Saudi Arabia’s factory sector sees 50% growth since Vision 2030’s launch: Deputy minister

RIYADH: The General Authority for Military Industries has launched a new platform through which local and international investors will be able to access opportunities in Saudi Arabia’s defense industry.  

The Military Industries Enabler initiative will give investors a background of the sector in the Kingdom, including policies, procedures, demand, and incentives.

Ahmed Al-Ohali, Governor of GAMI, told Arab News: “Our objective is to build a very robust, sustainable, defense industry with technologies in Saudi Arabia, satisfying the needs of the defense and security entities, satisfying our aspiration of human capital Saudization in this defense industry, and also satisfying our ambition into bringing huge investment to contribute to the GDP (gross domestic product) by 2030.”

The launch of the platform acts as an integral step for the Kingdom as it seeks to create an attractive investment environment for entities in Saudi Arabia or abroad with plans to venture into the defense industry.

With the goal of elevating the investment process, integrating with relevant sectors, and various inclusive services, the initiative targets organizations within the sector, as well as individuals and governmental institutions.

Al-Ohali said: “The defense industry in Saudi Arabia is a new industry, so we are building the infrastructure for the success of this industry… We made it very clear that whoever wants to invest in the Saudi industry, a Saudi investor or a foreign investor, will be treated equally as long as they fulfill their obligations and commitment to the areas.”

Investors will be able to access various services including military licenses, enablers, general force planning, and a library of military specifications and standards through the Military Industries Enabler platform.

GAMI has incentivised governmental investment in Saudi’s defense industry through funding programs, guaranteeing export insurance, bolstering education costs and qualifying human resources.

It has also removed VAT costs, is supporting small and medium enterprises, and ensuring a government procurement system.

Al-Ohali said: “(The platform) contains all the policies and procedures that will clarify to the investors the demand for certain products, armaments, over the next 10 years. 

He went on: “(The incentives) includes some financial incentives, grants, for example technology and strategic products, which includes interest-free loans for certain products. 

“It contains also regular loans by SIDF (Saudi Industrial Development Fund). These incentives also include zero VAT for local manufacturing, human capital development, training, scholarships in the Kingdom and out of the Kingdom.”

GAMI is in the process of establishing a coordination committee for military industries with private and public sectors, aiming to enhance communication, exchange knowledge and experience, and contribute to the localization of strategic military industries and technologies, the Governor mentioned during the event.

The defense sector has significantly transformed since the establishment of the Authority in 2017, where 349 constituent permits and licenses were issued for 194 facilities operating in Saudi’s military defense sector.

In 2018, the localization rate within the sector was a mere 2 percent, and has increased to 13.7 percent of the total military services and equipment by the end of 2022.

There are currently 62 service capabilities in the sector across the maritime, land, armament, and advanced interactive electronic fields, and over 74 dedicated investment opportunities in the supply chain project estimated at SR270 million ($71.87 million).

Al-Ohali said: “They’ll find it a very comprehensive platform that gives them a very clear picture of the defense industry in Saudi Arabia, from policies and procedures, demand and incentives.”