Road Map Towards a Knowledge-Based Economy
Khalid A. Al-DakkanDirector of Innovation and Commercialization SectorDirector of the National Technology Development Center
Knowledge-based economies rely heavily on the production and management of knowledge, rather than simply physical products
Knowledge-Based Economies (KBE)
Drive Economic Growth
1
Create New High Value Jobs
2
Globalize Local Economy
3
Facilitate Knowledge Transfer
4
Foster Innovation & Entrepreneurship
5
PolicyEducation
Networks NationalInnovation System
Four Pillars of KBE Benefits of KBE
Source: World Bank; Asian Development Bank; OECD(Organization for Economic Co-operation and Development); Booz & Company analysis
The National Science, Technology and Innovation Plan provides KSA with the strategic vision to join knowledge-based economies …
§ Establish infrastructure for science, technology and innovation– Development of
national eco-system– BADIR program– SBIR– Technology
Innovation Centres– Tawteen – Taqnia
§ Become a leading country in science, technology and innovation in the region
§ Become one of the leading countries in science, technology and innovation in Asia
2025
2020
2015
2010
1st 5-Year Plan 2nd 5-Year Plan 4th 5-Year Plan
§ Transform to a knowledge-based economy
3rd 5-Year Plan
Saudi Arabia
Qatar
LebanonIsrael
Middle East
Asia
Global
Source: KACST
…and regroups all key elements necessary to achieve the transition
Technology Innovation, Entrepreneurship and Incubation
Economic and Social Systems and Laws
Universities &Research Organizations
Human Resources
Financial Resources
Innovation Entrepreneurship
Incubation
Source: KACST; Booz & Company Analysis
The plan will enable Saudi Arabia to address its most pressing socio-economic issues today
Socio-Economic Challenges in Saudi Arabia
Source: SAMA; The Conference Board of Canada; U.S. Patent and Trademark Office; Booz & Company analysis
Econ
omic
Mix
Popu
latio
n G
row
th
Inno
vatio
n R
anki
ng
Tale
nt p
ool
30
20
10
020102005200019951990198519801975
+4% Other15%
Oil85%
40289
509743
SaudiUSGermanySweden
KSA Population (MM) KSA Revenues
Number of Granted PatentPHD Graduates
(per100,000 of population)
Diversify the Saudi economy by focusing on value-adding technology sectors
Provide unique job opportunities in technology sectors for the young Saudi population
Position Saudi Arabia as a leadinginnovative nation
Support capacity building for the Saudi talent poolin technology areas
58
0
20
40
60
2006 2008
+25%
2002 20102004
Regu
lation
s
Financial
Resources
Human
Resources
Strategic
TechnologiesTechnology Transfer
R&DCapabilities
Infrastructure
Administration
NSTIP implementation throughout the Kingdom Institutions….
NSTIP Framework
Private Sector
Society
National Science,
Technology, & Innovation
Plan (NSTIP)
Ministries and Governmental
Institutes
Research & Educational Institutes
Source: KACST; Booz & Company analysis
In regards to innovation, KACST will keep on focusing on 15 technological areas that have been identified as critical for KSA
Advanced Technologies Program
Technology Priorities for KSA Examples of KACST R&D Achievements
King Abdullah Initiative for Water Desalination
King Abdullah Initiative for Arabic Content
Design of Next Generation Electronic Chips
Date Palm and Camel Genome Projects
Gravity Probe - B Space Experiment
WaterOil and GasPetrochemicalsNanotechnologyBiotechnologyInformation TechnologyElectronics and CommunicationsSpace and AeronauticsEnergyEnvironmentAdvanced MaterialsMathematics And PhysicsMedical and HealthAgriculture TechnologyBuilding and Construction
Source: KACST; Booz & Company analysis
KACST established Joint International Centers of Excellence with World Leading R&D Organizations
KACST Joint Centers of ExcellenceInternational Universities and Institutes
Source: KACST; Booz & Company analysis
IBM (2) (USA)Intel (3) (USA)Boeing(2) (USA)Clariant (Germany)Selex (UK)Synopsys (USA)
MIT (USA)Stanford (USA)Oxford (UK)Cambridge (UK)UCLA (USA)UCSD (2) (USA)Northwestern (USA)Chinese Academy of SciencesBelarus Academy of Sciences CSIR (South Africa)C-DAC (India)NASA (USA)
International Companies
Fraunhofer (Germany)EMPA (Switzerland)
CENTER FOR COMPLEX ENGINEERING SYSTEMS (CCES)
CCES Vision
The Center for Complex Engineering Systems (CCES) at KACST and MIT is intended to be a world-class international research program that will uncover fundamental principles and will develop new methods and tools such that complex systems can be modeled, designed, and managed more effectively than is possible today. 40 researchers from both sides.
CENTER FOR COMPLEX ENGINEERING SYSTEMS (CCES)At KACST & MIT
Example: KACST-MIT Joint Center of Excellence
CENTER FOR COMPLEX ENGINEERING SYSTEMS (CCES)
CCES Projects
TransportationEnergy
UrbanismWater
ICT
Sustainable Infrastructure Rating System (SISRS)
Urban Traffic System (UTS)
Integrated Energy Decision Support System (IEDDS)
CCES Domains
CCES Domains & Projects
The problems addressed by CCES will touch on several domains as well as on the interactions amongst those domains.
Funded Projects 2011 -2008 based on Technologiesratio to the total
budget (%)Budget (SR) Ratio to the total
(%)Number of
funded projectsTechnologies
4.1 51,867,936.00 4.5 32 Water
1.8 22,400,580.00 1.8 13 Oil & Gas
1.2 15,174,700.00 2.0 14 Petrochemicals
11.7 147,184,765.00 13.7 97 Nanotechnology
8.0 100,481,372.00 8.1 57 Advanced Materials
3.9 49,044,485.00 4.8 34Electronics &
Communication & Photonics
20.9 261,854,306.00 20.7 146 Biotechnology
6.3 78,697,429.00 8.4 59 Information
2.1 25,732,250.00 2.4 17 Space & Aeronautics
6.4 80,908,698.00 7.9 56 Energy
8.5 106,098,258.00 9.9 70 Environment
1.9 23,363,320.00 2.0 14 Agricultural
0.2 2,406,000.00 0.3 2 Building
1.2 15,131,671.00 1.7 12 Mathematics and Physics
21.9 274,492,506.00 11.8 83 Medical & Health
100% 1,254,838,276.00 100% 706 Grand total
R&D Funding - 706 Projects
Innovation in Saudi Arabia has begun to show early signs of success – a momentum that we aim to further boost
3.2
3.9
4.1
4.3
5.1
5.4
5.6
5.8
0 2 4 6
SaudiArabia
Japan
Kuwait
Oman
Singapore
UAE
Finland
US1
18
33
43
50
6
3
(Out of 139)Ranking
Minimal or Nonexistent Intensive and Ongoing
96
Source: The Global Competitiveness Report (2010-2011),WEF; SCImago. SJR SCImago Journal & Country Rank ;Booz & Company analysis
Extent of University-Industry Research Collaboration(2010)
Research Papers Published Regionally(1996 to 2010)
Compared to 50 at2008
0
500
1,000
1,500
2,000
2,500
3,000
3,500
4,000
4,500
5,000
5,500
6,000
1996 1998 2000 2002 2004 2006 2008 2010
Saudi ArabiaKuwaitUAEJordan
Via BADIR, KACST will setup 80 incubators in the Kingdom by 2025 to create over 20,000 jobs…
BADIR Program Long-Term Targets and Achievements
BADIR Supported Incubators
Number of Clients
Employment in Client Companies
Number of Graduate
Companies1
Graduate Employment2
Total Employment
280 560
2,240 4,480
95 333
836 3,596
3,076 8,076
2015 2020
Number of Incubators 20 40 80
1,120
8,960
761
9,740
18,700
2025
1) Cumulative and 15% business failure2) Cumulative and 5% annual growthSource: NSTP Long Term Objectives
BADIR Program Long-Term Targets
Yanbu
Al QassimPrincess Noura
Taibah
Al KharjAl Baha
Om Al Qura
King Khalid
BADIR ICT BADIR BIO BADIR AMI
Currently, BADIR is supporting 54 clients– double the 2009 figure - resulting in over 112 new jobs created
BADIR Client Base
25
12
766
+350%
ICT
BIO
AMI
Jul-11
54
30
17
Jun-11
48
27
15
May-11
45
28
11
Apr-11
43
27
115
Mar-11
45
30
105
Feb-11
44
29
105
Jan-11
42
28
104
2010
43
28
105
20092008
Clients and Affiliates by Incubator
Source: BADIR Monthly reports
ICT AMI BIO Total
Jobs Created# Generating
Revenues# Generating
Profits
100
9
2
7
0
0
16
0
0
112
9
2
2011 Client Status
Selected Success Stories
§ S-me is a highly successful SMS based social network for young Saudis boasting some 600,000 members
§ AceBiotech aims to provide kits and reagent for PCR, DNA/RNA Isolation, Cloning, Electrophoresis and Buffers
§ Ataalam provides a learning environment, training virtual Women through virtual classrooms, and interactive whiteboards
To produce a critical mass of high-quality patents , KACST launched the Technology Innovation Centers (TIC) program
Source: KACST; Booz & Company analysis
Technology Innovation Centers (TIC)
Technology Innovation Centers
§ Address economic and social goals of the Kingdom
§ Promote university industry research collaboration and technology transfer in the Kingdom
§ Strengthen university research and science and engineering education in KSA
Objectives
§ Established 3 technology innovation centers in collaboration with Saudi universities with a cost of SAR 150 million
Achievements
RiyadhAl-Madinah
Eastern Province
Al-Qassim
Asir
Tabouk
Jeddah
Hail
Northern Borders
JazanNajran
Al-Jawf
Carbon Retain &Sequestration
Individual Diagnostic
medicine
Dhahran
Radio Frequency
&Photonics
Through SBIR, KACST will support the development of Saudi businesses by funding innovative research
SBIR Program
Encourage the foundation and growth of technology-based companies
Commercialize promising technologies from universities and research centers
Catalyze high tech employment in the kingdom
Ability to Produce Sustainable Jobs
SBIR Program Objectives
Phase II§ Provides the core funding
necessary to develop a prototype
Activities
Phase I§ Provides preliminary funding
for feasibility studies
Phase III§ Supports the transition to
private sector finance, and product development
§ Graduation from the program Phase III
SBIR Program Phases
Source: KACST; Booz & Company analysis
…that will significantly support in overcoming the commercialization chasm
16
Commercialization Chasm
Research and Development
Idea g
enera
tion
Basic
rese
arch
Conce
pt de
velop
ment
Proof
of co
ncep
tPro
totyp
e
Produ
ct de
velop
ment
Manufa
cturin
gMar
ket in
trodu
ction
Marke
ting
Dissem
inatio
n
Production and Dissemination
Current Gap
Value Add of Incubators in Addressing Commercialization Chasm§ Incubator programs provide significant add-on funding to the commercialization initiatives, examples include– Norway: FORNY program designed to commercialize research based business; most of the FORNY
supported spin-offs receive significant support from Innovation Norway through the incubator grant scheme
– Canada: The Industrial Research Assistance Program (IRAP) supports a significant share of spin-offs. In combination with tax deductions these funds can add up to 70% of the total project costs
Taqnia will capture the potential of emerging technologies and support the national strategy to deliver impact
Taqnia value chain
Taqnia
Attract / Make Investment
Improve NationalCompetitiveness
Grow sustainably Improve LocalCapability
Manage a Growth Portfolio
CorporationsCreate jobs
Create adequate regulation
Illustrative
Gaps and overlaps in current stakeholder support to SMIs
Bu
sin
ess
Req
uir
emen
ts
Stage of Growth (in months)
Facilitation with Govt.
Licenses / Approvals
Funding
Mentorship & Training
Infrastructure Support
T-12 T0 T12 T24 T36 Tn
SIDF, National Commercial Bank, Saudi Credit & Savings Bank, private banks
NICDP
Council of Saudi Chambers3
HRDF1
Saudi Industrial Property Authority (MODON)
Centennial Fund
PIF4
Early stage infrastructure support limited
Support not beyond the first few months of business start-up
Limited facilitation once setup
Multiple sources of funding
Ministry of Commerce & Industry, SAGIA2
1: HRDF subsidizes 50% of wages for new Saudi hires for the first 2 years2: SAGIA’s focus is FDI (with or without local partners) 3: CSC also facilitates financing for SMIs4: PIF primarily focuses on large scale investments 5: Provides skilled graduates based on the needs of the market6: Research grants, incubation support, office space7: KACST provides incubator support through the Badir program
TVTC5
KACST
Sources of funding may be challenging due to limited history of SMI
….Tawteen is KACST-MCI Initiative helps in Supporting Small, Medium Industries (SMIs) in KSA
…..deciding where Tawteen could and should play is a key strategic question
Start UpStage
GrowthStage
ExpansionStage
SustainStage
• R&D Incubator• R&T Incubator• Manpower and Labor• Assurance of Raw Materials
Supplies• Support Infrastructure
• Certification and Standards• Technical Assistance• Automated Process and Efficiency and
Productivity Improvements• Tax and Financial Benefits • Business & Market Development
• Technological capability• Management capability• ICT capability• Brand Development• Outsourcing• Distribution channels• Skills Develoment
• Design capability• Industrial Upgrading• Investment abroad
Ca
pa
bil
ity
Time
Globally Competitive
Inv
est
me
nt
SMI maturity curve
Global SMI agencies overview
MEP: Manufacturing Extension PartnershipEC: Enterprise ConnectIRAP: Industrial Research Assistance Program
SC: Steinbeis CentrePITRI: Public Industrial Technology Research Institute MAS: Manufacturing Advisory ServiceINTI: Instituto Nacional de Tecnología Industrial
FFG: Austrian Research Promotion AgencyInno.: Innovation Fund for Small Technology-based FirmsFEDIT: Federación Española de Entitades de Innovación
Represents 80% of total factories by volume
Analysis of current industry concentration in the kingdom….Fabricated metal products, rubber & plastics, food products and chemical & chemical products were the top 4 sectors by number offactories
51333434549666767899797
100107151
193331
359
501
556
598
3,653
86
Prin
ting
& R
epro
duct
ion
of M
edia
Mot
or V
ehic
les,
Tra
ilers
, Sem
i-Tra
ilers
Che
mic
al &
Che
mic
al P
rodu
cts
Food
Pro
duct
s
Rub
ber &
Pla
stic
s
Fabr
icat
ed M
etal
Pro
duct
s
Cok
e &
Ref
ined
Pet
role
um P
rodu
cts
Furn
iture
Woo
d, C
ork
(exc
ept f
urni
ture
)
Text
iles
Ele
ctric
al E
quip
men
t
Mac
hine
ry &
Equ
ipm
ent
Pap
er &
Pap
er P
rodu
cts
Total
Oth
er T
rans
port
Equ
ipm
ent
Pha
rmac
eutic
al P
rodu
cts
Bev
erag
es
Leat
her &
Rel
ated
Pro
duct
s
Wea
ring
App
arel
Bas
ic M
etal
s
Oth
er
Non
-Met
allic
Min
eral
Pro
duct
s
Com
pute
r, E
lect
roni
cs, O
ptic
al
Source: National Factories Database 2010 , Saudi Industrial Development FundClassification based on International Standard Industrial Classification (ISIC) codes
Number of Factories in the Kingdom classified by L0 industries
……Top 25% industries represent 70% of all factories by volume
1 01 01 21 31 61 71 81 81 91 92 02 12 12 72 72 82 92 93 74 24 44 55 05 85 96 76 97 37 8848 48 99 19 49 79 71 071 071 3 5
1 4 91 5 31 6 1
4 4 9
5 3 7
1 6 8
Tann
ing
& D
ress
ing
Oth
ers
Jew
elle
ry
Pro
cess
ing
and
pres
ervi
ng o
f mea
t
Pre
pare
d an
imal
feed
s
Wea
ring
appa
rel e
xcep
t fur
Spe
cial
-pur
pose
mac
hine
ry
Man
-mad
e fib
res
Ref
ined
pet
role
um p
rodu
cts
Dom
estic
app
lianc
es
Gla
ss a
nd g
lass
pro
duct
s
P&
A fo
r mot
or v
ehic
les
Rub
ber p
rodu
cts
Bas
ic ir
on a
nd s
teel
Oth
er fo
od p
rodu
cts
Gra
in m
ill p
rodu
cts
Wiri
ng a
nd w
iring
dev
ices
Pro
cess
ing
of fr
uit a
nd v
eget
able
s
Stru
ctur
al m
etal
pro
duct
s
Bas
ic c
hem
ical
s
Pes
ticid
es, p
aint
s, s
oaps
, etc
.
Ref
ract
ory
prod
ucts
Fabr
icat
ed m
etal
pro
duct
s
Pla
stic
s pr
oduc
ts
Ele
ctric
ligh
ting
equi
pmen
t
Dai
ry p
rodu
cts
Text
iles
Mot
or v
ehic
les
Con
fect
iona
ry
Ele
ct. m
otor
s, g
en.,
trans
form
er
Pro
duct
s of
woo
d &
cor
k
Furn
iture
Bak
ery
prod
ucts
Cem
ent,
lime
& p
last
er
Prin
ting
& s
ervi
ce a
ctiv
ities
Bev
erag
es
Pap
er &
pap
er p
rodu
cts
Gen
eral
pur
pose
mac
hine
ry
Veg
etab
le, a
nim
al o
ils &
fats
Opt
ical
& p
hoto
grap
hic
equi
pmen
t
Mag
netic
and
opt
ical
med
ia
Pha
rmac
eutic
al P
rodu
cts
Foot
wea
r
Cok
e ov
en p
rodu
cts
Non
-fer
rous
met
als
Number of Factories in the Kingdom classified by L1 industries
Source: National Factories Database 2010 , Saudi Industrial Development FundClassification based on International Standard Industrial Classification (ISIC) codes
Fabricated metal products
Rubber & plastics
Food products
Chemical & chemical products
Non-metallic mineral products
Electrical equipment
Machinery & equipment
Paper & paper products
Motor vehicles, trailers, semi-trailers
L0 Classification Legend
The technology transfer ecosystem includes different stakeholders, governed by a regulatory framework
23Dec
Technology Transfer Ecosystem
Enabler Impact
Regulatory Framework
§ Govern the technology transfer ecosystem through public policies and regulations
§ Aim to ensure proper technology transfer
Technology Owners
§ Own a technology in form of patented or non-patented innovation, intermediate good, machinery, etc.
§ Negotiate technology transfer agreement with technology acquirer
R&D Institutions§ Conduct research and development across sectors to
develop innovation, in the form of concepts, prototypes, processes, formulas, etc.
Technology Transfer Facilitators
§ Support R&D institutions and technology owners in transferring technology to local firms and entrepreneurs
§ Initiate marketing activities, support entrepreneurs/firms in technology transfer efforts
Local Firms/ Entrepreneurs
§ Evaluate technology potential for commercialization§ Develop technology and disseminate product in the
market
Market§ Constitute the technology demand market across all
sectors§ Drive the need for innovation
Source: Booz & Company analysis
Regulatory Framework
R&D Institutions
TechnologyTransfer Facilitators
Local Firms/Entrepreneurs
Market
TechnologyOwners
(Local/ International)
Vertical Technology TransferHorizontal Technology Transfer
Incentives
§ Define all objects eligible for the technology transfer, and indicate technology’s ownership details
We will recommend enhancements to the interaction models and develop regulatory guidelines for the technology transfer in KSA
24Dec
Interaction Models and Regulatory Framework
Source: Booz & Company analysis
Regulatory Framework Categories
Technology Transfer Agreements
Revenue Sharing
Dispute Resolutionand Penalties
Taxation andFinancial Support5
3
2
4
Technology Ownership
§ Include obligations for a complete transfer of technology, and provide incentives to attract foreign talents and entrepreneurs
§ Include the rules regulating revenue distribution between all the technology transfer stakeholders
§ Define prohibited conducts during technology transfer activities, and set dispute resolution mechanisms
§ Clarify taxation rules and provide incentives for facilitating technology transfer
1
Regulatory Framework
R&D Institutions
TechnologyTransfer Facilitators
Local Firms/Entrepreneurs
Market
TechnologyOwners
(Local/ International)Incentives
Vertical Technology TransferHorizontal Technology Transfer
§ What are the best practices for technology transfer model and regulation?§ How do regulations vary from a country
to another?§ What are the regulatory framework
dimensions? What are the regulation implications on technology transfer?§ What are the lessons learned from the
benchmarking exercise?
Global Best Practices
§ How is technology transfer conducted currently in KSA?§ What are the involved entities in the
process?§ What are the existing regulations in
KSA related to technology transfer? § What are the existing challenges?
Current Situation in KSA
…..four step approach to develop KSA technology transfer interaction model and regulatory guidelines
2
Dec
1
§ What are the pain points in the KSA technology transfer ecosystem?§ How does the KSA technology transfer
interaction model compare to global practices? § What about KSA regulatory framework,
compared to benchmarks?§ Across each pain point, what are the
gaps of the technology transfer model in KSA?
Gap Analysis
§ What is the optimal technology transfer model in KSA?§ What are the key components that
should be covered in the KSA technology transfer regulation?§ What are the incentives for facilitating
technology transfer to KSA?
Model and Regulatory Guidelines3 4
25
5 weeks 7 weeks 9 weeks
Timeline
Source: Booz & Company analysis
The Way Forward …
… An Exciting and Challenging Time for Technology, Innovation, and Entrepreneurship
THANK YOU