Egypt fuels private sector investment in Saudi industrial zones

Reuters/Ahmed Yosri

• Food industries lead $735.5m investment in Q2 2023
• Kingdom targeting $20bn in investments in food by 2035
• Low taxes and relaxed staffing laws attract foreign private businesses

Private sector investment in Saudi industrial zones has spiked by nearly 25 percent in the second quarter of 2023, with Egypt the primary source market for overseas investors.

The Saudi Authority for Industrial Cities and Technology Zones (Modon) announced that SAR 2.77 billion ($735.5 million) was invested in Q2 2023 — up 23.5 percent year-on-year.

The total number of industrial contracts signed hit 203 during the three-month period, and 1,236 factories are now operational in Saudi industrial zones.

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Privatised industrial areas grew by 100 percent to 1.62 million square metres, Modon said, adding that a total of 1,226 foreign investments were attracted from 67 countries in Q2 2023, mainly Egypt, Jordan, India, the US and the UK.

The Jeddah Second industrial zone was the most popular with private companies, with a 29 percent share of the Q2 2023 contracts won. Sudair and Al Kharj, both strategically located close to Riyadh, followed with 13 percent of the contracts each.

Saudi Arabia’s industrial zones offer favourable conditions to companies looking to set up in them, including relaxed Saudisation and foreign ownership laws, as well as tax holidays and incentives.

Food and beverages industries secured the most contracts, representing 17 percent of the total contracts awarded. Mining industries followed at 9 percent, chemicals and rubber at 6 percent each, and machinery and equipment at 5 percent.

Saudi Arabia’s Ministry of Industry and Mineral Resources is targeting investments worth $20 billion in the country’s food industry sector by 2035 — and the country’s industrial zones are helping to drive that investment.

Egyptian baking solutions firm Dr. Baker was among those to sign deals to operate in Saudi industrial zones in Q2 2023, and a flurry of other deals with food companies worth tens of millions of dollars were announced in June. 

Among them was an agreement worth SR140 million ($37.3 million) for the production of milk and fresh yoghurt in Jeddah’s Third Industrial City, and an investment of SR22 million ($5.86 million) for the manufacture of cocoa, chocolate, and sweets products in the Second Industrial City in Qassim.

Earlier in the year, Modon signed a SR50 million ($13.3 million) deal with Jordan Valley Food Industrial Co. to establish a factory in Jeddah Second Industrial City producing grains and legumes, and a $1.05 million deal with Dose Café to allocate a factory in Sudair city to food production.

Modon currently oversees 36 industrial cities across Saudi Arabia with more than 5,000 factories either already producing or under construction, as well as complexes and private industrial cities.