Presenting SAMA’s 42nd annual state of the economy report for 2005 to the Custodian of the Two Holy Mosques, King Abdullah in Riyadh, its governor, Hamad Al-Sayari, emphasised the growing strength of the Saudi economy and noted increasing investment in all vital sectors.

Saudi Arabia formally became the WTO’s 149th member on December 11, 2005, after 12 years of intense negotiations. The Kingdom adopted 42 new regulations and measures as part of its efforts to join and, of these, 19 were related to the main WTO agreements.

‘The national economy is moving in the right direction, taking quick but firm steps in order to achieve greater strength, competitiveness and diversification and creating more job opportunities for citizens. And all these factors will ensure continuous growth’, Sayari told the King.

Hamad Al-Sayari referred to the economic city projects in Rabigh, Hail, Medina and Jizan, which are likely to mobilise foreign and domestic investment of about SR250 billion and create more than a million new jobs. In his keynote speech, Sayari noted the role being played by the Supreme Economic Council, a mini cabinet chaired by the King, in taking the national economy to new heights.

‘Since its formation in 1999, the national economy gained an average annual growth rate of 4.2%, overtaking the population growth rate of 2.5%’, he pointed out. The private sector made an annual average growth rate of 4.6% during the past six years.

Economist Ihsan Bu-Hulaiga, who is a member of the Shoura Council, said the SAMA report would have a significant impact in terms of winning confidence of foreign investors. ‘This is a major annual publication that covers the Saudi economy from all aspects which makes it very important internally and externally for analysts, economists, academics, companies, embassies etc, since it is published in Arabic and English’, Bu-Hulaiga told the press.

Exports of leather

The export of leather including wet-blue and crust has gone up to $88 million though the market is facing a slump due to less demand for leather from European countries as compared to two to three years before. The Saudi government levies a 5% duty against imports of machinery and chemicals. In fact, the Saudi government has fixed this import duty on all commodities not produced in the Kingdom.

Al Dagal Leather Factory

In a competitive world Al-Dagal Leather Tannery in Medina Munnawara have emerged as a well managed leather factory. Starting out as a producer of wet-blue, Al-Dagal Leather Company have gone into finished leather which is required by local people and industry. They fulfill the demands of the local leather industry for chappals, sandals, bags, shoes etc.

The company were founded by Abdul Qadir Ali Dagal who was exporting raw skins from Saudi Arabia to Türkiye and Europe. Saud Al Dagal, deputy general manager of Al-Dagal Leather Company, told Leather International, that each month they export 57 containers of wet-blue sheep, each containing 1,500 dozen of skins (1,026,000/ year). Exports of goat amount to 30 containers each containing 2,000 dozen, an annual total of 720,000, making a grand total of 1,740,000 skins/month.

In value terms the sheepskins amount to 20 million riyals, while goat skins are 8 million riyals. Exports go to Pakistan, India, Italy, Türkiye, Mexico, Argentina, Brazil and China. Saud Al Dagal said that after a long period, he is participating in the Hong Kong fair in 2007. He is not exporting finished leather but wants to study the trends of the Far Eastern market, especially in China.

Giving a brief overview of the leather industry, including Saudi Arabia, Saud Al Dagal said their market is becoming more and more competitive. ‘We purchase raw skins according to the requirements of our customers. The tanning business here depends on how many slaughterhouses one manages.’ Al Dagal have several slaughterhouses, three in Medina, one in Yanbu, one in Taif, one in Jeddah and one in Mecca. There have been some changes in the management of the slaughterhouses in Riyadh, which has affected production in some of the leather factories.

The main purpose of their participation in the Hong Kong fair is ‘to show people what we are producing in our tannery. Luckily, we have good leather technicians and we can produce any type of finished leather quality which is demanded by European and Far East customers. Our finished leather is of high quality which can be used both in shoes and garments.’

Giving his opinion of the world leather market, Saud Al Dagal said that the bulk of European purchasers are getting their supplies from free trade zones since various countries are exporting to free zones for buyers to inspect wet-blue before purchase. Türkiye has a free trade zone near Istanbul, due to foreign exchange problems. Russia is now much less active in purchasing leather garments from Türkiye, although some trade is still there. In Europe leather manufacture is shrinking and is moving towards Asia.

He said, it is very well understood all over the world that leather consumption is high in the Kingdom, hence imports are of a big volume. In this scenario manufacturing of finished goods and finished products is improving a lot. The management of Al-Dagal (P) Ltd recognised the need of the sector and, to increase their production of finished leather, have made substantial investments in purchasing machinery:

Toggling machines (2) by Forni Verese; ironing machines (2) Rotopress; setting machines (2) Mercier Turner; shaving machines (6) Poletto; Mollisa staking machines (2) Cartigiliano; Finiflex machines (2) from Turner France; buffing machine Turner; snuffing machine Gozzini; polishing machine Ficini Rino; polishing machine (4) Aletti; vacuum dryer; board (2) TB; sammying machine from Mercier Turner and one from Aletti; dry milling machine Turbo Mill (2); wet drums (4) Olcina; and one hydraulic press from Mostardini.

This is to feed 36 showrooms owned by Al-Dagal (P) Ltd and selling their own manufactured sandals and other leather products, such as bags, wallets, belts and accessories. With the addition of the new machines, Al-Dagal (P) Ltd are becoming the biggest supplier of coloured leather to furniture makers and shoe makers in Saudi Arabia. This will have very positive effects on the leather sector in general and finished goods market in particular in Saudi Arabia.

The company are proud of the trust the Saudi Development Bank have placed in them. The bank are prepared to give them a loan of 20 million riyals for expansion which they are not taking at the present.

Al-Ahli Leather Factory

Al-Ahli Leather Factory in the 2nd Industrial Estate of Riyadh at Al-Kharaj Road have maintained the lead over other tanneries. Yaseer M Saeed, deputy general manager of Al-Ahli Leather Factory told Leather International that they are producing 18,000 pieces of wet-blue from goats of the best breeds of Arabic and Najidi.

The cows are of Sawakini and Harness breeds and there are camels as well. Their leather is mainly used for shoe uppers and garments.

He said they supervise the operations of 28 slaughterhouses and appoint specially trained butchers so that there are no unnecessary cuts on the skins which spoil the quality of raw material. The slaughterhouses are given five year contracts to supervise the operations.

He said at present the demand is for goat and cow. They do not import raw material from abroad and use the skins taken from their own slaughterhouses.

Yasser said that they are exporting about twenty containers of wet-blue per month. They also export crust to those countries who order it.

Al-Ahli produce leather garments, purses and chappals. They have well trained staff from India and Türkiye for producing garments and leathergoods.

Modern Tannery – Riyadh

Modern Tannery of Riyadh are one of the biggest tanneries and were established about 22 years ago. Abdul Rahman Hazami, the founder and proprietor, told Leather International that they process about 16,000 sheepskins and 5,000 cows and camels in 25 drums. They export about 18 containers per month.

He said that they supervise the operations of about 40 slaughterhouses and get all their raw skins from these slaughterhouses.

His son Bandar Hizami has now also joined his father’s business as a director.

At present, Modern Tanneries are working in a non-industrial area. Hazami has a plan to shift the factory to a 32,000 sq m plot in the 3rd Industrial Area. They have an agent at Dubai who supplies both India and Pakistan and adjoining countries.

Al-Jabreen Leather Factory

A big expansion in their leather factories has been made by Al-Jabreen Leather Industries Factory. Previously they were producing wet-blue in a factory located in a non-industrial area but they have now set up another factory in industrial area No 3 to produce high quality crust. Manager of the factory Rasheed Abdus Salam told Leather International they are producing 500,000 sq ft annually of crust and finished leather on modern machines and are processing 6,000 to 8,000 skins per day.

He said that they use both Arabic and Najidi for producing nappa with a soft grain. The company have established warehouses all over Saudi Arabia to purchase and collect raw skins.

New Middle East Tannery

Nasir Omar Basahel, who has 20 years’ experience in the tanning business, has received a licence from the Saudi Arabian Ministry of Industries to set up a tannery for producing wet-blue, crust and finished leather. The factory will be set up in the industrial area of Jeddah.

Nasir Omar Basahel has already set up a shoe factory with different management in the industrial area of Mecca. The surface area of this shoe factory is 3,456 sq m and includes machinery imported from Italy. The facility will produce chappals for both men and women from locally produced finished leather. The approximate production will be 300 pairs per day.

Al Edara Est

Al Edara Est is also owned by Nasir Omar Basahel whose name has a good reputation in the local market. He collects both raw hides and skins from the various slaughterhouses and wholesalers in Jeddah, Makkah and Taif and supplies them to the various tanneries.