International consulting firm A.T. Kearney thinks that the KSA’s relative lack of an industrial tradition can be viewed as a positive asset, presenting an opportunity to move straight to 4IR. There are some sectors in which Saudi Arabia has obvious advantages. For example, 3-D printing is set to revolutionize the industrial process, and relies largely on plastics and other petrochemical derivatives for its basic ingredients. DUBAI: Saudi Arabia is a global leader in the multi-billion dollar oil and petrochemicals business, but it cannot claim leadership in many other sectors on the industrial spectrum. Bob Willen wants to help change that. The Middle East partner and managing director of the American-based international consulting firm A.T. Kearney, thinks that the Kingdom’s relative lack of an industrial tradition can be viewed as a positive asset, presenting an opportunity to move straight to the next phase of economic development — the Fourth Industrial Revolution, or 4IR as it is usually referred to. “You could say that Saudi Arabia has missed some of the earlier industrial revolutions, but I’d rather say they have the opportunity to leapfrog those processes. It presents them with a lot of potential — rather than go through the whole painful process, they can be flexible in what approaches they adopt,” he said. That potential was the topic of a top-level forum held in Riyadh late last year, hosted by A. T. Kearney and the Saudi think-tank Al-Aghar, which gathered industrial and technology experts, policy-makers and academics, to discuss “The Future of Production” in the Kingdom. Willen explained the genesis of the gathering. “It grew out of our work with the World Economic Forum (WEF) on the subject of 4IR. We refined this to look at specific country reactions, to examine the practical steps a country can take toward adopting and implementing specific policies to address future policy,” he said. The 4IR concept came from Klaus Schwab, the founder of the WEF, who first used the phrase to describe the coming together of digital technology, communications and biology to create an industrial and economic system every bit as transformational as the earlier advances in industrial techniques, from steam engines through electricity and computers. Policymakers in the Kingdom have leapt enthusiastically on the concept, not least because it offers a blueprint for the future very much in line with the requirements of Vision 2030, the over-arching strategy for medium term economic development. “We’re thinking now about what kind of production and productive capability is required to fulfill the ambitions of V2030, specifically the plans to diversify the economy away from oil and enhance the non-oil economy, as well as increasing the attractiveness of Saudi Arabia for expatriate workers and investment,” Willen said. He has described some of the big transformational projects in the Kingdom, such as the $500 billion “giga-city” of Neom in the north-west, as perfectly suited for 4IR policies. “With Neom, with its emphasis on artificial intelligence, robotics, and different lifestyes in a semi-autonomous environment, you have the perfect example. This is going to be an ‘open lab’ format, which Saudis can design from scratch,” he said. There are some sectors in which Saudi Arabia has obvious advantages. For example, 3-D printing is set to revolutionize the industrial process, and relies largely on plastics and other petrochemical derivatives for its basic ingredients. “This talks to the oil industry, and also helps satisfy the need for the exploration of local resources, another big element of Vision 2030,” he said. There is an obvious opportunity for use in the defense industry, where Saudi Arabian Military Industries (SAMI), the Kingdom’s own attempt at creating a “military industrial complex,” is committed to producing half of the defense equipment from indigenous sources. “3-D printing from locally-produced materials would allow them to do that,” Willen said. Before joining A.T. Kearney he trained as an aerospace engineer, and worked on the American Atlas rockets that powered manned space flight and missile defense systems for many decades, and which are still in use. But he warned that Saudi Arabia has to chose its target sectors carefully. “Saudi Arabia has got to make deliberate choices. For example, flat screen TV production is almost entirely based in China and Korea. Europe and the US got out of that market entirely. Saudi Arabia has to do the same, it would be crazy to try to compete,” he said. Likewise, the Kingdom is just too far behind in some areas of manufacturing to achieve anything resembling global leadership. “Germany has a big lead in robotics engineering and a big presence in that area. They are ready for the 4IR. Can Saudi Arabia match them in that and compete in that globally? No, and they would be crazy to try,” he said. The Kingdom must play to its strengths. “Software is an area where the Kingdom has obvious advantages. It has lots of young people, enthusiastic about being connected and who are big on video entertainment. It’s not such a big step to being software developers, then you marry software with 3-D printing, the defense industry and petrochemicals. Suddenly you have a very beneficial value chain. “It all dovetails nicely too with Saudi Aramco’s strategy of adding value to the downstream chain and moving away from oil simply as fuel. Petrochemicals make it easier and cheaper, and it grows local demand too,” he said. Another example is the software for wearables, such as smart goggles and other kinds of intelligent technology. “Saudi Arabia doesn’t have an existing production base, so it’s best to leave that to Germany and China. But it does have the intellectual potential,” he said. There is also the potential for final assembly production. “The Kingdom could become a hub for the final part of the production process where it brings in and assembles the parts of a technology product,” he said. Jaguar Land Rover, the Indian-owned auto-manufacturer, has for some time been considering plans for an assembly plant in the Kingdom. But it will not all be plain sailing to a 4IR future. There are big challenges, Willen said. “There is a long development path ahead, and in any such process there are issues with the speed of change. There will be acceleration and deceleration,” he said. The policymakers will require “enablers” to see the process through. Human capital requires education and training, brought together in a system that encourages innovative thinking. “This needs input from government and the financial sector, and maybe that’s where Saudi Arabia still has the furthest to go. The education, policy and financial nexus is where the biggest challenges are. “Creating this is not an easy or an immediate thing, it can take decades. There is a reason people keep coming back to Silicon Valley — there is an advanced, existing ecosystem there that took a long time to develop,” he added. He reeled off a list of the areas where further work still needs to be done. “King Abdullah Economic City, for example, has not yet been integrated enough into the global value chains, in comparison to Jebel Ali in Dubai. But the Red Sea coast is at the center of all the major global shipping routes and has big local populations nearby, so KAEC should be able to play a bigger role in the global value chains,” he said. The Kingdom does have organizations that exist to develop and encourage innovative thinking, such as the Saudi Technology Development and Investment Company (Taqnia) and the King Abdulaziz City for Science and Technology (KACST). “I’d like to see more of a concerted national effort to develop them and use them properly. It’s better to focus on being the biggest and the best in a few selected areas that are appropriate,” Willen said. He thinks that the recent commitment to solar energy signpost the way things should go. The Public Investment Fund, the Kingdom’s innovation-minded sovereign wealth fund, has joined with the SoftBank Vision Fund in a $200 billion strategy to make Saudi Arabia a world leader in solar technology and manufacturing, making use of its plentiful sunshine to establish a world-leading technological edge. “It is a great example of an area where they can focus production on a big government-backed investment into a specific area of the 4IR. It can dovetail with existing strategies, for example, in developing from petrochemicals a material with properties that can be used in solar equipment, where dust does not settle on surfaces in the desert,” he said. The potential prize is enormous. A.T. Kearney studies estimate that 4IR processes, if properly implemented, could add 30 percent to the Kingdom’s gross domestic product by 2030, create three million jobs, adding 80 percent to the non-oil sector. The cumulative economic impact could amount to SR1 trillion, including direct and indirect foreign investment, and propel the Kingdom toward global leadership in the field of production. Then Willen’s background as an aerospace engineer potentially offers a solution to his regular logistical problem of getting from A.T. Kearney’s base in the UAE and its business in the Kingdom. “Maybe there’s the possibility of a sub-orbital rocket between Dubai and Jeddah? Not really, only joking,” he said.