The new Ministry of Industry and Mineral Resources
As the countdown for Saudi Aramco’s listing has started, the Kingdom will establish an independent Ministry of Industry and Mineral Resources, separating it from the Energy Ministry. Bandar Al-Khorayef, a businessman from the Saudi industrial conglomerate Khorayef Group, has been named as head of the new Ministry of Industry and Mineral Resources.
The industry and mining sectors are critical to Saudi plans to diversify the economy of the world’s top oil exporter away from crude. The government aims to keep the economy thriving by aligning the education system with market needs, and by creating economic opportunities for entrepreneurs, small enterprises and large corporations in trade and industry.
The government plans to increase the private sector’s contribution to 65 percent of gross domestic product (GDP) from 40 percent, to raise the share of non-oil exports in non-oil GDP to 50 percent from 16 percent, to increase the contribution of small and medium enterprises (SMEs) to GDP to 35 percent from 20 percent, and to raise foreign direct investment (FDI) to the global level of 5.7 percent of GDP from 3.8 percent.
Assuming that the Saudi Industrial Property Authority (MODON) will be under its mandate, the new ministry will oversee more than 40 industrial cities covering massive areas across the Kingdom, while employing hundreds of thousands of locals and expats, and engaging hundreds of SMEs as the backbone of the economy. Furthermore, the new ministry will have the challenge of attracting leading global companies in the industrial field with added value to Saudi industrial investments.
Another program that could be under the new ministry’s mandate is the National Industrial Development and Logistics Program (NIDLP), which aims to transform the Kingdom into a leading industrial power and an international logistics platform in a number of promising areas.
The program focuses on four key sectors: Industry, mining, energy and logistics. It provides a range of essential enablers that include developing appropriate systems, providing financing, developing industrial lands, expanding the implementation of digitization procedures and training.
The new royal decree to set up an independent ministry is a wise one, and has been received with a great degree of confidence and optimism by the private sector. It is a strong message of support and endorsement to local and international industrial organizations, and will attract FDI by leading global companies.
• Basil M.K. Al-Ghalayini is the Chairman and CEO of BMG Financial Group.
