JEDDAH: A batch of 300 Saudi-made scroll chillers are set to be exported to the US in what is a first for the Kingdom, the CEO of Johnson Controls Arabia has announced.

Speaking to Arab News, Mohamad Al-Shaikh revealed the market value of the products stands at SR100 million ($26.66 million), and the shipment will come from the Johnson Controls Arabia Manufacturing Complex in King Abdullah Economic City.

Though the domestic demand for heating, ventilation, and air conditioning equipment and technology is growing, the total addressable market for Saudi Arabia is still small compared to the global demand, the executive said.

Reflecting on the milestone of the company’s largest export order to date, Al-Shaikh said: “It is a very proud moment for us as a Saudi company to reach a level where our Saudi-made products are compliance competitive to meet all the quality requirements according to the specification for the United States’ market. 

“We have reached the maturity level where we are able to use Saudi talents, Saudi engineering and Saudi supply of chain to ship our fine products to the US market.”

The company plans to increase exports from 30 percent to 60 percent of its total production output over the next three years, aligning with the national industrial strategy and Vision 2030 to enhance economic diversification and local production development.

He said: “We are thrilled also to announce our most ambitious and largest export order of 1,000 YORK Scroll Chillers for next year over three phases.”

The event also housed the signing of a memorandum of understanding between Johnson Controls Arabia and the Saudi Export Development Authority. 

This agreement aims to establish a strategic account for JCA, enhancing Saudi Arabia's non-oil exports capable of competing on a global scale, in line with Vision 2030.

Additionally, Johnson Controls Arabia announced the groundbreaking for a new factory expansion, supported by the Local Content and Government Procurement Authority. The expansion will start manufacturing water-cooled chillers with a high capacity of up to 6,000 tons of cooling, the world’s largest air conditioning product.

During his opening keynote, Al-Shaikh underscored the company’s dedication to innovation, sustainability, and supporting the local content through exports of Saudi-made products.

“This milestone reflects our unwavering commitment to advancing local content and the Saudi-made initiative, which are integral to the Kingdom's economic diversification efforts. By exporting Saudi-made products to the US market and 26 other global markets, we are not only contributing to the growth of our economy but also showcasing the quality and innovation of our Saudi products on a global stage,” he stated.

After commending the long-standing bilateral trade relations between the Kingdom and the US, Al-Shaikh added: “At JCA, we have a vision and a strong commitment to the Saudi Market, where we focus on reinforcing localization and boosting job creation to support the economy while giving back to the community.”

Johnson Controls Arabia has made significant strides in local manufacturing, with 80 percent of its sales coming from locally manufactured products. 

The company’s exports have also grown to account for over 30 percent of its total production, demonstrating its commitment to global expansion and market diversification.

RIYADH: Saudi Arabia recorded a budget deficit of SR12.4 billion ($3.3 billion) in the first quarter of 2024, comprising 16 percent of the annual deficit forecast set by the Ministry of Finance at the end of the previous year.

This suggests that it aligns with expectations, showcasing the Kingdom’s progress in accelerating spending related to Vision 2030 implementation, alongside its careful fiscal management.

The Ministry’s quarterly performance report also revealed an annual 9 percent boost in its non-oil revenues to reach SR293.43 billion, primarily driven by increased taxes on goods and services.

Report data showed these taxes surged by 11 percent to approximately SR70 billion in the specified period. This income source constituted nearly a quarter of total government revenues and approximately 63 percent of non-oil income.

This typically refers to taxes imposed on particular products or services, rather than on individuals or businesses as a whole. Examples include Excise Tax, Value-Added Tax, and specific levies such as those targeting expatriates.

The percentage share of non-oil revenues from the overall government income increased to 38 percent, up from 36 percent in the same quarter of 2023.

The second largest factor driving the non-oil revenue growth is categorized as Other Revenues, which, as per the Ministry’s report, includes income from a variety of sources. 

These encompass revenues from other public government units, including the Saudi Central Bank, sales conducted by other entities such as income from advertising and fees from port services, administrative fees, fines, penalties, and confiscations.

Conversely, oil revenues experienced a 2 percent uptick, reaching SR181 billion. However, their percentage share decreased from 64 percent in the same quarter the previous year to 62 percent. This brought total government revenues to SR293.43 billion.

The tightening of oil revenues can be linked to the voluntary oil production cuts adopted by members of the Organization of the Petroleum Exporting Countries and their allies, known as OPEC+. Saudi Arabia announced in March the extension of its 1 million barrels per day cut, initially implemented in July 2023, until the end of the second quarter of 2024.

Government expenditure

Expenditures surged by 8 percent during this period, reaching SR305.82 billion, with non-financial capital expenditure, often referred to as CAPEX, driving much of this growth.

This category saw a substantial 33 percent increase, totaling SR34.5 billion, and it encompasses investments in physical assets like buildings, machinery, and infrastructure, aimed at enhancing the Kingdom’s capacity and capabilities.

The Ministry had indicated in its budget statement in December for the fiscal year 2024 that there will be increased spending during the coming years to expedite the implementation of key programs vital to the objectives of Saudi Vision 2030. Therefore, the quarterly deficit remains within expectations, reflecting prudent fiscal management.

The second most significant factor driving the increase in expenditure is the utilization of goods and services, which surged by 12 percent during this period, reaching SR60.7 billion. Accounting for 20 percent of total expenditure, their substantial share amplified their impact.

This category represents the total amount spent on acquiring goods and services by the government for various purposes, such as operational activities or resale. It reflects the government’s consumption or investment in resources necessary for its operations, excluding any changes in inventory levels.

In third place was the compensation of employees, making up the largest portion of the total at 45 percent, reaching SR137.5 billion. However, its growth during this period was only 3 percent.

According to the Ministry’s report, this refers to the compensation received by an employee for the work they perform, which can be in the form of cash or non-monetary benefits. It includes any social security contributions that the government unit pays on behalf of its employees.

Although subsidies account for a small portion of government spending, at 3 percent, they experienced the highest growth rate, reaching SR8.33 billion, highlighting the Kingdom’s dedication to investments in education, health, and social protection programs.

Additionally, the data revealed that health and social development were the second-largest contributors to expenditure growth, increasing by 20 percent to reach SR60.5 billion, following municipal services.

The Ministry’s report indicated that the deficit will be covered entirely through borrowing. Domestic debt accounted for 60 percent, or SR665.03 billion, of the end-of-period debt balance, while the remaining 40 percent came from external debt, totaling SR450.8 billion.

Compared to advanced economies or G20 countries, Saudi Arabia’s public debt as a percentage of GDP remains relatively low. Additionally, it is well-covered, with government reserves totaling around SR392 billion in the first quarter of this year.

This robust reserve level provides a substantial buffer against any potential financial challenges or economic downturns, enhancing the Kingdom’s fiscal stability and ability to meet its financial obligations.