Over the last three decades, Saudi Arabia has witnessed extraordinary growth. The evolution of the country from a desert landscape to a technological, modernized nation is attributed to its wise and inspired leadership. The fast development has been tremendous and only a very few specialized companies were able to support such massive development.

The construction market has contributed to more than 12.0% of the real GDP of Saudi Arabia (KSA) over the last decade. Thriving economy and increased income levels resulted in demand for residential units leading to demand exceeding supply due to the rapid growth in population. The non-residential (commercial and industrial building) segment also benefited from demand for corporate offices and industrial units because of increase in corporate activity. The construction sector is the third largest sector of the Saudi economy after oil, and Information and Communication Technology (ICT) and has experienced rapid growth in recent years. Saudi Arabia currently accounts for more than 50.0% of the total construction market in the Gulf Cooperation Council (GCC).*

Saudi Arabian Electrical Industry Sector is the base that will eventually help in the nation raise in all aspect of life. Because of its rapidly expanding population and an ambitious industrialization plan, Saudi Arabia is one of the world’s most attractive markets for power generation equipment and services. The Saudi Ministry of Industry and Electricity’s 25-year electricity plan calls for $117 billion in capital investment to increase the Kingdom’s total power generation capacity from 17000 MW per year by 2020. Manufacturers of the electrical power and electronics sector will find wide opportunities here.

Along with this, rapid rate of growth for the major cities is also an important factor driving the construction market. The creation of new airports, highways and even new cities has attracted construction professionals from all over the world. Saudi Arabian General Investment Authority is carrying out development strategy involving billions of dollars expenditure to build Greenfield economic cities around the country. The main areas for construction in Saudi Arabia are Jeddah, Riyadh, Al-Khobar, Yanbu and Hail. Some of the major growth drivers for the construction industry are: Scale of development. The real estate sector has been predicted to be one of the major factors driving the regional economic growth within Saudi Arabia. The real estate projects announced in Saudi Arabia like the six economic cities are mammoth and unprecedented in terms of size and cost involved. Four among these six economic cities will require an area of around 500 sq. km to be developed according to the activities scheduled in 8th development plan.* However, the 9th Development Plan is based on five major themes which form an integrated framework for continuing the comprehensive and balanced development of the national economy during the coming five years, in addition to establishing the pillars of sustainable development in the long-term. The fifth theme “the raising the competitiveness of the national economy and national products”, is of great importance particularly under the growing trend of globalization and the integration of the Saudi economy into the global economy.

The government has provided a range of incentives to encourage the private sector to participate in the Kingdom’s industrial effort. Numbers of industrial estates provide private Saudi manufacturing companies with the necessary infrastructure and services at a very low cost. Credit facilities on generous terms are readily available for such enterprises.

Saudi Arabia is studying a restructuring plan to develop its electricity industry and open up the electricity market to private sector and local investors. Now, 95% of the Saudi Arabian provinces electrical grid is interconnected. The government is also studying a plan to complete its national grid linking all the provinces by 2012.

Saudi Electricity & Co generation Regulatory Authority (ECRA) has already embarked upon a comprehensive plan to develop industry for a competitive market where supply and demand control the market process.

A key element in the Saudi Arabian government’s economic strategy is industrial diversification, a process which has as its primary objective the reduction of the Kingdom’s dependence on oil revenues. To this end, the government has encouraged the development of a wide range of manufacturing industries.

The Kingdom has adapted a free market economic model. The financial, industrial and trade sectors of the economy have made rapid progress, enabling the private sector to play an increasingly important role in the development and diversification of the economy, especially in the fields of construction.

*Mike King