Presentation on theme: "‘SIDF’s role in Development of Industrial Sector in Saudi Arabia’ By Ali Al-Dhalaan 8th Rajab,1433 29/05/2012."— Presentation transcript:
1 ‘SIDF’s role in Development of Industrial Sector in Saudi Arabia’ By Ali Al-Dhalaan 8th Rajab, /05/2012
2 MAIN POINT TO PRESENTATION 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.
3 WHY WAS SIDF ESTABLISHED? 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).SIDF Main Goals and Function:Development of Private Industry:Medium and Long-term Loans (new projects, expansion, modernization & relocation)Detailed analysis of the commercial viability of the projectMonitoring the performance of projects and the status of the Fund’s loan from initial disbursement to final repaymentShould an operational project financed by SIDF require technical, marketing, business consultancy, such need-based services are provided free of chargeConducting industry related strategic studies
4 SIDF LENDING POLICY GUIDELINES All Industrial Licensed Companies are eligibleSaudiJoint Venture (between local & foreign companies)100% foreign owned projectsViable projectTechnicalMarketingFinancialMaximum 20-years term loanRepayment schedule designed to match projected cash flow
5 SIDF LENDING POLICY GUIDLINES Up to 75% of Financiable Project CostFixed AssetsPre-operatingStart-up working capitalA minimum of 25% Owner's EquitySecurityMortgage on the financed fixed assetsAcceptable Pro-rata Personal and Corporate Guarantees from the shareholders.Disbursement Commensurate with Project ImplementationActual progress supported by documents
6 ANALYSIS OF APPROVED SIDF INDUSTRIAL LOANS (KSA/ Yanbu Region) Fiscal Years 1432/1433 (2011G)
7 ANALYSIS OF APPROVED SIDF INDUSTRIAL LOANS (By Sectors)
8 Advantages Of Receiving Financing Through SIDF 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 projectThe promoters can have an independent opinion whether the investment proposal is fundamentally worth pursuing, as a detailed appraisal of the project's feasibility is conductedDuring the pre-screen of the feasibility study the deficiencies, if any, are brought to the attention of the sponsorsCommercial banks and Saudi institutions recognize the value of SIDF's approval of a project's loan
9 Advantages Of Receiving Financing Through SIDF If requested, SIDF provides an appraisal of the key managers from amongst the sponsors' candidatesA technical and financial audit is conducted during the project's implementation and operationAdditional loans for project expansion could be done on a fast-track basisAvailability of qualified staff and database enables SIDF to provide valuable advise and consultancy to individual investors
10 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 2011GNumber 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.
11 Financing Industrial Service Projects: Natural Gas Distribution projects in Industrial Cities.Water Desalination Plants and Water Treatment Plants serving the Industrial Cities.Industrial, Chemical and Medical waste treatment.Mobile Desalination Plants (Barges).Medical and Food Sterilization by using X-rays and electronic rays.
12 Financing of Infrastructure for Industrial Cities: SIDF allocated $270 million to finance Infrastructure in Industrial cities owned by Modon & Private sector.The Program goals is to promote private sector companies to invest in development of Industrial Cities.Support housing projects at the Industrial cities owned by Modon.Support financing Logistics projects related to direct services to industrial cities such as : Transportation, Warehousing, District Cooling, Training Centers and Standards Factories.
13 CONCLUSIONSIDF is a financing agency reporting to the Ministry of FinanceThe Fund’s principal objective is to encourage private sector industrial ventures in Saudi ArabiaThe role of SIDF in the development of the private Industrial sector in KSAEstablishment 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.