WHY SAUDI EDUCATION

2020
Why invest in
Saudi Arabia's
Education
sector?

2
3 KEY REASONS TO INVEST IN EDUCATION IN SAUDI ARABIA

Education market is Many opportunities Government has a

large and attractive for education clear plan to
investments develop education
available locally

3
 3 KEY REASONS TO INVEST IN EDUCATION IN SAUDI ARABIA
Education market is large and
attractive
• With 8.5 M students, KSA has by far the largest
education market in the GCC region. Of these, 0.4
M students are enrolled in kindergartens, 6.3 M in
K-12 institutions, 0.4 M in TVET1 and 1.5 M in
university programs
• The education system is strongly dominated by
public sector institutions and KSA currently has the
lowest share of students enrolled in private
education in the GCC
• However, private education in KSA is associated
with higher quality and demand for private
education is growing, creating strong opportunities
for FDI
• In addition, publicly listed education providers in
KSA appear to be largely profitable
1. Technical and Vocational Education and Training
Many opportunities for education
investments available
• Several programs to improve education sector in
Saudi Arabia are underway, providing strong
opportunities for private sector participation:
– School operators
– Institutional operation services
• Key players in the education sector have already
entered the market and successfully collaborated
with the government
Government has a clear plan to
develop education locally
• Education is at the heart of Vision 2030 and
the government has strong ambitions to
develop education in KSA
• USD 51 B for education in 2019 represents the
largest budget item for the country and is
vastly larger than in peer countries
• Government introduced multiple initiatives to
address historical challenges of education
sector and unlock additional investment
opportunities
• KSA offers a strong set of incentives to attract
private investors
4
3 KEY REASONS TO INVEST IN EDUCATION IN SAUDI ARABIA

Education market is Many opportunities Government has a

large and attractive for education clear plan to
investments develop education
available locally

5
 ​With 8.5 M students, KSA has by far the
largest education market in the GCC region

Three key
reasons make Growing demand for high-quality education
coupled with limited private school offering,
Saudi education generates strong opportunities for FDI
market attractive

​High EBITDA margins for education providers

in KSA

6
KSA IS THE LARGEST EDUCATION MARKET IN THE GCC
REGION

Total number of students (M)

8.5

1.2 0.9 0.7

0.3

Note: 2018 data for Saudi Arabia, 2017 data for UAE, Oman, Kuwait and Bahrain. TVET students in UAE, Oman, Kuwait and Bahrain not included. 7
Source: GCC STAT 2018, KSA GAStat, Bahrain Statistical Office
TODAY, STUDENTS ARE SPREAD ACROSS DIFFERENT
EDUCATION SEGMENTS…

Total number of students (M)

​8.5 ​0.4 ​6.3

​0.4 ​1.5

​Total students ​Kindergarten ​Primary-secondary ​TVET1 ​Universities

1. Technical and Vocational Education and Training 8

Sources: GASTAT, Ministry of Education, TVTC , Team analysis
…AND THE EDUCATION SECTOR IS DOMINATED BY PUBLIC
INSTITUTIONS - ESPECIALLY IN KG AND PRIMARY/SECONDARY

Total number of institutions (2018) ​Public

​Private

​3,400 ​27,350 ​1,180 ​75

23%
40%
63%
89%
77%
60%
37%
11%
​Kindergartens ​Primary-secondary ​TVET ​Universities

9
Sources: GASTAT, Ministry of Education, TVTC , Team analysis
WHEN COMPARED TO GCC PEERS, KSA HAS THE LOWEST
SHARE OF STUDENTS ENROLLED IN PRIVATE SCHOOLS

Total number of students (M) ​Students in public institutions

​Students in private institutions

​8.5 ​1.2 ​0.9 ​0.7 ​0.3

10%
27%
59%
74%
87%
90%
73%
41%
26%
13%
​Saudi Arabia ​UAE ​Oman ​Kuwait ​Bahrain

Note: 2018 data for Saudi Arabia, 2017 data for UAE, Oman, Kuwait and Bahrain 10
Source: GCC STAT, KSA GAStat, Ministry of Education, Bahrain Statistical Office
TOTAL NUMBER OF INSTITUTIONS

93
Al Madinah
1007 568
Ar Riyad
Ash Sharqiyah

722 Jeddah
Makkah

102

11
Sources: GASTAT, Ministry of Education, TVTC , Team analysis
…Latest Statistics from MoE Riyadh

Total number of institutions (2020) 1007

692
59 110 85
56
5

​International schools ​Foreign schools International programs ​Academic Tracks Language centers ​Cultural Centers

12
Sources: GASTAT, Ministry of Education, TVTC , Team analysis
…Latest Statistics from MoE Jeddah

Total number of institutions (2020) 722

507
67 53 63
28 4

​International schools ​Foreign schools International programs ​Academic Tracks Language centers ​Cultural Centers

13
Sources: GASTAT, Ministry of Education, TVTC , Team analysis
…Latest Statistics from MoE Damam & Khobar

Total number of institutions (2020) 568

330
86 44 84
22 2

​International schools ​Foreign schools International programs ​Academic Tracks Language centers ​Cultural Centers

14
Sources: GASTAT, Ministry of Education, TVTC , Team analysis
…Latest Statistics from MoE Makkah

Total number of institutions (2020) 102

40
17 32
13

​International schools International programs ​Academic Tracks Language centers

15
Sources: GASTAT, Ministry of Education, TVTC , Team analysis
…Latest Statistics from MoE Madinah

Total number of institutions (2020) 93

41
16 17 19

​International schools International programs ​Academic Tracks Language centers

16
Sources: GASTAT, Ministry of Education, TVTC , Team analysis
HOWEVER, PRIVATE EDUCATION IS ASSOCIATED WITH HIGHER
QUALITY IN KSA AND ITS DEMAND IS GROWING
"International schools in the Kingdom are steadily gaining
popularity among Saudi students due to parents’ perceptions
that their children stand to acquire a more well-rounded
education in these schools despite the high fees."
– Arab News (International schools catch on with Saudis)
"As per a recent study, 70% of Saudi parents prefer to enroll
their children in international schools which emphasize
English proficiency, international curricula, and contemporary
teaching techniques."
- GFH GCC Education sector report
“The best performing schools, moreover, are private — so
you get the know-how and performance culture, as well as cost
efficiency.”
- Financial Times (Saudi Arabia, cutting its budget, turns to
private schools)
"However, increasing demand for better quality education
in Saudi Arabia has led to an overall increase in the school fee
charged and majority of schools have hiked their tuition fee by
around 5.0% for the academic year after attaining the approval
from the Ministry of Education"
- Forbes Middle East (Saudi Arabia Is Training Its Focus On Its
Education Sector)
17
INCREASE IN PRIVATE SPENDING ON EDUCATION INDICATES
GROWING WILLINGNESS TO PAY FOR PRIVATE EDUCATION

Private expenditures on education in KSA (USD, B)

​+5% 8.4
7.8
7.2
6.2

​2013 ​2015 ​2017 ​2019

18
Source: Euromonitor
AND PRIVATE EDUCATION PROVIDERS IN KSA ARE EXPECTED
TO CAPTURE HIGHER TUITION FEES IN THE FUTURE

Average annual tuition fees by sector in KSA (USD)

​+6% ​+7%
14,290 19,180
12,110 15,770
10,260 12,970

​2016 ​2019 ​2022 ​2016 ​2019 ​2022

International kindergarten International primary-secondary institutions

Note: Analysis based on annual growth (2016-2019) of average tuition fees for five international kindergarten and four international schools in KSA 19
Source: School websites, team analysis
FURTHERMORE, LISTED EDUCATION COMPANIES IN KSA
APPEAR TO BE LARGELY PROFITABLE

EBITDA (%) ​2018 ​2019

35 33
32 32

National Company Ataa Educational

For Learning And Company
Education

Note: Analysis based on publicly listed companies and large private corporations 20
Source: Capital IQ
3 KEY REASONS TO INVEST IN EDUCATION IN SAUDI ARABIA

Education market is Many opportunities Government has a

large and attractive for education clear plan to
investments develop education
available locally

21
A VAST RANGE OF OPPORTUNITIES IS AVAILABLE IN THE
SHORT-TERM AND MORE TO COME

Kindergartens K-12 institutions

• 1500 investment opportunities for private kindergartens with
about SAR ~3B investments needed
Operators &
training
providers
TVET
• Investment opportunity to open tourism and aviation colleges
as well as cultural programs with a demand of 2000-4000
students per year for 1-3 year programs
• Investment opportunity to provide executive education and
training programs for leadership in business with a demand of
100K employees per year
• 4187 investment opportunities for private local and
international K-12 institutions with about SAR 16B
investments needed
• 100 investment opportunities for special needs education with
about SAR 500M investments needed
Universities
• Investment opportunity to open foreign university branches
under a new law approved by the Kingdom with a demand of
1000-2000 students per year for 2-5 year programs

22
 EDUCATIONAL OPPORTUNITIES IN KSA

General Education Higher Education Institutional operation services Creativity, Culture & Edu Edu Tech

Facilities mgmt.: Performing Art LMS

​ K-12 operators Academic Tracks ​ TVET operators Catering
Security, cleaning, facilities
International schools Private TVETs Canteens,
maintenance services, student
cafeterias
housing, infra./ equipment
(AV/Labs)

AR/VR content
Music
​ Kindergarten
​ Universities
operators
Private universities Transportation Student supplies
Private operators of
​ Executive& continuous School children Stationary, uniforms,
public kindergartens
education transportation supplies

Creativity Digital content

Special Needs
Education ​ Quality assurance Learning
Admin services
environment HR, admin assistance, 23
Libraries mgmt., IT systems, accounting
healthcare (nursing)
 Kindergartens

K12 Location Kingdom-wide

Entity Ministry of Education

Ministry of Education has created 1500 investment

opportunities across the Kingdom for private KG
Description institutions. It is expected that about 150,000 additional
seats will become available.

Investment SAR 5-30M per investment (total SAR ~3B)

Partnership Pure Private Sector - Joint Venture – Franchise

Model Agreement – Management & Operation Contract

Timeline Starting in 2020

24
 K-12 educational institutions

K12 Location Kingdom-wide

Entity Ministry of Education

Ministry of Education has created 4187 investment

opportunities across the Kingdom for local and
Description international private K-12 institutions. It is expected that
800,000 additional seats will become available.

Investment SAR 5-30M per investment (total SAR ~16B)

Partnership Pure Private Sector - Joint Venture – Franchise

Model Agreement – Management & Operation Contract

Timeline Starting in 2020

25
 Special needs education
Special
Education Location Kingdom-wide

Entity Ministry of Education

Ministry of Education has created 100 investment

opportunities across the Kingdom for special needs
Description education. It is expected that about 11,000 additional
seats will become available.

Investment SAR 5-30M per investment (SAR ~500 M in total)

Partnership Pure Private Sector - Joint Venture – Franchise

Model Agreement – Management & Operation Contract

Timeline Starting in 2020

26
 Executive Education & Training

Training Location Kingdom-wide

Entity Ministry of Education & TVTC

Enable growth in the number of professionals in

leading positions & meet high demand for qualified
Description leaders in the job market
Demand: 100K Employees per Year

Investment SAR 1M-3M per investment

Partnership Pure Private Sector - Joint Venture

Model

Timeline Starting in 2020

27
 Technical & Vocational Training

Training Location Kingdom-wide

Entity Ministry of Education & TVTC

Tourism, culture and aviation colleges: to qualify national

workforce and more than 10,000 future employees in
Description events management, culinary art, hospitality aviation
management, flight operations, etc.
Demand: 2000-4000 students per year

Investment SAR 10M-30M per investment

Partnership Pure Private Sector - Joint Venture

Model

Timeline Starting in 2020

28
 Foreign Universities

Higher Education Location Major cities in KSA

Entity Ministry of Education

Main university majors & programs required by KSA:

nursing, special/critical healthcare, AI, renewable
Description energy & nuclear programs, cybersecurity, arts, culture
and hospitality
Demand: 1000-2000 students per year

Investment SAR 20M-100M per investment

Partnership Pure Private Sector - Joint Venture – Partnerships

Model with Local Universities

Timeline Starting in 2020

29
KEY PLAYERS HAVE ALREADY ENTERED THE MARKET (I/II)
Supported the development of
Saudi Early Learning Standards
for early childhood programs
Provides content through
schools and B2C channels
in KSA
Source: Team analysis
English language TOEFL testing
centers throughout KSA
Delivers English courses and
connects Saudi and British
educational institutions
to each other. Provided strategic
advise on English language
training to MoE
Extensive plays across the
value chain including supplying
content, assessment tools and
providing advisory to MoE
Partnered on a JV basis with
National Talents Co. for Training
and Education to offer the LEGO
Education product to students
across KSA
Extensive plays across
the value chain including
supplying content, assessment
tools and providing advisory
Provides English language
training content and tools
30
KEY PLAYERS HAVE ALREADY ENTERED THE MARKET (II/II)

Operates three schools in KSA Operates two schools in KSA, Offers content and resources to Publicly listed KSA investment
with operations in Jeddah and including one on a joint venture private English language holding company; operates one
Riyadh basis with Kingdom Holding Co. schools in KSA school in KSA on a joint venture
basis with GEMS Education

Agency for French Education Operates eight British or Operates two schools in Riyadh Operates a day school following
Abroad supports a number of American schools in KSA. and Dammam following the an American-based curriculum in
French-based schools in KSA A fully local player Indian curriculum Riyadh. Also offers IB programs

American Int’l School

31
Source: Team analysis
3 KEY REASONS TO INVEST IN EDUCATION IN SAUDI ARABIA

Education market is Many opportunities Government has a

large and attractive for education clear plan to
investments develop education
available locally

32
EDUCATION IS AT THE HEART OF KSA VISION 2030

​“We intend to embed positive moral beliefs in our children’s

characters from an early age by reshaping our academic and
educational system.”—Developing our children’s character

​“We will continue to improve and reform our regulations, paving the
way for investors and the private sector to acquire and deliver
services—such as education”—Privatizing government services

​“We will continue investing in education and training so that our

young men and women are equipped for the jobs of the future.”—
Learning for working

​“To this end, we will prepare a modern curriculum focused on rigorous

standards in literacy, numeracy, skills and character development.”—
An education that contributes to economic growth

​“We will invest particularly in developing early childhood education,

refining our national curriculum and training our teachers and
educational leaders.”—Learning for working

33
Source: Vision 2030
 Large portion of
annual national
Government budget assigned
commitment
expressed through
Initiatives to unlock
a large budget, opportunities
comprehensive
initiatives and
strong incentives ​Incentives to attract
private education
providers
34
EDUCATION REPRESENTS KSA'S LARGEST BUDGET ITEM AND
IS VASTLY LARGER THAN IN PEER COUNTRIES

​Top 3 KSA national budget

items (B, USD, 2020) ​Government education budget (B, USD, 2019)
51 51
49
45

4 3
1
​Education ​Military ​Health &
social
development

35
Source: KSA MoF, UAE MoF, Times of Oman, Kuwait MoF, Bahrain MoF
MOE IS ADDRESSING HISTORICAL CHALLENGES TO UNLOCK
EDUCATION OPPORTUNITIES FOR INVESTORS (I/II)

Major historical challenges Completed/ongoing initiative

1 Saudization ​ ack of flexibility in employment due to Saudization
L ​Relax Saudization ratios
requirement
​ llow for employment flexibility in private schools,
A
​Difficult to find qualified Saudi teachers for international especially for schools delivering international
or local curriculum curriculum

2 Teacher ​The quality of teachers is very low, many not interested ​New regulation imposing minimum number of
development in progressing their careers through professional professional development training for teachers
development
Establishment of an professional development
center specialized for teacher development

Put in place a performance review system for

teachers

3 Ownership ​Foreign investors couldn’t have majority ownership in ​Allowed foreign investors to have majority
private schools ownership in private schools

36
Source: Team analysis
MOE IS ADDRESSING HISTORICAL CHALLENGES TO UNLOCK
EDUCATION OPPORTUNITIES FOR INVESTORS (II/II)

Major historical challenges Completed/ongoing initiative

4 Land ​ ifficult for private school operators to acquire
D ​ gile and customized regulation on education
A
appropriate land for schools properties

​Cumbersome processes involving multiple parties to

obtain building permit

5 Access to ​Difficult for individuals to launch private schools due to ​Develop a fund to provide loans to new operators
financing access to capital lacking capital

Transparency ​ issing single source of truth and publicly accessible

M ​ evelop data unification portal to ensure student
D
6
information at school and student level to support and school level data are collected and publicly
decision making of investors available

37
Source: Team analysis
 ​Tech. and ​General and ​Supporting
​Quality
A structured ​Funding vocational
training
higher
education
assurance
and wider
system entities

and well
governed
Education
ecosystem ​Education and training provision
has been
established ​Private
sector
​Pre-K
sector
​K-12
schools
​TVET
inst.
​Higher
ed. inst.
​Human
​Private capability
sector ​Institutions development
program

38
MISA supports companies seeking
to invest in KSA Education sector

Highlight opportunities for investment

Provide information on KSA and

Education sector
Coordinate with government bodies to
provide incentives for investments

Connect investors with potential partners

Support with business plan

Deliver licenses
39
 Waad Al Shamal

WORLD-CLASS
INVESTMENT NEOM
King Salman International
Complex for Maritime
Industries and Services
PROJECTS Wadi Al-Disah

Amaala King Salman Energy Park

Saudi Arabia’s mega and giga Al Ula ILBZ (SPARK)
projects represent some of King Abdullah Financial District
The Red Sea
the most ambitious Knowledge
developments under Economic
King Salman Park
City Qiddiya
construction around the world King Abdullah
Economic City
today.

New Jeddah
Downtown

Jizan Economic City

Giga Mega Projects

Projects
40
KING ABDULLAH ECONOMIC CITY (KAEC)
Saudi Arabia has a proven track record in the delivery of
mega projects in partnership with the private sector, with King Abdullah Port
KAEC being a leading example. operated by the private sector
and the world's 2nd fastest

>110 >$14bn
growing container port

leading local and global non-oil worth of private investments

investors,
including Pfizer, Sanofi, Mars and Volvo.

Haramain High Speed

Railway conveniently
Why is KAEC attracting links KAEC to western
cities of Medina, Jeddah,
global investors? and Mecca

Diverse community Strategically located

with leading educational on the Red Sea coast along major
institutions and entertainment shipping routes to Europe and 181 million sqm
options. Asia one of the largest private
sector-run projects in the
Middle East
41
Source: KSA
KNOWLEDGE ECONOMIC CITY (KEC)

Saudi Arabia has a proven track record in the delivery of mega projects in
partnership with the private sector, with KEC being a leading example.

Worth of Private Investments

>25,000

Keys for umrah and hajj

Hospitality,
>$25bn
including all required supported services to be
Madinah the hub for Hajj& Umrah.

42
WHY IS KEC ATTRACTING A unique center for living, trading and
GLOBAL INVESTORS? doing business that will address the
growing demand from Al-Madinah’s
residents and visitors

Haramain High Speed

6.8 million sqm one of the largest
Railway conveniently links KAEC to
private sector-run projects in
western cities of Medina, Jeddah,
AlMadinah AlMunawara
and Mecca

Strategically located Connectivity Strong Financial Position

5Km from Madinah central Al-Haram
Mosque.
8Km from International airport between
2nd ring road and 3rd ring road.
Proximity to Haramain railway station
and to Prince Mohammed bin Abdulaziz
international airport.
Cash rich with more than SAR 400
million.
Full municipal infrastructure in the north
area of total 2.5million sqm.

43
WHAT MISA CAN DO FOR YOU
We’re here to facilitate seamless investments in all areas of the Saudi Arabian economy
Whether you’re seeking to expand an Our dedicated account managers are here to support you through
established multinational or are on the the end-to-end investment journey, helping you identify promising
brink of launching a brand new opportunities, assisting with feasibility studies, smoothing the way
venture: we can help. as you commence operations, and much more.

Our services include:

Before set-up During set-up After set-up

Tailored market and economic Obtaining licenses or permits Helping you overcome any
intelligence Introductions to financing obstacles
Matchmaking and linkage institutions
Organizing site visits Organizing publicity and launch
Assisting in location searches events
Supporting business case development Connecting with recruiting
and feasibility studies agencies
Providing tailored incentives
44
WORLD-CLASS INVESTOR JOURNEY
Due to a raft of economic reforms designed with foreign investors in mind, setting up a company in Saudi
Arabia today is both simple and inexpensive.

MISA will support you in every step of the way, ensuring your business gets off to the best possible start.

Reserve a Open a work Obtain a general

Trade name Office file Manager iqama

Subscribing in the Chamber of

Commerce

Obtain a Obtain a Issuing a license from concerned

authorities
Commercial General
Registration Manager visa Opening a file with Zakat and Income
Opening a bank account
Opening a GOSI file automatically
Obtain a when opening the working office file
License
Issuing a Municipality License

45
EXPEDITED INVESTOR LICENSING
To obtain MISA’s
license, it only takes
2 documents
Reduced from 12 documents
Post-registration documents
required to commence
business: Tax certificate
Social insurance
Labour certificate
All services and information are
available through MISA’s Business
Center – a one stop shop for 6 key
government agencies
3 hours All requests are processed digitally
Reduced from 3 days
Commercial registration
Chamber of Commerce certificate
Municipality certificate

…all of which can now be obtained within

5 days (reduced from 18 days). 46
EDUCATION
LARGEST Top investment opportunities
Saudi Arabia’s education sector accounts for almost 80% of public education expenditure in
the GCC region. In 2019, education became the largest item in Saudi Arabia’s fiscal budget. Early childhood education (ECE)

K-12
UNTAPPED
Technical & vocational training
The private sector currently accounts for only 12.6% of a $37.2bn market, 15.7%of 7.7m Higher education
students, and 18.3%of 36,461educational institutions in Saudi Arabia. Significant demand for Special education
private education is being driven by population growth and a desire for high -quality
education.
Top education ecosystem service
REFORMS
In addition to allowing 100% foreign ownership in 2018,Saudi Arabia has undertaken a Teachers Training and Licensing
number of initiatives to encourage private investment, including subsidies for KG and Transportation such as School transportation services .
nursery schools, school construction financing, and PPPs.
Catering such as Food and beverage services dedicated for
GROWING schools and universities.
Driven by increasing global mobility, Hajj visitors are expected to rise from 2m to 5.4m by People sourcing, development & quilt y assurance such as
2030 at a rate of 6.2% per year, while Umrah visitors are expected to grow from 6m to 30m recruiting, training and management of leaders, teachers,
at a rate of 7.6% per year. faculty and trainers. also for Student tutoring & test
preparation and teacher and student assessment.

Top foreign investors Content development & publishing such as development of

traditional & digital content development, Education content
publishing through text books and magazines
and Stationery tools for education.
Dr Reem Al Turki
Construction & maintenance such as Design and MISA, Sector Head, Education
development of education infrastructure and RAltorki@misa.gov.sa
Quality assurance of education infrastructure.
47
Appendix – incentives

48
KSA offers a wide range of incentives to investors

1 2 3 4 5
Export credit
Energy Financial
financing, Loan Customs duty
& utilities incentives
guarantee, programs exemption
enablement for R&D
insurance

6 7 8 9 10

Tax credit, Government Ecosystem

Employment Property
exemption procurement stimulus
funding solutions
(partial) law (for SMEs, suppliers)

Cost advantages Enablement Funding

Source: Saudi Fund for Development, Industrial Clusters, Saudi Technology Development And Investment Company, Saudi Customs, Ministry of
Commerce and Investment, Public Investment Fund, Saudi Industrial Development Fund, The Arab Fund for Economic and Social Development, General 49
Authority of Zakat and Tax, Passport General Department
1
Export credit financing, guarantee, insurance
Name Description
​ xport credit financing,
Credit financing, E
guarantee and guarantees and insurance
insurance by the EXIM Bank (direct)
and through partners
P financial institutions
(indirect)
​Other export Refund on percentage of
related fees incurred during
incentives export activities (product
certification, marketing,
L consulting & legal
advisory, etc.)
1. Proposed, subject to further confirmation
Source: Responsible entities reported in the table
Note: information dated July 2019
Main conditions Responsible entity
• All sectors except crude oil • EXIM Bank (&
• Min financing amount SAR 2M per partners
application1 financial
• Max financing amount SAR 600M per institutions
obligor1 SIDF, ITFC)
• Max of 5 year duration including grace
period1
• Min 25% local of value added (crude oil is
excluded)1
• Reimbursement of up to 50% of product • Saudi Exports
certification fees (up to SAR 20k)
• Reimbursement of up to 75% of
marketing fees for promoting products
abroad (up to SAR 125k)
• Reimbursement of up to 55% of fees
incurred for export-related consulting
activities (up to SAR 255k)
• Other incentives on e-commerce
registration fees, participation in
exhibitions, etc.
P Pending official announcement
50
L For local investors only
2

Energy & utilities enablement

Name Description Main conditions Responsible entity

​Enabling energy ​Attractive conditions for • Power at $0.048 per kWh for industrial • MEIM
and utilities power, water, natural sector • Modon
gas, ethane, diesel and • Drinking water at $1.1 - $2.2 per cubic & Industrial
land available in Modon meter (based on region & volume) Clusters
Industrial Cities • Wastewater at $0.7 - $0.9 per cubic • Saudi
meter (based on region & volume) Electricity
• Treated water at $0.5 - $1.4 per cubic Company
meter (based on region & volume) • National
• Natural gas at $1.25 per Million BTU Water
• Diesel at $15.26/barrel Company
• Land for lease starting from $0.27 per • Saudi Aramco
sqm

Source: Responsible entities reported in the table P Pending official announcement

Note: information dated July 2019 51
L For local investors only
3

Financial incentives for R&D

Name Description Main conditions Responsible entity

​Financial ​Investment in selected • Investment with following • King
incentives for local and international characteristics Abdulaziz City
R&D projects R&D projects with – Enable technology transfer to Saudi for Science
potential to boost Arabia and
country’s economic – Diversify Saudi Arabia economy Technology
growth and – Create high skilled jobs
self-reliance • Financing depends on R&D project's
characteristics

​Multi-purpose ​Finance capital Eligibility criteria: • Saudi

loan expenditure items not • Acceptable financial position within SIDF Industrial
L resulting in rated requirements Development
production capacity • Investment not leading to increased Fund
increase but potentially production capacity
improving the borrower’s • Investment achieving a clear operating
business or operations benefit

Source: Responsible entities reported in the table P Pending official announcement

Note: information dated July 2019 52
L For local investors only
4

Loan programs ― local (I/II)

Name Description Main conditions Responsible entity

​Loan program for F
​ inance up to 50% of project costs • Financeable industrial project with a • Saudi Industrial
industrial in major cities, 75% in promising valid Commercial Registration,
projects cities and 75% for strategic industrial license Development
sectors • Feasibility study Fund
• Repayment periods up to 20y • Value added to the economy
• Up to 2-year grace period • Credit worthiness of the applicant
• Advisory services on • Aligned with open sectors
administration, marketing,
and technical incentive
program for Local content
• incentive program for Energy
Efficiency and Industry 4.0
• Incentive program for SME’s
• Multi-purpose loan

​Loan Guarantee ​ over the risk of banks in financing

C • Legal entity & annual sales < SAR • Kafalah
Program small and medium enterprises 30M (independent
(KAFALAH) for • Guarantee rate up to 75% of • Viable in the economic, financial, entity), Saudi
small and loan technical and administrative terms banks
medium • Contributes positively to the Saudi
L
enterprises economy in terms of:
– Hiring & training Saudi nationals
– Replacing imported goods by
local ones & producing high
quality innovative goods &
Source: Responsible entities reported in the table P Pending official announcement
services
Note: information dated July 2019 53
L For local investors only
4
Loan programs ― local (II/II)
Name Description
​Productive Loans • Low interests loans
for small projects provided across a
and start-ups variety of paths to
support the Saudi
society
​Working capital Short-term loan (up to 12
financing months) provided to
existing clients to fund
L projects’ operational
expenses
​Acquisition S​ audi companies
Financing acquiring international
​(Under targets (acquired
development) companies) and Saudi
companies acquiring local
P L targets with clear value
add to industrial sector,
beyond increasing
shareholder value
Source: Responsible entities reported in the table
Note: information dated July 2019
Main conditions Responsible entity
• Saudi national • Social
• Specific conditions for each path Development
Bank
• Existing SIDF clients only • Saudi
• Companies facing working capital Industrial
shortage Development
• Targeted at companies: Fund
– With limited access to bank
financing
– Undergoing growth
• Acquisition financing is only offered to • Saudi
industries included in the National Industrial
Industrial Development and Logistics Development
Program (NIDLP) priority sectors Fund
• Acquirer must have licensed financial
and legal advisors
• Acquisition should have socio-economic
• Acquisition must be financially viable
• Repayment period up to 5 years
P Pending official announcement
54
L For local investors only
4

Loan programs ― regional (I/II)

Name Description Main conditions Responsible entity

Loan program ​Financing for • Public sector: request to be accompanied by a The Arab fund for
for public/private techno-economic feasibility study (to be economic and
public/private investment projects considered for financing) social
investment • Reduced interest • Private sector: only for legally independent development
projects rate to 2.5% for entity with:
low-income Arab – Sound financial position
countries and 3% – Good management practices
for other Arab – Operating in a purely commercial basis
countries – Main objective of developing the economy
• 4-6 grace period – Not less than 51% of capital owned by
• Long term citizens of member states of the Arab Fund
extended to
22-25 years

​Loan program Loans and facilities • The fund must take into consideration when Arab monetary
for economic offered lending to Arab countries: fund
development to help address – Fairness and equal opportunity of access to
and reform in overall balance of Fund’s loans
Arab countries payment deficit of – Safeguard of the Fund’s ability to maintain
member countries; its continuity in growth
include 4 types of – Ensure that the resources it lends are used
loans that vary in safely by borrowing members who must
size, terms have the ability to meet their obligations
and maturity

Source: Responsible entities reported in the table P Pending official announcement

Note: information dated July 2019 55
L For local investors only
4

Loan programs ― regional (II/II)

Name Description Main conditions Responsible entity

Financing Refinancing of Arab exports • Goods entirely produced or Arab trade
facilities for to Arab & non-Arab manufactured in an Arab country from financing program
trade countries through lines of primary resources and other domestic
transactions of credit, e.g., pre-export components, or if the value added in
goods of credits, post-shipment an Arab country is at least 40% of the
Arab origin credits, buyers’ credits, and value of the goods
import credits

Political and I​nsurance schemes and • Investment insurance for investments • The Arab
commercial risk guarantees to encourage in an Arab country, the investor shall investment
insurance for investments in Arab not be from the same country of the and export
investments and countries, and enhance investment credit
export credit inter-Arab trade and Arab • Export credit guarantees for exports guarantee
guarantees exports worldwide to/from Arab countries corporation

​Equity and debt Offers different financing
financing for schemes to support
enterprises and investment capital of
productive projects, grants loans to
projects in enterprises and productive
member projects, and accepts
countries deposits to mobilize
financial resources in
accordance with the
provisions of Islamic law
Source: Responsible entities reported in the table
Note: information dated July 2019
• Prospective member country should: • Islamic
– Be a member of the Organization development
of Islamic Cooperation (OIC) bank
– Pay its contribution to the capital
of the Bank
– Be willing to accept such terms
and conditions as may be decided
upon by the bank’s board of
governors
P Pending official announcement
56
L For local investors only
5

Custom duty exemptions

Name Description Main conditions Responsible entity

Custom duty ​Exemption on authorized
exemption imports for industrial
establishments (e.g.,
materials, equipment,
machinery)
• Available only if local supply does not • MEIM
exist or the local supply is not up to the
specifications of the manufacturers

Source: Responsible entities reported in the table P Pending official announcement

Note: information dated July 2019 57
L For local investors only
6

Tax credits and exemption

Name Description Main conditions Responsible entity

Tax credit on ​Up to 50% tax credit on • Available in specific regions • Industrial
Saudi national Saudi national worker’s – Hail, Northern Border, Jazan, Al- clusters
payroll and payroll and training cost Jouf, Najran, Al-Baha
training cost for 10 years • Capital >1M SR
• Number of employees >5
P – either technical or administrative
jobs
– contract time not less than 1 year

Tax credit, ​Tax exemption on • No specific requirements • General

exemption on earnings from exports Authority
earnings from of Zakat
exports and Tax

Source: Responsible entities reported in the table P Pending official announcement

Note: information dated July 2019 58
L For local investors only
7

Employment funding (I)

Tamheer Employment
program subsidy program for upskilling
​On-the-job training program for Saudi ​HRDF to provide a subsidy of 30% of the Saudi
graduates salary for the first year (40% for females, and
• To provide financial support of SAR higher in remote regions)
3,000 per month during the 3 to 6
months long period of training, and ​Conditions to apply
occupational hazard insurance • Saudi national
• Age between 18-60
​Conditions to apply • Employee’s monthly salary should be
• Saudi national (or foreign national between 4,000 and 10,000 SAR
with Saudi mother)
• With bachelor, master or PhD
degree
• Currently unemployed and not
employed for the
past 6 months
• No previous participation in
Tamheer program

Source: Human Resources Development Fund (HRDF) P Pending official announcement

Note: information dated July 2019 59
L For local investors only
7

Employment funding (II)

Professional Doroob
Certification Support Program program
​Aim is to enable the Saudi workforce to ​Comprehensive program involving electronic
obtain professional certificates learning courses
accredited in several professional fields • Aim is to obtain certificates approved and
required by the labor market, e.g., recognized by the main companies
• CMMP, CIT, PMP,…etc.,
​Priority in the direct employment for the
​HRDF to provide reimbursement for certificates holders
training costs, and test fees • Providing also the opportunity of benefiting
from the on-the–job training program
​Conditions to apply
• Saudi national ​Conditions to apply
• Certificate to be accredited by • Saudi national
HRDF
• Certificate to be valid and not
expired
• Maximum reimbursement: 2
certificates for
each person
Source: Human Resources Development Fund (HRDF) P Pending official announcement
Note: information dated July 2019 60
L For local investors only
8

Attractive property solutions

Selected examples - not exhaustive

Ecosystem
• Industrial and economic cities setup to grow local regions
and to contribute in diversifying the national economy ​Saudi Industrial
– Many of those to create cluster-effects, leveraging Property Authority
synergies and fostering the overall system
productivity Detailed on the following page

• Integrated supporting infrastructure and tailored shared

services ​Royal Commission
– Ready-built factories, central business districts, ​for Jubail and Yanbu
diverse residential options, world-class educational
institutions

• Diversified industries hosted including petrochemical,

mineral, alternative energy, synthetic material, maritime
and shipbuilding ​Economic
Cities Authority
• Land at very competitive prices
– $0.27 – $4.40 per sqm/ year

​Industrial Clusters
Land & Loan Joint offering with 61
Note: information dated July 2019
Saudi Industrial Development Fund
8

The Saudi Industrial Property

200 Mn Sqm of 125 Mn sqm of leased
Authority (MODON) is developed land land 5,000 Active factories
responsible for the
development of industrial
cities with integrated
infrastructure and services
> 400 Read-Built 8,000 MVA of power 6,000 lease contracts
Private industrial cities are factories connected signed
under direct MODON
supervision

290 km of roads
connected 2 technology zones 6 training centers

Note: information dated July 2019 62

9

Government
procurement law P

Entities affected
​All RfPs from:
• Governmental entities (e.g.
Ministries, Agencies, regional/ Local content Local content Local content
local entities) pricing preference weighting minimum threshold
• Semi-governmental entities1
• Local products receive • Scoring criteria gives • Minimum local content
a 10% price preference preference to listed percentage is set for
over foreign products companies and bids different sectors
with higher local
content
Timeline
• Published after Ramadan
• Gradually enforced (planned to be
fully in force by 2020)

1. Detailed list of products and semi govt. entities that will be affected by the regulation
P Pending official announcement will be published at the same time as the new regulation
Note: information dated July 2019 63
L For local investors only
10

Ecosystem Stimulus (Monsha'at)

Indirect Lending Initiative

Program details Conditions to apply

​Enhance SME lending by offering low-
cost loans to licensed financing
companies that are used in turn to
provide financing solutions and loans
with competitive advantages for SMEs.
• Company must satisfy the conditions
of the financing entity
• Company must meet the credit rating
requirement of the financing entity

​Loan values range from 50,000 SAR to

7,500,000 SAR

Source: Monsha'at P Pending official announcement

Note: information dated July 2019 64
L For local investors only
@investsaudi