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After the Council of Ministers, chaired by Crown Prince and Prime Minister Mohammed bin Salman, approved the cancellation of the financial fee imposed on foreign labor in industrial establishments licensed under an industrial license, investors are viewing the decision as a move that strikes at the "core" of factory economics, namely operational costs.

In industry, the real difference appears in unit costs and the facility's ability to maintain margins as production expands, followed by the ability to price competitively at the export gate.

The figures provided by the Ministry of Industry and Mineral Resources give the decision its full context. Between 2019 and 2024, the number of factories increased from 8,822 to over 12,000, while industrial GDP jumped from 322 billion riyals to over 501 billion riyals, and industrial investments rose from 908 billion riyals to 1.22 trillion riyals.

On the export front, non-oil exports increased from 187 billion riyals to 217 billion riyals. The picture here is clear: the growth of output and investment is proceeding at a faster pace than the growth of exports, making "price competitiveness, quality, and compliance" the hallmark of the next phase.

The cancellation of the financial fee frees up operational liquidity that was being consumed monthly based on the number of foreign workers, and provides factories with three weighted usage pathways: increasing production capacity through additional shifts and longer operating hours, improving productivity through upgrading equipment and partial automation and more efficient maintenance techniques, or enhancing quality and compliance to open foreign markets with longer contracts and higher margins. Each of these options translates into a financial equation: lower unit costs, higher free cash flow, and a faster payback period for investment.

The biggest test is related to converting cost savings into measurable results, especially with the localization rate rising from 29% to 31% during the same period. The market is monitoring two parallel trends: the continued growth of localization through quality jobs and training within production lines, while increasing productivity to keep unit costs within a globally competitive range.

By 2025, the indicators that will determine the impact of the decision can be summarized in five points: accelerated growth of non-oil exports compared to the trajectory of 2019–2024, increased productivity per factory as the industrial base expands, a rise in qualitative investments in automation and advanced manufacturing, growth in licenses and expansions instead of merely improving margins, and improved ability to deliver export contracts in terms of time and quality.

The decision today is transforming from regulatory support into a budgetary tool tested by the numbers of exports and productivity.