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Wednesday, May 17, 2017

Saudi Arabia Starts New Defense Company

Saudi Arabia has launched a new national defense company as part of a government initiative to diversify the economy.

Arab News, a Saudi English-language newspaper, reported that the kingdom's Public Investment Fund had announced the creation of a new national defense industries company, called Saudi Arabian Military Industries.

The report stated,
"Saudi Arabian Military Industries (SAMI) will manufacture products and provide services across four business units: Air Systems, which includes maintenance and repair of fixed-wing aircraft as well as manufacturing and repair of unmanned air vehicles; Land Systems, which includes manufacturing and repair of military vehicles; Weapons and Missiles, including ammunition; and Defense Electronics, which includes radars and sensors as well as communication systems and electronic warfare."
SAMI has an ambitious goal of breaching the world's top 25 defense firms in 13 years. By 2030, SAMI hopes to contribute SR 14 billion to gross domestic product, according to Arab News. Over the coming years, it seeks to invest over SR 6 billion in research and development.

If expectations are met, SAMI will create 40,000 jobs.

The report quoted Deputy Crown Prince Mohammed bin Salman as saying, "While the Kingdom is one of the world’s top five spenders on security and defense overall, only around 2 percent of our military procurement is domestic."

The establishment of SAMI was hinted at by Saudi officials previously. Saudi Arabia is currently in the initial stages of its Vision 2030 development program which aims to diversify the economy and lessen dependence on oil revenue.

As part of that initiative, Saudi Arabia hopes to develop its defense industry, with a goal of having 50 percent of military procurement sourced locally.

Riyadh is currently a major defense importer, particularly for Western systems. According to The Washington Post, the United States may offer Saudi Arabia in the coming days a military agreement worth between $98 billion and $128 billion, that could over 10 years reach a total of $350 billion.

W4T has previously reported about the proposed arms sale, though without the potential price tag stated by The Washington Post.

While arms imports are set to continue, Saudi Arabia hopes to increasingly condition its purchases by stipulating local production where possible, as well as local maintenance and overhaul agreements. Doing so can help support Saudi jobs while also bringing costs down. 

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