Saudi Gazette report

RIYADH — Saudi Arabia has localized 19.35% of its military spending, a significant increase from 4% in 2018, with plans to exceed 50% by 2030.

The announcement came from Eng. Ahmed Al-Ohali, Governor of the General Authority for Military Industries (GAMI), during a panel discussion at the 2024 Local Content Forum in Riyadh on Thursday.

Al-Ohali highlighted the growth in licensed entities in the military industries sector, which now number 296 as of Q3 2024.

He also emphasized the development of local supply chains and procurement, noting that SR13 billion ($3.4 billion) has been allocated to domestic companies for projects such as unmanned aerial vehicles (UAVs), rapid interceptor boats, and the maintenance of defense systems.

Local content development is a cornerstone of Saudi Vision 2030, Al-Ohali stated, with the military sector achieving a local content rate of 38%. The sector’s contribution to GDP is estimated at SR5 billion ($1.3 billion).

GAMI has introduced 11 policies and regulations to enhance governance, build investor confidence, and support local manufacturing and service capabilities, creating numerous high-value job opportunities.

To further support local content, GAMI has signed four framework agreements covering 70 categories, including military apparel, equipment, weapons, and ammunition. These agreements have already generated contracts worth SR1 billion ($266.6 million), yielding a 20% cost savings.

The agreements are expected to grow to SR1.6 billion ($426.6 million), with the entire amount to be spent in the domestic market.

Al-Ohali underscored efforts to simplify licensing processes and create an attractive investment environment for local and international companies.

Initiatives include VAT exemptions for locally manufactured military goods, financial incentives, and the development of industrial sites.

GAMI has also signed 53 industrial participation agreements valued at SR35 billion ($9.3 billion), of which SR13 billion is allocated for local procurement.

The authority is leveraging digital transformation to develop locally made products that meet military market demands.

The unified military industries platform integrates all services provided to stakeholders, automating processes and employing advanced technologies like artificial intelligence and data science.