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Jeddah - Yasmine El Tohamy - Defense sector needs local supply chain to ensure reliability, says SAMI CEO
RIYADH: Saudi Arabia’s defense sector needs an efficient local supply chain to ensure reliability, as international supplies are often impacted by political scenarios, according to Walid Abukhaled, CEO of Saudi Arabian Military Industries.
Speaking at a panel discussion during the Public Investment Fund Private Sector Forum in Riyadh, Abukhaled said that SAMI now has 8,845 suppliers, both local and international.
But he was quick to point out that out of that number, only 5 percent belong directly to the defense sector, while the remaining 95 percent are generic suppliers.
“I look at the numbers to know how many of the 8,845 suppliers approved by SAMI are local suppliers. And it is 50 percent of them. And the unfortunate thing is only 1.3 percent of the local suppliers are defense-related,” said Abukhaled.
He clarified that defense-related means those having a license from the General Authority for Military Industries to engage in direct contracts.
“In the defense sector, if you are depending on an international supplier, and unfortunately, we always have to do. Even if the international supplier wants to deliver something to you, it all depends on the politics and government restrictions of that country. So, it cannot be 100 percent reliable,” Abukhaled said.
He said that a country looking to have independent, indigenous, and sovereign capability generally has to depend on local capability on the supply chain. “Local suppliers are the engine of the economy, and they will ensure that we can achieve Vision 2030.”
Highlighting the fast pace at which Saudi Arabia is growing in this sector, Abukhaled said that SAMI became one of the top 100 defense companies in the world within four years of its establishment.
Pointing out that the ultimate aim of SAMI is to become one of the top 25 companies in the sector, he added that it will be possible only by strengthening local supply chains within the Kingdom.
Talking about the growth trajectory of SAMI since 2017, Abukhaled said the national defense firm managed to establish 12 joint ventures with the largest defense companies in the world. “We acquired two companies. We have five key sectors -- aerospace, land systems, sea division, and two divisions which are advanced electronics and defense systems.”
Abukhaled further added that SAMI is progressing in the right direction to achieve the target of localizing 50 percent of Saudi Arabia’s total government defense spending.
“Vision 2030 is not a vision anymore. It is a reality, and it is happening. Vision 2030 taught us that nothing is impossible. Though the defense industry has not been established in the past, I think the way forward is extremely optimistic and positive, and we will make things happen,” he concluded.
Earlier in February, during an interview with Arab News, Abukhaled said that SAMI has hired some of the best local talents, along with international experts who have first-hand knowledge about the defense sector. He pointed out that this played a crucial role in determining the company's success in a very short period.
He also revealed that SAMI is working on new technologies like artificial intelligence and autonomous vehicle technology to grow in the defense sector further.
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