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MAIN POINT TO PRESENTATION

‘ SIDF’s role in Development of Industrial Sector in Saudi Arabia’ By Ali Al-Dhalaan 8 th Rajab,1433 29/05/2012. 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.

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MAIN POINT TO PRESENTATION

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  1. ‘SIDF’s role in Development of Industrial Sector in Saudi Arabia’By Ali Al-Dhalaan8th Rajab,143329/05/2012

  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 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 • Conducting industry related strategicstudies

  4. SIDF LENDING POLICY GUIDELINES • All Industrial Licensed Companies are eligible • Saudi • Joint Venture (between local & foreign companies) • 100% foreign owned projects • Viable project • Technical • Marketing • Financial • Maximum 20-years term loan • Repayment schedule designed to match projected cash flow

  5. SIDF LENDING POLICY GUIDLINES • Up to 75% of Financiable Project Cost • Fixed Assets • Pre-operating • Start-up working capital • A minimum of 25% Owner's Equity • Security • Mortgage on the financed fixed assets • Acceptable Pro-rata Personal and Corporate Guarantees from the shareholders. • Disbursement Commensurate with Project Implementation • Actual 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 project • 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 • During the pre-screen of the feasibility study the deficiencies, if any, are brought to the attention of the sponsors • Commercial 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' candidates • A technical and financial audit is conducted during the project's implementation and operation • Additional loans for project expansion could be done on a fast-track basis • Availability 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 2011G • 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.

  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. CONCLUSION • 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.

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