Saudi Arabia’s industrial sector is set to grow based on innovative production principles
RIYADH: Saudi Arabia is looking to introduce pioneering manufacturing technologies as it seeks to turn its industrial sector into a major driver of growth, according to a top analyst.
Karim Sharif, head of Bain & Company’s Middle East advanced manufacturing services practice, told Arab News that Saudi goals include strengthening productivity, resilience and environmental management.
Saudi Arabia is poised to create a dynamic and innovative production environment, with a vision to increase the number of factories to 36,000 by 2035, of which 4,000 will be fully automated.
With the introduction of advanced technologies such as artificial intelligence, 3D printing and robotics, Saudi industry is positioning itself as a global leader in this revolution.
Sharif said: “Saudi Arabia, under the guidance of the Ministry of Industry and Mineral Resources, the National Industrial Development and Logistics Program, and other bodies, is actively working to encourage the adoption of the highest standards of advanced and clean manufacturing principles and to support the private sector. program” to build and operate facilities that are competitive on a regional and global level. ”
He added: “To fully achieve the highest standards of excellence, this transformation must not only focus on top-mind improvements such as increased use of robots and factory autonomy, but also include automation, digitization, We need to focus on a real systems-based approach that combines circularity, human resources,” he added. ”
The Saudi industrial sector is experiencing sustained growth, with investments in manufacturing reaching $132 billion since the launch of the economic diversification strategy Vision 2030 in 2016.
A key highlight of this resurgence is the adoption of Industry 4.0 principles. This includes integrating advanced technologies such as the Internet of Things, artificial intelligence, and robotics to create more efficient, flexible, and interconnected systems.
This technological leap is aimed at increasing efficiency and productivity and moving the country away from an oil-centric economic model.
This move is already bearing fruit, with Saudi Arabia’s manufacturing activity surging by 18.5 percent in December 2022, demonstrating firm acceptance of these innovative technologies.
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For the Kingdom to continue on this trajectory, “fundamental changes” are needed in the manufacturing landscape across Saudi Arabia, and the adoption of Industry 4.0 principles is “a clear step towards building a thriving manufacturing ecosystem.” Sharif said:
He added: “Governments need to strengthen workforce development, energy efficiency and many other policies to ensure the right carrot-and-stick approach to enable transition at the right pace.” .
Experts noted that a differentiated approach is needed to ensure that new factories are established to the right standards at the start.
Additionally, universities and educational institutions need to understand the talent gaps that need to be filled to ensure they provide the right curriculum and training to incoming graduates.
Saudi Arabia is leveraging international cooperation, especially with Turkiye, to demonstrate a forward-looking approach to diversifying its industrial expertise and is not relying purely on domestic innovation to develop this sector.
Minister of Industry and Mineral Resources Bandar Alkhoraev has previously emphasized the potential for international partnerships in food security, health, military and aviation industries, and stressed the importance of technological advances in these areas.
The National Industrial Strategy is a key element of Vision 2030 and aims to make the industrial sector globally competitive and sustainable.
Saudi Arabia aims to increase the contribution of its industrial sector to gross domestic product by 900 billion riyals ($230 billion) by 2030 by fostering innovation, optimizing domestic products and fostering global partnerships.
The development of local content is a crucial aspect of this strategy, with the aim of increasing the share of locally produced products and services to 60% by 2025.
“The gap in Saudi manufacturing aspirations and the lessons learned from the benchmarks suggest that this transition will require a significant concerted effort,” Sharif said.
To promote local consumption, the Saudi Export Development Authority launched the “Made in Saudi” program in 2020.
To fully achieve the highest standards of excellence, this transformation will not only focus on improving the most important issues such as expanding the use of robots and making factories autonomous, but will also include automation, digitization, circularity, We need to focus on a real systems-based approach that combines human resources.
Karim Sharif is the Middle East head of Bain & Company’s Advanced Manufacturing Services practice.
This move is already yielding positive results and boosting the growth of manufacturing in the country.
More than 2,000 new licenses have been issued for various projects, contributing to the creation of 193,000 new jobs in the industrial sector.
The Saudi mining industry is a major contributor to this transformation, granting more than 1,300 new licenses and attracting more than $32.4 billion in investment.
Saudi Arabia’s efforts to amend mining laws and issue new permits reflect the country’s ambitions to position the mining sector as the third pillar of the national industry, with estimated mineral resources reaching $1.35 trillion.
Future outlook
The Saudi government’s efforts to attract foreign investment through incentives and local production requirements underscore the country’s commitment to economic resilience and growth.
Investment initiatives such as the Industrial Development Fund and the development of special economic cities will further expand the trajectory of industrial growth.
Public-private partnerships, exemplified by initiatives like Operation 300 Billion in the UAE, ensure a consistent approach towards digital transformation and ultimately contribute to manufacturing growth.
The future of Saudi Arabia’s industrial sector holds immense potential, driven by strategic planning, international cooperation and a firm commitment to technological advancement.
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