A call to strengthen local supply chains in the Saudi military...

          Economists assure Asharq Al-Awsat that the policy of diversifying the economy's sources has begun to show positive results            

At a time when economic observers called for maximizing supply chains in the Saudi military industries, the Saudi economy diversification policies confirm the tendency to maximize non-oil exports in global markets, in light of the demand for the importance of strengthening cooperation between the public and private sectors to enable a stronger rise in the military and marine industries and spare parts.

Saudi Vision 2030 puts the goal of increasing the industry and mining sector in the national product among the priorities of the country’s transformation project, as it targets growth from 10 to 15%, provided that it exceeds 600 billion riyals ($ 160 billion) in 2030.

According to observers and specialists, the non-oil sector has grown significantly over the past three years as a result of efforts to diversify sectors, including the industrial sector, which has contributed to raising public financial revenues and achieving diversification of exports, taking advantage of the real growth of the Kingdom’s gross domestic product with the progress of reform programs and expansion of the absorptive capacities of the national economy And enhancing competitiveness.

Supply chains

The head of the Industrial and Mineral Resources Committee of the Council of Saudi Chambers, Dr. Abdul Rahman Al-Obaid, told Al-Sharq al-Awsat that the Kingdom is determined to localize vital industries, especially military industries and the parts of marine vessels. Vision 2030 included an integrated strategic plan covering all economic aspects, led by elements. Strength in the Saudi economy, indicating that one of those vital sectors is to enhance the competitive capabilities of the military industries system.

Al-Obaid expected that the vision would strengthen supply chains, military industries, and national dependence on building weapons and equipment alongside existing industries, including the construction of naval ships, pointing to the interdependence between military industries and civilian industries, especially at the level of supply chains.

  • Cooperation of the two sectors

Al-Obaid said, “There is cooperation between the public and private sectors to strengthen local industries while transferring technology and training national capabilities,” stressing that this would enhance the advancement of the military and maritime industries in Saudi Arabia.

The head of the “Industrial and Mineral Resources Committee” of the “Riyadh Chamber” added that the supply chains and the military industry depend on simple small industries to support the formation of chains participating in the various complexities of the industry, indicating that there is an integration with the manufacture of cars and spare parts for artillery aircraft.

Aircraft and ships

Last October, Saudi Arabia announced, through the Ministry of Defense and the General Authority for Military Industries, the launch and resettlement of the first locally manufactured fast interceptor boat, in addition to the launch of the first floating dock, as part of the plan to localize military industries in the country. The Saudi local manufacturing came in accordance with the latest international specifications and standards, in partnership between the “Zamil Saudi Marine Services” and the French “CMN” company.

In the same month, the Saudi Advanced Technologies Company (Wahaj) announced that it had obtained a quality license, as the first Saudi company to manufacture mechanical Typhoon components in Saudi Arabia from London-based BAE Systems. The head of “Wahaj” company, Ayman Al-Hazmi, considered that obtaining the license is an indication of a commitment to the quality of the products that are manufactured, and the promotion of the localization of this industry through national human cadres in the military industries.

For his part, the Saudi economist Fadl bin Saad Al-Buainain – who was recently appointed as a member of the newly formed Saudi Shura Council – considered the policy of diversifying the sources of the economy as one of the most important goals of “Vision 2030”, in addition to raising the volume of exports and diversifying them, indicating that despite the utmost importance of these goals, they are in Adequate time period needed to achieve them.

Al-Buainain added, “The strategic objectives are to be implemented in the long run. However, some positive results of diversifying the sources of the economy have begun to appear on the ground, including the military and shipbuilding industries, in addition to mining, tourism and industry in general.”

In his speech to Al-Sharq Al-Awsat, Al-Buainain stressed the need to look at the strategic goals according to their long time dimension, indicating that it is important to track the implementation stages to ascertain future results and to measure the efficiency of implementation.

Al-Buainain added, “It was not surprising that the value of non-oil merchandise exports decreased in the first half of 2020, a decrease linked to the emergency changes that swept the world … Nevertheless, the total value of the Kingdom’s non-oil exports reached 90.23 billion riyals (24 billion dollars).” And he added, “I think that there are signs of improvement as a direct result of opening the economy.”

Al-Buainain added: “I believe in a strategy to diversify the sources of the economy, which will result in strengthening non-oil exports, according to what I have seen in terms of efficient plans and programs that have already been implemented, which will lead to a significant improvement in the volume of non-oil exports in 2021 and the coming years.”

The impact of the pandemic

In the same context, Dr. Abdul Rahman Baeshen, head of the Al-Shorouk Center for Economic Studies, affirmed that the Kingdom has achieved economic successes at the local and global levels, in terms of developing and improving the work environment, and has launched programs to diversify the economy that would enhance sustainability and economic development.

Baeshen pointed out that Saudi economic policies challenged the negative effects of the Corona pandemic on the diversification process, in terms of financial facilities to support the private sector, as the total bank credit granted to the private sector for all economic activities during the second quarter of 2020 amounted to about 1.671 billion riyals (426.6 million). Dollars).

Baeshen went on to say that Saudi Arabia has continued to pump many improved policies to the global economy through its presidency of the G20, taking advantage of the policies it has achieved internally, according to which it has been able to achieve first place globally in business environment reforms among 190 countries within the ease of doing business index 2020 issued by the World Bank.

He stressed that the successes achieved by the Kingdom in indicators that included starting commercial activity, protecting minority investors, paying taxes, trading across borders, enforcing contracts, settling insolvency cases, registering property, obtaining credit, and other indicators that would enhance economic diversification programs and maximize Saudi exports. Non-oil in global markets, including the military industries.

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