Korea’s SMEs embrace opportunities in Saudi industrial zone project

2023.09.18 15:25:01 | 2023.09.18 15:25:13

[Courtesy of Gaoncell]이미지 확대

[Courtesy of Gaoncell]

South Korean small and medium-sized enterprises that have confirmed their participation in the Saudi-Korean Industrial Village (SKIV) have competencies that are difficult to replicate across various sectors, including renewable energy, biotech, digital solutions, and heavy industries.

Gaoncell, a specialized hydrogen fuel cell company, received a request earlier this year from the Saudi International Industrial Village Company (SIIVC) to demonstrate its direct methanol fuel cell (DMFC) system to back up the kingdom’s power supply. The DMFC system developed by the Korean company utilizes methanol as fuel to generate electricity in an eco-friendly power solution. Unlike solar or wind energy, it can continuously supply power in areas where electricity is unavailable, irrespective of the weather. Gaoncell is set to establish its presence in the SKIV located in Jazan, southwestern Saudi Arabia, with a goal to supply more than 14,000 backup power DMFC systems, targeting revenues exceeding 500 billion won ($377 million).

MiCo BioMed, a Korean company specializing in in vitro diagnostic medical devices, recently completed the establishment of a local joint venture (JV) with the SIIVC. Together with Gaoncell, the company plans to sign a contract for a production site in Jazan next month and start building production facilities. Saudi Arabia has paid attention to MiCo BioMed’s point-of-care diagnostic technology, which can provide fast and effective diagnosis and treatment.

The change in the location of the Saudi-Korean industrial park to Jazan instead of the originally proposed Yanbu Industrial City reflects the will of the Saudi government and royal family.

In May, the Saudi government designated four new special economic zones, including Jazan, Riyadh, Ras Al-Khair, and King Abdullah Economic City. Jazan is one of the Silk Road ports and is considered a strategic hub for importing and exporting goods to the entire Middle East and Africa. Businesses in these zones will benefit from exemptions from corporate taxes, customs duties on machinery and raw materials, recognition of 100 percent foreign ownership, and relaxed regulations on hiring foreign labor.

The Saudi government is also actively pursuing economic diversification with a focus on advanced manufacturing to achieve sustainable economic growth. To this end, the kingdom has set a target of increasing the private sector’s contribution to the gross domestic product (GDP) from about 40 percent to 65 percent. SIIVC, in collaboration with the Saudi Jazan Royal Association, is driving the SKIV project, which is part of the ‘Vision 2030 Project’ aimed at transitioning the Saudi economy away from its heavy reliance on oil. Korean SMEs participating in SKIV will enter Saudi Arabia in the form of joint ventures, with a fixed 20 percent ownership stake guaranteed in exchange for technology transfer and local employment.

SIIVC, provides full support for the construction of factories and the equipment needed by Korean SMEs within the industrial complex via the Saudi Industrial Development Fund (SIDF). The support provided by the fund to the 17 Korean SMEs participating in the SKIV is considerable, amounting to several hundred billion won per company. Additionally, with the designation of Jazan as an economic zone, participants can also enjoy benefits such as reduced corporate taxes and customs duty exemptions.

By Yang Yeon-ho and Minu Kim

[ⓒ Pulse by Maeil Business Newspaper & mk.co.kr, All rights reserved]