A radical transformation is taking place that is changing the way the world does business with Saudi Arabia.
So much is happening so quickly that, for the uninformed observer, it may be difficult to keep pace with the speed of progress. Projects spanning the tourism, technology and construction sectors are driving cultural and economic advances.
We are also witnessing a real shift in the approach of international companies seeking opportunities in Saudi Arabia. For years, the Kingdom imported foreign expertise in order to export its natural resources, often partnering with companies based abroad.
However, there is a mutually beneficial appetite for international partners to increase their presence inside the country. This has been further fueled by Aramco’s iktva program, which is attracting even more foreign firms to the Kingdom – and growing the private sector ecosystem in the process.
A prime example is the King Salman Energy Park (SPARK), where oilfield services company Schlumberger has recently inaugurated a new facility to manufacture products for the energy industry. It is just the latest milestone at SPARK, an impressive energy city being developed on 50 square kilometers of land between Dammam and Al Hasa which is expected to add more than $6 billion to the country’s GDP.
SPARK has already attracted dozens of key anchor investors and more than 70 percent of land in Phase 1 has been allocated, with companies such as Baker Hughes, Haliburton, Yokogawa and Emerson all signing up as tenants.
This marks a significant change in approach by the private sector and corresponds with broader expansion of Saudi Arabia’s industrial base.
A record number of new international companies entered Saudi Arabia last year and manufacturing was among the biggest growth areas, accounting for 190 new foreign firms. That is a 68 percent increase over the 113 foreign companies that entered the sector in 2018.
A similar trend exists in the construction and ICT sectors, which saw the number of new foreign entrants increase by 74 percent and 60 percent respectively between 2018 and 2019.
Saudi Aramco’s iktva program has been focused on driving growth in the national economy since its launch in 2015.
Through iktva we work with our partners to establish a presence in Saudi Arabia, maximize procurement of local goods and services, recruit and train Saudi staff, develop small and medium enterprises (SMEs), perform research and development locally and export from the country.
This not only benefits the broader economy, but provides the local workforce opportunities for skilled training and employment. It is an essential approach given that more than half of the growing Saudi population is aged under 30.
SPARK, which is expected to create up to 100,000 direct and indirect jobs, is just one component of a broader strategy that aims to create jobs and support the Kingdom’s Vision 2030.
This strategy also includes the King Salman International Complex for Maritime Industries and Services at Ras Al Khair, the largest facility of its kind in the region, where Aramco is helping create a world-class hub for regional maritime engineering and construction to support our offshore shipping supply chain. It will have the largest ship lifting capability in the world and the largest combined dry dock in the MENA region.
Aramco is a partner in International Maritime Industries (IMI), a cornerstone of the complex, where at least 30 percent of production is targeted for export – generating new revenues while supporting further growth of the energy sector.
There is also Arabian Rig Manufacturing, again in Ras Al Khair, which is a world-class land rig and equipment manufacturing and repair facility established by Aramco in partnership with Houston-based National Oilwell Varco (NOV). It is expected to create more than 1,000 jobs.
Foreign companies’ positive engagement in such projects bodes well for the future of Saudi Arabia’s economy and its people.
Through iktva Saudi Aramco aims to achieve 70 percent localization of all spending, which will drive the transformation further.
There has probably never been a better time for foreign companies to enter the Saudi market.