The 50 new investment opportunities recently identified in Saudi Arabia’s machinery and equipment (M&E) sector are set to boost job creation by almost 60 percent within the next 10 years, experts from Kearney Middle East told Arabian Business.
Last week, the kingdom’s Minister of Industry and Mineral Resources Bandar bin Ibrahim AlKhorayef identified 50 new investment opportunities in the M&E sector, worth SR96 billion ($25.6bn).
“Many of the M&E opportunities are expected to grow between four and 10 percent annually for the next 10 years,” said Mehdi Kanso, Partner at global management consulting firm Kearney.
“The M&E sector employs over 100,000 people and has potential to generate increase this by 50 to 60 percent in the next 10 years.”
The move comes as part of the Gulf country’s efforts to diversify its economy away from its reliance on oil and grow its GDP by expanding the industrial sector, halving imports and boosting exports to both regional and global market, said AlKhorayef, who is also chairman of the National Industrial Development Centre (NIDC).
“The M&E industry is a key driver of economic diversification in Saudi Arabia. It will reduce the country’s reliance on oil and gas exports and create new opportunities for businesses and entrepreneurs. The M&E sector is poised for significant growth in the next decade,” Igor Hulak, Partner at Kearney, told Arabian Business.
The experts said that the M&E sector is crucial for the Saudi economy as it supports the oil and gas, construction, mining, and food sectors. In line with Vision 2030, it also supports import substitution and exports enablement.
The industry is also vital for the success of mega city projects such as NEOM, Qiddiya, and Amaala and can drive the success of key infrastructure projects like desalination plants and railway network expansions.
“The government of Saudi Arabia is actively boosting demand for M&E products, with plans to invest in mega projects (minimum of SAR 150 billion annually) across Aerospace & Defense, Automotive, Transport, Food and Agriculture, and Construction,” Kanso explained.
“These projects will require a wide range of M&E products, from heavy machinery for construction to specialized equipment for specific purposes.”
In addition to the 50 prioritized investment opportunities highlighted by AlKhorayef earlier this month, there are 100 more opportunities in the sector which have been identified by the National Industry Strategy (NIS).
Saudi Arabia launched the National Industry Strategy in October last year to triple industrial output and increase the value of the kingdom’s industrial exports to around $149 billion by 2030.
“The materialization of all these opportunities can potentially add 60,000 jobs in the sector. These developments indicate that the M&E sector is poised to attracted both local and foreign investments, providing a significant boost to Saudi Arabia’s economy,” Hulak said.
However, the experts noted that the sector still faces a number of challenges, including the limited local capacity to meet the growing demand for the sector’s products and services and the relatively higher cost of labour and materials which make it difficult for local industries to compete with lower-cost foreign manufacturers.
“The National Industry Strategy (NIS) has shown positive results so far. This investment is helping to modernize the Saudi industrial sector and make it more competitive in the global market,” Hulak said.
The new investment opportunities can be found on the Invest Saudi platform, where those interested in investing can make inquiries and check out all that is available.
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