In August 2018, Saudi Arabia’s Abdul Latif Jameel (ALJ) and Japan’s Kosei Aluminium signed a memorandum of understanding with the National Industrial Clusters Development Program to drive foreign investment into the Kingdom’s auto manufacturing sector.
A year later, Arab News reached out to ALJ for an update on the project’s various dimensions. The first update relates to the technical and financial feasibility of manufacturing automotive aluminum die casting wheels and components in Saudi Arabia.
An ALJ spokesperson said the feasibility study is underway and is expected to be completed by the end of the year.
“This is the first step in the three parties’ commitment to developing a competitive global auto- components export hub and driving foreign investment into Saudi Arabia’s manufacturing sector,” said the spokesperson.
Expected to be a major milestone in the Kingdom’s manufacturing industry, the most obvious question is what preparations are going into making this venture successful.
“The agreement poses enormous potential and opportunity for the Kingdom, particularly so, as we’ve seen regional demand for vehicles rapidly increasing,” said the spokesperson.
“The Saudi government’s commitment to developing promising and competitive industries is a key component in the success of the automotive sector. We see this being addressed in Vision 2030 through the National Industrial Development & Logistics Program, which is working to create favorable growth conditions through automotive clusters and investment incentives.”
But perhaps the most pressing question is how many Saudi jobs is this project likely to create? The spokesperson said manufacturing skills and job creation are at the heart of the project, which aims to establish the first Saudi venture in largescale automotive components manufacturing.
“It’s expected to generate significant employment opportunities, both directly and across the wider value chain,” the spokesperson said, adding that the benefits of these partnerships are manifold.
But besides technology transfer, what are the other benefits for Japan and Saudi Arabia in collaborations of this kind?
Arab News has learned that this project is one of more than 60 public-private collaborations already in development under Saudi-Japan Vision 2030, which aims to create opportunities for mutual economic growth and deepening cultural ties.
For Saudi Arabia, this is an important step toward the first major automotive components manufacturing venture for worldwide export as it immediately delivers opportunities for technology and skills transfer.
“In the longer term, it unlocks opportunities for infrastructure investment, capacity building and skill development across the full value chain around an emerging automotive parts manufacturing industry,” the spokesperson said.
For the Japanese partners, the collaboration offers the opportunity to access new resources to support business development, grow a strong automotive parts supply base, establish a strategically located hub for worldwide exports, and enable two-way knowledge transfer.