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Advantages & Services Print E-mail

Rabigh CIP offers its tenants excellent value, which consists of feedstock with competitive prices, an ideal location to cover regional and international markets including Europe, incentives given by the Government, and more. All of the above advantages and services are detailed below:

Resins and Energy

The tenants of Rabigh CIP will benefit significantly from competitively-priced resins and electricity supplied by PETRORabigh. Resin prices will be negotiated individually with tenants, with reference to the netback price of resin in each tenant's target market .

Electricity will be supplied at the Government-set rate (approximately 3.2 cents/kWh at the beginning of 2007), thus bringing significant savings to the tenants.

From the fourth quarter of 2008, in its first phase development phase, PETRORabigh will make the following products available to the tenants of Rabigh CIP:

  • High density polyethylene (HDPE)

  • Linear low density polyethylene (LLDPE)

  • Easy processing polyethylene (EPPE)

  • Polypropylene homopolymer (Homo PP)

  • Polypropylene random copolymer (Random PP)

  • Polypropylene impact copolymer (Impact PP)

  • Mono ethylene glycol (MEG)

  • Propylene oxide (PO)

(Other source materials can also be brought in as required.)

Logistics

Rabigh CIP benefits from state-of-the-art infrastructure provision, including:

  • Accessibility to raw materials

  • Availability of International Gateways of Seaport and Airport

  • Logistics Service Center for the handling of cargoes - transportation and warehousing

  • Comprehensive waste management services (pay-service)

Human Resources

Thousands of Saudi and non-Saudi workers will be employed at Rabigh CIP and PETRORabigh.

Saudi Arabia has a large labor pool, as it has a population of 25 million with approximately half of them 20 years or younger. The size of the Saudi labor force is estimated to have risen from 1.2 million in 1969 to 3.2 million in 1999, increasing by an average annual rate of about 3.3 percent. At the same time, the availability of skilled labor is also growing, with student enrollment (male and female) at various educational institutions having increased from 0.6 million in 1969 to about 4.7 million in 1999, denoting an average annual growth rate of 7.0 percent. This process is also facilitated by the Government-sponsored Human Resources Fund, which provides for the training of operators and technicians in selected institutes in Saudi Arabia.

At present, there are no laws prescribing a minimum wage in Saudi Arabia. The average wage among the manufacturing workers is approximately twice as much as that in China and less than one-tenth of that in Germany and the United Kingdom. With lower costs of resins and electricity, Rabigh CIP is expected to retain an overall competitive advantage.

To diversify its industrial sector, the Government of Saudi Arabia provides various educational and training opportunities to its nationals. Training institutions have been set up in some cities. Recently, a human resources fund was established for the purpose of providing training for technicians and machine operators at some of those institutions. In the town of Rabigh, a vocational center is under construction. It will provide training for manufacturing workers, which is expected to benefit Rabigh CIP directly. There will also be schools, colleges and universities in the Education Zone in King Abdulaziz Economic City.

Support Services

Each tenant will be provided with power (13.8 kV), water (desalinated water) and telecommunications. Power and water will be sourced from captive facilities at PETRORabigh. Arrangements will also be made for the joint procurement of outsourced services, such as solid waste management, wastewater, warehousing, shipping, etc.

In addition to utilities, Rabigh CIP, through the Park Manager (its operation and management entity), will provide its tenants with various services either directly or in the form of joint outsourcing:

  • Security management at the park entrance and common facilities

  • Support for the application of governmental approvals and permits

  • Provision of publicly-available business information

  • Support for the preparation of a business continuity management (BCM) plan

  • Provision of such services as logistics (warehousing and shipping), solid waste and wastewater management, manpower procurement, canteens, transportation of workers, facility maintenance and repair, office supplies, etc.

The Sponsors will provide a Plastic Technical Center with technical assistance and application development cooperation. To further take advantage of its aim of economies of scale deriving from integration, the Park intends to propose more (optional) services for the benefit of its tenants.

Professional Management

Rabigh CIP will be managed by a professional Park Manager in accordance with guidelines prepared by its Sponsors, Saudi Aramco and Sumitomo Chemical. The guidelines are designed to fully ensure business continuity and convenience for all the tenants of Rabigh CIP. The Park Manager and the Sponsors intend to propose various services to maximize the benefits of integration. The manager will help tenants realize the full value that Rabigh CIP can deliver to them. It is expected that tenants will benefit from the full value offered by Rabigh CIP.

Saudi Arabian Incentives

The Government of Saudi Arabia provides incentives to foreign investors, particularly in the manufacturing industry. The following lists of incentives are broken into three categories: General Incentives includes social and economic environmental incentives, Specific Incentives is a list of incentives for foreign investors, and lastly, incentives provided by the initiative, Saudi Arabian General Investment Authority (SAGIA) are listed.

I. General Incentives

  • Kingdom's political and economic stability

  • Adoption of open market economic policies

  • Leading exporter/importer country in the Middle East

  • Largest consumer market in the Middle East

  • Strategic geographic location between regional and international markets

  • Modern infrastructure

  • Abundance of natural resources

  • Modern and equipped industrial cities

  • Rental of industrial sites for long periods and at nominal charges

  • Provision of basic utilities (electricity, water, etc) at reasonable rates

  • Incentives provided under the protection and promotion of National Industries Act: i-Exemption from customs duties of machinery and equipment, imports of raw materials and spare-parts if imported for industrial use ii-Preferential treatment for national products in governmental procurements

  • Access to soft capital and commercial financing from lending governmental institutions

  • Support for indigenous manpower employment from the Human Resources Development Fund (HRDF)

  • Promotion of Saudi non-oil exports of products and services by the Saudi Export Development Center (established under the umbrella of the Saudi Council of Chambers of Commerce and Industry)

  • SME's Loan-Guarantee Program (established within the Saudi Industrial Development Fund "SIDF")

  • Recent considerable increase in the capital of the Saudi Credit Bank "SCB" with the additional assignment to support and finance SMEs

  • Economic sectors are wide-open for growth

  • On going privatization process of public entities

  • High market liquidity

  • Vivid and growing domestic stock market

  • Stable, strong and advancing banking system

  • Availability of insurance service providers covering a variety of insurance risks (eg property" fire, theft", motor vehicles, contractors, 3rd party, health, ... etc)

  • The Kingdom does not impose personal income tax

II. Specific Incentives: Incentives in the Foreign Investment Law (FIL):

  • Foreign investors can own 100 percent of their investment projects.

  • Foreign investments, including joint ventures, shall enjoy all the benefits, incentives and guarantees extended to national investments.

  • Financial losses can be carried forward indefinitely and will be written off at the time of tax settlement once the company begins showing a profit.

  • The rate of tax on corporate profits above SR 100,000 ($26,700) is subject to a ceiling of 20 percent, reduced from 45 percent.

  • Foreign investors are allowed to repatriate fully their capital, profits and dividends.

  • Partners in a foreign investment project may freely transfer shares among themselves and others.

  • The licensed entity is entitled to obtain industrial loans on favorable terms from the Saudi Industrial Development Fund (SIDF) and other lending agencies.

  • Foreign investment entities are allowed to own both the commercial and residential properties required to carry out their licensed activities, including staff housing.

  • Foreign investors can benefit from all bilateral investment protection and promotion agreements signed by the government.

  • No investment can be confiscated or expropriated in whole or in part without a court order and the payment of fair compensation.

  • The foreign investor may obtain more than one license to practice the same activity, or different activities.

  • The licensed project can sponsor the project's foreign employees, i.e. to obtain entry and exit visas and residency and work permits.

  • Disputes can be appealed to a new Board of Grievances and Investment Disputes Settlement Committee. If the dispute remains unresolved, it shall be settled under the provisions of the Arbitration Act.

  • Being a member of the Multilateral Investment Guarantee Agency (MIGA), The Kingdom, hence, ensures the same treatment, protection and incentives accorded to a national capital.

  • The pre-investment assistance including helping foreign investors to prepare feasibility studies for industrial projects and providing information and statistics for investment projects within the scope of Saudi Arabia's development plans.


III. Incentives Provided by SAGIA (Current and as per new Strategy):

One of the major achievements of the Supreme Economic Council (SEC) has been the concurrent formation of SAGIA and the introduction of FIL (April, 2000). SAGIA, Saudi Arabia's investment promotion agency, has been entrusted with the task of improving the Kingdom's investment climate and investor services, and of promoting the Kingdom's advantageous location. SAGIA is currently the starting point of business investing in Saudi Arabia. Services provided by SAGIA to investors include:

  • Issuing the Investment License through the Investor Service Centers (ISU) in major Saudi cities (Riyadh, Jeddah, Dammam and Al-Madinah)

  • Investment License Application is decided upon within 30 days of submission of the complete file and reasons for denial decisions must be stated

  • Denial decision can be appealed before the Grievance Board

  • Investment License Application can be made online through SAGIA's website and will receive expedited treatment

  • Periodical follow-up on the status of issued licenses in order to help resolve any implementation problems and ensure projects are either in production or on-stream for production

  • Studying investment barriers facing investors with the aim of eradicating them or, at least, mitigate them to the minimum possible level

  • Review of investment activities not eligible for foreign investment (Negative List) with the aim of convincing the concerned authorities to reduce this list and make more economic activities open for foreign investment

  • Co-ordinate with the concerned authorities to review and improve the laws and by-laws connected to foreign investment

  • Participate in the preparation of agreements related to investment in order to better serve the investors

Our Concepts and Opportunities

It is envisioned that Rabigh CIP, as a totally integrated industrial park, will become one of the most important chapters in the history of the industrial development of Saudi Arabia. It is also a showcase project where significant values, including government incentives, are provided to both domestic and foreign investors in return for job opportunities for the local population. If you would like additional information regarding the concepts and opportunities that shape Rabigh CIP, please refer to Concepts and Opportunities.