The plant of the Saudi Steel Pipe Company in the Second Industrial City of Dammam

The plant of the Saudi Steel Pipe Company in the Second Industrial City of Dammam

Modon on the fast track

Saudi Arabia’s march towards greater economic growth, diversification and employment owes much to Modon which is creating industrial cities in every corner of the kingdom

February 2014

Modon, the Saudi Industrial Property Authority, has announced it is aggressively pursuing its mission of creating industrial cities to bolster economic growth for both the public and private sectors, diversify the economy and raise employment levels.

The organisation’s current tally of 29 industrial cities – operating and under development – will grow to 40 within the next five years and cover 160 million sq m of land, it has said. Several cities are in the planning stage including Salwa, Dhuba, Nawan and Jeddah-4 as well as an enclave that will serve as a hub for military industries.

Modon currently oversees a range of industrial cities that have contributed significantly to Saudi industrial development, transfer of technology and overall prosperity. They include the industrial cities of Riyadh 1, 2  and 3, Jeddah 1, 2 and 3, Dammam 1, 2 and 3, Makkah, Qassim 1 and 2, Al Ahssa, Madinah, Al Kharj, Sudair, Hail, Tabuk, Arar, Al Jouf, Assir, Jazan, Najran, AlBaha, Taif, Al Zulfi, Shaqraa and Hafr Al Baten.

They together account for more than 3,000 factories with investments exceeding SR250 billion ($66.6 billion) and staff of more than 300,000. Additionally, Modon oversees two technology zones and expects to supplement that figure with other zones equipped with modern facilities.

Private industrial cities also come under Modon’s direct supervision. It now oversees six such cities and has stated this number will expand considerably before long.

In all its operations, Modon pledges to provide integrated services that meet the needs of investors, contribute to community development and preserve the environment.

The authority has dangled carrots to draw investors to its fold. Annual rent starts from just SR1 per sq m and government financial institutions and banks provide loans of up to 75 per cent of the capital with an extended repayment period of up to 20 years. Export incentives are provided that make manufacturers aggressively eye overseas sales while customs duty exemptions for imported raw materials and equipment mean that local companies start at a clear advantage.

“The strategic trend of the Government of the Custodian of the Two Holy Mosques is to make the kingdom a key industrial nation contributing to inter-development, creation of job opportunities for citizens, the adding of value to economic advantages the kingdom enjoys and growth and diversification of the kingdom’s exports,” said Dr Tawfiq Al Rabiah, Minister of Commerce and Industry and Modon chairman, recently.

A Hidada fabrication yard in Jeddah Industrial City-2

“Modon has been achieving its objectives by providing industrial developed lands for industrialists in all regions of the kingdom which is an effort worthy of appreciation.” He urged all businessmen who had managed to gain licences to hurry up with setting up their plants.

A company that recently signed up to a Modon enclave in Jazan is Al Rabie Saudi Foods Company, which is establishing a plant worth SR500 million to support its activities in producing juices and food products. Al Rabie, which signed a lease agreement for 165,000 sq m, already has a plant in Riyadh’s Second Industrial City.

GE has signed a land lease agreement with Modon to set up an advanced GE Oil & Gas manufacturing facility in Dammam’s Second Industrial City. The GE site will provide consolidated offices as well as manufacturing capabilities, packaging and assembly for GE oil and gas businesses.

In recent months, several companies celebrated the formal openings of their plants including the Al Yamama Factory for Steel Industries in Dammam, a closed joint stock company with an authorised capital of SR82 million. It has annual production capacity of 50,000 tonnes of square, rectangular and circular tubes in addition to 20,000 tonnes of coated sheet metal plates.

Among other factories that opened recently were the Al Sharqia Factory for Aluminium Extrusion, which has a capital of SR60 million and a production capacity of 80,000 tonnes of rods and special forms of unmixed aluminium.

In its quest to provide infrastructure necessary to encourage industrial investments, Modon oversees water, power, transportation and environment projects set up at considerable cost. In Dammam, for example, projects are underway to build a reverse osmosis station, a plant to treat wastewater, a network of water pipelines, a station to pump treated water, a scheme to extend electricity cables and a road to link Dammam with the Riyadh-Dammam highway.

Modon also plans to build 1,000 ready-made factories throughout Saudi Arabia for owners of small and medium enterprises.

It is strict on the issue of preservation of the environment. Under the Modon Environment Management programme, it monitors and follows-up on the performance of factories in the industrial cities. It recommends to factories ways to reduce the impact of air and water pollution and provides them technical support to keep the environment free of toxic material and to meet the requirements of standards they have to adhere to.

While it provides every support to industrial plants, it has seen that some have violated norms for the sake of greater economic gain. For instance, in an example presented by Modon, a plant in Dammam’s Second Industrial City built extensions that discharged industrial wastewater on to the water drainage networks, an act that not only harmed the environment but also adversely affected the reputation of the company involved. Modon acted by forcing it to remove the extensions and pay damages for the havoc caused.

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