(WO) – With plans to become a technology and innovation hub, the Ras Al Khail Special Economic Zone is expected to make a significant contribution to the Saudi economy. The main activities in this zone include shipbuilding, offshore drilling rig manufacturing, and related activities such as maintenance, repair, and operations (MRO). This zone and others like it will contribute to the Kingdom’s broader Vision 2030 by growing and diversifying the economy through import substitution, exports and innovation.
A key aspect is to leverage Saudi Arabia’s strategic location between three continents and the fact that 6% of global seaborne trade passes through Saudi ports to position Saudi Arabia as a global maritime hub. It’s about positioning. This expansion into new fields has contributed to the steady growth and transformation of the Saudi economy in recent years.
“The most dramatic change has been the rise of Saudi Arabia as an investment destination, with FDI increasing four-fold since 2016 and Saudi Arabia experiencing the second fastest investment recovery in the world post-COVID-19. ” – Khalid Al Farih, Saudi Arabian Minister of Investment and Director General of the Special Economic Zones Authority.
Special Economic Zones (SEZs) and their adjoining areas are supported by a network of infrastructure and new technologies. Industry 4.0 technologies such as artificial intelligence (AI) and the Internet of Things (IoT) are integrated at multiple levels. These technologies enable ports to run more efficiently by optimizing schedules and reducing delays.
IoT tracks objects such as cargo containers, and AI processes the data to generate real-time insights, reducing inefficiencies and facilitating data-driven decision-making. Integrating these technologies from the outset will future-proof Ras Al Qaia SEZ and help it remain globally competitive for years to come.
All of this is being funded by the Saudi government and investments from major corporations such as Saudi Aramco, Bahri, Lamprell, Hyundai Heavy Industries (HHI), and Baosteel. Several incentives are offered to further encourage investment.
- Withholding tax on repatriation of profits from SEZs abroad is permanently 0%.
- For the first five years, flexible and supportive regulations regarding foreign personnel apply.
- The value added tax on all intra-SEZ goods exchanged within and between zones is 0%.
- Corporate tax is 5% for a maximum of 20 years.
- Customs duties on goods within the SEZ will be deferred by 0%.
- An expatriate tax that guarantees fee exemptions for employees and their families in special economic zones.
International Maritime Industries (IMI) has already signed offtake agreements totaling $10 billion over 10 years with partners Aramco and Bari to acquire at least 75% of Bari’s merchant shipping needs over time from the shipyard. The aim is to deliver 20 rigs and 52 vessels.
All these factors and the current economic climate create significant growth potential, both within Ras Al Khair and the wider Kingdom. The Saudi shipbuilding and MRO market is expected to grow by approximately 23% between 2021 and 2030, while the offshore rig market is estimated to grow by 20% over the same period.
From 2021 to 2030, the Ras Al Khair SEZ is projected to contribute SAR 119 billion to Saudi exports, SAR 5.6 billion in FDI, SAR 82 billion to GDP, and more than 80,000 jobs. The country’s maritime and mining sectors contribute significantly to these goals, and the Ras Al Khail SEZ is at the crossroads of this. Saudi Arabia boasts some of the lowest aluminum production costs in the world due to its large bauxite deposits, which are part of an estimated $2.5 trillion worth of undeveloped mineral deposits.
With the trend of increasing demand for offshore platforms in the Arabian Gulf and the wider Middle East, Ras Alkea SEZ is positioned to become a major supplier through shipbuilding, rig manufacturing and MRO activities. In addition to its extensive support and modern infrastructure, the SEZ aims to leverage these advantages to provide investors with an attractive environment for business growth.
