SAUDI ARABIA – Swiss food giant Nestlé is going to invest up to seven billion riyals (US$1.8 billion) in Saudi Arabia over 10 years in a bid to strengthen its presence in the kingdom which is looking to attract more foreign investments to diversify its oil-dependent economy.

The kingdom’s investment ministry said it has signed a memorandum of understanding with Nestle in the field of food industries, which will include establishing a factory and a research and development center.

The food and beverage giant is set to initially invest SAR375m in the establishment of a new manufacturing site in the country, which is set to open in 2025.

The plant will produce Nestlé infant-nutrition products and ready-to-drink coffee, supplying the domestic market and exporting to countries in the Middle East and North Africa.

The investment will also fund the establishment of the company’s first regional center with a research and development program and its first local business incubator for SMEs and start-ups.

In addition, it will see the expansion of the Nestlé Centre of Excellence which provides “capability building and uplift programs for Saudi talent.”

Nestlé, which already has seven mineral water factories in Saudi Arabia, said the investment will create additional 3,500 direct and indirect jobs.

Yasser Abdul Malak, the chairman, and CEO of Nestlé’s operations in the Middle East and North Africa said Saudi Arabia is a sizeable market with major potential for growth.

The company has been present in Saudi Arabia for more than 55 years, owning 12 offices and employing more than 5,000 people. In the wider Middle East and North Africa region, the company has 24 factories in 19 countries.

Khalid Al-Falih, Saudi’s Minister of Investment, added: “This strategic plan was developed together with the Saudi Ministry of Investment’s food department, reflecting solid investor confidence in the Kingdom and its long-term prospects.

“We more than welcome Nestlé’s investments which will contribute to food security and the development of local businesses, fuel local innovation, and create jobs for youth and professionals.”

Saudi Arabia has set a target of attracting around U$100bn a year of foreign direct investment by 2030 as it looks to diversify its economy. Yet most of the foreign investments in the country have been into the oil industry.

Of the nearly US$20bn of FDI last year, about US$12bn was related to an oil pipelines deal by state-owned oil producer Saudi Aramco.

Other large food companies making strategic moves in Saudi Arabia this year include Brazilian meat heavyweight JBS.

In May revealed it had acquired a manufacturing facility and set up a distribution network in the country.

In July, US peer Tyson Foods beefed up its presence by taking a stake in subsidiaries of local firm Tanmiah Food Company.

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