Saudi Arabia has launched four special economic zones that will offer companies financial and non-financial incentives as it seeks to attract more foreign investment and position itself as a global business centre.
The new zones will focus on the key growth sectors of advanced manufacturing, cloud computing, medical technology and maritime, the Saudi government said.
They will offer foreign investors a chance “to have a stake in the world’s fastest-growing economy”, said Khalid Al-Falih, chairman of the Economic Cities and Special Zones Authority and Minister of Investment.
The new zones are the King Abdullah Economic City SEZ, Jazan SEZ, Ras Al Khair SEZ and Cloud Computing SEZ, which is located in the King Abdulaziz City for Science and Technology.
Special economic zones are geographically defined areas that support specific activities such as investment, trade and employment by providing competitive advantages and legislative frameworks that differ from the base economy.
In October 2020, Mr Al Falih said Saudi Arabia planned to launch a series of special economic zones focused on logistics, biotechnology and the maritime, chemical and manufacturing industries to attract investment and boost its economy.
The Arab world's biggest economy is pushing to become one of top 15 global economies by 2030.
It is developing a series of projects in critical sectors ranging from tourism to manufacturing and putting in place reforms to attract investment as part of its Vision 2030 programme to reduce reliance on oil.
In October 2022, the kingdom launched the Global Supply Chain Resilience Initiative (GSCRI) that seeks to support investments worth 40 billion Saudi riyals ($10.6 billion) in its first two years.
The project will allocate 10 billion riyals in financial and non-financial incentives for investors as the country seeks to expand its transport sector and become a global logistics centre.
The four new zones will offer companies financial and non-financial incentives such as competitive corporate tax rates, duty-free imports of machinery and raw materials, 100 per cent foreign ownership, easier set-up procedures and “flexibility in employing foreign labour”, the Saudi government said.
“The zones will become engines of growth, increasing the kingdom’s export competitiveness, attracting talent, boosting technology and improving our global links,” said Nabil Khoja, secretary general of the Economic Cities and Special Zones Authority.
Of these zones, the King Abdullah Economic City will focus on advanced manufacturing and logistics, from the automotive supply chain, including assembly, as well as consumer goods, information and communications technology and MedTech.
Located on the Red Sea coast, less than 90 minutes from Jeddah Airport, the 60-square-kilometre city offers access to global trade routes through King Abdullah Port.
Its anchor investor Lucid, the luxury electric vehicle manufacturer backed by Saudi Arabia's Public Investment Fund, will produce 150,000 EVs a year from its base in King Abdullah Economic City.
Jazan SEZ, an industrial centre, will focus on trade with fast-growing markets in Africa and Asia. It offers access to Jazan port for the export of goods and import of materials.
“Jazan is part of the kingdom’s fertile south-western region, providing opportunities for the manufacturing, processing and distribution of food products to cater [to] growing regional demand and meet food security challenges across the region,” the Saudi government said.
Ras Al-Khair SEZ will be a fully integrated marine ecosystem, with a network of existing investors.
Forty per cent of the zone is already reserved. It will offer opportunities in shipbuilding and repair, offshore drilling and the maritime value chain.
Cloud Computing SEZ will serve as a centre for emerging and disruptive technology.
The zone is based around a hybrid model that allows investors to establish physical data centres and cloud-computing infrastructure in several locations within the kingdom.
“It will open up new gateways for investors worldwide to capitalise on the rapidly growing global cloud market, expected to be worth $834 billion by 2027,” the Saudi government said.
Saudi Arabia's economy is forecast to grow 3.1 per cent this year and the next, following an 8.7 per cent expansion in 2022, according to the International Monetary Fund.
The kingdom, the world's largest exporter of oil, benefitted from the rally in crude prices last year.
