Dammam- Saudi Arabia plans to boost the capital of the Saudi Industrial Development Fund (SIDF) by 6 billion riyals ($1.6 billion) to help finance the kingdom’s entry into new industries, Minister of Energy, Industry, and Mineral Resources and Chairman of Saudi Aramco Khalid al-Falih said.
The additional planned allocation would be on top of the 3 billion riyals of capital recently injected in the fund, Falih said without giving a figure for total current capital.
“We are talking about renewable energy industries, conversion industries, automotive industries, vital industries that have never existed in the kingdom,” he said, adding that military and pharmaceutical projects would receive support.
Saudi Arabia is seeking to diversify the economy beyond oil exports as low crude prices have strained state revenues.
To do this, Riyadh is initially relying, to a large extent, on projects financed by big state funds.
Saudi Aramco on Wednesday reaffirmed its steadfast commitment to its In-Kingdom Total Value Add (IKTVA) localization program by celebrating the accomplishments made by both the company and its suppliers since its launch a year ago.
At a ceremony attended by Prince Saud bin Nayef bin Abdulaziz, governor of the Eastern Province, as well as government dignitaries, business and supplier executives, Falih said in a keynote speech: “IKTVA represents a pioneering and model program, among other major programs on which the Saudi Arabian government is working to expand and diversify the economy, localize strategic industrial and economic sectors, and create jobs, in line with Saudi Vision 2030.”
Falih said that the localization of the Saudi economy, by both the public and private sectors, has reached 35% in 2015 and is expected to reach 50% by 2021, 59% by 2025 and 70% by 2030.
“These ambitious targets will be pursued through an integrated program to encourage suppliers to procure their goods and services locally,” he said.
He added that the national localization program, the IKTVA initiative, and similar other programs, represent strong incentives to strengthen and complement the Kingdom’s industrial transformation strategy.
He explained that this strategy rests on three pillars. “First, the development of new industries and economic activities based on the strengths of the current economic platform; second, a legal and legislative framework that provides an enabling business environment and the incentives needed to achieve an integrated and competitive industrial sector; and third, a Saudi economy that is competitive in global markets thanks to strong industrial and exports sectors.”
Notably, IKTVA is Saudi Aramco’s flagship localization initiative, designed to drive domestic value creation, with the aim of achieving 70% localization of all spending on goods and services and enabling the export of 30% of Saudi energy sector products by 2021.
In addition to enabling a sustainable Saudi energy sector, IKTVA provides a level playing field for suppliers through consistency and transparency in application and process.
Uniform evaluations for both service and material suppliers will be consistent across the company, creating supplier-focused partnerships.
In his keynote address, Saudi Aramco President and CEO Amin H. Nasser said that while the current low oil price environment has posed challenges for the oil and gas industry, particularly for service providers and suppliers, a long term perspective is required and will ensure IKTVA succeeds.
“IKTVA can be part of the building blocks for a thriving and competitive world class Saudi energy sector as Saudi Aramco champions massive investments that will create new industries, which will need completely new localized supply chains,” he said.
In his closing remarks, Nasser said that the passion and desire of young Saudis to make a difference and a make a mark in their careers is a powerful incentive to ensure that IKTVA is a success.
“This priceless resource can be the lifeblood of our nation’s transformation.”
Saudi Aramco has been working diligently to enable the training and development support systems required to meet the critical needs for highly trained and highly productive Saudi manpower through partnerships with government training institutes.
In partnership with Technical and Vocational Training Corporation (TVTC), 12 national training centers are now operational Kingdom-wide, with a target of 28 by 2030. Among them, he pointed out; they will have the capacity to graduate up to 360,000 young Saudi men and women in a wide range of disciplines.