‘SIDF’s role in Development of Industrial
Sector in Saudi Arabia’
By Ali Al-Dhalaan
8th Rajab,1433
29/05/2012
MAIN POINT TO PRESENTATION
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The Saudi Industrial Development Fund (SIDF) and why it was set up.
SIDF Lending Policy Guidelines.
Analysis of Approved SIDF Industrial Loans.
Advantages of receiving financing through SIDF.
Kafalah Program for SME projects.
Financing Industrial Services projects.
Financing Infra- structure for industrial cities.
Conclusion.
WHY WAS SIDF ESTABLISHED?
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SIDF Establishment:
– Royal Decree on 26/02/1394H (1974), commenced operation in 1394 (1974G)
– Development finance institution (affiliated with Ministry of Finance)
– SIDF Capital progressed from SR 500 million to SR 40 billion ($11 Billion).
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SIDF Main Goals and Function:
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Development of Private Industry:
– Medium and Long-term Loans (new projects, expansion, modernization &
relocation)
– Detailed analysis of the commercial viability of the project
– Monitoring the performance of projects and the status of the Fund’s loan from
initial disbursement to final repayment
– Should an operational project financed by SIDF require technical, marketing,
business consultancy, such need-based services are provided free of charge
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Conducting industry related strategic studies
SIDF LENDING POLICY GUIDELINES
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All Industrial Licensed Companies are eligible
– Saudi
– Joint Venture (between local & foreign companies)
– 100% foreign owned projects
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Viable project
– Technical
– Marketing
– Financial
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Maximum 20-years term loan
– Repayment schedule designed to match projected cash flow
SIDF LENDING POLICY GUIDLINES
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Up to 75% of Financiable Project Cost
– Fixed Assets
– Pre-operating
– Start-up working capital
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A minimum of 25% Owner's Equity
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Security
– Mortgage on the financed fixed assets
– Acceptable Pro-rata Personal and Corporate Guarantees from the
shareholders.
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Disbursement Commensurate with Project Implementation
– Actual progress supported by documents
ANALYSIS OF APPROVED SIDF INDUSTRIAL LOANS
(KSA/ Yanbu Region)
Fiscal Years 1432/1433 (2011G)
All Regions
(KSA)
Yanbu Region
Cumulative Loan Commitment
(as of 31st December 2011)
Numbers of approved projects
$25,460 million
$ 2,428 million
2,371 Projects
72 projects
Cumulative Disbursement
$17,228 million
$1,643 million
Cumulative Loan Repayment
$9,924 million
$946 million
Numbers of Fully Repaid Projects
1,308 projects
31 projects
Total number of Loan approved (application)
3,344
90
Total Number of New Industrial Loans
2,371
72
973
18
Total Number of Expansion Loans
ANALYSIS OF APPROVED SIDF INDUSTRIAL LOANS
(By Sectors)
All Regions
Major Sectoral
Dist. Of Projects
Chemicals
584
Loan
Amount
($ mn)
10,032
Building
Materials
Engineering
Products
Consumer
385
2,804
31
1,308
684
5,431
14
372
642
4,166
3
256
Cement
30
2,609
11
275
Other products
46
418
3
64
2,371
25,460
72
2,428
Total
No.
Projects
Yanbu Region
No.
Projects
10
Loan
Amount
($ mn)
153
Advantages Of Receiving Financing Through SIDF
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Cost of financing: The Fund will apply a front-end evaluation charge (on
approved loans) to cover its costs of studying and evaluating the
application, and follow-up costs are billed once every six months during the
relationship of the project
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The promoters can have an independent opinion whether the investment
proposal is fundamentally worth pursuing, as a detailed appraisal of the
project's feasibility is conducted
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During the pre-screen of the feasibility study the deficiencies, if any, are
brought to the attention of the sponsors
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Commercial banks and Saudi institutions recognize the value of SIDF's
approval of a project's loan
Advantages Of Receiving Financing Through SIDF
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If requested, SIDF provides an appraisal of the key managers from
amongst the sponsors' candidates
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A technical and financial audit is conducted during the project's
implementation and operation
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Additional loans for project expansion could be done on a fast-track
basis
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Availability of qualified staff and database enables SIDF to provide
valuable advise and consultancy to individual investors
Kafalah program to promote commercial loans to SME
projects:
The program:
- The program started on January 2006 and its goal is to provide
guarantees of up to 80% of the commercial loans (Banks) to SME
projects.
- Maximum amount is up to SR1.6 million or $427,000. Minimum
amount is SR 80,000 or $21,300.
- By the end of 2011G
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Number of guarantees are 3,095.
Number of Establishment are 1,991.
Amount of granted loans are $818.5 million.
Amount of Kafalah (guarantees) $361.4 million.
Financing Industrial Service Projects:
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Natural Gas Distribution projects in Industrial Cities.
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Water Desalination Plants and Water Treatment Plants serving the
Industrial Cities.
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Industrial, Chemical and Medical waste treatment.
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Mobile Desalination Plants (Barges).
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Medical and Food Sterilization by using X-rays and electronic rays.
Financing of Infrastructure for Industrial Cities:
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SIDF allocated $270 million to finance Infrastructure in Industrial cities
owned by Modon & Private sector.
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The Program goals is to promote private sector companies to invest in
development of Industrial Cities.
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Support housing projects at the Industrial cities owned by Modon.
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Support financing Logistics projects related to direct services to
industrial cities such as : Transportation, Warehousing, District
Cooling, Training Centers and Standards Factories.
CONCLUSION
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SIDF is a financing agency reporting to the Ministry of Finance
The Fund’s principal objective is to encourage private sector
industrial ventures in Saudi Arabia
The role of SIDF in the development of the private Industrial sector
in KSA
Establishment of Kafalah program to encourage commercial loans
for SME.
Extended SIDF financing to include Industrial Services projects
and Infra-structure for Industrial cities.
Thank you.