Through the executing entities and success partners of the National Industrial Development and Logistics Program (NIDLP), the ecosystem provides variety of enablers to promote investments in the Kingdom. Some enablers are categorized as general enablers, whereby they apply to all investment projects in NIDLP sectors. There are also special enablers, which target certain types of enterprises and investment projects.
The “mandatory list” is a list of national products that the contractor must commit to purchase from national manufacturers in conjunction with a government agency. The list aims to develop national industries and products that have the ability to meet the needs of government projects.
Supply Competitions:
The competitor is obligated to present product origin, whether it is national or foreign.
The offer where the competitor did not comply with the mandatory list shall be excluded, and in the event that the competition is divisible, then the items in which the competitor did not abide by the mandatory list shall be excluded in the supply contracts.
Other Competitions:
The competitor does not have to present the original product, whether it is national or foreign.
The contractor must abide by the list when executing the contract, and the government entity takes into account this list when supervising the implementation.
You can visit the website of Local Content & Government Procurement Authority for more details:Local Content
This mechanism aims to give a price preference to national products. This is directly applied by the government agency in the supply contracts, and the contractor is obligated to apply it in his contracts with his subcontractors. At the end of the contract, the contractor submits a report confirming his commitment to the share of national products during the contract period. Fines are also imposed on the contractor in the event of default in the share of national products.
Mechanism Characteristics:
The national product is granted a price premium, by assuming the price of the foreign product 10% higher than indicated in the bid.
The premium rate may be increased through an agreement between LCGPA and the Center of Spending Efficiency, provided that the modified rate is explicitly stated in the tender documents.
This mechanism applies to products not included in the mandatory list.
This mechanism applies either directly or indirectly.
Direct application: through the government agency in the supply contracts where national products are preferred. Also during the evaluation phase of offers according to the price preference equation.
Indirect application: through the contractor with the government agency in all contracts other than supply. Giving preference to national products when purchasing materials or tools. Also, the contractor is obligated to apply the price preference mechanism in his contracts with his subcontractors.
This mechanism aims to define a minimum required for local content at the project level. It applies to some projects, determined by the Local Content and Governmental Procurement Authority and the Spending Efficiency Center. It is applied to high-value contracts. Competitors provide a percentage of local content, no less than the minimum required, and must clarify whether or not the company is listed in their submitted offers. This is included in the financial evaluation according to an equation that determines the winner of the competition.
Mechanism Characteristics:
In the financial evaluation, this mechanism grants a price weight equivalent to 60%. The remaining 40% includes:
This mechanism allocates weight to the local content and to companies listed on the financial market during the financial evaluation phase. An accounting formula determines the highest-ranking competitor.
Mechanism Characteristics:
In the financial evaluation, this mechanism grants a price weight equivalent to 60%. The remaining 40% includes:
The Contracting Method Of Localization Of Industries And Knowledge Transfer
Local Content & Government Procurement Authority
Industry localization and knowledge transfer agreements are agreements directed to investors who own leading technologies around the world to motivate them to transfer technology and knowledge to the Kingdom in exchange for a government purchase guarantee, the percentage and duration of which are agreed upon according to a feasibility study that considers the investment returns on the government commitment as well as on the investor.
ECONOMICAL IMPACT:
Developing local content through the impact of the establishment of factories by major international companies within the Kingdom as well as creating jobs, transferring knowledge, and creating new local supply chains.
Attracting foreign investments.
Reducing dependence on imported products and creating new opportunities to export local products.
Customs duty exemption on authorized imports for industrial establishments, such as machinery, equipment, and spare parts imported for industrial use.
Targeted Imports:
An exemption is applied to products that are not available through local manufacturers/suppliers, or in case the local supply does not meet the required specifications.
In line with supporting promising small and medium-sized industrial enterprises, the SME Scale-Up product was launched to provide financial facilities to SMEs with proven success records. This allows them to increase their production capacity and reach the growth and expansion that resonates with their aspirations. This offering is available for both new and existing SIDF investors.
Initiative Requirements:
Brownfield projects with three years of audited financials.
Increase in revenue or volume sold.
Terms and conditions apply.
Benefits:
Longer tenure of 8 years.
Longer grace period of up to 24 months.
Possibility to reduce net worth requirement to 50% of the loan amount.
Tawteen program is set to facilitate, enhance, and finance supply chain localization opportunities of the Kingdom’s industrial sector. To achieve this, SIDF established partnerships with leading companies in the Kingdom of Saudi Arabia to enable the switch to source locally manufactured products and spare parts. Through preferential financing solutions, the Tawteen program will help stimulate investment activities and support the national and local content strategy.
Tawteen Objectives:
Stimulate domestic and foreign investments to increase local content.
Highlight localization opportunities.
Measure and maximize SIDF Local Content contribution.
In collaboration with Commercial Banks, SIDF has introduced the Letter of Credit as a default payment mechanism to Clients with preferred terms and conditions.
Objectives:
Better liquidity management.
Project implementation acceleration.
Lower Issuance fees.
Roles Of Each Party:
The Client: Contractual agreement between client and supplier.
SIDF: Provide a guarantee to issue the Letter of Credit with terms and conditions.
The Bank: Issues Letter of Credit and validates shipping documents.
Financing the incremental working capital needs (account receivables, inventory and account payables) to aid the growth of projects by extending short-term loans with a maximum financing tenure of one year.
The Saudi Industrial Development Fund has launched phase one of the Acquisition Finance Product, which aims to fund acquisitions for local companies to acquire local targets in SIDF financed sectors with a clear added value to Saudi Arabia.
Applicable Acquisitions For Financing:
Financing the acquisition of a specific technology, a method of manufacture, or intellectual property.
Financing the acquisition of a supplier or clients to achieve integration in cost or revenues.
Financing the acquisition of a competitor for the integration and development of offers.
SIDF finances capital expenditures aimed at improving the operational value of the project, including production lines, services, buildings, IT systems, safety equipment upgrades, vehicles, and warehouses.
Requirements:
Assure a non-increase of the production capacity of the project.
Produce a clear positive impact on improving the operational value of the project.
The company should be financially solvent enough to repay the SIDF loan and with a track record of profits in the last two years.
Benefits:
Medium-term financing for a maximum period of 5 years.
SIDF offers this service to projects, through a set of different requirements, procedures, and stages, ranging from short to long term loans for various purposes.
Saudi Authority for Industrial Cities and Technology Zones
Saudi Authority For Industrial Cities And Technology Zones(MODON)
MODON oversees more than 36 industrial cities. Each industrial city has a field administration that supervises the daily needs of investors and supervises the operation and maintenance of the site and the construction projects in the industrial city. Moon has introduced different products that enhance its role and responsibility as one of the pillars of national industry empowerment and leadership.
Industrial Lands:
MODON provides developed infrastructure and services such as electricity, water and others in different areas in all regions of the Kingdom that meet the needs of industrial investors.
Ready-Built Factories:
MODON provides ready-built factories for investor partners who own small and medium enterprises. It has equipped production halls targeting clean and light industries.
The Royal Commission for Jubail and Yanbu supervises the operation of 4 industrial cities in each of Jubail, Yanbu, Jizan and Ras al-Khair. Meeting highest international standards to be the best option for investors in the petrochemical and energy-intensive industries. RCJY follows Comprehensive Management methods, leading the way for the Kingdom and the Arab region. The Royal Commission oversees nine sectors, namely; comprehensive planning, basic infrastructure, operation and maintenance, investment promotion, security and safety, health and community service, education, workforce training, and environmental protection.
Economic Cities And Special Zones Authority (ECZA)
Economic Cities And Special Zones Authority (ECZA)
ECZA enhances the Kingdom’s global competitiveness by launching and enabling a range of cities and special economic zones that provide an attractive regulatory environment for investment. ECZA supports targeted competitive incentives and enablers, highly efficient integrated government services, and a stimulating living environment with global quality of life standards. The lunch took place in four special economic zones, including:
1- King Abdullah Economic City (KAEC) SEZ
Sectors of Opportunity:
Automobile supply chain and assembly.
Consumer goods.
ICT (Electronic light manufacturing).
Pharmaceuticals.
MedTech.
Logistics.
2- Ras Al-Khair Special Economic Zone
Sectors of Opportunity:
Shipbuilding and MRO.
Rig platforms and MRO.
3- Jazan Special Economic Zone
Sectors of Opportunity:
Food processing.
Metals conversion.
Logistic.
4- Cloud Computing SEZ
Sectors of Opportunity:
Cloud computing.
Access Attractive Economic Incentives Across The SEZ Network:
Corporate income tax reductions.
A variety of withholding tax exemptions.
Deferred customs duties on goods entering the SEZ.
Expat levy ensuring fees exemption for employees and their families in the zone.
VAT exemptions based on sector/activity criteria.
Flexible and supportive regulations around foreign talent.
You can visit the website of Economic Cities and Special Zones Authority (ECZA) for more details:
A program to provide training support to private sector establishments to raise the skills of their employees. This meets the needs of the private sector through electronic training, in cooperation with government agencies and academics.
Admission Requirements:
Targeted Employees to be Saudi Nationality.
Age not be less than 18 years and not more than 60 years old.
To be registered in the national portal – TAQAT.
Non-government employee – according to the data of the Ministry of Human Resources and Social Development.
Should not have previously benefited from the Momaken program.
The eligibility of an individual benefiting from the program is not affected by the Fund’s support in other programs.
The Training Program:
Training is provided electronically and is carried out by training agencies and governmental bodies. It includes all activities, methods and training enablers within the Skills Program, which aims to provide the targeted group with the knowledge, skills and experience necessary. It supports them in performing their job tasks and offers greater stability in them.
An employment support program provided by the Human Resources Development Fund. The program aims to support research and jobseekers in the private sector. The fund bears a percentage of the employee’s wages, and includes support for all the jobs in the private sector for full-time and remote work. The program adds additional support in regions and cities with fewer job opportunities, less female employment. It provides support to persons with disabilities, and is for small, medium and micro enterprises.
Targeted Entities:
All private sector entities are subject to the support provided through this program, unless they are suspended by the Ministry of Human Resources and Social Development of the Human Resources Development Fund. The minimum wage is 3200 riyals. The maximum wage is 15,000 riyals, according to social insurance records. The duration of support period extends to two years.
The Tamheer program is an on-the-job training program for Saudi graduates from local and foreign universities and graduates of institutes and colleges who hold technical, health, and administrative diplomas. It aims to train them in government institutions and distinguished companies in the private sector so that they can acquire the expertise and skills necessary to prepare them to participate in the labor market.
Targeted Entities:
The applicant/trainee has to be:
A Saudi Citizen
Holding bachelor degree or higher, or holding of technical, health or administrative diploma.
The social insurance records at the Ministry of Human Resources and Social Development should indicate that the applicant has not been registered for any job during the previous six months.
Not currently employed.
Applying for the program for the first time.
Program Benefits:
A financial reward of (3000) riyals per month for the trainee for bachelor’s degree holders and above, and a financial reward of (2000) riyals per month for the trainee for holders of technical, health and administrative diplomas, provided by the Human Resources Development Fund.
Insurance against occupational hazards.
Electronic training courses.
Experience certificate provided by the Human Resources Development Fund after completing the training program.
Provide financial facilities for small and medium enterprises to increase production capacity and deliver the growth and expansion that resonates with investor’s aspirations.
Program Products And Services:
Support growth of promising projects (established projects).
Collaboration with business accelerators.
Collaboration with other financing institutions (Social Development Fund).
The Program Offers The Following:
Longer tenure (minimum of 8 years).
Longer grace period (up to 24 months).
Possibility to reduce net worth requirement to 50% of the loan amount.
Upfront disbursement of 30% of the loan amount.
Program Objectives:
Encourage and support small and medium projects to grow.
Small & Medium Enterprises Loan Guarantee Program – Kafalah
The program provides effective guarantees to stimulate financing and support small and medium enterprises (SMEs) that contribute to strengthening the national economy. İt also provides financial guarantees to enhance enterprise access to the necessary financing through strategic partnerships, national cadres, and innovative and knowledge-based technical tools.
Objectives:
Encouraging financial institutions to engage with the SME sector.
Supporting SMEs in accessing appropriate financing.
‘Monshaat’ has launched the Venture Capital Initiative, one of the initiatives designed to stimulate the private sector, which aims to stimulate venture investments by investing in funds as well as co-investing with angel groups for the primary goal of minimizing equity financing gaps for startups and SMEs. Saudi Venture Capital Company was founded in 2018 to implement the objectives of this initiative.
Objectives:
Supporting start-up companies and investment funds.
Creating an investment ecosystem with targeted practices to bridge financing gaps and achieve economic integration.
Creating a successful investment environment by stimulating the private sector to invest in promising start-up companies.
Small & Medium Enterprises General Authority – Monshaat
A service provided by the General Authority for SMEs ‘Monshaat’ among private sector stimulating initiatives, and in cooperation with the Social Development Bank to provide low-cost loans to finance companies licensed by the Saudi Arabian Monetary Agency, which provides financing solutions with competitive advantages for small and medium enterprises.
Program Objective:
Promoting lending to micro, small and medium enterprises by providing low-cost loans.
Small & Medium Enterprises General Authority – Monshaat
An e-service that qualifies and empowers small and medium-sized enterprises by linking them to the purchasing opportunities of the public and private sectors and facilitating access of enterprises to purchasing opportunities to ensure growth and market opening.
Small & Medium Enterprises General Authority – Monshaat
In an effort to reach entrepreneurs and SMEs owners in all cities and governorates of the Kingdom, the General Authority for SMEs has created an application called “Monshaat’s Windows” to provide guidance and counselling services. The application aims to increase enterprise success and stability and to enable enterprises to overcome challenges by providing specialized advisers and mentors with business expertise.
Objectives:
Reducing the failure rate or drop-out from the market through counseling and appropriate solutions by specialized advisers.
Supporting entrepreneurs throughout the Kingdom.
Increasing success rate for SMEs and enabling them to achieve stability, growth and overcome challenges.
Through it, it reduces the personal guarantees and financial solvency required to obtain financing, enabling entrepreneurs to start their industrial activities by creating innovative investment and financing tools.
Targeted Groups:
Small and medium enterprises.
Entrepreneurs.
Benefits:
Soft loans (without asking for personal guarantees or mortgaging the investor’s property).
Diversifying the investment tools available to entrepreneurs and small and medium enterprises.
Submission Mechanism:
Through the electronic loan platform provided by the Industrial Fund, on condition of joining and passing the industrial business incubators program.
This program contributes to the improvement of local developers in the field of Renewable Energy’s production and promote the quality of products specialized mainly in Solar and Wind Energy. Thus, aligning them with the local and global demands through three tracks of financing:
Financing Renewable Energy Components Manufacturing
Financing Benefits:
Longer tenor (up to 15 years).
Including grace period (up to 36 months).
Financing up to 75% of project cost.
Alignment with the Renewable Energy Projects Development Office (REPDO).
Financing Distributed Solar Electrical Generation
Financing Benefits:
Longer tenor (up to 15 years).
Including grace period (up to 36 months).
Financing up to 75% of project cost.
Available for projects owners and developers in commercial and agriculture sectors.
Financing Renewable Independent Power Producers (IPPs)
The Saudi Export Incentive Program aims to encourage Saudi companies to enter and expand export markets, as the program offers nine incentives that are compatible with the requirements of the World Trade Organization, covering the costs borne by Saudi companies in the different stages of their export activities.
Products And Services:
Individual Participation in Trade Fairs: Saudi Exports will provide this incentive to reimburse 65% of the fees up to ceiling of 150,000 SAR.
Legal Support: Saudi Exports will provide this incentive to reimburse 85% of the fees up to a ceiling of 100,000 SAR.
Marketing and Advertising: Saudi Exports will provide this incentive to reimburse 75% of the fees up to a ceiling of 200,000 SAR.
Product Certifications: Saudi Exports will provide this incentive to reimburse 50% of the fees up to a ceiling of 250,000 SAR.
Advisory Supply Chain & Export Strategy: Reimbursement of 55% of fees up to ceiling of 255,000 SAR.
Potential Buyer Visit Support: Saudi Exports will provide this incentive to reimburse 90% of the fees up to 50,000 SAR.
E-commerce Listing: Saudi Exports will provide this incentive to reimburse 70% of the fees up to a ceiling of 55,000 SAR.
Product Registration: Saudi Exports will provide this incentive to reimburse 50% of the fees up to ceiling of 55,000 SAR.
Specialized Training: Saudi Exports will provide this intensive to reimburse 55% of the fees up to a ceiling of 50,000 SAR.
The bank aims to enhance the development and diversification of Saudi exports and increase its competitiveness, provide export financing and guarantee services, and secure export credit with competitive advantages, enhance confidence in Saudi exports and their entry into new markets and reduce the risks of non-payment, and provide credit facilities for exports.
Products And Services:
Letter of guarantee: issuance of letters of guarantees.
Buyer’s credit: short to medium-term revolving.
Structured financing for international projects: Includes medium to long-term tailored loans.
Working Capital Finance: Finance export-related working.
Line of credit International and Domestic: Lines of credit extended to international and domestic Financial Institutions for import of Saudi Exports.
Letter of Credit Insurance Policy: An insurance policy between Saudi EXIM and local commercial banks and financial institutions to protect them against the risk of nonpayment of an irrevocable Letter of Credit (LC) issued by the importer’s bank.
Export credit insurance policy: A credit insurance policy that covers the Saudi exporter against the risks of non-payment of the international buyer resulting from commercial or political risks.
Economic Cities And Special Zones Authority (ECZA)
ECZA enhances the Kingdom’s global competitiveness by launching and enabling a range of cities and special economic zones that provide an attractive regulatory environment for investment. ECZA supports targeted competitive incentives and enablers, highly efficient integrated government services, and a stimulating living environment with global quality of life standards. The lunch took place in four special economic zones, including:
1- King Abdullah Economic City (KAEC) SEZ
Sectors of Opportunity:
Automobile supply chain and assembly.
Consumer goods.
ICT (Electronic light manufacturing).
Pharmaceuticals.
MedTech.
Logistics.
2- Ras Al-Khair Special Economic Zone
Sectors of Opportunity:
Shipbuilding and MRO.
Rig platforms and MRO.
3- Jazan Special Economic Zone
Sectors of Opportunity:
Food processing.
Metals conversion.
Logistic.
4- Cloud Computing SEZ
Sectors of Opportunity:
Cloud computing.
Access Attractive Economic Incentives Across The SEZ Network:
Corporate income tax reductions.
A variety of withholding tax exemptions.
Deferred customs duties on goods entering the SEZ.
Expat levy ensuring fees exemption for employees and their families in the zone.
VAT exemptions based on sector/activity criteria.
Flexible and supportive regulations around foreign talent.
You can visit the website of Economic Cities and Special Zones Authority (ECZA) for more details:
Which aims to promote national goods and services to become the preferred option locally and internationally in collaboration with a group of public and private partners.
Provided Benefits:
Marketing for products and local brands
Use of “Saudi Made” logo on products
Workshops participation
Connecting with all government stakeholder entities
The Contracting Method Of Localization Of Industry & Knowledge Transfer (LIKT)
Local Content & Government Procurement Authority
Industry localization and knowledge transfer agreements are agreements directed to investors who own leading technologies around the world to motivate them to transfer technology and knowledge to the Kingdom in exchange for a government purchase guarantee, the percentage and duration of which are agreed upon according to a feasibility study that considers the investment returns on the government commitment as well as on the investor.
Economical Impact:
Developing local content through the impact of the establishment of factories by major international companies within the Kingdom as well as creating jobs, transferring knowledge, and creating new local supply chains.
Attracting foreign investments.
Reducing dependence on imported products and creating new opportunities to export local products.
In line with supporting promising small and medium-sized industrial enterprises, the SME Scale-Up product was launched to provide financial facilities to SMEs with proven success records to allow them to increase their production capacity and reach the growth and expansion that resonates with their aspirations. This offering is available for both new and existing SIDF investors.
The Initiative Requirements:
Brownfield projects with three years of audited financials.
Increase in revenue or volume sold.
Terms and conditions apply.
Benefits:
Longer tenure (8 years).
Longer grace period (up to 24 months).
Possibility of reducing the net worth requirement to 50% of the loan amount.