KSA investment The power of One English1 - sagia.gov.sa · PDF fileKSA investment. The power...
Transcript of KSA investment The power of One English1 - sagia.gov.sa · PDF fileKSA investment. The power...
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Contents
▪ SAGIA history, challenges and future aspirations
▪ The Kingdom, decades of development and investment, achievements, opportunities and challenges
▪ The power of one, unified investment roadmap
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Contents
▪ SAGIA history, challenges and future aspirations
▪ The Kingdom, decades of development and investment,
achievements, opportunities and challenges
▪ The power of one, unified investment roadmap
3
KSA Timeline of key events (1/2)
SOURCE: Web, press, team analysis
Pre 1932 1932 1938 1960 1976-77 1980 1981
� Saudi Arabia was primarily known for its deserts and as the home of two of Islam's holiest sites - Makkahand Madinah
� The kingdom unified under king Abdul-Aziz AlSaud
� Oil is
discovered and production begins under the US-controlled Aramco (Arabian American Oil Company).
� Saudi Arabia is a founding member of Opec(Organisation of Petroleum Exporting Countries)
� Saudi Arabia purchase all Aramco
from the US
� Royal Commission for
Jubail and Yanbu (RCJY)
was formed to oversee infrastructure and services of Jubail, Yanbu and RasAl Zour industrial cities.
� Oil drastically
changed its lifestyle
and demographics. People were drawn away from the desert to modern urban areas.
� Saudi Arabia is a founder member of the GCC(Gulf Cooperation Council).
1975
� SABIC was founded. It marked the beginning of economy’s diversification by using oil extraction by-products to produce commodities for export –such as chemicals, polymers & fertilizers
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Booming economy by all measure, but diversification below ambition
• Oil accounts for 83% of total export& 90% of income
• Saudization level in most sectors does not exceed 20%
• Local content in most sectors dose not exceed 20%
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Distribution of spend on large CapEx projects
1 Some pre-engineering, engineering, and procurement activities happen in parallel
NOT EXHAUSTIVE
Total
184
GCC
34
Foreign based in GCC
36
Foreign
114
Foreign GCC
SOURCE: Zawya
Oil and gas and petrochemical project mix among EPC contractors
USD bn, 2012 active projects, varying end dates
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Isolated actions to develop the local industry, often leveraged by foreign capital to boost use of local workforce and improve local infrastructure
Clear view on supply gaps and programs initiated to address the gaps. E.g., minimum local content requirements to bid for exploration and acquisition of blocks
Clearly defined and implemented strategies based on supply gaps. High-level of professional qualification, import substitution and technology development initiatives
Supply industry at world-class level (competitive to export goods and services). Achieved high employment generation, maximized income and limited local content incentives
Local content maturity level
National industrial
development
Emerging local
content model
Basic local
content model
Isolated initiatives
for the local industry
Compared to other countries with similar natural reserves GCC countries
are lagging behind with regards to local content development
SOURCE: Accenture analysis, Press search
NorwayUK
Tanzania
Indonesia
South Africa
Colombia
Trinidad & Tobago
Nigeria
Malaysia
Angola
Mexico Brazil
KSA
China1
1 Follows different economic model focused on exporting low-end goods
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A snapshot of the healthcare industry reveals that Saudi Arabia
is an “importer” of skills and products
WHO NHA, WHO GHO, Business Monitor International, MoH statistical year book 1432 :SOURCE
Percent Local
Expatriates
1From medical colleges
40
Public Private
Service provision 60
22 Financing 63 15
Government PI OPP
Local production Imports
Pharmaceuticals 20 80
Local production Imports
Medical devices 100 <10 90
Graduates198 2
Physicians/Nurses
27 73
Education and
training
HEALTHCARE
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Material and Construction accounts for largest percentage of
project lifecycle
Expert interview; team analysis: SOURCE
�
Percentage oftotal cost
1 Other includes Masonry, Metals, Wood & Plastics, Therm & Mosit Protec, Specialties, Conveying Systems, Integrated Automation, Communications, Electrical Safety & Security
CONSTRUCTION
Land costConsulting
services
Excavation
and earth
works
Material&
Construction
Electricity
and water
utility
Fit-outs/
Interior
construction
Other
15 %15-20%~ %~5%2 %2-4%~ %~50%1 %1-2%~ %~20%~3 %~3-5%
0%
9%4%
3%
Concreting Package
Other1
HVAC
46%
10%
27%
Finishes
Plumbing
Electrical
Door & Windows100%
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Top 5 Largest Construction Material Import Categories
USD Bn
KSA is importing more than 5 Bn USD in construction material
2010 UN Commodity Trade Data : SOURCE
CONSTRUCTION
Structures and parts of
structures
Refined copper and
copper alloys
Taps, cocks, valves and
similar products
Total
0.8
1.2
0.9
0.9
5.3
Seamless tubes, pipes
and hollow profiles
Flat-rolled products of iron or non-alloy steel
1.6
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Budget expenditures have grown at 11% per year since
2000
SOURCE: Ministry of Economy & Planning, Ministry of Finance, & SAMA
0
200
400
600
800
1,000
1,200
1,400
-100
0
100
200
300
400
500
600
700
+11% p.a.
05040302012000
SAR Bn
2012111009080706
Budget Balance – Right Axis
Expenditures-Left Axis
Revenues-Left Axis
KSA Budget Revenues & Expenditures
Expenditures of
~830 Bn SAR in
2012 vs ~230 Bn
SAR in 2002
14SOURCE: Ministry of Finance Press Release; Other Press Releases; Team Analysis
KSA budget’s focus on welfare, education, healthcare and enabling
infrastructure will create demand for services in these sectors
Sector
2013 Projected Government
Expenditures, USD Bn
10
15
17
27
54 25
12
7
8
4
XXPercentage of Total Budget Spend
37% of total
budget spend
on education
and healthcare
where ~60-70%
of spend is on
on-going service
delivery
Education &
Training
Health &
Social Affairs
Transport &
Telecom
Water,
Agriculture, &
Related Infra-
structure
Municipality
Services
Expected to grow by 5% p.a. in the next 5 years
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That’s why we need to unify our vision& efforts to
▪ Diversify our economic base
▪ Attract technology and ensure knowledge transfer
▪ Create meaningful jobs
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Contents
▪ SAGIA history, challenges and future aspirations
▪ The Kingdom, decades of development and investment, achievements, opportunities and challenges
▪ The power of one, unified investment roadmap
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There is clearly a need for unified investment plan (UIP) to keep all the
forces aligned
Iserve as a sector blueprint for
decision makers
Ifocus government agencies and align
on few development priorities
Iavoid duplication and enable
synergies
Icreate actionable implementation
plan
SOURCE: Team analysis
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More than 30 government agencies or programs are involved in the
different stages of the investment process
Provision of financing
3
Provision of enablers
4
CRITICAL LINKAGE BETWEEN INVESTMENT
OPPORTUNITY AND GROWTH
▪ NIS▪ NICDP▪ MODON▪ RCJY▪ CITC▪ King Abdullah
Financial District▪ KA-CARE▪ SCTA Tourism
Strategy▪ �
▪ SAGIA▪ Economic City
Developer▪ Chambers of
Commerce▪ NICDP▪ MODON▪ RCJY▪ �
▪ ECA▪ MODON▪ RCJY▪ HRDF▪ TVTC
▪ MOF▪ PIF▪ IIC (tbd)▪ SIDF
▪ Sanabel
▪ TCF
▪ �Overall investment strategy
Identification of opportunities and investor attraction
1 2
Ensure delivery
5
Enable & accelerate growth
6
▪ MOCI▪ EC▪ MODON▪ NIS▪ NICDP▪ RCJY▪ CITC▪ King Abdullah
Financial District▪ KA-CARE
▪ MOL/TVTC/ HRDF
▪ SAGIA ▪ ECA▪ Municipalities▪ MinPet
Need to ensure linkage between focus of enablers
and investment priorities
Need to ensure linkage between delivery and
accountability for impact
▪ Tanmiya▪ MinPet▪ SEC▪ KACST
What is the ‘Saudi Inc’ governance framework to manage the complexity of this process?
SOURCE: Team analysis
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Objectives of the Unified Investment Roadmap
Scan existing sector and investment priorities using two approaches: competitive sectors + government spent
Develop a national investment roadmap based on prioritized (sub-) sectors, and identify 15-20 ‘platform investments’, i.e. investments to unlock sector potential and accelerate growth
Focus on describing 3-6 concrete programs for implementation (incl. infrastructure, enablers, incentives, and investment)
Align multiple stakeholders on jointly pursuing these 3-6 programs
Develop robust governance mechanism to follow up and pursue additional opportunities
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Targeted sectors& mechanism
We aim to liberalize promising sectors in the Kingdom such as health care, engineering and construction, manufacturing, transportation, communications, and spare parts through:
▪ Create mechanisms in government projects that enables the creation of leading national companies
▪ Exploit Government spending in activating the role of the private sector and raise the local content in state enterprises
▪ Mandate the allocation of a percentage of government contracts to small and medium local business
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In conclusion
The Kingdom have had several developmental achievements and witnessed many booms, but this one is the most
significant one and requires our collective efforts to translate this sustained boom into meaningful diversification and job
creation through targeted investment road map and strategies that aim to unlock key sectors and localize industries