What MODON Is and Why It Matters for Factory Setup
MODON (Saudi Authority for Industrial Cities and Technology Zones) manages 36 industrial cities and technology zones across Saudi Arabia. Established by Council of Ministers Resolution No. 235 in 2001, it operates under the Ministry of Industry and Mineral Resources and is responsible for developing, managing, and licensing industrial land within its boundaries.
For a foreign investor setting up a manufacturing facility in Saudi Arabia, MODON is the primary channel for two things: industrial land allocation (whether raw land or a ready-built factory) and the reduced work permit fee of SAR 100 per worker instead of the standard SAR 9,600.
This article covers the steps to secure industrial land, the financing programs available, the fee structure, and how the process connects to the rest of company setup.
1. The Shareek System — MODON's Electronic Portal
All MODON services are accessed through the Shareek system — the unified electronic platform at partner.modon.gov.sa. Shareek handles: industrial land allocation applications, ready-built factory requests, Land and Loan and Factory and Loan program applications, operating license requests, and supplier registration.
Before applying through Shareek, the company must hold a valid commercial registration (CR) from the Saudi Business Center. A MISA investment license is required before the CR for foreign investors. See our business setup service for the full 23-step path.
2. Industrial Land Allocation — Step by Step
Industrial land in MODON cities is allocated, not sold. The investor receives a long-term allocation contract (typically renewable annually for 24 months, or one-time payment). The allocation fee varies by city, location within the city, area in square meters, and industrial activity type.
1. Extract a commercial registration from the Saudi Business Center (required before Shareek registration)
2. Select the appropriate industrial city for your activity from the 36 available cities
3. Register in the Shareek system at partner.modon.gov.sa
4. Submit an industrial land or ready-built factory allocation application through Shareek
5. Upload required documents: feasibility study, technical specifications, investment license
6. MODON reviews and approves the allocation
7. Receive the allocation contract and pay the allocation fee
8. Begin construction and development through MODON-qualified contractors
9. Obtain the building license from MODON after engineering plan submission
10. Obtain the operating license after production line installation and technical inspection
Allocation fee payments are made directly through MODON — there is no fixed SADAD biller code. Payment follows the contract terms.
3. MODON Industrial Cities by Region
Selecting the right city is a practical decision based on proximity to raw materials, logistics access, and available infrastructure. The following table covers the main industrial cities by region:
| Region | Main Industrial City | Key Sectors |
|---|---|---|
| Riyadh | Second Industrial City Riyadh (Sanaiya) | Light manufacturing, food processing, plastics, chemicals |
| Riyadh | Third Industrial City Riyadh | Heavy industry, steel, construction materials |
| Western Region | Second Industrial City Jeddah | Food, packaging, consumer goods, pharmaceuticals |
| Eastern Region | Industrial City Dammam | Petrochemicals, steel, oil services, logistics |
| Eastern Region | Industrial City Jubail | Heavy industry, petrochemicals, refineries |
| Northern Region | Industrial City Hail | Agricultural processing, building materials |
| Southern Region | Industrial City Jazan (JIZAN SEZ) | Logistics, manufacturing, agri-processing |
| Al-Qassim | Industrial City Al-Qassim | Food, packaging, consumer goods |
For the full list of 36 cities, visit modon.gov.sa directly. Motaded provides comparative analysis between cities for specific activities — contact us to identify the best site for your industrial project.
4. Land Allocation vs. Ready-Built Factory
| Option | Best For | Allocation Fee | Setup Time | Key Requirement |
|---|---|---|---|---|
| Industrial Land Allocation | Investors who need custom factory dimensions or specialized infrastructure | Variable by city, area, and activity — paid monthly for 24 months or one-time | Longer — requires construction phase | Feasibility study and engineering plans |
| Ready-Built Factory | Investors prioritizing faster production start | Variable — similar structure to land allocation | Shorter — factory shell already exists | Technical specifications of production equipment |
Ready-built factories come equipped with standard infrastructure: electricity connections, water, drainage, and fire safety systems. Custom activities with specialized infrastructure requirements (heavy electrical loads, special gas connections) may be better served by land allocation.
5. Land and Loan / Factory and Loan — SIDF Financing Programs
MODON operates two integrated financing programs in partnership with the Saudi Industrial Development Fund (SIDF):
▸ Land and Loan Program
A unified application for industrial land allocation + SIDF financing in a single submission. The program aligns the land allocation requirements of MODON with the financing requirements of SIDF. The investor submits one application that covers both the land request and the loan request, reducing duplication.
▸ Factory and Loan Program
A unified application for a ready-built factory allocation + SIDF financing. Suited for investors who prefer starting with an existing factory structure rather than raw land. The factory lease and the loan are coordinated through the same application process.
SIDF financing covers up to 75% of the project cost for qualifying industrial projects. Loan terms, repayment periods, and eligible activities are defined by SIDF's current program guidelines. See our business setup service — Motaded coordinates the SIDF application alongside the MISA license and CR as part of the industrial setup path.
6. Work Permit Fee Reduction for MODON Facilities
One of the most significant financial incentives for manufacturing companies in MODON: work permit fees for foreign workers in industrial facilities are SAR 100 per employee per year — compared to SAR 9,600 for companies outside MODON.
| Company Type | Annual Work Permit Fee per Worker | Saving per Worker/Year |
|---|---|---|
| Standard company (non-industrial, non-MODON) | SAR 9,600 | — |
| Company in MODON industrial city | SAR 100 | SAR 9,500 |
| Exempt small Saudi establishment (≤9 workers, until Jan 2027) | SAR 0 | — |
To benefit from the SAR 100 fee, the company's activity classification on the Qiwa platform must match the industrial activity on the MODON allocation contract and the MISA investment license. Motaded ensures this alignment across all platforms as part of the factory setup process.
7. Building License and Operating License
▸ Building License
After land allocation, a building license is required before construction begins. MODON is the licensing authority within its cities. Requirements: engineering plans certified by a licensed consultant, Environmental Impact Assessment (EIA), compliance with the Saudi Industrial Building Code, and fire safety systems specification.
▸ Operating License
After construction and production line installation, an operating license is required before commercial production begins. This requires: a technical inspection by MODON engineers, certification that production equipment matches the approved activity, and environmental compliance documentation.
Once the operating license is issued, the allocation fee is suspended — the investor pays no monthly allocation fee during active production. This is one of the financial incentives for maintaining continuous production.
8. The Full Setup Path for a Factory in MODON
Setting up a factory in a MODON industrial city combines the standard company registration steps with the MODON-specific allocation and licensing steps:
| Stage | Steps | Platform / Authority |
|---|---|---|
| Company Registration | MISA investment license → Commercial registration → Chamber of Commerce → HRSD + Qiwa activation → ZATCA + GOSI → national address → investor visa → Iqama → bank account | /services/business-setup |
| MODON Allocation | Shareek registration → industrial city selection → allocation application → document submission → approval → allocation contract → fee payment | Shareek system (partner.modon.gov.sa) |
| Construction | Building license application → engineering plan submission → MODON approval → construction by qualified contractor | MODON |
| Financing (if applicable) | Land and Loan or Factory and Loan application → SIDF review → financing approval | SIDF + MODON |
| Operations | Operating license application → technical inspection → production line certification → operating license issuance → allocation fee suspension | MODON |
| Workforce | Work permit issuance at SAR 100 (industrial rate) → Iqama → GOSI registration → WPS payroll via Mudad | Qiwa, Muqeem, GOSI, Mudad |
Setting Up a Factory in Saudi Arabia?
Contact us at info@motaded.com.sa. Motaded manages the full industrial setup path from MISA license to MODON allocation, SIDF financing, and operating license. See our business setup service.
Also Read: MODON Authority Guide | Logistics Sector in Saudi Arabia | Setup Cost Calculator
Q: What is the minimum area for industrial land allocation in MODON?
A: Minimum and maximum area depends on the industrial city, location within the city, and the nature of the industrial activity. MODON does not publish fixed minimum areas — contact the regional sector manager of the target city for a site-specific allocation. Motaded coordinates this directly.
Q: Can a foreign investor own 100% of a company in MODON?
A: Yes. Manufacturing activities in MODON are listed as 100% foreign ownership eligible under the current MISA investment framework. A MISA investment license is required before commercial registration. See our business setup service.
Q: How long does industrial land allocation take in MODON?
A: The allocation process in MODON typically takes 4 to 8 weeks from Shareek application to allocation contract, depending on the city and the completeness of submitted documents. The construction phase follows and varies by factory size. Motaded manages the full process — contact us for a project-specific timeline.
Q: What does the SAR 100 work permit fee apply to?
A: The SAR 100 annual work permit fee applies to foreign workers employed at industrial facilities registered in MODON cities, where the company's Qiwa activity classification matches the approved industrial activity. The standard fee of SAR 9,600 applies to companies outside MODON. Motaded ensures the correct classification alignment.
Q: How does Motaded support companies setting up in MODON?
A: Motaded manages the full factory setup path: MISA investment license, commercial registration, government platform activation, Shareek registration, industrial city selection, allocation application, SIDF financing coordination, building and operating license tracking, work permit issuance at the industrial rate, and ongoing HR and payroll compliance. See our business setup service.
