Arabic 
A recent report by KPMG underscores the pivotal role of Saudi Arabia’s industrial policies in achieving the goals of Vision 2030. The report highlights how government intervention is essential for fostering innovation, attracting investment, and supporting the growth of key sectors. As the Kingdom diversifies its economy beyond oil, these policies will be crucial in positioning Saudi Arabia as a global industrial leader.
Key national programs driving industrial development
The National Industrial Development and Logistics Program (NIDLP), launched in 2019, is a cornerstone of Vision 2030. Its goal is to transform Saudi Arabia into a global logistics hub and leader in energy, mining, and industry. By creating synergies between sectors and improving regulations, the NIDLP aims to foster a competitive business environment.
Key initiatives include major investments in renewable energy, updated mining regulations, and the Made in Saudi program, which promotes local content. Complementing this is the National Industrial Strategy (NIS), launched in 2022. The NIS seeks to raise the non-oil industrial sector’s contribution to GDP from $88.26 billion in 2020 to $377.06 billion by 2035, create 2.1 million jobs by 2030, and triple industrial exports to $148 billion by 2030. The strategy targets twelve key sectors, including chemicals, renewable energy, and aviation, focusing on building resilient supply chains and fostering innovation to enhance the Kingdom’s global competitiveness.
Commenting on the report , Ghassan Elchaarani, Partner, Head of Investment Attraction at KPMG said: “Saudi Arabia’s industrial policies are pivotal to its economic transformation. By fostering innovation and attracting strategic investments, the Kingdom is creating an environment where industries can thrive, driving sustainable growth and aligning with the ambitions of Vision 2030.”
Effective policy design for sustainable growth
The success of Saudi Arabia’s industrial policies hinges on careful design and implementation. Policymakers must adopt a data-driven approach to target industries with the most potential for growth, ensuring continuous adaptation to global market changes. The report emphasizes avoiding policies that “pick winners” and instead recommends fostering a competitive environment where support is transparent, temporary, and performance-based.
Public-private partnerships are central to this approach. The Shareek platform promotes collaboration, encouraging local investment and identifying new business opportunities. Made in Saudi also supports small and medium-sized enterprises (SMEs) through training, funding, and customs facilitation to boost local production.
Omar Alhalabi, Partner, Head of Enterprise Strategy at KPMG said: “The success of Saudi Arabia’s industrial strategy lies in its ability to adapt to evolving global challenges. Effective policy design, supported by data-driven decisions, will ensure the Kingdom’s competitiveness on the global stage while creating substantial opportunities for local industries.”
International best practices
The report draws lessons from other countries’ industrial strategies. China’s 2006 Medium and Long-Term Program of Science and Technology (MLP) emphasized innovation and self-reliance, funding 16 megaprojects like 5G technology and satellite mapping (Beidou). These initiatives positioned China as a technological leader.
South Korea’s Heavy and Chemical Industries (HCI) drive, launched in 1973, targeted sectors such as steel and electronics to spur industrial growth. Education played a central role, with institutions like the Korea Advanced Institute of Science and Technology (KAIST) enhancing research and innovation.
In Germany, the dual education system combines apprenticeships with formal education, a key component of its industrial strategy. Germany’s High-Tech Strategy 2025 promotes research in areas like AI and green energy, while its Renewable Energy Sources Act (EEG) and National Hydrogen Strategy support sustainable industrial practices.
Addressing key challenges
The report highlights several challenges that Saudi Arabia must address. Data availability is essential for effective policy formulation, requiring a robust statistical framework to provide timely and accurate data on industrial performance and labor market trends.
Human capital development is another crucial factor. The Kingdom must equip its workforce with the skills needed for a dynamic industrial sector. This can be achieved by promoting vocational training, continuous learning, and aligning education with industry needs. Public-private partnerships will be vital in this effort.
Knowledge acquisition is also necessary to boost Saudi Arabia’s industrial capabilities. Encouraging research and development through tax incentives and grants will foster innovation. Establishing technology parks and innovation hubs can promote entrepreneurship and facilitate knowledge transfer between academia and industry.
Conclusion
Saudi Arabia’s industrial policy is at a crucial juncture as the Kingdom works to diversify its economy. The KPMG study concludes that the success of these policies depends on balancing government intervention with market forces to foster an environment of innovation, investment, and inclusive growth.
Learnings from other countries that underwent a rapid industrialization valuable insights into how Saudi Arabia can design policies that target industries with significant growth potential. By focusing on human capital development, innovation, and integrating its industries into the global value chain, Saudi Arabia can achieve its Vision 2030 goals.
This KPMG report underscores the importance of data-driven, adaptable, and inclusive industrial policies. These policies will ensure that Saudi Arabia’s industrial sector remains resilient, globally competitive, and a key driver of the Kingdom’s long-term economic success.