Supporting Localization in the Saudi Financial Market: Policies, Programs, and

Localization support is a fundamental pillar in the economic and social policies pursued by Saudi Arabia for decades, but it gained greater importance with the launch of Vision 2030, which placed investment in Saudi human capital at the center of sustainable growth. Localization support is defined as the complete package of legislative, regulatory, and financial measures aimed at increasing the percentage of citizens working in the public and private sectors, making the Saudi citizen the core component of the national workforce. The concept of localization goes beyond merely hiring Saudis to include skill development, training, career development, and ensuring an attractive work environment for citizens. Economically, localization support contributes to reducing youth unemployment, increasing national savings by limiting wage remittances abroad, and raising domestic demand levels. Expanding the base of national employment supports labor market security and reduces reliance on foreign labor, mitigating risks associated with economic or legislative fluctuations in labor-exporting countries. Localization support is viewed as a means of equitable wealth distribution, achieving social stability, and developing human capital, making related policies an integral part of the Kingdom's overall economic strategy. Moreover, localization support has stimulated institutional innovation and increased productivity efficiency, as companies compete to attract and develop Saudi talents, positively impacting the quality of services and products offered in the market. It is noted that localization support is not limited to traditional sectors but extends to future sectors such as digitization and advanced industries, in an effort to prepare the new generation for the jobs of tomorrow. In light of this vision, localization support has become a key criterion in evaluating the success of economic and social policies in Saudi Arabia.

Saudi Arabia's Vision 2030 has placed localization at the forefront of its priorities, considering that investment in national human capital is the cornerstone for achieving sustainable economic development. The vision aims to raise the percentage of citizens in the labor market, especially in the private sector, to 50% by 2030, compared to approximately 41% recorded at the end of 2024. This is translated through integrated policies aimed at reducing unemployment among Saudis, empowering women in the labor market, improving the quality of education and vocational training, and developing the work environment to align with the aspirations of new generations. Among the initiatives of the vision are direct financial support, training programs, and new legislation that obliges companies to gradually raise Saudization rates within the 'Nafath' system. The vision also focuses on supporting promising sectors such as technology, tourism, industry, and financial services, considering them as engines for growth and generating quality jobs. The Saudi government has launched dozens of initiatives in this context, including on-the-job training programs, support for small and medium-sized enterprises, and encouraging large companies to adopt advanced localization policies. These efforts aim to build a competitive knowledge economy that achieves self-sufficiency and reduces reliance on foreign labor while enhancing community participation and financial sustainability. Economic studies indicate that achieving localization targets will add approximately 165 billion riyals annually to the GDP and increase local consumer spending, contributing to stimulating the private sector and expanding the circle of economic and social development. Vision 2030 places particular importance on localizing jobs in strategic sectors such as renewable energy and manufacturing industries to ensure sustainable development and diversify national income sources. Thus, localization support represents a central tool for achieving the Kingdom's aspirations for economic leadership regionally and globally.

In recent years, Saudi Arabia has witnessed the launch of a wide range of government initiatives and programs specifically designed to support localization and provide the appropriate environment for increasing citizen participation in the labor market. Among the most prominent of these programs is the 'Tamheer' program, which aims to train new graduates and prepare them to enter the labor market, and the 'Qeem' program, which focuses on developing financial and technical skills for Saudi youth. The Human Resources Development Fund (Hadaf) has also launched initiatives to support the salaries of newly employed Saudis and cover a significant portion of training and qualification costs. In 2024 alone, 68 new initiatives were announced to stimulate the employment of Saudis in the private sector, including providing direct financial incentives to companies, administrative facilitation in obtaining visas and licenses, in addition to specialized training programs. On the other hand, the Ministry of Human Resources and Social Development launched the 'Tadawul' initiative to localize social investment, which aims to empower non-profit organizations and the social sector to benefit from national talents. The 'Nafath' system has also been enhanced to classify companies according to their Saudization rates, allowing compliant companies to receive additional benefits and government facilitation. The initiatives also include support for entrepreneurship projects and small and medium-sized enterprises, as well as financing programs for industrial projects that adhere to high localization rates. The Saudi government has allocated billions of riyals within its budgets to support these programs, leading to improved working conditions and increased demand for jobs in the private sector. These initiatives reflect the state's commitment to achieving localization goals gradually and sustainably while focusing on developing national competencies and enhancing the competitiveness of the Saudi economy in global markets.

Financial and regulatory incentives represent one of the most important tools used by the Saudi government to encourage companies to actively participate in localization support programs. These incentives include covering part of the salaries of newly hired Saudis, providing financial support for training and qualification costs, in addition to reducing or exempting some government fees related to licenses and visas. In 2024, the Ministry of Human Resources announced an initiative to pay half of the salary of new Saudi employees in the private sector, reducing the financial burden on employers and encouraging them to attract national talents. The 'Nafath' system grants companies that achieve high Saudization rates advanced classifications (such as green), allowing them more facilitation in recruiting foreign labor when needed and obtaining government services more quickly. The incentives also include support programs for small and medium-sized enterprises, such as providing easy financing for projects that adhere to specific localization rates, and supporting vocational and technical training costs for Saudi employees. These incentives are part of a larger strategy aimed at narrowing the gap between the cost of hiring citizens and the cost of recruiting foreign labor, ensuring that companies benefit from local competencies in the long term. Additionally, companies' commitment to the required localization rates provides them with greater opportunities to win government projects and major contracts, especially in strategic sectors such as construction, industry, and logistics services. These incentives have contributed to increasing competition among companies to attract and develop national capabilities, positively impacting the labor market and the overall performance of the Saudi economy.

The 'Nafath' system forms the most important legislative and regulatory framework for monitoring and developing localization rates in private sector establishments in Saudi Arabia. Launched over a decade ago, this system has been continuously developed to align with the targets of Vision 2030, classifying companies into four categories (red, yellow, green, and platinum) based on the percentage of Saudis working in them compared to the minimum required for each sector. The classification mechanism relies on factors such as the size of the company, type of activity, and total number of employees. Companies that achieve high Saudization rates receive advanced classifications (green or platinum), granting them administrative privileges such as expedited visa issuance, easy license renewal, and participation in government project tenders. Conversely, companies with low Saudization rates face restrictions on hiring foreigners, suspension of some government services, and may be barred from participating in certain tenders. In 2023-2024, the required rates were raised in some vital sectors, such as retail, telecommunications, and industry, to encourage companies to increase the employment of Saudis. The 'Nafath' system is an effective tool in driving the labor market towards gradual localization, as it periodically monitors performance and gives companies the opportunity to improve their status by engaging in localization support programs and obtaining incentives. The system is also used as a primary reference in government performance reports and provides an accurate database for analyzing the development of the national labor market. It is noted that updates to the 'Nafath' system come in response to market changes, ensuring a balance between providing job opportunities for citizens and sustaining economic growth in the private sector.

Localization support has achieved tangible results in the Saudi labor market in recent years, with the Saudization rate in the private sector rising to about 41% by the end of 2024, compared to less than 37% in 2022. This increase is attributed to firm policies, financial incentives, and intensified training and qualification programs. Some sectors, such as retail and telecommunications, have seen Saudization rates exceeding 50%, reflecting the success of government initiatives in attracting citizens to these activities. Additionally, programs like 'Tamheer' and 'Qeem' have integrated graduates and youth into the labor market, providing new job opportunities. Despite these achievements, significant challenges remain, notably the ongoing need to develop the skills of the national workforce, align educational outputs with market demands, and provide an attractive and stable work environment for citizens. Another challenge is the resistance of some companies to raise Saudization rates due to additional costs or a lack of expertise in certain specialties, necessitating continued government support and intensified vocational training programs. The challenge of localization in industrial and technical sectors, which require specialized skills that may not be readily available among job seekers, also stands out. Nevertheless, official data indicates a decline in the unemployment rate among Saudis and improved employment rates for women and youth, reflecting the positive impact of localization support policies. Government entities are working to address these challenges by enhancing partnerships with the private sector, developing the training system, and providing more incentives to ensure the sustainability of localization and achieve national goals.

The cement sector is one of the most prominent industrial sectors that has effectively benefited from localization support programs in the Kingdom. This sector is considered one of the cornerstones of the Saudi economy due to its direct connection to infrastructure projects, housing, and major development projects such as NEOM and the Red Sea. According to official data for 2024, Saudi cement companies have seen a significant increase in the employment rates of Saudis, with some companies achieving Saudization rates exceeding 45%. These companies have benefited from government incentives, such as covering part of the salaries of Saudis and providing specialized training programs to qualify national labor for work in factories and production lines. An example is 'Hail Cement Company' (3001), which has adopted comprehensive localization policies and participated in training initiatives in collaboration with the 'Hadaf' fund and 'Tamheer' programs, leading to an increase in the number of Saudi employees in technical and administrative departments. The Hail region has also launched programs in collaboration with the Ministry of Human Resources to qualify Saudi youth to work in cement factories and provide specialized certifications. On the other hand, companies face challenges related to the availability of advanced technical skills and the need for ongoing investment in training and raising the efficiency of national labor. Although localization costs may raise operational expenses in the short term, the long-term benefits include enhancing job stability, increasing productivity, and meeting institutional sustainability requirements. Sector reports indicate that localization has improved companies' image in front of investors and increased their chances of winning government projects, demonstrating the integration between localization policies and the performance of the cement sector in the Saudi market.

Hail Saeed Anam and Partners Company (Hail Cement), listed in the Saudi financial market under symbol 3001, represents a prominent model of the industrial sector's response to localization support policies. Over the past few years, the company has focused on increasing the national employment rate in its factories and management, benefiting from government support programs, especially training and qualification programs provided by the 'Hadaf' fund and initiatives from the Ministry of Human Resources. The average Saudization rate in the company has reached high levels compared to the sector average, granting it an advanced classification in the 'Nafath' system and allowing it to benefit from various financial and regulatory incentives. Financially, Hail Cement has recorded relatively stable performance amid fluctuations in demand and prices, with its stock price ranging between 60-80 riyals during 2024, with a market capitalization estimated between 10 to 15 billion riyals. Despite a high price-to-earnings (P/E) ratio during some periods due to fluctuating profits, the company continued to distribute attractive cash dividends ranging between 4-5% annually, indicating its commitment to maximizing shareholder returns. Data has shown that investing in training and qualifying Saudis has contributed to enhancing productivity, reducing employee turnover, and developing technical and administrative work skills within the company. On the other hand, the company's experience has not been without challenges, as the localization process required additional investments in human resource development and updating HR policies to attract Saudi talents. Nevertheless, the company has achieved notable alignment with governance and sustainability standards, enhancing its competitive position in the market. The experience of Hail Cement illustrates that localization support is not merely a regulatory commitment but represents a strategic opportunity to improve institutional performance and enhance sustainable growth.

The Saudi cement sector is witnessing strong competition among several major companies, including Saudi Cement Company (3000), Hail Cement (3001), Yamama Cement (3006), Eastern Cement (3003), and Northern Cement (3009), along with other small and medium-sized companies. This competition drives companies to develop their products and improve the efficiency of their operations to meet the increasing demand for cement, especially with urban expansion and massive government projects under Vision 2030. With localization support, competition is no longer limited to price and product quality but now includes companies' ability to hire and develop national talents. Companies that have increased their Saudization rates have received advanced classifications in the 'Nafath' system, granting them advantages in winning government contracts and major projects. Localization has also improved companies' image in front of investors and government institutions, increasing their chances of obtaining financial support and administrative facilitation. Conversely, some companies have faced challenges in attracting specialized national labor, requiring additional investments in training and qualification. Reports indicate that companies that succeeded in achieving high localization rates were able to benefit from government incentives, reducing their reliance on foreign labor, which mitigated the risks associated with labor market fluctuations. Additionally, localization has enhanced job and production stability within companies, contributing to improving their ability to adapt to economic and legislative changes. Thus, localization support has become a crucial factor in enhancing competitiveness and sustainability in the Saudi cement sector, with expectations of growing demand and increasing job opportunities for citizens in the coming years.

Training and vocational qualification form the foundation for the success of localization support programs in Saudi Arabia, as integrating citizens into the labor market requires developing their technical and managerial skills according to the demands of various sectors. The Saudi government has recognized the importance of this aspect and launched specialized training programs such as 'Tamheer', which provides practical training for new graduates, and 'Qeem', which focuses on developing financial and technical skills. The 'Hadaf' fund also provides financial support to companies for training Saudi employees, covering part of the training costs during the qualification period. In industrial sectors such as cement, workshops and specialized courses have been organized to qualify Saudi youth to work in factories and production lines, in collaboration with government entities and vocational training centers. These efforts have contributed to raising the efficiency of the national workforce and reducing the skills gap between Saudis and foreign labor. Practically, studies have shown that Saudi employees who underwent intensive training demonstrated better performance and higher job stability, positively reflecting on companies' productivity and product quality. Additionally, investing in training enhances employee loyalty and motivation, reducing turnover rates. Despite these positive results, there remains a need to expand training to include future skills, such as digitization and modern technologies, and ensure that training curricula align with changing market needs. The government is currently working on developing partnerships with the private sector and academic institutions to enhance the training and qualification system, ensuring the sustainability of localization and achieving national goals in the long term.

The impact of localization support extends to macroeconomic indicators in Saudi Arabia, contributing to enhancing GDP, reducing unemployment, and increasing local consumer spending. Estimates indicate that localization initiatives will add approximately 165 billion riyals annually to GDP by 2030, resulting from increased productivity of the national workforce and stimulating domestic demand. Additionally, the rising Saudization rate in the private sector has led to a decline in the unemployment rate among citizens and improved employment rates for women and youth. At the level of consumer spending, employing citizens has increased the disposable income of Saudi families, positively impacting the retail, services, and housing sectors. Localization support has also contributed to reducing wage remittances abroad, increasing national savings and enhancing financial stability. On the other hand, localization policies have encouraged companies to invest in training and development, leading to improved product and service quality and raising the competitiveness of the Saudi economy regionally and internationally. Although some operational costs have risen in the short term due to job localization, the long-term benefits include enhancing social and economic stability, reducing reliance on foreign labor, and achieving sustainable development. Furthermore, localization has contributed to the development of promising sectors such as technology and manufacturing industries, opening new horizons for entrepreneurship and local investment. Thus, localization support represents an effective tool for enhancing economic growth and achieving the goals of Vision 2030 in building a diverse and sustainable economy.

Localization support has directly impacted the strategies of companies listed in the Saudi financial market, as compliance with localization rates has become a pivotal factor in the operational and financial planning of companies. Major companies, especially in industrial and service sectors, have sought to develop human resource policies that align with localization requirements, including attracting Saudi talents, investing in training and qualification, and developing an attractive work environment for citizens. Companies have also sought to benefit from government incentives, such as wage support and facilitation under the 'Nafath' system, to enhance their competitiveness and reduce operational costs. Strategically, achieving high localization rates has become a prerequisite for winning government contracts and major projects, prompting companies to review their organizational structures and update hiring policies. Additionally, companies' commitment to localization has enhanced their image in front of investors and raised their ratings in sustainability and governance reports. In the cement sector, for example, companies have increased the number of Saudis in technical and administrative positions, contributing to improved productivity and reduced employee turnover. Despite challenges related to providing national competencies and training costs, companies that successfully aligned their strategies with localization policies achieved better financial and operational performance in the medium and long term. Localization support has also encouraged companies to innovate and adopt modern technologies, helping them keep pace with economic transformations and achieve sustainable growth.

Despite the notable progress in localization support programs, the path toward achieving full goals is not without future challenges that require innovative solutions and close collaboration between the government and the private sector. Among the most prominent challenges is the ongoing need to develop the training and education system to meet the changing labor market requirements, especially in technical sectors and advanced industries. The challenge of attracting national competencies to work in industrial and technical sectors, which require specialized skills and practical experience, also stands out. Companies also face difficulties in raising localization rates without affecting operational efficiency, necessitating continuous investment in improving the work environment and providing additional incentives to attract citizens. Future opportunities include expanding digital training programs and e-learning, and developing partnerships with universities and technical institutions, contributing to preparing a new generation of Saudi professionals capable of meeting labor market demands. Additionally, the shift toward a digital economy opens new horizons for job localization in technology, artificial intelligence, and manufacturing sectors. On the other hand, the growth of small and medium-sized enterprises presents an opportunity to enhance localization, especially with the financial and regulatory support provided by the government to this segment of companies. To achieve sustainable success, it is essential to foster a culture of work and creativity among youth and provide guidance and mentorship programs to help them choose suitable career paths. Thus, localization support remains a continuous national project that requires collaborative efforts to achieve the ambitious goals of Vision 2030 and achieve comprehensive development in the Kingdom.

The non-profit sector in Saudi Arabia has witnessed a qualitative leap in localization support thanks to innovative programs such as 'Tadawul', launched by the Ministry of Human Resources and Social Development in 2025. This program aims to empower non-profit organizations and the social sector to employ national talents and provide a stimulating and sustainable work environment for Saudis. 'Tadawul' focuses on developing the managerial and technical skills of workers in the non-profit sector through specialized training programs and financial support to cover part of the salaries of new employees. The program also provides incentives for organizations that commit to high localization rates, such as facilitation in obtaining funding, preferences in granting licenses, and logistical support. This initiative has contributed to raising the Saudization rate in the non-profit sector and enhancing the sector's contribution to achieving the goals of Vision 2030, especially in community development, education, and healthcare. It has also created new job opportunities for youth and women, driving non-profit organizations to develop advanced human resource policies. On the other hand, the sector faces challenges related to aligning skills with job needs and the need to develop a continuous training and qualification system. Nevertheless, the experience has shown that localization support in the non-profit sector contributes to enhancing social stability, developing human capital, and achieving sustainable development. The 'Tadawul' program represents a successful model of integration between government policies and the non-profit sector in supporting localization, with the potential to generalize the experience to other sectors to achieve the desired national goals.

Localization support has become an integral part of sustainability and corporate governance standards in Saudi Arabia, as regulatory authorities and investment institutions place increasing importance on companies' ability to employ and develop national talents. This impact includes several aspects, most notably enhancing transparency in human resource policies and ensuring fairness in employment and career development opportunities for Saudis. Companies' commitment to localization rates reflects their social responsibility and enhances their image in front of local and international investors, especially in annual sustainability reports. Studies have shown that companies that integrate localization into their strategies achieve better performance in governance indicators, such as job stability, reduced turnover rates, and increased employee satisfaction. Localization also contributes to reducing operational risks associated with reliance on foreign labor and achieving long-term growth sustainability. On the other hand, localization support requires companies to develop continuous training and qualification policies and adopt high-quality standards in human resource management. It also encourages innovation and the adoption of modern technologies, raising companies' competitiveness in local and global markets. Despite the challenges associated with training costs and providing competencies, the positive impact on sustainability and corporate governance makes localization support an indispensable strategic option in the modern Saudi business environment.