The Economic Cities and Special Zones Authority (ECZA) is currently considering incentive packages and necessary exemptions tailored to the requirements of each region and the targeted investments. This includes developing flexible regulations aimed at fostering investor confidence in qualitative projects.
The Special Economic Zones (SEZ) hold the potential to unlock new avenues for development in Saudi Arabia. They are part of initiatives aimed at transforming the Kingdom into a premier global investment destination and a vital hub bolstering global supply chains.
Saudi Crown Prince Mohammed bin Salman bin Abdulaziz launched the four special economic zones last April, with strategic locations in Riyadh, Jazan, Ras al-Khair, and King Abdullah Economic City, north of Jeddah.
Sec-Gen of ECZA Nabil Khoja believes that the flexibility of the legislative environment and quick response to the changing needs of investors is one of the essential elements of the success of SEZ.
In an interview with Asharq Al-Awsat, Khoja revealed that regulations are being prepared, considering the most critical international experiences to facilitate the procedures for investors to enter the SEZ.
The Sec-Gen pointed out that the special economic zones were designed to increase investments in several new sectors, from assembling cars, manufacturing electronic devices, logistics services, building ships, and offshore platforms.
Given the Kingdom's potential, he expected that the SEZ would witness more investments during the coming period as an economic power that leads the fastest-growing major economies.
Asked about the Authority's achievements and plans, Khoja said the Investment Forum was hosted after Crown Prince Mohammed bin Salman announced the launch of four special economic zones on April 13.
The forum marked the initial step in showcasing the advantages of these zones and their role in fostering the development and diversification of the Saudi economy, as well as enhancing the investment environment.
In this short period, SEZ successfully attracted initial investments of approximately 47 billion SAR. Moreover, the total value of additional ongoing investments has reached 116 billion SAR across vital sectors, including the maritime, mining, industrial, logistics services, and modern technologies sectors.
The launched SEZs are ready to attract investors, and a large part of their infrastructure has been completed. Several companies are establishing or conducting their operations within the geographical boundaries of these zones, such as Lucid, International Maritime Industries, and Alibaba.
Khoja also expects increased investments during the coming period, especially since international investors are aware of the promising new opportunities.
Asharq Al-Awsat asked the Sec-Gen about the tools and incentives the economic zones utilize to attract investments. He explained that investing in SEZ provides a world-class operating environment supported by an integrated infrastructure that includes all basic services.
He noted that it provides an integrated package of competitive advantages and financial, administrative, and legislative incentives that enable international companies to achieve their commercial goals and ambitions and help them expand their business in the region.
The establishments will receive a package of incentives, including reductions in corporate income tax, tax exemptions, customs duties on goods entering the SEZ, and exemption from fees for resident workers and their family members.
Companies also benefit from value-added tax exemption, depending on the sector or commercial activity, and a package of flexible and business-friendly regulations attracting foreign talent.
Khoja recalled that SEZs are designed to increase investments in several new sectors, including car assembly, electronics, logistics services, shipbuilding, and offshore platforms.
The ECZA is responsible for studying incentive packages and exemptions according to the needs of each region and according to the investments it targets.
In response to a question about the legislative environment that attracts investors, the expert indicated that the flexibility of the legislative environment and the speed of response to the investors' changing needs are two of the essential elements of the SEZ's success.
The Authority is keen to ensure the integration of the SEZ with the leading economy by setting clear criteria for accepting investment applications, which would limit the possibilities of self-optimization and unfair competition.
Asked about the targeted global factories and the advantages of economic zones, Khoja explained that they provide new opportunities for investors according to the competitive advantages of each region.
The promising opportunities will significantly impact investors to overcome the most important challenges related to the delivery of raw materials and products to consumers and suppliers and consolidate the Kingdom's role as a link that enhances efficiency.
The Ras al-Khair SEZ hosts the most advanced marine basin in the region, which will provide a wide range of integrated manufacturing services for companies operating in the maritime sector.
King Abdullah Economic City's special economic zone provides advanced infrastructure and integrated service facilities that support the requirements of companies in promising sectors.
The Jazan zone also provides investment opportunities in the food and mineral processing industries to meet the market's needs.
SEZ supports the Kingdom's tendencies to promote innovation and entrepreneurship in various sectors, in line with Vision 2030, by attracting direct investments in several promising sectors, he said.
He noted that it provides tremendous opportunities that benefit the local economy and supports the growth of entrepreneurs and startups.
He noted that the presence of companies will lead to a significant increase in service demand, representing an exceptional opportunity to conclude partnerships with local suppliers and enhance the integration of the local supply chain.
Khoja explained that the new regions will provide favorable opportunities for cooperation and partnership between local and international investors of different sectors and business sizes.
It will contribute to creating an environment that improves the competitiveness of Saudi exports, strengthening the Kingdom's position as a leading global investment destination, and opening new horizons for development.
The Sec-Gen explained that ensuring the success of any initiative, cooperation, coordination, and concerted efforts requires the collective effort of different teams working together.
He indicated that the Authority has channels of communication with all stakeholders to place the Kingdom on the map of SEZ through cities that compete regionally and globally.
The Authority acts as an organizational umbrella for an integrated system that includes 43 government agencies concerned with facilitating the work of the new SEZ.
He indicated that the Authority coordinates with various government agencies, including Modon, to achieve the desired goals of the new SEZ and contribute to achieving the goals of Vision 2030.
Asharq Al-Awsat asked Khoja about the government's Shareek program. He noted that SEZs play an integral role in the basic economy by targeting new strategic investment sectors and establishing an integrated financial, administrative, and legislative incentives system.
He declared that it contributes to the development of the non-oil economy, the promotion of local content, and the increase of exports.
The objectives of the special economic zones traverse with the Sharee program, said Khoja, adding that they complement each other and support the Kingdom's endeavors to improve the business environment and help private sector companies achieve their investment goals.
They also support the local market with more qualitative opportunities and create promising sectors that contribute to enhancing the flow of foreign investment, diversifying the local economy, facilitating the transfer of knowledge, and enhancing confidence in the investment system in the Kingdom.
During the recent meeting with representatives of international companies and investors, Khoja recalled they were interested in the advantages offered by the new special economic zones and the exceptional opportunities they provide in vital sectors and industries.
All these factors support national strategies by developing local capabilities, encouraging industrial renaissance, and contributing to the growth of the Saudi economy as a leading center for business.
In a record time, the Special Economic Zones were able to attract billions of dollars in investments, but the launch of the four zones is only the beginning, said Khoja.
He told Asharq Al-Awsat that the new special economic zones have a pivotal and vital role in promoting local content and knowledge transfer by supporting the establishment of local startups and accelerating their growth.
The special economic zones support the Kingdom's efforts to promote a culture of innovation and entrepreneurship in various sectors.
It works to facilitate the transfer of knowledge and advanced technology by attracting international companies and benefiting from their technical and operational expertise.
The new cloud computing special economic zone in Riyadh is a gateway that allows investors to innovate and expand the horizons of the fastest-growing technology in the world.
He explained that the region adopts a business model based on innovation, allowing investors to establish data centers and cloud computing infrastructure in multiple locations within the Kingdom.
It will positively affect establishing specific industries and building specialized local capabilities.
Khoja concluded that all these activities undoubtedly contribute to the creation of direct and indirect jobs, the participation of national competencies, and the transfer of expertise in the targeted sectors.
