Saudi Arabia’s Ras al-Khair Special Economic Zone integrates advanced industry 4.0 technology and infrastructure to ensure its competitiveness going forward, positioning it as a major maritime hub and investment destination

With plans to become a hub for technology and innovation, the Ras al-Khair Special Economic Zone is projected to make significant contributions to the Saudi Arabian economy. The zone’s major activities include shipbuilding, offshore rig fabrication and related activities like maintenance, repair and operations (MRO). The zone and others like it contribute to the Kingdom’s broader Vision 2030 by growing and diversifying the economy through import substitution, exports, and innovation.

A key aspect is positioning Saudi Arabia as a global maritime hub, leveraging its strategic location between three continents and the fact that 6% of all global maritime trade passes Saudi ports. These forays into new sectors have contributed to the robust growth and transformation that the Kingdom’s economy has witnessed in recent years.

“The most dramatic shift has been Saudi Arabia’s emergence as an investment destination, with FDI quadrupling since 2016 and the kingdom experiencing the second fastest post-COVID investment rebound in the world.” – Khalid al-Falih, Saudi Arabia’s Minister of Investment and Chairman of the Economic Cities and Special Zones Authority

Supporting the special economic zone (SEZ) and adjacent areas is a network of infrastructure and new technologies. Industry 4.0 technologies like artificial intelligence (AI) and Internet of things (IoT) are integrated at multiple levels. These technologies enable ports to run more efficiently by optimising schedules and reducing delays. IoT can track objects like cargo containers, with AI processing the data to produce real-time insights – thereby reducing inefficiency and promoting data-driven decision making. Integrating these technologies from the start helps to future proof Ras Al-Khair SEZ and keep it globally competitive going forward.

Financing all of this is investment from major players Saudi Aramco, Bahri, Lamprell, Hyundai Heavy Industries (HHI), and Baosteel – in addition to the Saudi government. To further drive investment, several incentives have been offered:

• Permanent 0% withholding tax for repatriation of profits from SEZ into foreign countries.
• Flexible and supportive regulations around foreign talent during the first 5 years.
• 0% VAT for all intra-SEZ goods exchanged within the zone and between zones.
• 5% corporate income tax for up to 20 years.
• 0% customs duties deferral for goods inside the SEZ.
• Expat levy ensuring fees exemption for employees and their families in the special economic zone.

The International Maritime Industries (IMI) already has signed offtake agreements totalling US $10 billion over 10 years with partners Aramco and Bahri, for the delivery of 20 rigs and 52 vessels acquiring at least 75% of Bahri commercial vessel needs over the period from the shipyard.

All these factors and the current economic climate generate significant growth potential, both within Ras Al-Khair and the Kingdom more broadly.  The Saudi shipbuilding and MRO market is projected to grow by approximately 23% between 2021 and 2030, while the offshore rigs market is estimated to grow by 20% over the same period.  Between 2021 and 2030, Ras Al-Khair SEZ is projected to contribute SAR 119 billion to the Kingdom’s exports, SAR 5.6 billion in FDI, SAR 82 billion to GDP, and over 80,000 jobs. The country’s maritime and mining sectors are key contributors to these goals, with Ras Al-Khair SEZ at the intersection. The Kingdom boasts the lowest aluminum production costs in the world with significant bauxite deposits, part of untapped mining reserves estimated at US $2.5 trillion.

As demand for offshore platforms in the Arabian Gulf and broader Middle East is set to increase, Ras Al-Khair SEZ is positioned to become a major supplier through its shipbuilding, rig fabrication and MRO activities. Along with its considerable backing and modern infrastructure, the SEZ aims to capitalise on these advantages to offer investors a compelling environment for business growth.