ANKARA: Turkey’s TAEK atomic energy authority on Monday granted Russian builder Rosatom a construction license to start work on the first unit of the Akkuyu nuclear power plant, the state-run Anadolu news agency said.
The grant comes a day before a visit by Russian President Vladimir Putin to Ankara, where Putin and Turkish President Tayyip Erdogan will also attend a ceremony to officially launch Akkuyu’s first unit.
“As a result of the construction license process, an important step in the project started nearly three years ago, being completed ... it has been decided by TAEK to grant a construction license for the construction of the first unit of the Akkuyu Nuclear Plant,” Anadolu quoted a TAEK statement.
The $20 billion, 4,800 megawatt (MW) plant, is part of Erdogan’s “2023 vision” marking 100 years since the founding of modern Turkey and is intended to reduce Turkey’s dependence on energy imports.
However, since Russia was awarded the contract in 2010, the project has been beset by delays.
Last month, sources familiar with the matter said Akkuyu was likely to miss its 2023 target start-up date, but Rosatom, which is looking for local partners to take a 49 percent stake in the project, said it is committed to the timetable.
The Interfax news agency later cited the head of Rosatom saying that the sale of the 49 percent stake was likely to be postponed from this year until 2019.
Turkish companies have been put off by the size of the financing required as well as by concerns they will not receive a sufficient share of the lucrative construction side of the deal, two industry sources have said.
Putin will make a two-day visit to Turkey from Tuesday where he will meet Erdogan and Iranian President Hassan Rouhani for a summit on Syria. (Reporting by Tuvan Gumrukcu and Orhan Coskun, editing by David Evans)
Turkey grants Rosatom construction license for first unit of Akkuyu nuclear plant
Turkey grants Rosatom construction license for first unit of Akkuyu nuclear plant
- The grant comes a day before a visit by Russian President Vladimir Putin to Ankara.
- The $20 billion, 4,800 megawatt (MW) plant, is part of Erdogan’s “2023 vision”.
Fitch affirms Jordan’s BB- rating with stable outlook
RIYADH: Jordan’s macroeconomic stability has led to Fitch Ratings affirming its long-term foreign currency issuer default ratings at BB- with a stable outlook.
This confirmation highlights the country’s progress in fiscal and economic reforms, alongside resilient financing supported by its liquid banking sector, public pension fund, and international assistance, as outlined in a press release.
However, the country’s ratings are constrained by high government debt, weak growth, and risks in domestic and regional politics.
“Jordan has preserved economic and political stability despite significant external shocks, including social instability in the region (Arab Spring) and wars in neighboring countries (Iraq and Syria), but these shocks have led to lower growth and significant government debt build-up,” stated Fitch in the report.
It further noted: “A prolonged or expanded Gaza conflict, even if it does not involve Jordan directly, could weaken growth prospects and increase the challenges for debt reduction.”
The analysis also pointed out that current account deficits and net external debt higher than rating peers have negatively impacted Jordan’s position.
According to the US-based agency, a BB- rating signifies an elevated vulnerability to default risk, particularly in the event of adverse business or economic changes.
This rating also indicates that there is business or financial flexibility in the country that supports the servicing of financial commitments.
Fitch further noted that Jordan’s government maintains its commitment to advancing its three pillars: economic, public administration, and political reform agenda despite the external challenges.
The report added that Jordan’s economy expanded by 2.6 percent in 2023. However, the rate of growth is expected to contract to 2.3 percent this year, driven by lower tourism inflows, weaker external trade performance, and continued regional political uncertainty.
Fitch noted that if geopolitical risks ease, the country’s economy is expected to grow by 2.8 percent in 2025.
The credit rating agency also highlighted that Jordan’s general government deficit increased to 3 percent of gross domestic production in 2023. This reflects a wider central government deficit, which stood at 5.2 percent of GDP.
“We project that the deficit will ease to 2.6 percent and 2.4 percent in 2024 and 2025, respectively, as expenditure restraint will balance lower-than-budgeted revenue growth and higher interest payments,” added Fitch.
Saudi Arabia woos investors with lucrative business environment
- Vision 2030 aims to reduce the nation’s dependence on oil, diversify its economy, and build a vibrant society
RIYADH: With an average growth rate of 4 percent over the past seven years and an upward trajectory buoyed by a pro-business environment, Saudi Arabia has demonstrated remarkable resilience amid global economic challenges.
Given its strategic location, robust economy, and ambitious Vision 2030, it’s hardly surprising that the Kingdom stands as a beacon of progress and growth in the region.
A key to this has been attracting foreign direct investment, as well as working on agreements with neighboring countries to ensure Saudi Arabia is seen as being open for business.
Economist and policy adviser Mahmoud Khairy told Arab News that the Kingdom has “enhanced trade relations and reduced barriers” in this regard as it seeks to put its Vision 2030 strategy into action.
That plan aims to reduce the nation’s dependence on oil, diversify its economy, and build a vibrant society.
Khairy added: “The Kingdom has already started to take serious steps to capitalize on its exceptional location through the establishment of logistics and free trade zones, coupled with efforts to diversify the economy under Vision 2030, attracts foreign investment and fosters trade partnerships.”
Khairy emphasized that investments in digital infrastructure and e-commerce platforms have further modernized the Kingdom’s trade ecosystem, enhancing its connectivity with global markets.
Furthermore, he said, tremendous efforts have been made to advance the financial ecosystem, with new measures planned to improve the ease of doing business and develop the investment environment further.
Khairy’s analysis was echoed by Saudi-based economist Talat Hafiz, who told Arab News: “One of the main pillars of Saudi Vision 2030 is to create a business environment that supports economic growth in the Kingdom and attract FDI as well as diversify the Kingdom’s economy. The only way to reach such a goal is through facilitating doing business and trade.”
Gateway to global trade
Situated at the crossroads of Europe, Asia, and Africa, Saudi Arabia boasts a strategic geographical location that makes it a natural hub for international trade, giving it a unique advantage when it comes to Asia-Europe commerce channels and distributing goods through the Arabian Peninsula.
With access to over 424 million consumers within a three-hour flight radius, the nation serves as an efficient gateway to markets spanning three continents.
The Saudi freight and logistics industry, supported by state-led investments in infrastructure, is a vital component of the Kingdom’s economic landscape.
Saudi Arabia has undertaken extensive expansion and modernization efforts at its ports, such as the King Abdulaziz Port in Dammam and the King Abdullah Port in Jeddah, incorporating cutting-edge technology for efficient cargo handling.
Khairy said that the development of such modern ports “increases the country’s capacity to handle large volumes of cargo, thereby improving efficiency and reducing transit times for goods entering and leaving the region.”
When compared to many Western countries, Saudi Arabia’s corporate tax rates are notably lower, with certain industries and regions even benefiting from tax exemptions or reduced rates.
Mahmoud Khairy, Economist and policy adviser
Hafiz added: “With a combined total of 290 berths, Saudi Arabia’s ports comprise the Middle East’s largest seaport network that not only contributes a great deal to national growth but also showcases the Kingdom’s formidable regional and international standing.”
He went on to emphasize that the country’s ports are capable of accommodating any form of vessel, which is what drove the Saudi Port Authority, also known as Mawani, to provide specialized terminals for various types of loads.
Furthermore, substantial investments are being made in expanding rail and road networks to enhance connectivity and streamline the transportation of goods domestically.
According to Khairy, the expansion and improvement of transportation networks, including roads, railways, and airports, enhance connectivity both domestically and internationally.
“This seamless connectivity facilitates the movement of goods and people, supporting supply chain efficiency and enabling businesses to access global markets more effectively,” he added.
Saudi Arabia’s well-established logistics infrastructure offers unparalleled opportunities for logistics companies and manufacturers looking to capitalize on its strategic advantages.
Business-friendly environment
The Kingdom offers a business-friendly environment characterized by stable economic policies, government incentives, and a youthful, tech-savvy population.
Hafiz noted that Saudi Arabia “jumped significant places in the World Bank’s Ease of Doing Business index and IMD, making the Kingdom among the world’s top improvers.”
Ease of Doing Business index ranked economies from 1 to 190, with the Kingdom standing at number 62 in the final report issued in 2020.
Saudi Arabia ranked 30 in 2023’s IMD World Digital Competitiveness Ranking, which assesses the capacity and readiness of an economy to adopt and explore digital technologies as a key driver for economic transformation in business, government, and wider society.
The government, through Saudi Arabia’s General Investment Authority, also known as SAGIA, offers various incentives to attract foreign investors. These incentives comprise low corporate tax rates, streamlined business regulations, and robust infrastructure development.
“When compared to many Western countries, Saudi Arabia’s corporate tax rates are notably lower, with certain industries and regions even benefiting from tax exemptions or reduced rates,” Khairy pointed out.
He went on to say that “the digitalization of bureaucratic processes makes it easier for investors to navigate the business environment and set up operations in the country.”
The incentives play a significant role in investor decisions by enhancing the attractiveness of Saudi Arabia as an investment destination.
Businesses are drawn to markets with favorable tax regimes and simplified regulatory frameworks, as they contribute to higher profitability and operational efficiency, according to Khairy.
Hafiz added: “These developments, which are aligned with Saudi Arabia’s Vision 2030, will hopefully increase FDI’s contribution to the Kingdom’s gross domestic product from 3.8 percent in 2016 to 5.7 percent by 2030.”
With this, Saudi Arabia presents lucrative opportunities for foreign investors and entrepreneurs seeking to establish their presence in the region.
Furthermore, initiatives such as the establishment of special economic zones and the growth of the venture capital sector underscore the country’s commitment to fostering innovation and entrepreneurship.
The VC sector has over 80 active firms, with more entering the market, highlighting the commitment to nurturing innovative startups.
Adding to this, the continuous infrastructure development initiatives like NEOM and Red Sea Global underscore the dedication to establishing top-tier business environments and fostering opportunities across diverse industries.
Over 200 international firms, including Northern Trust, PepsiCo from the US, IHG Hotels and Resorts, PwC, and Deloitte from the UK, have opened their regional headquarters in Riyadh.
The Kingdom had previously announced that it would not award any deals to any foreign company or commercial entity with a Middle Eastern base outside Saudi Arabia starting from January 1, 2024.
Driving innovation through technology
Embracing the transformative power of artificial intelligence and machine learning, Saudi Arabia is spearheading initiatives to harness these technologies for economic growth.
Under the leadership of Crown Prince Mohammed bin Salman, the nation is investing in AI research, education, and infrastructure to propel its industries into the digital age.
According to Khairy, collaboration between academia, industry, and government can harness AI’s potential to enhance productivity and competitiveness across sectors.
AI adoption can lead to new products, services, and business models, optimizing operations and decision-making, he explained.
Generative AI, a cutting-edge technology, holds immense potential for revolutionizing supply chain and procurement operations in Saudi Arabia.
The National Strategy for Data and AI, initiated in 2019, outlines the country’s commitment to advancing AI capabilities and data-driven decision-making.
Generative AI, powered by large language models like OpenAI’s ChatGPT and Google’s BERT, stands out as a transformative technology with the potential to revolutionize supply chain and procurement operations.
Within the context of Vision 2030, generative AI aligns with goals of economic diversification, localization, and sustainability, positioning Saudi Arabia as a key player in international supply chain management.
“The new National Industrial Strategy of the Kingdom not only focuses on raising the number of factories in Saudi Arabia to 36,000 but also improves its technological capabilities,” according to Hafiz.
A visionary path forward
As Saudi Arabia continues its journey towards economic diversification and innovation, it remains poised to emerge as a global leader in business and technology.
“I believe that the sky is the limit when it comes to business opportunities in Saudi Arabia, especially in economic sectors that could add value to the Kingdom’s economy such as advanced technologies: AI, digital economy, internet of things and other sectors, especially advanced renewable energies,” Hafiz said.
Saudi Arabia’s youth population, combined with its dedication to education and technological advancement, positions it as a powerhouse of talent and innovation.
In the era of supply chain diversification, Saudi Arabia has emerged as a compelling rival in the global logistics market. The Kingdom presents an attractive proposition for businesses seeking to optimize their supply chains and expand their global footprint.
As Saudi Arabia continues on its path to becoming a global supply chain hub and a leader in AI and machine learning, it is prioritizing programs that equip its youth with the skills and knowledge required for these transformative job opportunities.
By all accounts, Saudi Arabia can leverage generative AI to not only enhance its supply chain and procurement processes but also empower its youth to thrive in the workforce of the future.
“The technology sector is experiencing rapid growth, driven by government initiatives and increasing investment in areas such as digital transformation and artificial intelligence,” Khairy said.
The rise of the Saudi perfume market
- Sector mirrors the Kingdom’s opulent lifestyle and its people’s historical connection to scents
RIYADH: Saudi Arabia, with its rich cultural heritage and burgeoning economy, presents a complex study of contrasts and traditions, particularly in its luxury perfume market.
This sector, deeply ingrained in Saudi society, mirrors the Kingdom’s opulent lifestyle and its people’s historical connection to scents.
With the market’s valuation at $1.8 billion in 2023 and anticipated growth to $2.6 billion by 2032, the Kingdom’s perfume industry is a testament to the cultural significance of fragrance.
According to data from the Ministry of Commerce, exports amounted to SR416 million ($110.9 million) for 10 months of 2023, compared to imports, mostly from European countries, amounting to SR1.1 billion during the same period.
The rise of locally produced Saudi perfumes poses an opportunity for investors no longer restricted to international brands.
The number of commercial registrations granted to practice the manufacturing and bottling of perfumes in Saudi Arabia further demonstrates the rising tendency of citizens to invest in the industry.
According to data from the ministry, the number of existing commercial records for perfume manufacturing activity in the Kingdom reached 1,263 by the end of 2023.
Moreover, the push for female empowerment and increased tourism are expected to buoy the market further, making it an appealing sector for investors and entrepreneurs.
An inclination toward luxury and tradition
In the heart of Saudi Arabia’s scent market lies a preference for luxury and tradition. Premium products dominate the scene, reflecting a societal penchant for high-quality ingredients and prestigious brand associations.
Chandra Mohan, the assistant vice president at research firm P&S Intelligence, told Arab News that the demand for premium fragrances is increasing due to rising personal disposable income and surging consumer awareness about the benefits of using extravagant perfumes.
Data gathered by his firm revealed that the luxury category held the larger share of the Kingdom’s scent market in 2022, accounting for almost the entirety of the sector at 90.9 percent.
“Premium perfumes are made up of high-quality ingredients, which differentiate them from other cheap products. These are also concentrated and long-lasting and are designed to evolve and offer more sophisticated and refined experience,” Mohan explained.
“Nowadays, people are also becoming more conscious about brands and shifting toward quality and premium products, as they have high spending power. Thus, the growing usage of premium products is contributing to the growth of the market in the country,” he added.
The inherent quality and luxury of the Saudi perfume market, driven by the cultural significance of scents such as oud and musk, have contributed to the industry’s success.
With their complex profiles and traditional ingredients, Arabic perfumes command a significant market share.
Their popularity is a nod to the region’s cultural heritage, where these fragrances are more than just scents: They are a bridge to the past and a celebration of Arab identity.
Demonstrating this, oriental perfumes accounted for the largest revenue share of the Saudi perfume market, accounting for 65.77 percent in 2022, according to a report by P&S Intelligence.
The report further noted that this category is expected to grow by 6 percent from 2023 to 2030.
FASTFACTS
• With the market’s valuation at $1.8 billion in 2023 and anticipated growth to $2.6 billion by 2032, the Kingdom’s perfume industry is a testament to the cultural significance of fragrance.
• The number of commercial registrations granted to practice the manufacturing and bottling of perfumes in Saudi Arabia further demonstrates the rising tendency of citizens to invest in the industry.
The craftsmanship behind these fragrances, often passed down through generations, adds layers of depth and sophistication, making them highly sought after locally and internationally.
The inclination toward premium fragrances connects back to deep-rooted cultural practices where perfumes served as an extension of personal identity and social standing, the owner of Saudi perfume brand “Nabdh,” Zaynah Al-Hamza, told Arab News.
The digital age and celebrity branding
The digital landscape has transformed how perfumes are marketed and sold in Saudi Arabia.
E-commerce, bolstered by the pandemic, has become a critical channel for reaching consumers, with many brands expanding their online presence.
“In recent times, developments in information and communication technologies, particularly social media, have revolutionized the way marketing activities take place. Social media has surfaced as a cost-effective and efficient information exchange platform for all,” Mohan said.
“Celebrities are also promoting several brands on social media and people are increasingly buying those products because of celebrity influence,” he added.
In March 2023, Portuguese influencer Georgina Rodriguez starred in social media adverts for Saudi fragrance brand Laverne, which later collaborated with global supermodel Taylor Hill.
Perfume companies partner with celebrities to increase brand awareness and drive website traffic and sales, the P&S global report said, adding that this tactic also aids in generating engagement, creating a community, and serving as a channel for customers.
This shift has made the Saudi luxury perfume market more accessible and has opened up new avenues for brands to engage with their audience through social media and online marketing.
The interplay between tradition and modernity and embracing digital methods sets the stage for a dynamic future in the Saudi fragrance industry.
The unisex phenomenon
Unisex fragrances, capturing the largest market share, indicate a progressive shift in consumer behavior. This trend underscores a growing acceptance of products that transcend traditional boundaries, with scents like oud, musk, and amber being used for scents that appeal to all customers.
“Another key trend observed in the market is the rising demand for unisex perfumes. This is because people have different tastes and a large number of individuals are looking for an aroma that is not only feminine but also masculine,” the P&S analyst said.
“Moreover, anyone can wear them, and it allows sharing and swapping collections among different genders. Furthermore, unisex perfumes are neutral in odor and millennial consumers are mostly choosing products with inimitable fragrances in order to build up their personality and individuality,” he added.
These preferences highlight the changing landscape of the Saudi market, which, despite its traditional foundations, is receptive to modern influences.
AlUla’s rise drives economic growth and job creation
- AlUla on track to achieve 2 million visitors annually by 2035
RIYADH: Increasing visitor numbers to the cultural and tourism hub of AlUla is already delivering a boost to Saudi Arabia’s economy in line with Vision 2030 ambitions, experts have told Arab News.
Situated in the northwest of Saudi Arabia and covering around 22,000 sq. km, the Kingdom’s historic city also boasts a thriving agricultural sector that plays a pivotal role in its economic development.
Built upon social, economic, and ecological principles, the Royal Commission for AlUla has outlined a strategic roadmap for the comprehensive development of the area, with the primary objective of assisting the Kingdom in diversifying beyond oil and contributing to the national gross domestic product.
This strategy encompasses three main pillars: tourism, heritage, and nature; local community; and economic diversification.
Phillip Jones, chief tourism officer at RCU, told Arab News: “AlUla is an integral part of the tourism objectives driven by Saudi Vision 2030. With AlUla’s regional economy primarily driven by tourism, by 2035, AlUla will contribute a cumulative SR120 billion ($31 billion) to the Kingdom’s GDP.”
He said the RCU is following a “light-touch” tourism model to ensure the continued conservation of AlUla’s natural and cultural heritage.
Jones also highlighted that AlUla hosted over 260,000 visitors last year, marking a 43 percent increase from the previous year, and projected that it would welcome more than 290,000 visitors in 2024.
“We are also on track to achieve 2 million visitors annually by 2035.”
Tourism infrastructure
Across the Kingdom, the transformative economic impact of tourism is in full swing.
In 2024, AlUla is poised to welcome two new hotels: Dar Tantora in the second quarter of the year and Hegra Boutique Hotel in the final quarter.
These new additions will join Habitas and Banyan Tree, core hotels that opened in 2021 and 2022 respectively.
Additionally, in the coming years, AlUla will also welcome AZULIK AlUla Resort, Sharaan Resort, and the International Summit Centre, among others.
“AlUla’s emergence as an expansive archeological, cultural, and tourism hub, equivalent in size to Belgium, is a significant milestone in Saudi Arabia’s economic diversification and global outreach enhancement efforts,” Ali Haider, regional director for Middle East and Africa at Nomadic, a subsidiary of Fragomen, told Arab News.
With AlUla’s regional economy primarily driven by tourism, by 2035, AlUla will contribute a cumulative SR120 billion ($31 billion) to the Kingdom’s GDP.
Phillip Jones, chief tourism officer at RCU
“As AlUla continues to develop, it is poised to attract a diverse range of visitors, both locally and internationally, in line with Saudi Arabia’s aim of attracting 150 million visitors by 2030 and having the tourism sector contribute $200 billion to the economy,” Haider added.
This development comes as RCU recently launched its first global brand campaign – “Forever Revitalising” – which Jones described as the embodiment of their vision for AlUla.
This showcases the commission’s commitment to not just preserving AlUla’s historical essence but also enhancing the region’s eternal appeal, according to the executive.
“We will continue to see the economic benefits of smart, sustainable development as we welcome more international visitors with new international flights, new luxury accommodations, and our year-round activities and attractions,” RCU’s Jones reiterated.
Haider emphasized how a surge in tourism will also lead to increased demand for ancillary services such as accommodation, transportation, tour guides, and dining establishments.
“By investing in destinations such as AlUla, the Kingdom aims to reduce its dependency on oil revenue and create new, sustainable sources of economic growth as well as preserve and promote its cultural heritage,” the Nomadic executive highlighted.
Workforce and talent acquisition
As the region undergoes development, there will likely be tangible improvements to the Kingdom’s broader talent acquisition and retention metrics across various sectors.
“While increasing demand for tourism to destinations like AlUla will create jobs locally within the tourism sector and other supporting sectors, visitors to AlUla may also leverage their stay to visit other parts of the Kingdom, or even the broader region, and thereby broaden the economic impact of their visit,” Haider explained.
He continued by stating that this could foster the development of lesser-known tourism destinations. Additionally, he mentioned that the global uptake of “bleisure travel” might result in visitors staying in the Kingdom for longer periods and potentially exploring the local business landscape.
He emphasized that due to several recent enhancements, this was more attractive than ever.
Bleisure travel refers to the blending of business and leisure activities within a single trip.
“Furthermore, AlUla’s potential to attract international talent will facilitate knowledge exchange and collaboration, leading to the transfer of skills and expertise to the local workforce,” Haider underlined.
He pointed out that the Kingdom’s ambitious target of creating over 1 million jobs within the tourism industry by 2030 reflects its commitment to leveraging both local and global talent to drive economic growth in multiple ways.
Additionally, he explained that creating those jobs “hinges on effective implementation strategies and sustained investment in infrastructure and human capital development.”
Saudi Arabia also has one of the youngest populations globally, with 63 percent of Saudis under the age of 30.
“The youth represent a significant advantage for the country’s diversification ambitions, offering a skilled, innovative, and cost-effective workforce. Additionally, it fosters entrepreneurship and accelerates technology adoption over the long term,” he emphasized.
Haider also highlighted how the fresh perspectives and digital proficiency of this demographic have the potential to propel the growth and competitiveness of Saudi Arabia’s economy on a global scale.
“Considering the Kingdom’s proactive approach to tapping into international talent pools – as evidenced by the recently enhanced Premium Residency Permit scheme – as well as its broader commitment to economic diversification coupled with AlUla’s strategic significance as a tourism destination, there is optimism that this initiative will contribute significantly to job creation,” he explained.
From RCU’s perspective, the people of AlUla are at the center of their strategy, and they are among the primary beneficiaries of the diversified economy.
“In the process, we expect to create around 40,000 new jobs by 2035, which will be filled mainly by talent from AlUla and across Saudi Arabia,” Chief Strategy and Digital Officer at RCU, Waleed Al-Dayel, told Arab News.
He added that RCU has already created “thousands of new jobs, trained thousands of Saudis in critical job skills to match the requirements of the new positions, provided language training and scholarships, and reduced the local jobless rate by more than half.”
Sustainable destination
There is no doubt that AlUla also plays a vital role in sustainability.
Al-Dayel explained that RCU’s development of the city into a world-class sustainable destination for tourism and investment was guided by the 12 principles of the AlUla Sustainability Charter, aligning with the goals of Saudi Vision 2030 and the Saudi Green Initiative.
The executive further elaborated on the increasing number of initiatives registered with the Saudi Ministry of Energy and Ministry of Environment, Water, and Agriculture. These are specifically focused on key sustainable growth initiative objectives.
“RCU’s comprehensive vision is transforming AlUla into a global sustainable destination where our community of residents, tourists, and future generations can thrive,” Al-Dayel highlighted.
In terms of transport strategy, the governorate’s residents and visitors prioritize eco-friendly options in line with the AlUla Sustainability Charter, as well as the national transport strategy’s aim to enhance the quality of life through improved transport services.
Al-Dayel also shed light on how RCU is developing a future transport model for AlUla, with a low-carbon tram line at its core, surrounded by pedestrian, equestrian, and biking trails. This model also supports the needs for individual vehicles and freight.
“When combined with the increase in open green spaces and revitalized urban design, the future of transport in AlUla will greatly contribute to the improved quality of life,” he concluded.
Johnson Controls Arabia celebrates export milestone of Saudi-made scroll chillers to US
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.
