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Saudi Arabia – Industrial Policy

The economic policy of the KSA Government aims at diversifying the economic base through reducing today's main dependence on exporting crude oil, but it seems for sure that this sector is to continue occupying the first rank compared to the other resources, as its huge revenues are the main financing source for the economic and social development projects.

 The objectives of the transformational industries determined as following:

-              To raise the national economy production capacity to the effect that it is able to produce a various group of commodities, and with costs helping it to compete at the local and foreign markets

-              To benefit from the great advantages offered by low energy prices and the surplus amounts of the crude materials resulting from oil and its industrial products, the agricultural, mineral and fishery wealth; and make use of these advantages and resources to diversify the industrial bases

-              To expand and deepen the Kingdom's connections to the modern world technology

-              To encourage benefit from all the private sector capacities in the manufacturing industry

-              To achieve regional, balanced industrial development

-              To raise the industrial sector productivity through encouraging the ideal production capacity factories

-              To reduce the industry dependence on non-Saudi workers; this is through developing national skills through boosting the technical and general education capabilities and adopting the in-service training approach

-              To increase the proportion of cooperation and integration among all existing industries

 Industrial Policy Statement

In 1394 AH/1974, the Government issued a statement determining the principles of the industrial policy which the Kingdom follows to achieve the desired industrial development. The motive behind issuing this statement is the Government's desire to give the Saudi citizens a full opportunity to achieve the most economic and social benefits from the industrial development program, as well as informing the Kingdom's ministries, government departments and businessmen inside and outside the Kingdom of the main principles of the state's policy towards the industrial development. The statement reads as follows:

1.            The Government aims at encouraging and expanding the manufacturing industry and the agro-depending industries; this is due to what these fields will achieve in terms of contributions to the national income; and what they will generate in terms of job opportunities leading to raising the living standard for individuals and community. Also, what the state will gain of benefits thanks to diversifying the country's economic base. And for this last reason, the Government will adopt the plans which will achieve a number of advantages, in addition to increasing the national income such as reducing the effect of the external economic upheavals on the Kingdom's economies, creating plenty of job opportunities to accommodate the technical developed calibers and capacities of the Saudi people.

2.            The principle of the free competition prevalent among the industrial and commercial institutions is the basic of the economic activity in the Kingdom. And having realized such a fact, this made the government believe that in order to achieve the industrial development objectives, at the end of the day; we must give these private institutions full freedom to bear the responsibility of carrying out the industrial projects. And in order to achieve this objective, all the support and assistance will be presented at all the stages of industrial projects implementation for the private institutions and businessmen who have a desire to achieve lucrative profits and the willingness to accept the success and failure results.

The government support includes helping to establish and finance industrial projects or participating in managing them if their size or the kind of technology which will be used above the private sector capacity alone.

3.            The government considers competition that targets customers' interest is the best way to push the private industrial institutions to choose the projects achieving profit and assimilating the purchasing market energy; this is through choosing the most appropriate projects for the needs of the markets, and which distinguish low production cost. This in turn leads to determine the prices of the products at reasonable and fair limits for both the producer and the consumer.  

The Government will not allow the harmful foreign competition such as dumping.

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