Industrial Cities in Saudi Arabia

Following an initiative over two decades ago, industrial cities have been springing up across Saudi Arabia, changing the face of the Kingdom’s industrial sector.

The Saudi Authority for Industrial Cities and Technology Zones, more commonly known by its Arabic acronym MODON, is the government body in charge of overseeing the kingdom’s industrial cities and technology zones and offering a wide range of products and services to its investors.

At the time of MODON’s establishment in 2001, Saudi Arabia was in search of a path toward economic transformation. The Kingdom was determined to foster growth across its industrial sector in parallel to its long-established oil and gas sector.

Over two decades later, MODON has been largely successful in encouraging industrial development, with the number of Saudi industrial cities under MODON’s supervision increasing to 36, consisting of over 6000 factories.

MODON has continuously worked to improve the industrial infrastructure of various industrial cities across the Kingdom. “Throughout the year [2022], MODON successfully executed 13 construction projects that serve 10 cities and industrial oases. Our focus has been on the development and rehabilitation of infrastructure, construction of stations and lines for electricity transmission, installation of potable and irrigation water tanks,” commented the CEO of MODON, Majid bin Rafid Al-Arqoubi.

MODON Oasis in Jeddah is an exemplary industrial zone developed by the authority, where the installation of the right infrastructure has created a hotspot for industrial innovation. Launched in 2015 in the northeastern part of the Jeddah province, the industrial oasis has expanded to cover over 3.3 million square meters of developed land.

In less than eight years, over 60 contracts have been finalized between MODON and investors in Jeddah, which would not be possible without the installation of the required infrastructure such as the industrial zone’s 110KV electricity line.

Other infrastructural and logistical amenities available to factories in the oasis include container yards, distribution hubs, and dry and refrigerated warehouses, among much else.

MODON has also created a favorable investment climate in many parts of Saudi Arabia. The FDI that has been injected into various economic sectors thanks to MODON can be an indicator of the authority’s effectiveness in fulfilling its objectives.

In October 2023, MODON reported a +136% jump in investment for 3Q2023 compared to the previous year. At the same time, industrial contracts issued by MODON rose by 96% in the third quarter to 249, while industrial allocation grew by 114% to 2.1 million sqm.

In spite of such achievements, MODON is keen to evolve and improve further. In order to remain dynamic and relevant in today’s ever-changing business landscape, MODON adjusts its strategy from time to time. The latest update in the authority’s strategy was announced in 2022, which, according to MODON, marks the beginning of a new phase in Saudi Arabia’s industrial development.

Based on the new strategy, the Kingdom will endeavor to become the preferred investment destination and go-to partner for investors and industrialists wishing to do business in the region.

This will be in line with Saudi Arabia’s Vision 2030 plan. “MODON is fully committed through its strategy to enable the growth drawn by the Saudi Vision 2030 to localize promising industries,” notes the authority’s 2022 annual report.

And MODON’s products and services offering only continues to grow. Indeed, MODON’s offers a wide range of products to meet its partner’s needs, offering investment prospects based on industrial requirements, support for SMEs, and opportunities to establish partnerships with relevant authorities. Its products and services now include industrial lands, ready factories, business incubators and accelerators, not to mention its logistics products, which include support units, self-storage units, and long-term logistics contracts.

As the volume of industrial activities continues to rise in the country, it also becomes increasingly important to keep an eye on sustainability. In 2022, MODON published its first sustainability report, in accordance with the standards of the Global Reporting Initiative (GRI).

The report included detailed risk analyses in terms of environmental, social and governance (SEG), as well as MODON’s strategies and opportunities for responding to challenges. The report sets a precedent in the country, encouraging other stakeholders to be as transparent as possible about sustainability while ramping up industrial development.