Saudi industrial investments surge 54% to $400 billion amid expanding sector reforms

Investments in Saudi Arabia’s industrial sector have soared by 54 percent this year, reaching SAR 1.5 trillion ($400 billion), compared to SAR 992 billion ($264 billion) in 2019, according to a report released by the Federation of Saudi Chambers’ economic-affairs department.

The report highlights the effect of the government’s decision to waive fees for expatriate workers in the industrial sector, an initiative introduced in 2019 and recently extended until the end of 2025.

This initiative, along with other supportive measures, has significantly enhanced the sector's performance across several key metrics, including gross domestic product (GDP) contribution, the number of industrial establishments, investment volume, employment, non-oil exports, product quality, and foreign investment.

The industrial sector’s contribution to Saudi Arabia’s GDP reached 14.7 percent in 2023, with the sector’s GDP growing to SAR 592 billion ($158 billion), up from SAR 392 billion ($104 billion) in 2019. The number of industrial establishments also saw a significant increase, rising by 55.6 percent from 7,625 in 2019 to 11,868 by 2024.

Foreign investments in the sector experienced a remarkable surge, driven by the government’s supportive policies, including the fee waiver and local content regulations.

The number of foreign-owned factories grew by 71.5 percent, reaching 1,067 in 2023, compared to 662 in 2019. Additionally, foreign capital investments in the sector doubled, increasing by 116.2 percent to SAR 93 billion ($24.8 billion) from SAR 43 billion ($11.4 billion).

The report emphasized the significant role of the industrial sector in creating employment opportunities for Saudis. By the end of the first quarter of 2024, the sector employed 1.2 million workers, including 358,000 Saudi nationals, representing 12.9 percent of the total Saudi private-sector workforce.

From January 1, 2023, to March 31, 2024, the industrial sector emerged as the largest creator of jobs for Saudis, providing over 82,000 positions and contributing 59 percent of all jobs created by the private sector.

The government’s focus on localization has also paid off, with the industrial sector’s localization rate reaching 28 percent. Various incentives have boosted localization in the private sector, paving the way for more job opportunities for Saudis.

The industrial sector’s non-oil exports increased by 12 percent, reaching SAR 208 billion ($55 billion) in 2023, compared to SAR 187 billion ($50 billion) in 2019. This growth was attributed to the expansion of markets for Saudi products and the signing of numerous trade agreements. Local content in non-oil sectors reached SAR 1.138 trillion ($303 billion) in 2023.

The report also noted that the fee waiver has positively impacted the quality of national products. Industrial establishments have adopted modern technologies, localized cutting-edge innovations, attracted skilled individuals, and increased production to meet local market demand.

This has fueled domestic demand for local products and enhanced the export potential of Saudi industrial goods, as evidenced by the rise in Saudi Quality Mark certifications from the Saudi Standards, Metrology, and Quality Organization (SASO).