cent of the kingdom’s non-petroleum exports. Large companies, such as Saudi Basic Industries Corporation (Sabic) and Saudi Aramco, dominate the city.

An extension, Jubail 2, is set to double the city’s industrial footprint to 110 square kilometres. There are currently 70,000 residents in Jubail, and the RCJ&Y is courting investment in conversion industries that can take feedstock from the larger plants to turn into saleable products.

An area of Jubail 2 will be reserved for smaller converters, and a plastics complex is to be developed next to the $20bn petrochemicals complex being built by Sadara Petrochemicals Company, a joint venture of Aramco and the US’ Dow Chemicals.

Facilities

There are full port facilities at Jubail. The Power and Water Utility Company for Jubail and Yanbu provides utilities.

Benefits

  • Tax holidays
  • Customs exemptions
  • Cheap land and utilities

Industries

  • Hydrocarbons
  • Power and water
  • Petrochemicals
  • Fertilisers
  • Oil refining
  • Steel
  • Plastics

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Yanbu Industrial City

Yanbu is located 350km north of Jeddah and more than 1,000km from Saudi Arabia’s oil fields, but within reach of key export markets in Europe and North America.

It has a population of almost 200,000 and is home to large-scale oil refining and petrochemicals production plants, as well as a developing base of conversion industries.

Aramco has extensive refining operations at Yanbu, while Sabic operates several petrochemicals units. The RCJ&Y hopes to attract smaller conversion industries, including from the plastics, metals and oil refining sectors, to create jobs around the heavy industrial plants. It also plans to develop a strong non-oil sector based on the output of nearby phosphates, copper, iron ore and gypsum mines.

Facilities

Feedstock is transported by pipeline from the Eastern Province and the kingdom’s second-largest port can handle up to 3 million barrels a day (b/d) of hydrocarbon products.

Benefits

  • Tax holidays
  • Customs exemptions
  • Cheap land and utilities
  • Availability of feedstock and minerals
  • Located on Red Sea coast, close to Suez Canal

Industries

  • Oil refining
  • Petrochemicals
  • Plastics
  • Metals

Yanbu costs

Retail space rental: From SR350/sq m a year

Office space rental: From SR400/sq m a year

Industrial land rental: From $1.20/sq m a year

Electricity: From $0.039/kWh

Water: From $1.76/cubic metre

Diesel: From $0.096/litre

Liquid gas: From $0.75/million BTUs

Industrial fuel oil: From $0.033/litre

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Ras al-Khair Minerals City

Also known as Minerals Industrial City, Ras al-Khair lies 60km north of Jubail and is also being developed by the RCJ&Y. It will house a fertiliser complex, integrated aluminium facility and a port when it is completed. The anchor tenant Saudi Arabian Mining Company (Maaden) expects 27,000 jobs to be created when its projects are operational.

Facilities

The majority of the city’s infrastructure is now in place, with most roads completed as well as the North-South Railway to bauxite and phosphate mines in the north. Saudi Ports Authority expects more than 4.3 million tonnes a year (t/y) of mineral derivative exports from the port, as well as exports of downstream aluminium products. A 2,800MW combined-cycle power plant and a 296 million-gallon-a-day water desalination plant are under construction.

Benefits

  • Rail, road and marine links
  • Low cost of building aluminium conversion plants: $100m-150m could build a 50,000-t/y plant to produce automotive parts or aluminium foil
  • Full technical support from Maaden and Sabic
  • Preferential rates for rent and utilities
  • Loans available from the Saudi Industrial Development Fund

Industries

  • Fertilisers
  • Aluminium
  • Conversion industries

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Jizan Economic City (JEC)

JEC is in the southwest of Saudi Arabia, one of the kingdom’s most deprived areas with few natural resources save fishing and food processing. The 103 sq km city is overseen by the Saudi Arabian Investment Authority (Sagia).

Facilities

  • Saudi Aramco is now the driving force behind the development of the city. It is building a 400,00 barrel-a-day refinery, a 2,600MW integrated gasification combined-cycle power plant and is also steering development of the port facilities
  • The local Solb Steel started production in 2012 at its JEC plant, which has a capacity 1 million tonnes a year (t/y) of billets and 500,000 t/y of rebar.

Industries

  • Metals
  • Oil refining
  • Food processing

Sagia costs

Industrial city rental: SR1-2/sq m a year

Electricity: From SR12/kWh

Water: From SR0.10/cubic metre

www.sagia.gov.sa

Tel: (+966) 1 203 5555

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King Abdullah Economic City (Kaec)

The $27m Kaec was launched in 2005 as the first of six economic cities planned for the kingdom. It is being developed by Emaar, The Economic City (a subsidiary of Dubai-based Emaar properties) at Rabigh, 100km north of Jeddah, and is intended to house 4.5 million people and create 1.3 million jobs.

The $11.5bn Haramain High-Speed Railway will connect Kaec to Jeddah, Mecca and Medina. The city will cover 168 million square metres with six zones: seaport, industrial, central business district, waterfront resort, education and residential.

Kaec will focus on port and logistics, light industry and service sectors. In 2011, the government awarded a gas allocation to enable development of a $3bn integrated steel complex, and pledged a $1.3bn loan to accelerate construction.

Facilities

  • When completed, the Kaec seaport will be the region’s largest, with a container capacity of more than 10 million 20-foot equivalent units. Work on the port is under way, and basic infrastructure and utility works are completed. Land is now available for manufacturers to begin construction on the second and third phases of the industrial valley. The minimum size of available plots is 20,000 sq m.
  • Kaec’s residential sector is planned to contain 250,000 apartments, 24,000 villas, 120 hotels and more than 50,000 retail outlets. In 2012, Saudi Binladin Group completed the first two residential towers.

Industries

  • Logistics
  • Light industry
  • Services
  • Lubricants
  • Pharmaceuticals
  • Food

Riyadh sales centre, Kaec

www.kingabdullahcity.com

Tel: (+966) 2 615 9999

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King Abdullah City for Atomic and Renewable Energy (KA-Care)

KA-Care was created in 2010 to promote sustainable energy as part of Saudi Arabia’s plan to meet its rapidly rising demand for power. KA-Care, located 25km southwest of Riyadh, will be a scientific city researching sustainable energy. It will also develop large-scale atomic and renewable energy facilities. In a white paper published in February, KA-Care set out the competitive procurement process for renewables schemes.

Benefits

  • Amenities and services with emphasis on education, healthcare, infrastructure and design
  • Entertainment facilities, public spaces and gardens
  • Hi-tech communications and transportation services

Industries

  • Education
  • Nuclear energy
  • Renewable energy

www.kacare.gov.sa

Tel: (+966) 1 808 5555

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Modon Industrial Cities

Saudi Industrial Property Authority (Modon) was established in 2001 to develop industrial cities across Saudi Arabia. It currently oversees 28 cities, which are operational or under construction, and aims to create 40 cities covering 160 million square metres of developed industrial land within the next five years. There are more than 3,000 factories in its existing cities, representing more than SR250bn ($66.7bn) of investment. Combined, they employ more than 300,000 people.

Saudi Industrial Property Authority (Modon) was established in 2001 to develop industrial cities across Saudi Arabia. It currently oversees 28 cities, which are operational or under construction, and aims to create 40 cities covering 160 million square metres of developed industrial land within the next five years. There are more than 3,000 factories in its existing cities, representing more than SR250bn ($66.7bn) of investment. Combined, they employ more than 300,000 people.

The advantages for those setting up in Modon cities include reduced rent and low-cost utilities. Loans are available with extended repayment schedules and the Saudi government offers guaranteed exports to international markets and tax exemptions for the import of raw materials and equipment.

www.modon.gov.sa

Tel: (+966) 92 000 0452

The cities that are overseen by Modon include:

Sudair City for Industry and Businesses

Location: Near Riyadh Industrial City

Established: 2009

Modon has begun to develop the first phase covering an area of 8 million square metres. The city will eventually cover 260 million sq m and is home to a planned railway passage.

Jeddah First Industrial City

Location: 5km south of Jeddah

Established: 1973

Built in five phases, the city has expanded from an area of 0.5 million sq m to about 12 million sq m. It houses companies including US-based firms Clorox and PepsiCo, and Kuwaiti food manufacturer Americana.

Jeddah Second Industrial City

Location: 35 kilometres south of Jeddah First Industrial City

Established: 2009

The city’s development commenced in 2009. When completed, it will cover an area of 8 million square metres and will house food, building materials and metals manufacturing facilities.

Al-Madina al-Munawwara

Location: 190km from Yanbu Seaport

Established: 2003

Its proximity to the holy site Al-Haram al-Shareef supports industrial activity in the region, along with industries such as precious metals.

Tabuk

Location: Next to Tabuk on the Jordanian border

Established: 2003

Built on an area of 1.4 million sq m in the first phase, the city is close to Jordan and the port of Duba, providing transit links with neighbouring countries. Its industries include metals and food.

Hail Industrial City

Location: South of Hail city

Established: 2003

Phase one of the city covers an area of 800,000 sq m. Raw materials used in the food and metal industries, such as gypsum and magnesium, are sourced from the surrounding area. The city is linked to neighbouring cities by road and rail.

Jizan

Location: Abi Areesh

Established: 2009

The first phase was developed on an area covering 1 million sq m. The city is located 60km from Jizan port and 30km from the Yemeni border.

Riyadh Second Industrial City

Location: Southeast of Riyadh

Established: 1976

To satisfy the growing demand for industrial lands in Riyadh, construction of the industrial city was carried out on an area of more than 18 million sq m in four stages. Foreign firms operating factories in the city include Sweden’s ABB and the Saudi subsidiary of Germany’s Henkel.

Dammam First Industrial City

Location: On the Dammam–Al-Khobar expressway

Established: 1973

The city has been developed in three phases covering an area of more than 2.5 million sq m. Its industries include metals and chemicals.

Dammam Second Industrial City

Location: Dammam

Established: 1978

The city was built to spearhead industrial development in the Eastern Province. Its tenants include UK firm Wood Group.

Mecca al-Mukarrama

Location: On the Madina–Al-Munawwara road

Established: 1985

The city’s proximity to Mecca and Jeddah Islamic port (110km away) provides convenient trade links. It houses 60 factories and is seeking investment in food, metals and textiles.

Al-Qassim First Industrial City

Location: 15km from Buraidah

Established: 1980

The city’s 43 factories manufacture food and metals, among other items. Export-oriented factories for firms such as the local pharmaceutical company Spimaco are also located here.

Al-Jouf

Location: 40km from Sakaka

Established: 2003

The city was established on an area of 750,000 square metres in its first phase. It is located in the agricultural region and supplies materials for industrial projects and food manufacturers.

Al-Ahser First Industrial City

Location: Al-Ahser-Dammam expressway

Established: 1981

The city houses more than 52 factories manufacturing products including plastics, metals and electrical appliances.

Riyadh Third Industrial City

Location: 72km south of Riyadh

Established: 2008

The city is located inside a prison and is operated under a partnership between Modon and the General Directorate of Prisons. It provides human resources for industry and teaches the prisoners various skills. Firms setting up here must employ a certain number of detainees from the reformatory, depending on the activity and the area of land required.

Modon costs
City Min rent* One-off fees**
Sudair City  1.5 1
Jeddah Second  3 0.25
Al-Madina al-Munawwara 1 0.2
Tabuk 1 0.5
Hail  1 0.5
Jizan 1 0.5
Riyadh Second  1 0.5
Jeddah First 1 0.5
Dammam First  1 0.5
Dammam Second 1 0.5
Mecca al-Mukarrama 1 0.5
Al-Qassim First 1 0.2
Al-Jouf 1 0.5
Al-Ahser First  1 0.2
Riyadh Third  0.5 0.25
Source: Modon. *=SR per square metre a year. **=SR per square metre for land preparation

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Key contacts

Royal Commission for Jubail & Yanbu

www.rcjy.gov.sa

Tel: (+966) 1 479 4445

Saudi Industrial Development Fund

www.sidf.gov.sa

Tel: (+966) 1 477 4002

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