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Journey Towards a Knowledge-Based Economy

TAQNIA’s Role in Enabling Technology Innovation in Saudi Arabia

Corporate Presentation

Riyadh, November 2012

i. Imperative of a Knowledge-Based Economy for Saudi Arabia

ii. TAQNIA Overview

iii. TAQNIA Opportunities

1

1990-1995

Initiation of Diversification

1995-2000

Privatization

2000-2005

Regional Development

2005-2010

Human Development

Regional economic development

Private sector investments in

different regions

Efficient infrastructure in rural areas

Information centers in different

regions

Develop human resources

Reduce disparities in living

conditions and economic activities

among regions

Decentralize administration

Increasing foreign and national

investment

Further economic diversification

Private sector investment in

agriculture and light manufacturing;

Financial sector reform and the

establishment of the stock market

Enhanced government efficiency in

social and economic services

Growing emphasis on privatization

Economic efficiency in both public

and private sectors

5th 8th 6th 7th

x Development Plan

Saudi Arabia’s socio-economic trajectory has advanced

876837836

802786762722

686637636633

604608591576558556553553528484

1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010

2.8%

3.8%

2.6% 2.9%

KSA National Development Plans Highlights

Note: World Bank real GDP figures used; SAMA states 2010 real GDP figure at SR 865 Bn

Source: World Bank; SAMA, Booz & Company analysis

2

KSA Real GDP (SR Billions; 1990-2010)

However, the economy is still highly concentrated in favor of oil

Note: World Bank real GDP figures used; SAMA states 2011 KSA current GDP at USD 572 Bn

Source: World Bank, SAMA, Crude Oil Quotes, IMF, Euromonitor, Booz & Company analysis

KSA Economy Oil Dependency

577

451

377

476

385357316

250215189183188

927848

965457443426291821

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011

KSA Current GDP vs. World Crude Oil Prices (2000-2011)

47%65%

90%

10%

GCC

35%

KSA Large Resource

Rich Economies

53%

Non-Oil

Oil

KSA GDP Split (in %) (2011)

3

Highlights

KSA economy is highly dependent on the oil, gas,

and petrochemical industries

– KSA GDP is directly correlated to world crude

oil prices, as price fluctuations shape GDP

peaks and dips

– 53% of GDP is reaped from oil and its

derivatives, implying KSA economy is less

diversified than counterparts

World Crude Oil Prices - USD per Barrel

KSA Current GDP - USD Billion

KSA Oil vs. Non-Oil Exports (2000-2011)

91%

9%

2009

88%

2005

91% 91%

9%

2010

87%

13% 12%

2008 2007

90%

10%

2006

89%

11%

2001

87%

13%

2000

92%

8% 9%

2004

90%

10%

2003

88%

12%

2002

Oil Non-Oil

4

Saudi Arabia has prioritized knowledge economy as growth driver

Source: Ministry of Economy and Planning, KSA, Booz & Company analysis

KSA 9th Development Plan Objectives (2010 – 2015)

Bu

ild

a K

no

wle

dg

e-B

as

ed

Ec

on

om

y

Div

ers

ify t

he

Ec

on

om

y

Rais

e the s

tandard

of liv

ing

De

ve

lop

SM

E S

ec

tor

Enhance h

um

an d

evelo

pm

ent

Achie

ve b

ala

nced d

evelo

pm

ent am

ong

regio

ns o

f th

e K

ingdom

Ac

hie

ve

Su

sta

ina

ble

Ec

on

om

ic D

eve

lop

me

nt

Develo

p t

he h

oly

pla

ces

Safe

guard

Isla

mic

valu

es

Enhance the r

ole

of th

e p

rivate

secto

r

Ensure

rational utiliz

ation o

f natu

ral

resourc

es

Continue s

ocio

-econom

ic a

nd institu

tional

refo

rm

Str

ength

en e

conom

ic inte

gra

tion w

ith G

CC

countr

ies

1 2 3 4 5 9 10 11 12 6 7 8 13

To diversify the economic base

horizontally and vertically, expand the

absorptive and productive capacities

of the national economy and enhance

competitiveness

To move towards a knowledge-

based economy and consolidate

the basis of an information

society

To develop the sector of SMEs

to increase its contribution to

GDP, and create frameworks for

nurturing and organizing it

De

ve

lop

me

nt

Pil

lars

5

NSTIP1) is the key thrust in joining Knowledge-Based economies

1) National Science and Technology Innovation Policy

Source: KACST

KSA National Science and Technology Innovation Policy

Establish infrastructure

for Science and

Technology Innovation

(STI)

– Development of national ecosystem

– BADIR program

– Technology Innovation Centres

Become a leading

nation in STI, and

gain a regional stature

in this field

Become a leading

country in STI, and

gain an Asia-wide

stature in this field

2025

2020

2015

2010

1st 5-Year Plan 2nd 5-Year Plan 4th 5-Year Plan

Transform KSA into a

knowledge-based

economy

3rd 5-Year Plan

Saudi Arabia

Qatar

Lebanon Israel

Middle East

Asia

Global

Status

6

Innovation-led development starts from abundance of resources

Path to Knowledge-Based Economy

Source: Booz & Company analysis

Key Driver of

Economic Growth

Abundance in Natural Resources

Relative Abundance of Financial

Capital or Labor (Human Capital)

Accumulation of Production

Factors: Financial and Human

Capital

New Technologies and

Innovation Potential

Reso

urc

e

- B

ased

Eco

no

my

Facto

r-B

ased

Eco

no

my

Kn

ow

led

ge

-

Based

Eco

no

my

Description

Growth is primarily driven by natural resources that are extracted, yielding countries

with a starting point for economic growth and development

Growth is primarily driven by an accumulation of both human and financial capital

Production is based on already existing products and services with higher value

added due to a more complex production process

Growth is primarily driven by new technologies and ideas

Production is based on innovative products and services that are developed

through an addition to or modification in the value chain

Financial Capital: Growth is primarily driven by the relative abundance and comparative advantage in financial capital

Human Capital: Growth is primarily driven by the relative abundance and comparative advantage in human capital

+

7

Technology development is a priority for Saudi youth

KSA Readiness for a Technology Leapfrog

1) 10 percent/ points increase in digitization

Source: Booz & Company Ideation Center, Booz & Company analysis

~30-50% of GCC population is under the age of 25

57% of GCC youth follow technology topics regularly,

outpacing topics such as games, sports and politics

67% want their country to be known as a

technologically advanced nation

+60% believe that governments should create

employment should promote entrepreneurship

40% of MENA population are active online and in

social networks

KSA has the highest percentage globally of YouTube

users in total internet population

+60% of GCC users have at least 1 smartphone or

laptop

KSA still stands at the “Starting Gate” or in the early

stages of empowering women economically (Third

Billion rank 123 out of 128 countries analysed)

Gross impact on GDP from increasing women

employment ranges from 3% (in Sweden) to 56% (in

Egypt)

57% of university graduates in KSA are women

Digitization has clear impact on several pivotal areas in

societies:

– Economic advancement

(e.g. +0.6% GDP per Capita1))

– Societal well-being

(e.g. -0.84% unemployment rate1))

– Government effectiveness

(e.g. 1.17 points corruption perception index1))

Youth Aspirations Digital Adoption

Women Empowerment Digitization Impact

Country/ Agency Mandate Commercialization/ Development Entity Impact on Innovation – Patents

Growth

A*Star established to spearhead

specialized R&D initiatives and

commercialize selected R&D

projects

TEMASEK founded to manage

national investments

Governing body for all public

and private

Responsible for technology

talent development, R&D, and

commercialization (in

coordination with KIAT)

Conduct research and support

R&D activities

Propose national science plans

to Supreme Council

0

2,000

4,000

6,000

1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006

+39%

Best Practices Commercialization/ Developments Efforts

0

200

400

600

1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006

+35%

0

200

400

600

1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006

+30%

8

Best practices set up dedicated agencies to “push” innovation

Launch of

Technology Dev.

Program

Launch of

Technology Dev.

Program

Tubitak to manage R&D

and innovation state

support

1) Korea Institute for Advancement of Technology

Source: OECD, World Bank, Booz & Company analysis

R&D Focus

Development

R&D Focus

R&D Focus +

Development

9

The agencies support the transition towards a knowledge economy

Selected Countries’ Path to Knowledge-Based Economy

Note: The discovery of Norway’s oil reserves in 1969 did not push the economy back to natural resource-base, but rather expedited its progress towards a balanced factor-based economy

Source: OECD online database, International Innovation Index 2009, Booz & Company analysis

Resource-Based Economy Factor-Based Economy

Driven by Relative Abundance

in Financial Capital

New Technologies and

Innovation Potential Driven by Relative Abundance

in Natural Resources

Driven by Accumulation

of Financial and Human Capital

Driven by Relative Abundance in Labor (Human Capital)

Knowledge-Based Economy

KSA

(until the 1990s)

China

(until the 1960s)

Norway

(until the 1960s)

Sweden

(until the 1960s)

South Korea

(until the 1960s)

Singapore

(until the 1960s)

(late 1980s - today)

(1960s - 1970s)

(1960s - late 1970s)

(1960s - 1970s)

(1960s - late 1980s)

(1990s - today)

(1980s - today)

(1990s - today)

(late 1990s - today)

Not ordered by

ranking

(1960s - 1970s)

(1970s - 1990s)

(1970s - 1980s)

(late 1970s - late 1990s)

(1970s - 1980s)

(1980s - today)

Taiwan

(until the 1950s)

(1950s - 1970s) (1970s - 1980s) (1980s - today)

10

To accelerate, Saudi Arabia must tackle commercialization gap

A mature science, technology and innovation ecosystem and

institutional brings together the technology know-how, investment

and market need to commercialize high potential technologies

Gap

Commercialization Chasm

Research and Development Production and Dissemination Education Economic

Output


NSTIP ensured the setup of the key building blocks for innovation

Education

Lobbies & Entrepreneurial

Organizations

Incu

bati

on

Regulatory

Framework

R&D

Co

mm

erc

ializati

on

Infr

astr

uctu

re

Financial

Institutions

Med

ia &

Cu

ltu

re

STI

Ecosystem

Regulatory Framework

Development of National

Science and Technology

Innovation Policy

R&D

USD 271 Million (0.05% of

GDP) spent in 2010 - expected

to rise to 2% in 2024 to fund 11

priorities of KACST

Commercialization

Setup of TAQNIA in 2011 to

commercialize strategic outputs

of research and transfer

international know-how

Education

Over last decade, Government

consistently allocated 25% of

the national budget to

education

Financial Institutions/ Micro-SME

Finance

Saudi Venture Capital Investments

Company to invest SR 375 Million in

nascent SMEs

Incubation

15+ technology incubators set

up in Saudi Arabia

400 new technology jobs

created by BADIR program

Infrastructure

80% household broadband

coverage and extensive

deployment of FTTH and VDSL

networks

Government Programs

11th easiest place to do

business worldwide as

ranked by the World Bank

Lobbies & Entr. Organizations

Setup of Saudi Business

Incubator Network and SIRB

Angel Investors Network

Media & Culture

Entrepreneurship awareness

initiatives – Entrepreneur

Magazine, StartupArabia,

ArabCrunch, Wamda, etc.

Source: World Bank, KACST, KSA Ministry of Education, International Telecommunication Union, Booz & Company analysis

Focus of document

11

NON-EXHAUSTIVE


ii. TAQNIA Overview


12

TAQNIA was setup based on a Royal resolution

TAQNIA Setup

Source: TAQNIA, Booz & Company analysis

Established by a Royal Resolution No. (M/ 47) dated

20/7/1432 Hijra, based on Council of Ministers

Resolution No. (217) dated 18/7/1432 Hijra

“TAQNIA will fill the gap that currently exists within the STI

ecosystem in Saudi Arabia. By establishing TAQNIA, the Saudi

Government hopes to build a number of companies based on

solid industrial bases, creating a knowledge society and real

Saudi-based technologies”

Prince Turki bin Saud Al Saud

TAQNIA Chairman

13

TAQNIA governance follows Public Investment Fund guidelines

14

TAQNIA Governance

TAQNIA Board of Directors

His Highness Prince Dr. Turki bin Saud Al Saud

TAQNIA Chairman and representative of King Abdulaziz

City for Science and Technology (KACST)

Mr. Abdullah bin Ibrahim Al Iyadi

TAQNIA Vice Chairman and representative

of the General Investment Fund (GIF)

Dr. Mohammad bin Abdulaziz Al Ohali

Representative of the Ministry of Higher Education

Mr. Ibrahim bin Abdulaziz Al Hinaishil

General Manager of Saudi Credit and Savings Bank

Mr. Khalid bin Hamad Al Juraifani

Representative of Saudi Aramco

Mr. Fahad bin Abdulaziz Al Shuraihi

Representative of Saudi Basic Industries Corporation

(SABIC)

Mr. Abdullah bin Hassan Al Abdulqadir

Representative of the private sector

TAQNIA Key Governing Bodies

Top Management

Selection

Committee

Audit

Committee

Operational

Committee

Investment

Committee

Technology

Board

Committee


15

TAQNIA’s vision to support the economy is clear

TAQNIA Vision and Mission Statements

“To drive accelerated diversification of the Kingdom’s economy through knowledge-based

industries thereby creating value-adding jobs, and to help create an innovative ecosystem in

the Kingdom”

“TAQNIA will achieve its vision by investing in local and global technologies and actively

engage in the development and growth of those technologies into economically sustainable

enterprises”

TAQNIA Vision

TAQNIA Mission


16

TAQNIA aims to achieve three strategic objectives

TAQNIA Role in Science and Technology Innovation Ecosystem Strategic Objectives

Commercialize Saudi

Innovation to Create

Global Impact

Transfer Strategic

Technologies into the

Kingdom

Create Balanced

Growth Portfolio of

Investments

Support Sustainable

Growth of GDP

Diversify the

Economy

Create New, High-

Quality Jobs

Bridge Commercialization Chasm Transfer International Know-How


Attractive Sectors Requiring Significant Government Support/ Financing

17

TAQNIA plays a specific role in the STI1) ecosystem

Education

Lobbies & Entrepreneurial

Organizations

Inc

ub

ati

on

Regulatory

Framework

R&D

Co

mm

erc

iali

zati

on

Infr

astr

uctu

re

Financial

Institutions

Med

ia &

Cu

ltu

re

STI

Ecosystem

TAQNIA

Primary Role

TAQNIA

Secondary Role

TAQNIA Role in Science and Technology Innovation Ecosystem Focus Areas and Key Interfaces

R&D Centers Government Bodies

International

Organizations

Financial Institutions

Private Sector

Entrepreneurial

Organizations

PIF

NON-EXHAUSTIVE

1) Science and Technology Innovation


Attractive Sectors Requiring Significant Government Support/ Financing

18

TAQNIA will achieve its objectives through three main entities

Commercialize

Saudi Innovation

to Create Global

Impact

Transfer Strategic

Technologies

into the Kingdom

Create Balanced

Growth Portfolio

of Investments

TAQNIA

Industries

TAQNIA

Investments

TAQNIA

Services

Define and fund new

and/or mature

corporations in specific

technology sectors

ensuring sustainable

economic benefits

Invest internationally

with aim of transferring

technologies to KSA

Invest nationally in seed

and early stage

ventures

Provide professional

services related to

commercialization and

utilization of R&D

centers in Saudi Arabia

Bridge Commercialization Chasm Transfer International Know-How

Support Sustainable

Growth of GDP

Diversify the

Economy Create New, High-Quality

Jobs

1 2 3

R&D stream

from KACST

technology

priorities

Funding to

commercialize

R&D into viable

companies and

invest

internationally to

transfer

technology

know-how

PIF1)

1) Public Investment Fund - TAQNIA is a Public Investment Fund company


TAQNIA

19

TAQNIA Industries will setup promising technology companies

TAQNIA Industries

TAQNIA Industries

Define and fund new and sustainable corporations in a range of technology sectors that can employ large number of

Saudi nationals and create tangible direct and/or indirect economic benefits to the Kingdom

Saudi-Based

R&D

High-Potential

Technology Sectors

Funding Management

Support

KACST R&D in technology

priorities

Saudi university R&D in

technology sectors

Provide funding for the setup

of large joint venture

corporations that operate in

high-technology segments

(i.e solar industry)

With the support of PIF and

private sector

Provide management and

administrative support for the

setup of the new corporation

until it reaches self-

sustainability

With the support of TAQNIA

Services

Technology sectors where

Kingdom has a competitive

advantage and/ or is

strategic


20

TAQNIA Industries will operate within specific sectors

Source: EPIA, SEIA, ISPRE, DesalData, Delta Partners analysis, Booz & Company analysis

Description Priority Sectors Rationale

TAQNIA Industries – Strategic Sectors

Sp

ectr

um

of

Str

ate

gic

Secto

rs

Self-Reliance

Leadership

Increase self-

reliance and

control in sectors

that constitute a

large part of

national

investments

Grow and lead in

sectors which KSA

has some form of

competitive

advantage

Material Science

Energy and

Environment

Water Technology

Military, Security and

Defense

ICT

Highly strategic sector in which KSA already leads through companies like

SABIC, leveraging KSA’s oil & gas resources

Globally important and expanding sector due to rising prices of energy, with a

forecasted size of SAR 198 billion by 2015

KSA has great potential due to its weather conditions

High potential sector with a rising demand in the region

KSA is already one of the leading investors in sector-related activities and

technologies

Critical sector to KSA, reaching SAR 52 billion, equivalent to 9% of total

government expenditure in 2011

Biggest share of government spend SAR 181 billion (21% of total government

expenditure) in 2011. Initiative will address growing focus on security and

sovereignty

Fulfill digitization requirements across all sectors in KSA to enable

competitiveness and growth

Life Science and Health

TAQNIA Industries

National Industrial Strategy is a key input for TAQNIA Industries

Source: National Industrial Strategy, Booz & Company analysis

National Industrial Strategy

Increase industry sector’s

contribution to

Increase industrial value add by

Increase technology based exports

from 30% to

Increase Saudi industrial labor force

from 15% to

20%

of GDP

3x

60%

30%

Improve macro-

economic policies

Launch industrial

complexes and

clusters

Expand SME

community

Enact industrial

innovation strategies

Develop human

resources and

industrial skill set

Enhance industry-

enabling

infrastructure

Select new wave of

industry verticals

Create governance

mechanisms for NIS

1 5

2 6

3 7

4 8

2020 Goals Strategic Axis

21

TAQNIA Industries

22

TAQNIA Investments will invest within and outside Saudi Arabia

TAQNIA Investments

Participate in the Kingdom’s seed and early stage VC funding community to

invest in start-ups and SMEs in the technology sectors defined by NSTIP

Strategic investors include Government, PIF, and public and private

financial institutions

USD 500 Mn

Saudi-registered Venture Capital to invest and manage a portfolio of national and international technology companies to transfer technologies

to the Kingdom while generating profitable returns

TAQNIA Investment Capital

National

Investments

International

Investments

National Investments

TAQNIA Investment Objectives

International Investments

Internationally invest in innovative and/ or disruptive technologies with the

aim of transferring knowledge to the Kingdom

Direct investments in foreign technology companies will

– Employ Saudi nationals for fixed minimum periods

– Assume obligations to create full-time jobs in the Kingdom through

establishment of Saudi-based subsidiary

Strategic investors including private sector, PIF, and public and private

financial institutions

TAQNIA Investments


TAQNIA Investments is currently building its skill set

TAQNIA Investments

Research (Invention)

Big Idea (Innovation)

Prototype (Entrepreneurship)

Product (Business Model)

Cashflow (Management)

M&A/ IPO (Business Model)

Primary Scope of Deal Flow Screening and Investment Activity

Direct and trusted relations with a

broad range of targeted

organizations, investors and

professional advisors

Proactive approach to sourcing

deals in key sectors and regions of

interest to the fund

Ability to spot teams that can help

in building a good business

Effective Sourcing

Efficient screening of deal flow and

get to “no” efficiently

Maintains a strong advisory network

with direct access to deep domain

expertise

Effective Due Diligence

Structures win-win-win deals

(Founders-Seed Investor-VC)

Strong co-investment network

Proper Funding

Rigorous commitment to spending

regular and structured time with

portfolio companies

Proactive problem resolution skills

Maintains deep networks for

building out teams, product-market

strategies and business model

development

Effective Portfolio Management

23

TAQNIA Investments


24

TAQNIA Services will provide specific support services

Management Services Commercialization Support

Activity Details

Investment -

Finance

Identify and analyze commercialization prospects

Conduct valuation assessments, develop business

cases, negotiate and structure deals,

Legal

Provide legal consultation during patent applications,

license agreements and venture exits through IPOs and

acquisitions

Technical

Assessment

Assess the strategic soundness of potential

commercialization opportunities

Assess the technical merit of the proposals/ prototypes

for IP protection

Advisory -

Consultancy

Advise KACST programs in commercialization strategy

Provide consultations in start-up formation and on-going

mentorship to the entrepreneurs

Marketing -

Network

Increase awareness of entrepreneurship

Network with industrial sector and other parties for

possible partnerships

Strategy -

Business

Developmnet

Ensure investment alignment with long term vision and

mission

Routinely monitor performance

Service Details

Planning

Develop strategic objectives and related initiatives for

different KACST programs

Develop KPIs, targets and milestones

Develop forecasts

Management

Manage day-to-day program activities

Track KPIs and initiatives progress

Provide regular reports to the KACST management

Public Relations Manage public relations for topics related to innovation,

innovation funding, entrepreneurship

Shared Services

Provide shared services in

– Procurement and logistics

– Accounting

– IT (web hosting for clients etc.)

Recruiting

Recruit international experts for short term projects

through TICo without going for elaborate contracting

process

Training

Conduct basic training courses in

– Safety

– Management etc.

TAQNIA Services

TAQNIA Services


Professional services organization that will provide a range of services to commercialize R&D outputs

TAQNIA efforts will be coordinated to maximize synergies

TAQNIA Focus Areas Development and Investment Mandate

Priority Sector I

Sub-Sector I

Sub-Sector II

Priority Sector II

Sub-Sector I

Sub-Sector II

Priority Sector III

Sub-Sector I

Sub-Sector II

EXAMPLE

25

TAQNIA

Development Priorities Investment Priorities

Benefits

Maximum synergies for both TAQNIA entities

Faster development and knowledge transfer

Maximum impact on Saudi Arabia economy

Synergies

Kn

ow

led

ge In

teg

rati

on

TAQNIA Industries

Drive the development

activities of TAQNIA

Industries in the setup of new

industries

TAQNIA Investments

Drive majority of investments

activities of TAQNIA

Investments internationally

and nationally

Knowledge transfer to

KSA to maximize

impact


Focus Priorities

TAQNIA Services

Drive the commercialization

activities of TAQNIA Services

to feed the wider technology

focus in KSA

Synergies

Execu

tion

Inte

gra

tio

n

26

TAQNIA will pursue a value-adding role

TAQNIA Positioning

Low

High

Low High

Financer

Facilitator

Developer Fin

an

cia

l

Att

racti

ve

ne

ss

Complexity of Development

TAQNIA leaves development to

private sector, but provides

financing to offset low financial

attractiveness

TAQNIA leaves sector to be

developed by private sector and

could just play a role in raising

awareness

TAQNIA leaves financing,

execution and operation to

private sector but provides

development support and

access to technologies

TAQNIA actively drives

development, financing and

operations of underlying sectors

Private Sector

Potential JVs with

private sector

Limited

involvement

Direct

involvement

Potential JVs with

private sector


TAQNIA

27

TAQNIA will manage the push and pull of development ideas

Development Opportunities Selection

Government

Entities

R&D Centers

Entrepreneurial

Organizations

Private Sector

National

Strategies

Investment

Opportunities

International

Technology

Centers

Prioritized Development/ Investment Opportunities

TAQNIA

Development

Framework

TAQNIA

Development

Framework


28

Through its mandate, TAQNIA will aim to diversify the economy

Saudi Arabia GDP Breakdown (in % Contribution)

As a key player of Saudi Arabia’s Knowledge-Based

economy, TAQNIA will contribute to the growth and

diversification of the economy

KSA Economic Growth Outlook

47%

55%

35%

KSA 2020

TAQNIA X-Factor

KSA 2012

53%

Oil

Non-Oil

Technology

CONCEPTUAL

889851814779750722697683657

+4%

2020 2019 2018 2017 2016 2015 2014 2013 2012

Saudi Arabia GDP Forecast (in USD Bn) (2011-2020)

GDP per

Capita

(USD) 21,196 24,428

+15%

Note: IMF WEO estimates start after 2011

Source: International Monetary Fund, World Economic Outlook Database (October 2012); Booz & Company analysis

29

TAQNIA X-Factor supports diversification in high-growth sectors

All Sectors Sector Assessment

Dimensions

Prioritized Sectors

Satellites

Defense

Electricity and

Water

Biotech

Robotics

Economic

Attractiveness

Risk

Profile

Competitive

Dynamics

Strategic

Relevance

1

2

3

4

5

ILLUSTRATIVE

Aeronautics

Satellites

Defense

Radars

Electricity and Water

Communications Systems

Security

Solar

Membranes

MEMS

Nuclear Isotopes

N2 (Waste)

Wind Energy

Materials

Lighting

GIS

Biotech

Automotive

Geosciences

Environment

Robotics

Tools and Parts

Strategic Relevance

Alignment to National Plans

KACST R&D Priorities

Alignment to TAQNIA Objectives

Leadership Potential

Strategic Relevance

Sector Growth Potential

Job Creation Potential

Sector Profitability

Economic Stimulation

Competitive Dynamics

Global Competitive Intensity

Regional Competitive Intensity

Local Market Status

Risk Profile

Economic Risk

Operational Risk

Geo-Political Risk

Sector Assessment

Dimensions


TAQNIA Sectors Prioritization and Assessment

30

TAQNIA is finalizing its strategy and building its core capabilities

Immediate Action Plan

Internal Capability Build-Up

Continue build-up of internal capabilities along TAQNIA Industries, Investments and Services

STI Ecosystem Alignment

Continue aligning STI ecosystem and its key stakeholders to cement TAQNIA’s national mandate

Detailed Strategy

Finalization

Finalize the detailing of

TAQNIA strategy and

secure approval from

Board of Directors

Operating Model

Setup

Finalize the setup of

TAQNIA’s operating model

to ensure streamlined and

efficient operations

1 2

Technology Sectors

Prioritization

Finalize prioritization of technology

sectors to focus on – priority

sectors to act as mandate for all

TAQNIA activities

3

Oct‘12 Nov’12 Dec’12 Jan’13 Feb’13 Mar’13 Apr’13

a

b



ii. TAQNIA Overview


31

Opportunities are assessed for their value-add to the economy

32

TAQNIA Sectors Assessment

Strategic Relevance

How aligned is the sector to

Saudi Arabia’s strategic priorities

and national development plans?

Scoring Correlation

Alignment to National Plans

KACST R&D Priorities

Alignment to TAQNIA

Objectives

Leadership Potential

Sco

re

Str

ate

gic

Rele

van

ce

+

–

+

–

Economic Attractiveness

To what extent are the sector’s

economics viable and beneficial

to Saudi Arabia?

Scoring Correlation

Sector Growth Potential

Job Creation Potential

Sector Profitability

Economic Stimulation of

other Sectors

Sco

re

Eco

no

mic

Att

racti

ven

ess

+

–

+

–

Competitive Dynamics

To what extent can Saudi Arabia

develop a strong positioning in

the sector’s competitive

landscape?

Scoring Correlation

Global Competitive Intensity

Regional Competitive

Intensity

Local Market Status

Sco

re

Co

mp

eti

tiv

e D

yn

am

ics

+

–

+

–

Risk Profile

What are the risks (operational,

economic, geo-political)

associated with the investment

opportunity?

Scoring Correlation

Economic Risk

Operational Risk

Geo-Political Risk

Sco

re

Ris

k P

rofi

le

+

–

+

–


33

Power demand is growing at a fast rate

Energy & Environment Sector Overview

6%

2020

464

2011

268

Electricity Demand - TWh

55 103 Capacity (GW)

SR Bn Cumulative

Investments

2017 in Figures

390

Power Generation

Projects 34

New

Substations 25

SEC

SWCC

Large

Co.

I(W)PPs

K.A.CARE

Marafiq

Sole Power

Provider

Water

Desalination

Aramco

Sabic

Independent

Projects

Nuclear and

Renewables

Independent

Utilities

Provider

Oil Production

87%

13%

Other

KSA Power

SR 100 Bn

Opportunity

Cost

Challenge Opportunity

Alternative Energy

Fossil-Based

2030 Proposed

Power Mix

55%

45%

Passing of electricity law in 2005 providing

support for ECRA to liberalize the market, with

emphasis on competition and private sector

participation

Private sector participation in generation – 7 privately owned / operated power plants – 3 under construction

On-going unbundling of SEC, with creating of

Transco

Facts and Figures Ecosystem and Key Players

Achievements Opportunities and Challenges


34

TAQNIA could seek to support the development of local industry

Energy & Environment Trends

Trend Global Trends KSA Trends

1 Generation

Fossil fuels to remain the main

source at 80% of demand by

2030

Higher growth rates for wind,

solar, and biofuels

– 20% renewables target share

of energy usage in EU by 2030

– Potentially 33% Solar power

share worldwide after 2060

Solar cell and module

manufacturing moving to China

55% of generation mix earmarked

by K.A.CARE as alternative

power by 2030

– 41 GW solar (PV and CSP)

– 22 GW nuclear

– 7 GW wind

SR ~820 Bn in capital

investments in generation by

2030

Strong drive to develop local

industry and know-how

2

Transmission

and

Distribution

Proliferation of renewable energy

and impact on transmission

Smart meters shifting from

deployment to applications (80%

of Europe will benefit from smart

metering by 2020

Potentially substantial smart grid

investments (SR ~60 Bn) in order

to integrate intermittent renewable

sources into the national grid and

manage peak demand growth

TAQNIA Takeaways

Opportunities to support

investments to develop

local content in solar

upstream and downstream

Potential to develop smart

grid technology

applications to integrate

renewables into the

national grid and manage

customer demand

(batteries, smart meters)

Source: IAEA, ExxonMobil, PikeResearch, The Brattle Group, Harris Williams, Booz & Company analysis

Water Technology Sector Overview

KSA relies on desalinated water and lags in wastewater coverage

35

Facts and Figures Ecosystem and Key Players

Achievements Opportunities and Challenges

Saudi Arabia is the largest producer of desalinated

water in the world

Commercialization of TSE through NWC – New tertiary

plants

Development of patents in desalination technology

Advanced solar desalination plant co-developed by Aramco and

IBM

State-of-the-art water technology research centers and facilities

Increased spending & investment requirements in

water and wastewater

Aim to provide 100% wastewater coverage by 2020

Promotion of conservation and re-use of treated water

Research and development in desalination to reduce costs

and ensure environmental sustainability

Limited cost recovery from water and wastewater tariffs (revenues

cover about 10 percent of capital and operational costs)

Limited local industry

7% annual water demand growth driven by population and GDP

growth

Desalination capacity growth estimated at 8% annually (2012-2016)

while wastewater treatment network coverage growth is around 4%

annually (2012-2032)

High agriculture usage of water (over 80% due to food

security and landscaping)

Investment in water infrastructure amounts to around

USD 6 Bn/ year, corresponding to 1.4% of GDP, or

USD 200/ capita/ year – among the highest worldwide

Utility players – MoWE, NWC, SWCC, Marafiq, IWPPs

Research in water studie – SWCC, KACST, KAUST, KAU, KFUPM

Water technology providers mostly large global companies

Desalination technology providers – ABB, McIlvane,

Veolia, GE Water

Wastewater treatment technology providers –

Aecom, Parkson


Desalination and wastewater technologies are relevant to TAQNIA

36

Trend Trend Overview Key Indicators

1

Increasing

reliance of

seawater

desalination

High water demand growth

Reduced reliance on

groundwater resources 8%

growth in

capacity

2

Increase in

wastewater reuse

and treatment

NWC commitment to ramp up

and monetize waste water re-

use

Increase in wastewater

treatment capacity to meet

100% coverage targets

Around 15%

annual growth in

reused

wastewater

3 Resource

management

Increased re-use of water for

non-potable uses

Re-allocating water resources

effectively and optimizing

resources

Over 80% water

used for

agriculture

4

Research and

investment in

cost reduction

and conservation

Development of water

research centers and

institutions

Development of solar-

powered desalination plants

Over SR 8 Bn

budget for

national research

center

Localization of the desalination and

wastewater industry

Development of water conservation

technologies

Support for R&D and

commercialization of patents

Development of local water reuse

market

Innovation in desalination and

wastewater technologies


Water Technology National Trends TAQNIA Takeaways

Documents

Journey Towards a Knowledge-Based Economytwitmails3.s3-website-eu-west-1.amazonaws.com/users/325535741/87... · Journey Towards a Knowledge-Based Economy ... Source: Booz & Company