Saudi Arabia’s industrial investments have soared by 54%, reaching approximately SAR 1.5 trillion. The surge follows a 2019 government decision to exempt the industrial sector from financial fees.
The Federation of Saudi Chambers conducted a report assessing the economic impact of this exemption, effective from 2019 until the end of 2025. The study evaluated the decision’s effects based on seven key indicators, including GDP contribution, investment volume, and non-oil exports.
Strong Economic Performance
The industrial sector’s contribution to GDP increased from SAR 392 billion in 2019 to SAR 592 billion in 2023, representing 14.7% of the GDP. The number of industrial establishments also rose by 55.6%, growing from 7,625 in 2019 to 11,868 by 2024.
Investments in the sector climbed significantly, from SAR 992 billion to around SAR 1.5 trillion, reflecting the 54% growth rate. Foreign investments also surged, with the number of foreign factories increasing by 71.5%.
Job Creation and Workforce Localization
By the first quarter of 2024, the industrial sector employed nearly 1.2 million workers, including 358,000 Saudis. The localization rate reached 28%, with Saudi workers making up 12.9% of total private sector employees.
From January 2023 to March 2024, the industrial sector became the largest contributor to Saudi job creation, adding over 82,000 jobs, a 59% increase in nationals employed.
Non-Oil Exports and Product Quality
The sector’s contribution to non-oil exports reached SAR 208 billion, achieving a 12% growth rate. The decision to exempt financial fees also led to improvements in product quality through the adoption of new technologies and business models.
More industrial products now carry the Saudi Quality Mark, and domestic demand for locally produced goods continues to rise, boosting the sector’s overall output.
Government Support and Future Outlook
The government’s decision to bear financial fees for expatriate workers in industrial establishments was extended until 2025. More than 8,000 establishments have benefited, with expatriate labor fees in the sector estimated at SAR 5 billion.
