How to start your own industry project

Many questions revolve in the mind of thinking to break into the world of industrial investment - or other - which may take questions from the investor a great deal of his mind, and time, and effort before reaching a final decision to go to invest in a particular area, and in a particular industry.

Those questions and others may not answer them stands a real impediment to the investor, which may be deterred from its decision that did not find her answers.In order to reach the project owner to trust and take decisions properly in the beginning of the project and reduce risks and losses in the future, we must strive to collect large amount of information before it reaches the stage of implementation, and this information contributes to the proper planning and increase the chance of success.

The following study is trying to be involved new investors thinking and planning, to reach them to answers and solutions puts them in the first way to create a successful industrial project with minimal effort.

Thinking and planning

Any project, there are incremental steps for its implementation, as well as the administrative capacity and personal experiences, it must be gradual and walk steps sequential access to the desired results, and the first of these steps: thinking and planning, it is necessary for the investor new that has the desire to go to invest in the industry, and this require that has Initial perception of what he wants is not based on simulation and tradition, and stems from a strong motive for creativity and accept the challenge.

in order to be crystallizing this perception in a practical, you must first gather ideas industrial and which can be accessed through the information centers established in the chambers of commerce and industry, research centers, industrial and others related (Ministry of Finance, Ministry of Industry, the General Authority for Investment) or offices Consulting Services economic and industrial development.

After collecting ideas, it requires sifting through the contents of these ideas in the light of a Initial indications like comparing the evolution of imports example of a commodity within a certain time, and energies productivity licensed factories similar menu (if any), taking into account (the projects under implementation) to conclude the results may encourage the selection of an initial idea of the project, along with other ideas, bringing the investor at the end to another list of shortcuts for ideas alternative, in light of the search deeper may require the preparation of studies summarized each of them alone (studies of investment opportunities) to identify the most feasible and appropriate.

Feasibility Study

The work of a good economic study for the project to be established, not necessarily mean access to a good result and the most direct route and cost less.
The feasibility study is the subsequent step of thinking and decision-making, it is very important to investor to make the economic feasibility study of the project in order to reach his project to safety.
Availability of financial solvency (mastery Financial) and thinking about financing and the possibility of funding for the financing of several images, the most important and the most common include:

  • Full self-financing.
  • Self-financing of 25% -50% + loan funding from the Industrial Development Fund, 50% - 75% at the adoption of industrial activity fund, or through the Saudi Credit and Savings.
  • Self-financing 50% + 50% commercial loan (or any other ratios so that no self-financing is less than 25%).
  • Self-financing 25% + loan financing (banks) 25% + loan funding from the Industrial Development Fund, 50%.
  • Self-financing 25% + bank financing system of the Islamic Murabaha or other forms of financing.
  • Self-financing + medium-term payment facilities supplied by companies for equipment and primary materials.

It should be noted that the system of fund requires a minimum availability of financing self no less than 25% of the investment cost, note that the maximum loan funding not to exceed 50% in major cities and 75% in the less developed regions of the cost and a maximum of 600 million riyals.
Executive and administrative steps:

License

Required to follow specific procedural regular steps, to get in the end the decision authorized the project, which entitles the investor to benefit from the advantages provided by the State for industrial projects.

Begin these steps to prepare the project file and configure its accessories documentary, ending obtaining industrial license final, either through the Ministry of Trade and Industry said the project was an investment Saudi or Gulf 100%, or by the General Authority for Investment that has been mixed and the Ministry of Trade and Industry said the project was an investment Saudis 100% or in the Gulf, or through the General Authority for Investment that has been mixed (Saudi investment / foreign) or 100% foreign, and it is slightly different when you talk about industrial project investment of less than a million riyals.

Requires industrial license of by the Ministry of Commerce and Industry and met (License Application Form) and provide some other procedural documents, without the issuance of the license conditional on the provision of technical feasibility study for the project, except in exceptional cases decided by the ministry. After the decision of the industrial license, also start other procedural steps, linked to a number of governmental and non-governmental organizations in a relationship (CR, Labour Office, the Department of Zakat and income, membership in the Chamber of Commerce, industrial, municipal, ... etc.)

Allocation of the project land

A step that requires coordination with the industrial cities and technology zones (MODON) in the event of a desire to establish the project in one of the industrial cities or with municipalities (industrial areas, if the project will be held outside the industrial cities) to customize the site for the project in one of the industrial cities or industrial zones governmental or Private, or coordination with the Royal Commission for Jubail and Yanbu that the project will be held in one.

It is an important step prior to the preparation of engineering plans operational and contractual link with the leased (long-term lease).

The Saudi Industrial Property Authority (MODON) play a key role and is effective in this area through the facilities offered by the investors, whether in relation to the procedures for obtaining the land at nominal prices, or offering infrastructure services to investors in the industrial cities, which oversees and which services include electricity, water and communications the streets are also available in these cities stores and workers' housing and recreational services and multiple marketing.

Negotiations, technology transfer, technical partnerships

May require some projects join partner non-Saudi (company or individual) possesses technical expertise in similar industry, or enter into negotiations for the transfer of technical art (Artistic), and this requires communication and arrangements and organization negotiations with a hand or more, to be a formula contractual agree with the wishes of the parties involved.

This step may be carried out before, during or after the industrial licensing phase, where the timing depends on the nature of the project, and the extent of the technical complexity and the need for special expertise in it. In general, if the accession partner non-Saudi to (ownership) project requires (whatever the timing of joining the project) prepare sharing contracts and the provision of documents, experience, and submit it to the General Investment Authority to modify the ownership of the project in a resolution industrial license, if the decision has been issued in advance Saudi ownership and / or fully Gulf.

Implementation

It is the last stages of the investment track, where the project is achieved by entering into activated, this stage requires several details:

First: the preparation of the administrative aspects:

  • Selection of the Director General.
  • The preparation of the organizational structure of the plant.
  • Preparation of job descriptions for each job.
  • Hire a CFO or an accountant.
  • Production manager employment.
  • Employ administrative Saudi.
  • Action plan for the employment of the administrative and technical.
  • Contracting with an external employment office to complete the procedures for employment from outside the Kingdom.

Second: get on stage performances, analysis and signing of contracts

  • To obtain competitive bids for equipment, machinery and analysis of his work
  • Choose a leading supplier of machines and others as needed
  • Access to public schemes for buildings and production facilities from machines supplier
  • Contracting with an engineering firm for the preparation of engineering plans for the plant
  • Get bids for building works and selection of a qualified contractor
  • Contract with the Office of the engineering supervision to oversee the completion of the construction of buildings according Approved plans and schedule
  • Obtain offers for the factory supplies and transport systems and furniture stores and most appropriate offer.

Third: the construction phase and the arrival of part of the employment

  • Follow-up construction work on an ongoing basis by management and consulting engineer
  • Follow-up shipping machinery and equipment
  • Follow-up employment and to endeavor to reach a batch of help in processing labor to assist in the installation of machinery and equipment
  • Follow-up requests for funding to the various parties that submitted it
  • Careful to keep any documents costs are cashed or contracted work system for safekeeping.

Fourth: the arrival stage machinery and equipment and installation

  • Contracting with the Bureau of Customs clearance to rid the machines and equipment if they arrive to avoid carrying any irregularities
  • Arrange for the transfer of containers to site
  • Storage of machinery and equipment in a safe machines
  • System to determine the location and content of each container
  • Installation of machinery and equipment by the supplier of the machines and factory labor, taking into account as stipulated in the contract with the supplier
  • Provide escort to the site
  • Preserve documents such as invoices, bills of lading, shipping lists, catalogs, etc. operating.
  • Processing requirements of customs exemptions for submission to the Ministry of Trade and Industry

Assumed at this stage that the Department introductory campaigns for the company's products through direct contact with target customers.

Fifth: the stage of testing and acceptance of the machines and the arrival of the rest of the employment and the provision of raw materials needed to conduct operational tests

  • The need for the presence of his experience in the operation of the machines and achieve the properties contracted for production lines and quality of the products according to international standards.
  • Need to document the results of the tests and the circumstances in which it conducted.
  • An opportunity for labor to be trained on the production and operation of the machines and ask questions at a technical expert.
  • If there is a technical support agreement (Technical Assistance) will help so much in the future.
  • The arrival of the rest of the workers at this stage gives a good opportunity to train and prepare for the start of pilot production and actual.
  • Marketing management to continue efforts to identify the plant and its products.

Pilot production stage and then actual

  • An important stage to ensure the stability of production before the actual production.
  • A good opportunity to train workers to run the machines and see the raw material components suspicion for the best of the previous phase.
  • The documents are signed the end of the trial run.
  • Be responsible for operating and transmission production to factory management.
  • The actual start of production upon the arrival of customer requests.

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