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Saudi Crown Prince Announces 'King Salman Automotive Cluster' in KAEC

Saudi Crown Prince Mohammed bin Salman bin Abdulaziz Al Saud. Asharq Al-Awsat
Saudi Crown Prince Mohammed bin Salman bin Abdulaziz Al Saud. Asharq Al-Awsat
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Saudi Crown Prince Announces 'King Salman Automotive Cluster' in KAEC

Saudi Crown Prince Mohammed bin Salman bin Abdulaziz Al Saud. Asharq Al-Awsat
Saudi Crown Prince Mohammed bin Salman bin Abdulaziz Al Saud. Asharq Al-Awsat

Prince Mohammed bin Salman bin Abdulaziz Al Saud, Saudi Crown Prince and Prime Minister, has designated “King Salman Automotive Cluster" as the official name of the cluster for automotive manufacturing activities, located within King Abdullah Economic City (KAEC).
The hub will be a crucial step in Saudi Arabia’s economic diversification and will be an enabler for the automotive sector and sustainable transportation, contributing to raising non-oil GDP and increasing exports. The cluster enhances the automotive sector in Saudi Arabia by accelerating the growth of local capacity in manufacturing and sector-related research and development, and by making supply chains to serve regional and international markets more efficient.
King Salman Automotive Cluster will be a major center for the automotive sector and will have headquarters and factories for local and international companies. Notable companies include Ceer, the first Saudi electric car brand, and Lucid Motors, which opened its first international factory in KAEC in 2023. It will also host several PIF joint projects with global manufacturers, including Hyundai Motor – establishing a highly automated factory for manufacturing cars in Saudi Arabia – and a joint venture agreement with Pirelli to establish a tire factory locally.
The cluster aims to create optimal investment opportunities for the private sector to develop promising sectors in Saudi Arabia. It is expected that the cumulative GDP contribution from companies operating in King Salman Automotive Cluster will reach approximately SAR 92 billion by 2035. The cluster will also contribute to the creation of many direct and indirect jobs, support the local manufacturing sector, and increase Saudi exports to regional and global markets, which will positively impact the national balance of payments.
King Salman Automotive Cluster will leverage the supportive environment and investment incentives provided by KAEC, including its logistical infrastructure, and its proximity to a highly developed port in a vital location for global trade. These factors will provide opportunities for the local private sector and international companies to engage as partners, suppliers, and investors in the automotive sector and its related services.
The new King Salman Automotive Cluster will contribute to achieving Saudi Vision 2030, which aims to diversify the economy and achieve sustainable growth. The cluster will also be a major contributor to fulfilling the aims of the National Industrial Development and Logistics Program, which seeks to position Saudi Arabia as a leading industrial nation and a global logistics center by developing high-growth sectors locally and attracting foreign investment. This is in addition to supporting the objectives of national strategies for industry, transport and logistics.
Automotive and mobility is one of PIF’s strategic investment sectors, highlighted by partnerships with the private sector. PIF’s portfolio has several investments with the aim of enhancing the industry’s infrastructure and developing the sector’s local supply chain capacity. PIF is also contributing to enhancing local expertise and technology through joint ventures with major international manufacturers.

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Business

ECB Says Will Have to Act Again if 2nd-round Inflation Effects Appear

European Central Bank (ECB) President Christine Lagarde (CL) and Gabriel Makhlouf (CR), Governor of the Central Bank of Ireland during the family photo at the Informal meeting of EU Finance Ministers in Dublin Castle, Dublin, Ireland 18 September 2026. EPA/BRYAN MEADE
European Central Bank (ECB) President Christine Lagarde (CL) and Gabriel Makhlouf (CR), Governor of the Central Bank of Ireland during the family photo at the Informal meeting of EU Finance Ministers in Dublin Castle, Dublin, Ireland 18 September 2026. EPA/BRYAN MEADE
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ECB Says Will Have to Act Again if 2nd-round Inflation Effects Appear

European Central Bank (ECB) President Christine Lagarde (CL) and Gabriel Makhlouf (CR), Governor of the Central Bank of Ireland during the family photo at the Informal meeting of EU Finance Ministers in Dublin Castle, Dublin, Ireland 18 September 2026. EPA/BRYAN MEADE
European Central Bank (ECB) President Christine Lagarde (CL) and Gabriel Makhlouf (CR), Governor of the Central Bank of Ireland during the family photo at the Informal meeting of EU Finance Ministers in Dublin Castle, Dublin, Ireland 18 September 2026. EPA/BRYAN MEADE

European Central Bank will have to raise interest rates again if high energy prices feed through to other areas but so far there is no sign of such second-round inflation effects, ECB policymaker ⁠Gabriel Makhlouf said on ⁠Wednesday.

"Although inflation is above our target, we're not seeing the sorts of second round effects ⁠that start feeding through to prices," Makhlouf, Ireland's central bank chief, told national broadcaster RTE in an interview.

"If that happens (energy prices remain high and feed into other areas), we will have to take ⁠action ⁠again to meet our target."

Makhlouf cautioned earlier this month following the ECB's second interest rate hike this year that raising interest rates "a great deal more" risked damaging economic growth.

Also Wednesday, the ECB said the European Union could close a third of its productivity gap with the United States if it had as many large companies, adding its voice to calls for reforms that make it easier for businesses to scale up.

European policymakers are trying to tackle the EU's economic underperformance relative to the United States, which is home to many of the world's largest companies and is leading the race to develop artificial intelligence.

EU workers produce ⁠20% less output ⁠per hour than their US counterparts, according to academic studies. They were almost on an even keel in 1995.

ECB staff found that if Europe had the same distribution of large and small firms as the United States – without changing how productive each ⁠type of company is – the productivity gap would shrink by roughly one-third.

Large firms are significantly more productive than smaller ones. Companies with at least 250 employees generate an average of €86,800 in value added per worker annually, while firms with fewer than 10 employees produce less than half that amount.

The ECB said Europe's weaker productivity performance also reflects lower innovation, fragmented regulation and less developed capital markets, all of which ⁠make it ⁠harder for companies to grow and compete internationally.

The central bank backed the proposed "EU Inc" framework, an EU-wide corporate law regime aimed at reducing barriers to cross-border business activity.

Modelled loosely on Delaware's corporate framework in the United States, EU Inc would create a single legal structure operating across the bloc, bypassing a patchwork of 27 national company law systems and dozens of corporate forms.

"EU Inc. has the potential to support the Single Market, by strengthening competition, innovation and productivity growth," the ECB said.

Business

Surveys: Europe's Economy Surprisingly Resilient amid War-Driven Energy Shock

A view of the European Parliament in Brussels, Belgium, 23 September 2026. EPA/OLIVIER HOSLET
A view of the European Parliament in Brussels, Belgium, 23 September 2026. EPA/OLIVIER HOSLET
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Surveys: Europe's Economy Surprisingly Resilient amid War-Driven Energy Shock

A view of the European Parliament in Brussels, Belgium, 23 September 2026. EPA/OLIVIER HOSLET
A view of the European Parliament in Brussels, Belgium, 23 September 2026. EPA/OLIVIER HOSLET

Europe's economy is showing unexpected signs of health even as conflicts in the Middle East and Ukraine drive up energy costs for firms and households, key business surveys showed on Wednesday.

Business activity across the euro zone accelerated in September at its fastest rate in over three years, S&P Global said, with solid growth registered across both the manufacturing and service sectors.

The S&P Global Flash Euro Zone Composite PMI Output Index — where readings above 50.0 signal an expansion in activity — jumped to 53.1 in September from August's 52.0, defying expectations in a Reuters poll ⁠for a dip ⁠to 51.7. The highest forecast in the poll was for 52.6.

"All in all, today’s PMI readings are almost too good to be true," said Carsten Brzeski at ING.

"A euro zone economy that remains completely unharmed by an energy price shock and supply chain disruptions is a welcome surprise. Let’s hope it doesn’t turn out to be a mirage."

S&P said the latest rise in output was broad based across geographies covered by its data.

Business activity in Germany, Europe's largest ⁠economy, expanded solidly in September despite firms facing increased inflationary pressures while in France it grew at its fastest pace in just over two years, driven by a rebound in services demand.

But in Britain, outside the European Union, growth cooled this month as inflation pressure built, its PMI showed, an awkward backdrop for finance minister John Healey ahead of his first budget next month.

Overall new orders in the currency union surged at their fastest pace in over four years supported by a further rise in exports — which include intra-euro zone trade.

The bloc's services PMI bounced to its highest in nearly a year and was well ahead of estimates for a fall, while the manufacturing index held steady.

A gauge of output - ⁠which feeds into ⁠the composite PMI - nudged higher.

To meet the rise in demand firms took on more staff but faced a jump in input costs due to elevated energy prices stemming from the US war with Iran. They were able to pass some of this on to customers.

"September’s big improvement in the euro zone’s composite PMI supports our view that despite the weakness in the official activity data in July, GDP will increase in Q3," said Jack Allen-Reynolds at Capital Economics. "The output price PMIs rose too, but there is still no sign of 'second-round' effects on wages."

Earlier this month the European Central Bank raised interest rates for the second time this year to quell an energy-driven inflation rise and warned price pressures could prove lasting.

Markets are pricing three more ECB rate hikes by the end of June 2027.

"Today's PMI readings make it more difficult for even the ECB's most dovish policymakers to rule out another rate hike," said ING's Brzeski.

Business

What Do Saudi SMEs Need to Grow?

What Do Saudi SMEs Need to Grow?
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What Do Saudi SMEs Need to Grow?

What Do Saudi SMEs Need to Grow?

Financing alone is no longer enough to propel Saudi Arabia’s small and medium-sized enterprises into their next phase of growth, as their needs increasingly extend to accessing markets and contracts, securing operating liquidity, reducing business costs and boosting productivity, competitiveness and their ability to expand.

Financing available to the sector has nevertheless continued to grow. Cumulative credit facilities extended to micro, small and medium-sized enterprises reached about SAR 467 billion ($124.5 billion) by the end of 2025, up 33% year on year.

At the same time, Saudi Arabia’s National Strategy for Entrepreneurship and SMEs is seeking to address challenges beyond the financing gap by improving access to markets, procurement and supply chains, reducing the cost of doing business and strengthening companies’ capacity for sustainable growth.

In the latest financing initiative, the Small and Medium Enterprises General Authority, known as Monsha’at, signed a cooperation agreement with STC Bank in September 2026 for a financing portfolio of up to SAR 5 billion ($1.33 billion) for micro, small and medium-sized enterprises.

The portfolio includes short-, medium- and long-term facilities covering working capital, operating needs, purchases of assets and equipment, and financing for contracts, projects and supply chains.

Businesses also require more than long-term financing. The Social Development Bank’s Working Capital product offers financing ranging from SAR 150,000 ($40,000) to SAR 10 million ($2.67 million), with repayment periods of up to 12 months, to cover day-to-day operating costs and strengthen cash-flow management.

The bank distinguishes between working-capital financing for operating costs and capital-expansion financing for assets and expansion.

From financing to growth

Rayan bin Ibrahim Alfayez, Monsha’at’s deputy governor for enterprise services, said the 13 initiatives under the National Strategy for Entrepreneurship and SMEs are designed to directly address priority challenges facing business growth and create a more efficient environment that supports expansion and sustainability while strengthening competitiveness in the coming period.

Alfayez explained that one initiative aimed at expanding opportunities for businesses focuses on empowering SMEs and startups in industrial cities and special economic zones. It seeks to help them capitalize on opportunities available in those areas and provide support and incentives suited to the nature of their businesses, supporting their growth and strengthening their presence in industrial and economic activities and value chains.

He added that the strategy also includes an initiative to increase SMEs’ share of procurement by large companies, broadening their access to opportunities and contracts, strengthening their participation in supply chains and helping build sustainable commercial relationships that support business growth and expansion.

Alfayez noted that another initiative aimed at reducing the cost of doing business addresses one of the challenges affecting enterprise growth by examining fees and requirements in coordination with the relevant authorities and developing mechanisms to support fees based on carefully considered criteria. The initiative is intended to ease the financial burdens associated with doing business and create a more favorable environment for companies’ growth and sustainability.

He said the initiatives work together to address a range of factors linked to business growth, from the operating environment to opportunities, markets and value chains, strengthening SMEs’ ability to grow and expand while increasing their competitiveness and contribution to the national economy.

Markets after financing

Financial and economic adviser Hussein Al-Attas told Asharq Al-Awsat that the increase in financing directed toward SMEs reflected clear progress in Saudi Arabia’s financing ecosystem, but the challenge was no longer financing alone. Rather, it was an enterprise’s ability to turn that financing into sustainable growth.

Al-Attas explained that an enterprise needs three interconnected elements: appropriate financing, access to markets, and operational and competitive capacity.

He said a company may secure financing, but in the next stage it needs contracts and sales opportunities that allow it to increase revenue, alongside managerial and technological development to boost productivity and the ability to manage cash flows and expand without allowing growth to become a financial burden.

Al-Attas added that access to markets and contracts represents the link most closely associated with an enterprise’s transition from survival to growth. Financing gives a business the capacity to act, while contracts and markets turn that capacity into revenue and cash flow.

He further stated that greater SME participation in government procurement and the supply chains of large companies, along with opening export channels, could have a direct impact on their ability to expand, alongside efforts to reduce the cost of doing business and raise productivity.

The next phase requires moving from the concept of “financing the enterprise” to “financing the enterprise’s growth,” he underlined, meaning that financing should be linked to markets, contracts, technology, productivity and expansion.

Strategy broadens its scope

The focus on markets forms part of the wider National Strategy for Entrepreneurship and SMEs, which includes 13 initiatives addressing sector challenges in access to markets and opportunities, financing, the business environment, innovation, data and expansion.

The strategy also aims to raise SMEs’ contribution to gross domestic product to 35% by 2030 and create more than 500,000 direct and indirect jobs.

Some initiatives seek to turn market access from a broad objective into direct contracting opportunities by qualifying enterprises and connecting them with the supply chains of large companies and projects.

This approach is reflected in Monsha’at’s Jadeer service, which aims to improve businesses’ readiness, qualify them to enter supply chains and enable them to benefit from procurement opportunities.

The equation for SME growth therefore does not stop at increasing available financing. It also depends on businesses’ ability to use that financing first to fund operations, then gain access to demand and contracts, improve productivity and reduce costs before moving into expansion and investment.

This reflects a shift from addressing the financing gap to addressing the growth gap: liquidity gives an enterprise the ability to continue operating and move forward, while access to markets and operational efficiency determine its ability to turn financing into revenue and sustainable growth.