Is Saudi Arabia the next global supply chain hub? | B2BE Blog

Could Saudi Arabia become the next global supply chain hub?

Is Saudi Arabia the next global supply chain hub? | B2BE Blog

Earlier this week, there was news that the crown prince of Saudi Arabia, Mohammed bin Salman launched the Global Supply Chain Resilience Initiative (GSCRI) – this included the offer of financial incentives worth SAR 10 billion ($2.66 billion) with the aim to attract SAR 40 billion from investors to position the Gulf state as a major supply chain hub.

Last year, Saudi Arabia announced they would spend SAR 500 billion in infrastructure, including airports and sea ports, to help become a transport and logistic hub. Whilst not confirmed, these new financial incentives set by the state, are likely to focus on areas such as limits on foreign ownership of organisations, in the hope to achieve its vision 2030 goal to be a top 15 global economy.

The highlight being, that for the first time the state is offering international organisations the chance to tap into the kingdom’s natural resources and untapped potential.

The right time

Saudi Arabia has developed more than 40-industrial-clusters, and five economic zones to specialize in manufacturing, biotechnology and cloud computing in its race to present itself as a top global economy.

With economic problems highlighted in the supply chain processes throughout China and the pandemic, there couldn’t have been a better time to announce these new initiatives. Could large organisations possibly begin moving away from China in support of Saudi Arabia’s industrial clusters? Currently, tech companies such as Apple produce up to 95% of their products in China.

But, with Saudi Arabia also launching major ESG initiatives such as the Green Saudi Arabia and the Green Middle East initiatives to attract green technology investments, could this be the push that move organisations away from countries like China and begin the move to making the Gulf state a global supply chain hub?

The future of the supply chain

While the GSCRI initiative is only just launching, it may highlight the possibility of less of a dependence on existing supply chain countries and could help manage the current crisis by presenting different opportunities. Only time will tell.

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