SABIC hosts key local content development meeting, responsibilities of company’s localization team transferred to CEDA unit
Yousef Al-Benyan, SABIC Vice Chairman and CEO, stressed the pivotal role being played by SABIC in developing and encouraging local content, and in supporting Saudi Arabia’s efforts to diversify its economy and increase industrial output to boost GDP growth.
In his opening remarks at the 14th Networking Meeting on Localization and Maximization of Local Industrial Content hosted at the company’s headquarters in Riyadh on May 18, Al-Benyan added that SABIC has pursued the development of local content at two levels. The first relates to procuring the company’s requirements from local suppliers, and second, attracting international manufacturers to the local market.
Al-Benyan said that under the two-pronged strategy, SABIC supports industrial clusters in various sectors by helping improve the products of local manufacturers and expand their range to take advantage of local opportunities. Under the second approach, SABIC seeks to transfer modern technology to the local market, create jobs for Saudis, and help local manufacturers form partnerships within the Kingdom.
Al-Benyan expressed his happiness over the launch of the Saudi Military Industries Company, announced by the Public Investments Fund on May 17. “The company will be an important contributor to increasing local content and localizing vital industries in the Kingdom. It will increase the demand for locally manufactured products and attract foreign investments, besides bringing in other strategic benefits.”
He thanked Prince Mohammed bin Salman bin Abdulaziz, Deputy Crown Prince, Second Deputy Prime Minister, Minister of Defense, and Chairman of the Public Investment Fund, for the strategic step in line with Saudi Vision 2030. “I supplicate the Almighty to preserve our wise leadership and support its efforts for the general good of the citizen and the development of the country,” he said.
The network members include representatives from government agencies and private sector institutions, reflecting the commitment of all parties to achieve the objectives of the Saudi Vision 2030 and align with the National Transformation Program 2020. The meeting was attended by representatives of the Local Content and Private Sector Development Unit of the Council of Economic and Development Affairs (CEDA), the General Authority for Small and Medium Enterprises, the Saudi Arabian General Investment Authority, the Job Creation Authority, the Ministry of Energy, Industry and Mineral Resources, the Ministry of Economy and Planning, the Ministry of the National Guard, the Ministry of Defense, Defense and Security Technology Establishment, Industrial Clusters Program, Maaden, Saudi Electricity Company, Advanced Electronics Company, and Tasnee.
In support of developing local content, SABIC increased the value of its procurement of locally produced materials in 2016 to SR 2.6 billion, which represented 35% of the total materials purchased in the year and an increase of 143% since SABIC began its local content efforts.
In 2016, the total value of local service contracts in SABIC reached SR 7.8 billion, which constitutes 86% of the total services sought by the company during that year. The value of local purchases of materials and services – excluding services for mega projects – increased to SR 10.4 billion in 2016, representing 64% of SABIC's annual purchases in the Kingdom in the year.
Meanwhile, the number of qualified domestic manufacturers has increased significantly from 230 local factories to 545, an increase of 132% as of the end of 2016. The company attracted more than 65 investors with a total capital of SR 9.6 billion, expected to create more than 11,000 new jobs in the local economy.
SABIC also sponsored and participated in five conferences and exhibitions that were aimed at supporting content localization. At these events, SABIC presented investment opportunities in various areas, including spare parts and chemicals required by the company. More than 1,000 items were showcased at the Armed Forces Exhibition, while 20,000 more were presented electronically. SABIC also established a special unit to develop local content called Local Business Development.
At the end of the meeting, Fahd bin Mohammed Al-Skeit, Advisor to the General Secretariat of the Council of Ministers and head of CEDA’s Local Content and Private Sector Development Unit, and Al-Benyan, signed an agreement to transfer all SABIC responsibilities and powers of the company’s Industry Localization Team to the Unit.
"Today, we are honored to open the door to our partners in this network team to contribute to the advancement of this initiative. We wish every success to these efforts," Al-Benyan said.
SABIC will continue to support content localization in line with the Saudi 2030 Vision, particularly with regard to raising the participation of local manufacturers and service providers in the national economy. In this regard, SABIC will continue to sponsor these network meetings for the next five years.
Under its local content initiative, SABIC has hosted 13 meetings of the Industry Localization Team since it was first launched by the company in 2011.
Leader, Global Communications