Saudi Arabia’s Industry 4.0 Initiative Drives Economic Diversification

RIYADH: Saudi Arabia has embarked on an ambitious journey to embrace the Fourth Industrial Revolution, commonly associated with the period around the late 2000s to the early 2010s.

Recognizing its transformative potential for economic diversification and societal advancement, the nation unveiled its ambitious Vision 2030 plan on April 25, 2016, highlighting the strategic National Industrial Development and Logistics Program, or NIDLP.

This initiative aims to cultivate high-growth sectors domestically and foster an open economy receptive to foreign capital infusion. Additionally, it serves as a catalyst for integrating Industry 4.0 technologies across diverse sectors.

Speaking to Arab News, Harsh Kumar, chief strategy officer and co-founder of Shipsy — a software platform that helps logistics companies and shippers manage their cargoes —explained that Saudi Arabia is well-positioned to become a regional hub for Industry 4.0. The Kingdom leverages its abundant energy resources for cost-effective, energy-dependent production and its strategic geographic location as a crossroads for Asia, Europe, and Africa to develop advanced supply chain infrastructure.

From investments in the tech sector to fostering an innovation ecosystem, the Kingdom has laid the groundwork for a thriving knowledge-based economy poised for the challenges and opportunities of the digital age.

As a G20 member, Saudi Arabia actively fosters a progressive environment to nurture entrepreneurship and drive technological advancement.

The establishment of innovation hubs, startup accelerators, and research institutions creates fertile ground for collaboration and creativity. Initiatives like the Saudi Venture Capital Co., the King Abdullah University of Science and Technology, and the King Abdulaziz City for Science and Technology are fueling the development of cutting-edge applications.

By fostering a culture of innovation and entrepreneurship, Saudi Arabia empowers its youth and workforce to harness the opportunities presented by the Fourth Industrial Revolution and contribute to its economic prosperity.

Kumar added that Saudi Arabia can adopt smart manufacturing and supply chain technologies such as AI, predictive intelligence, automation, as well as IoT, and robotics to enhance efficiency and capitalize on growing domestic demand.

“A supportive policy framework offering incentives, investment in education to cultivate a skilled workforce, and fostering research and development through partnerships with global tech leaders will be crucial,” Kumar said.

He further noted that international collaborations could import best practices and tailor innovative solutions, setting Saudi Arabia as a leader in the region’s technological transformation and supply chain excellence.

Assessing the current level of digitalization and technological maturity within Saudi Arabia’s industrial sector, Kumar noted that, according to tech giant Ericsson, the Kingdom has an impressive 98 percent internet penetration among its over 32 million people.

“The nation is on the cusp of significant transformation. Then, initiatives like the Digital Government Authority and Vision 2030 will fuel smart city projects, enhance digital healthcare, upgrade infrastructure, and help roll out autonomous supply chain technologies,” Kumar said.

He added that the e-commerce sector is expected to exceed $13 billion by 2025, introducing immense opportunities to enhance end-to-end warehouse and delivery operations using AI.

“Furthermore, the government has initiated a $1.2 billion program to boost the digital capabilities of 100,000 students by 2030,” he said. Highlighting the specific subsectors within the Saudi industrial landscape leading the adoption of Industry 4.0 technologies, Kumar emphasized that robust and resilient supply chain and logistics networks are critical across manufacturing, trade, retail, and other industries.

He explained that a nation’s gross domestic product is directly linked to its supply chain performance. Therefore, it is unsurprising that the supply chain industry is expected to embrace advanced technologies like AI, machine learning, as well as IoT, automation, and analytics, along with predictive intelligence and blockchain.

These technologies are anticipated to reduce costs, drive sustainability, improve customer service, balance demand and supply, control prices of everyday items like groceries, vegetables, and meat, and ultimately enhance Saudi Arabia’s global competitiveness.

The second edition of the Global Machinery & Equipment Report 2024, released by Bain & Co., reveals significant opportunities for machinery and equipment manufacturers worldwide.

The study indicates that these manufacturers can achieve immediate and substantial improvements in productivity, with potential gains ranging from 30 to 50 percent.

This transformation can be accomplished by leveraging AI, lean methodologies, digital advancements, and sustainability innovations, essential components of the envisioned “Factory of the Future.”

The same report added that many machinery executives increasingly consider AI adoption urgent. According to Bain’s research, 75 percent of executives from the broader advanced manufacturing industry said that adopting emerging technologies such as AI is their top priority in engineering, research, and development.

Discussing the future path of Saudi Arabia’s industrial sector in the era of Industry 4.0 and the key opportunities, challenges, and uncertainties ahead on this transformative journey, Kumar stated that the Kingdom’s industrial sector is set to evolve through the digitalization and automation of supply chain operations, enhancing efficiency and fostering innovation.

“Key opportunities include the development of smart factories, growth in demand for e-commerce, enhanced data integration across the supply chain, and increased global competitiveness through advanced technologies like AI and IoT,” he said.  Kumar anticipates that the Kingdom will witness additional investments in workforce upskilling, cybersecurity risk management, and development policies that safeguard customer information, especially as AI is booming.

“Overall, Saudi Arabia’s commitment to Vision 2030 provides a solid foundation for embracing Industry 4.0, positioning it as a leader in technological advancement in the Middle East,” he said.

Commenting on the strides made by Saudi industrial companies in embracing advanced analytics and data-driven decision-making, Kumar said: “We see a rapid transformation occurring when it comes to embracing advanced technologies like AI, ML and automation.”

He added that businesses are increasingly becoming aware of the benefits these technologies can deliver in terms of productivity, cost savings, risk mitigation, and preparedness for unprecedented events.

Under Vision 2030, the Saudi government will invest $20 billion in AI by 2030 to develop the country’s digital sector.

According to a recent report by the professional services firm PwC, the projected economic impact of AI in the Middle East by 2030 is $320 billion, with an estimated $135.2 billion attributed to Saudi Arabia. The analysis also highlights an annual growth rate in AI contribution ranging between 20 percent and 34 percent across the region, with the Kingdom experiencing the second fastest growth.

Kumar concluded that Saudi Arabia’s ambition to become a global leader in Industry 4.0 technologies and innovation has significant geopolitical and geoeconomic implications.

NEOM leading path to tech, economic prosperity 

Saudi Arabia has witnessed several success stories in its journey to embrace innovation, entrepreneurship, and 4IR, with its $500 billion future city, NEOM, as a prime example.

The flagship project of Vision 2030 aims to create a futuristic, technologically advanced city in the northwest of Saudi Arabia. It is envisioned as a hub for innovation, sustainability, and economic diversification, leveraging 4IR technologies to drive progress across various sectors.

The initiative has attracted significant investment and partnerships from global companies and is set to become a model for prospective smart cities.

Ceer driving innovation future  

Announced by Crown Prince Mohammad bin Salman in 2022, Ceer is poised to catalyze a nascent industry and ecosystem, promising an array of innovative vehicles, attracting both international and domestic investments, generating local employment opportunities, and bolstering Saudi Arabia’s GDP.

In collaboration with Hon Hai Precision Industry Co., or Foxconn, Ceer will spearhead the design, production, and distribution of electric vehicles tailored for consumers across Saudi Arabia and the broader MENA region.

According to the annual report on Vision 2030, these cars will undergo rigorous testing to meet the highest global standards of quality control and safety.

Moreover, Ceer will lead the way in infotainment, connectivity, and autonomous driving technologies, leveraging Foxconn’s expertise in developing the vehicles’ electrical architecture and incorporating components sourced from BMW.

Unlocking the genetic code 

The Saudi Genome Program embarks on a groundbreaking endeavor to build a pioneering database. This initiative aims to map Saudi society’s genetic makeup and transform healthcare by enabling personalized medicine, reducing costs, and enhancing quality of life.

Initiated in 2018 by Crown Prince Mohammed bin Salman, it epitomizes a distinctive national initiative. It harnesses state-of-the-art genomic technologies to effectively diminish the occurrence of genetic diseases, advance diagnostics, therapy, and prevention strategies.

As per the Vision 2030 report, the first phase of strategy development was set in motion in 2022, unveiling the ambitious roadmap for SGP 2.0. This transformative vision seeks to establish the Kingdom as a globally recognized leader in genomics through a series of bold yet feasible objectives.

Solar oasis for sustainable thirst 

The Al-Khafji Desalination Plant, celebrated as the world’s largest solar-powered water desalination project, meets the region’s water needs through groundbreaking and sustainable methods.

Unveiled in 2018, this facility employs progressive technology to convert saltwater into potable water while generating renewable energy for the Kingdom. With a remarkable capacity of producing up to 90,000 cubic meters of clean water daily, it relies on innovative solutions developed by KACST.

By harnessing solar panels, the plant contributes to Saudi Arabia’s efforts to curtail carbon emissions and embrace a future powered by clean, sustainable energy.

Empowering entrepreneurs 

Misk Innovation, an initiative launched by the Misk Foundation to support and empower young innovators and entrepreneurs in Saudi Arabia, nurtures talent, fosters creativity, and accelerates the development of progressive solutions to address societal challenges and drive economic growth through various programs, competitions, and funding opportunities.

The initiative has helped launch several successful startups and technology ventures, contributing to the vibrancy of the Saudi innovation ecosystem.

Revolutionizing Red Sea tourism 

The Red Sea Development Co., responsible for designing one of the world’s most ambitious tourism projects along the Red Sea coast of Saudi Arabia, is building a sustainable luxury tourism destination that leverages 4IR technologies to minimize environmental impact, enhance guest experiences, and drive economic diversification.

The company is setting new standards for eco-friendly tourism development in the region through advanced design approaches, technology integration, and sustainable practices.

Quest for global biotech supremacy 

The National Biotechnology Strategy is poised to position Saudi Arabia as a regional and global biotech hub with a far-reaching impact on biomanufacturing and medical innovation.

According to the 2023 report on Saudi Vision 2030, the strategy marks the beginning of a transformative journey, not only for the Kingdom but also for the global biotechnology landscape.

It aims to advance Saudi Arabia’s self-sufficiency in vaccines, biomanufacturing, and genomics, unlocking a high-growth sector, fostering innovation, and improving the health and well-being of its citizens.

Moreover, the country harbors ambitious aspirations to emerge as the premier biotech hub in the MENA region by 2030, further advancing to attain global prominence by 2040. This endeavor is projected to contribute over $34.6 billion to the non-oil sector.

According to Abdullah Al-Swaha, chairman of the board of directors of the Research, Development, and Innovation Authority, this strategy sets the stage for dynamic prospects to develop and empower Saudi Arabia’s talented researchers, entrepreneurs, and innovators while driving groundbreaking discoveries and propelling the country toward a prosperous future.

The successes stem from broader initiatives in Saudi Vision 2030, with 87 percent of programs on track or completed, showcasing significant progress.

Fostering digital technologies and AI in Saudi Industries 

Highlighting the strategies his ministry is embracing to promote the adoption of digital technologies and artificial intelligence in Saudi industries, the spokesman for the Ministry of Industry and Mineral Resources, Jarrah Al-Jarrah, told Arab News that the industrial sector is considered a key driver in developing a prosperous economy.

Saudi Vision 2030 supports the increase of non-oil exports, attracting foreign investment, stimulating investment in research and innovation, and providing high-quality jobs for the nation’s citizens.

“In this regard, the Kingdom is working on several fronts to develop strategies and roadmaps related to the industrial sector, aiming to transform the country into a major industrial power. Among these plans is the National Industrial Strategy, which was launched in 2022,” Al-Jarrah said.

“The strategy has established a comprehensive roadmap to support the industrial development process in the Kingdom at an accelerated pace, in order to build a competitive, resilient, and sustainable industrial economy,” he added.

Regarding specific undertakings aimed at enhancing research and development in Fourth Industrial Revolution technologies in Saudi Arabia, Al-Jarrah said that his ministry has a set of integrated undertakings supporting research, development, and innovation activities.

“There is no doubt that modern, strategic, and vital technologies are prioritized in terms of support and empowerment. However, in general, all initiatives aim to promote a culture of innovation within the industrial sector and support all research, development, and innovation activities, whether they involve products, processes, or technologies,” he said.

Providing examples of successful national 4IR initiatives in Saudi Arabia, Al-Jarrah highlighted that various entities within and beyond the industrial ecosystem offer numerous programs to support the adoption and development of Fourth Industrial Revolution technologies.

“For example, the Ministry of Industry and Mineral Resources in Saudi Arabia launched the ‘Future Factories’ initiative, aiming to advance 4,000 facilities in Saudi Arabia by adopting best global practices in the 4IR technologies and advanced manufacturing, thereby enhancing production efficiency and offering incentives to participating factories,” he said.

He added that some of their key ambitions encourage factories to adopt modern manufacturing technologies and support projects focusing on automation, digitization, and energy efficiency.

As an example, Al-Jarrah mentioned the National Productivity Program offered by the Saudi Authority for Industrial Cities and Technology Zones, known as MODON.

This initiative, he said, helps small and medium-sized industrial companies achieve high production efficiency through free consulting services, maturity assessments, and operational excellence plans.

Al-Jarrah explained how the Kingdom has benefited from countries that have made significant progress in this new industrial revolution, highlighting that the country has adopted the Smart Industry Readiness Index methodology, which is used in over 30 countries and endorsed by the World Economic Forum.

“This has enabled us to measure the average level of smart maturity in factories, identify transformation priorities, and address gaps through the launch of the Future Factories program,” he said.