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Thu 15 Dec 2016 02:00 PM

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Saudi Arabia allocates extra $1.6bn to expand into new industries

Additional funds are on top of the $817m of capital recently injected in Saudi Industrial Development Fund

Saudi Arabia allocates extra $1.6bn to expand into new industries
Energy Minister Khalid al-Falih. (Getty Images)

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, Energy Minister 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.

"There is now a study to increase the capital of the fund by a large amount which will give it an opportunity to develop other industries," the minister told reporters late on Wednesday.

"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.

It is expanding its main sovereign wealth fund, the Public Investment Fund, to invest in strategic projects and firms.

The SIDF was established in 1974 to finance growth of private industry by providing loans to set up factories and upgrade existing ones. It also offers consultancy services to local industrial projects.

In its early years, the SIDF managed the government programme to finance electricity companies, helped to develop the cold storage and date-processing industries, and analysed government support for public hospitals. It is now involved in guaranteeing loans for small and medium-sized enterprises.

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