Mohammed bin Salman sees the Kingdom as the next industrial powerhouse in the world
Saudi Arabia has long been dotted with oil pumps, but soon they will be joined by factories.
Crown Prince Mohammed Bin Salman wants the country to become the manufacturing powerhouse of the Gulf, moving away from oil and natural gas.
The heir of Saudi Arabia’s $2 trillion crown wants to triple the number of factories to 36,000 in 2035, which will produce everything , from warships and cars.
He has invested in Lucid, a US electric car manufacturer that plans to build a plant in the country. A joint venture is also planned with Navantia – the Spanish state-owned shipbuilder.
He has now set his sights on another lucrative market, though expensive and notoriously complicated – combat jets.
Last week, it was revealed that controversial ruler will visit the UK this autumn. This announcement came after speculation about Saudi Arabia joining Britain’s biggest military project.
Downing Street wants to include the Kingdom in the £72bn Tempest program, originally an Anglo Italian effort that Japan joined last December.
Saudi Arabia’s large financial resources will be welcomed, but industry insiders worry about its technological offerings, as well political baggage.
The Tempest Project aims to replace the Eurofighter Typhoon with a fighter jet of sixth generation by the middle next decade.
Saudi Arabia wants to be a partner in the program, not just a buyer of the final product, like it did with Typhoon.
A partnership would require a large capital investment but will create new jobs in Saudi Arabia and give the ruler the technology expertise he craves. The planned visit and speculation about the state’s role have reignited concern over the human rights record of the Kingdom, as well as the approach it takes to gay rights.
The country still punishes homosexuality with death and is involved in an ongoing war in Yemen.
The CIA has determined that this will be Mohammed bin Salman (MBS)’s first visit to the UK since the murder and dismemberment of Washington Post Journalist Jamal Khashoggi. According to the CIA, the Crown Prince ordered the killing and dismemberment of Khashoggi.
He denied all involvement.
The cost of developing ever more sophisticated military hardware is a major factor in the attractiveness of the country, given its wealth and stance.
The Japanese government has expressed dissatisfaction with the decision to bring on a partner of such controversy.
Insiders also ask what the country has to offer in terms of supersonic jet designs, as only a few countries are capable of producing them.
Saudi Arabia, under MBS’s leadership, has increased its investments and ambitions for industry, technology, and defence, all as part of Vision 2030, with the aim to wean off oil.
MBS stated last year that “Through the National Industrial Strategy and in partnership the private sector, The Kingdom will become an industrial powerhouse which contributes to securing the global supply chains and exporting high-tech products around the world.” Saudi Arabia’s Basic Industries Corporation (SABIC) is already a leader in manufacturing.
It is a leader in the chemical industry, but also produces car parts, cosmetics and metals. Last year, sales reached $53bn.
Roxana Mohammadian Molina, an ex-investment banker and finance tech entrepreneur who did business in Saudi Arabia, said that the country was also liberalizing at a rapid pace.
She said, “It is a completely different experience than what people expect.” It is very open. You feel safe. I’ve been there many times alone.
They are open for business. They are eager to partner with other nations, especially UK universities which can attract talent.
She cited the recent success achieved by Tamara, an online payment platform in Riyadh that received a loan of $150m from Goldman Sachs back in March.
“Ambitions have never been higher.” She says, “I think this is going to be a long process. You’re not going become a technology hub overnight.” “But in Saudi Arabia things move quickly.”
She added that liberalisation is one of the changes occurring in the country.
“You have large cities like Riyadh, which are progressive and very young, but also smaller towns and cities that are still very tradition, it’s a delicate balance between those interests.” Ayham Kmel, the head of Eurasia Group’s Middle East and North Africa Research Team, believes that Saudi Arabia will invest in a wide range of areas before focusing its efforts on those where it excels.
He says, “I believe they need to experiment with different sectors before they double down.” It’s a very wide net. “I would expect that it will be more focused, but we’re not there yet.”
Today, the country has invested in a wide range of companies, from Nintendo to Uber, Newcastle United FC, and even its controversial takeover by , its rival, of Golf’s PGA Tour.
According to recent reports, Saudi Arabia also wants to be a leader in artificial-intelligence and is grabbing the computer chips needed to create an AI economy.
Kamel adds that Riyadh “is ambitious to get into high-tech industries and migrate some of the production to Saudi Arabia”.
Riyadh has already begun its plan to improve its industrial defence knowledge.
The Kingdom signed a deal in December with Spanish shipbuilder Navatia for a joint venture that will build warships. The deal’s final details will be worked out in the coming year. However, the agreement allows all construction to take place at Saudi shipyards.
Defence Minister Prince Khaled Bin Salman stated at the time that the deal “allowed the country to localise military industries”.
UK investment chiefs want to grab more Saudi income than send it to competitors like Spain.
One City veteran with experience in investing in Saudi Arabia expressed frustration at the negative perception of the country in the press.
He said: “Saudi Arabia’s transformation is happening at an astonishing rate and, to be honest, some of the media coverage has been almost obscene in its jaded, biased reporting.
“Saudi Arabia is much more than Khashoggi.” British business is good business. Saudi Arabia is the UK’s main trading partner in the Middle East, and the UK is Saudi Arabia’s closest European ally.
Last year, Saudi Arabia was the UK’s 10th largest export customer. Britain also enjoys a £7bn trade surplus with Saudi.
In the eyes of potential investors and customers, it must improve its human rights record. Last year, 196 people were executed in the country. This is the highest number recorded by Amnesty International since they began recording numbers 30 years earlier.
Polly Truscott is Amnesty International UK’s adviser on foreign policy. She said MBS must be held accountable for the abuses of Saudi officials including Khashoggi’s murder, widespread torture in Saudi prisons, and the indiscriminate bombardment of civilians in Yemen.