Here’s how NIDLP aims to transform Saudi Arabia’s economy

Photo courtesy of Center for International Communication

The National Industrial Development and Logistics Program (NIDLP), considered to be the largest and most impactful program under Saudi Vision 2030, has been officially launched in Saudi Arabia.

“The NIDLP is one of the most important programs for achieving Vision 2030, as it moves the Kingdom into a new era of sustainable development, prosperity and economic diversification,” the Center for International Communication (CIC) said citing Khalid Al-Falih, Minister of Energy, Industry and Mineral Resources and Chairman of the NIDLP committee.

The minister said the mining sector will become a third pillar of the Saudi economy alongside oil and petrochemicals, while we continue to develop renewable energy and explore the diverse opportunities presented by the fourth industrial revolution through research and innovation.

NIDLP’s objective is to transform Saudi Arabia into an industrial powerhouse and a global leader in logistical services by integrating growth across the four key sectors of mining, industry, logistics and energy.

Here are more details about the four key sectors:

Facilitating industrial development

To develop the industrial sector, NIDLP will focus on financing support, developing infrastructure, industrial land and special economic zones, as well as investing in digitization and human capacity building alongside adoption of technologies that will drive the Fourth Industrial Revolution initially in the automotive, food production, pharmaceutical and medical supplies industries, CIC statement added.

Additionally, localization efforts in the military equipment industry and increased local content requirements in the industrial and renewable energy equipment manufacturing sectors will create jobs and bolster growth of the non-oil economy.

Also read: New Saudi program to target auto, space, renewable energy: official

The program also aims to transform 100 existing factories in the Kingdom into templates for future development by allocating approximately $800 million in financing that will drive the establishment of fourth industrial revolution capabilities centers in partnership with several universities to benefit from international best practices and facilitate knowledge transfer.

The program also aims to build capabilities ready to capitalize on the fourth industrial revolution through specialized centers for training and development and in cooperation with a number of universities and vocational colleges for knowledge transfer in the application of the techniques of the fourth industrial revolution locally.

Diversifying the energy sector

In the energy sector, NIDLP will promote the increase of renewable energy as part of the domestic energy mix for electricity generation by adding around 200 gigawatts of renewable energy by 2030 through the development of 35+ projects across the Kingdom.

This will have a direct impact on job creation and the localization of the renewable energy industry, CIC said.

The program will also focus on technology applications and future technologies across a wide range of strategic sectors, with the aim to help reduce costs; reduce the expected impact of energy price reforms; decrease operating costs; increase productivity, improve operations and reduce fault rates.

Also see: Crown Prince launches National Industrial Development and Logistics Program

The program seeks to enhance energy sector competitiveness and encourage private sector participation by launching the Energy Competitiveness Reform Program and increasing generation capacity by 41 percent by 2020, gradually reducing the use of liquid fuels and raising the capacity of gas production and distribution networks from 12 to 18 billion cubic feet per day by 2020, CIC statement maintained.

Transforming the mining sector into a pillar of the national economy

NIDLP will transform the mining sector into the third pillar of Saudi Arabia’s economy by supporting and encouraging private sector investment, facilitating the issuance of mining licenses, and launching the accelerated exploration program, CIC added.

These collective efforts seek to realize the potential of mineral resources, especially phosphates, as the program aims to take advantage of untapped natural resources with a value in excess of $1.3 trillion.

The program aims to generate more than 130,000 direct and indirect jobs in the Kingdom’s mining sector by 2030 by increasing gold production tenfold, tripling the GDP contribution of the mining sector to $53 billion and increasing local content fourfold.

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The program covers all stages of the mining value chain, from exploration to mining, intermediary industries to training and developing Saudi geologists to support reserve exploration and encouraging the establishment of small businesses in the sector, CIC statement noted.

Making Saudi Arabia a global logistics hub

NIDLP seeks to create the right conditions to transform the Kingdom into a competitive global logistics hub by improving infrastructure, transport networks, land- sea- and air-ports.

The program will enhance the attractiveness of the logistics sector and increase its GDP contribution by approximately $58 billion by 2030 through implementing initiatives worth a total of $36 billion.

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NIDLP includes the construction of five airports, the expansion of three air freight stations and the construction of two new freight stations, as well as the construction of over 2,000 kilometres of railway lines for freight and passenger transport.

Together, these developments will improve the domestic infrastructure and enhance Saudi Arabia’s export capacity for, enabling it to fully leverage its strategic location as a hub connecting Africa, Asia and Europe.

The program will create the conditions to move the Kingdom’s into a top 25 ranking in the World Bank's World Bank Logistics Performance Report, up from 55th in 2018, CIC maintained.