How Aramco’s 1 trillion Riyal IKTVA plan can boost the Saudi economy

Saudi Aramco (Saudi Arabian Oil Company) is a company that has increasingly turned towards innovation and unprecedented initiatives over the course of the past five years. In 2013, it launched its investment initiative that helps SMEs grow: the $200 million USD Wa’ed Aramco Entrepreneurship Ventures, which already has invested in 100 companies. In addition to that, it is preparing to list on the Tadawul Saudi Stock Exchange during the second half of 2018 and has embraced renewable energy opportunities, including building a solar farm in the parking lot of its Dhahran headquarters.

 

IKTVA’s role in achieving Saudi Vision 2030

However, Aramco’s IKTVA (in-Kingdom Total Value Add Program) is a plan that could have the largest impact on the Kingdom’s economy during the current era of Saudization. The latter is a nation-wide policy which aims to create more jobs outside of the government sector for Saudi nationals, and Aramco’s IKTVA will help achieve that goal while playing an important role in the government’s Saudi Vision 2030 economic diversification plans.

 

 

Amin Nasser, President and CEO of Aramco, was one of several Saudi Arabian business leaders who spoke at Aramco’s December 2017 IKTVE SME Forum & Exhibition in front of an audience of investors from 35 countries.

Some of the major goals he said that IKTVE plans to achieve by 2021 include:

• Ensuring that 70 percent of Aramco’s spend on energy-related services and goods goes toward Saudi Arabia-based suppliers
• Creating 500,000 new jobs for Saudi nationals
• Achieving 30 percent export of Saudi energy sector products

All of the aforementioned milestones can help Aramco reach one of the goals Nasser has said is important: helping Saudi SMEs grow their current contribution to the Kingdom’s Gross Domestic Product (GDP), from 20 percent to 35 percent in the near future.

 

 

Entering a new era of business with Aramco

 

If you have plans this year to expand your business to Saudi Arabia via one of the means that GCC Solutions is a specialist in (launch a SAGIA company or an LLC Company) and open up production facilities in the Kingdom, your chances of doing business with Aramco will increase if you adhere to the IKTVA benchmark.

According to the IKTVA website, Aramco has created an “IKTVA Score” that gives preference to seeking procurement of services from companies that have a higher score and is tallied through the following calculation:

IKTVA score = [(A+B+C+D+r)/E]*100

A. Localized goods and services

B. Salaries paid to Saudis

C. Training and development of Saudis

D. Supplier development spending r. Research & Development

E. Company revenue (spend from Saudi Aramco only)

 

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If your company has any questions about doing business in Saudi Arabia, from company setup to VISA regulations and more, send an email to the GCC Solutions Riyadh office: [email protected].

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