RIYADH: Saudi Arabia launched initiatives and signed 15 agreements at the Local Content Forum, boosting domestic industries with an estimated SR12.4 billion ($3.3 billion) impact on gross domestic product.
The deals, signed on the first day of the three-day event in Riyadh, span multiple strategic sectors, including manufacturing, technology, and transportation.
The Local Content and Government Procurement Authority launched several initiatives aimed at driving the localization of key industries, aligning with broader economic goals.
The agreements include partnerships designed to localize manufacturing, transfer knowledge, and foster innovation, the Saudi Press Agency reported.
Key deals included:
- Two agreements with Saudi National Automotive Manufacturing Co. to localize and transfer knowledge for multi-purpose vehicles and light transport vehicles.
- Five agreements with NAFFCO for the localization of firefighting products, including dry powder extinguishers, trailer-mounted pumps, complete personal breathing devices, various types of fire extinguishers, and fire hoses.
- Agreements with Alfanar and Hewlett Packard Enterprise to localize and transfer knowledge for data center servers.
- A deal with InnovEra to localize manufacturing and knowledge transfer of directional devices.
- An agreement with Al-Salah Arabia to localize the manufacturing of bridge expansion joints.
- A partnership with Saffen Co. for the localization of oxygen sensor production.
- A deal with SAJA Pharmaceutical Co. for the production of “Empagliflozin.”
- An agreement with Coastal Co. to localize stadium seat manufacturing.
Wattenha program
Sadara Chemical Co. launched its “Wattenha” program, highlighting its contribution to Saudi Arabia’s localization efforts. The program aims to support domestic suppliers, develop human capital, and enhance manufacturing capabilities.
In the first half of 2024, Sadara reported a local content rate of 50.25 percent, surpassing industry benchmarks, with SR3 billion spent on Saudi procurement.
Locally manufactured products made up 43 percent of its offerings, and Saudization reached 77.8 percent, according to a press release.
A notable achievement is Sadara’s pipeline system connecting its facilities to the PlasChem complex, which supplies critical raw materials like ethylene oxide and propylene oxide, reducing costs and reliance on imports.
Logistics and transportation
Saudi Arabia Railways, in partnership with LCGPA, launched a SR15 billion Saudization program in the sector. This initiative, unveiled by Minister of Transport and Logistics Saleh Al-Jasser, aims to localize manufacturing, boost operational efficiency, and create up to 3,000 jobs by 2030.
The minister emphasized that this program reflects the partnership between SAR and the private sector, in collaboration with the LCGPA, according to SPA.
Automotive manufacturing
The forum also highlighted the Kingdom’s plans for the automotive industry, including the goal to produce 500,000 vehicles annually by 2030.
Ongoing negotiations with Hyundai underline Saudi Arabia’s commitment to becoming a hub for automobile manufacturing.
The Global Supply Chain Resilience Initiative, valued at SR100 billion, is driving 95 strategic projects, with a focus on value chain development and export promotion. Additionally, three automotive manufacturing complexes were announced, furthering the localization of this critical sector.
Diverse initiatives
The forum featured discussions on the future of local content in industries such as agriculture, energy, and industrial services. Programs introduced by the LCGPA aim to reduce reliance on imports, enhance local supply chain resilience, and foster innovation.
The “Golden Category” of the Made in Saudi program was also launched, aimed at integrating local suppliers into global supply chains and highlighting Saudi-made products on the world stage.
The initiative, overseen by the Saudi Export Development Authority, promotes local products and supports exports.
Minister of Investment Khalid Al-Falih emphasized that local content is a crucial driver of the economy, impacting key industries such as energy, industry, and tourism, among others.
He highlighted that achieving growth targets requires a highly competitive investment climate, with the private sector playing a vital role in boosting the Kingdom’s exports while meeting the demands of its growing economy.
Minister of Industry and Mineral Resources Bandar bin Ibrahim Alkhorayef further emphasized the importance of locally produced products that offer high quality and competitive advantages as a key requirement for achieving local content goals and maximizing its economic impact.
During his remarks at the forum, Alkhorayef stated that local content is one of the central pillars for achieving Saudi Arabia’s Vision 2030, as its development directly influences the execution of the initiative’s programs.
Alkhorayef also discussed the significant role of the private sector in advancing local content development, noting that the LCGPA implements local content through fostering strategic partnerships and facilitating the Local Content Coordination Council.
This council includes several major national companies, which have worked closely with the authority to increase local content in their operations and procurements.
GAMI localization on the up
Governor of the General Authority for Military Industries, Ahmed bin Abdulaziz Al-Ohaily revealed that the localization of military spending has reached 19.35 percent, compared to just 4 percent in 2018.
GAMI aims to localize over 50 percent of government spending on military equipment and services by 2030. Additionally, the number of licensed and authorized establishments in the military industries sector has increased to 296 by the third quarter of 2024.
Al-Ohaily highlighted the authority’s initiatives to establish supply chains in the sector, bolster military procurements from local companies valued at SR13 billion, and support the manufacturing of locally produced unmanned aerial vehicles, defensive systems, and fast attack boats.
This announcement came on the second day of the Riyadh event during GAMI’s top official’s participation in a panel discussion titled “Government Efforts in Enhancing Local Content,” part of the forum in Riyadh.
Al-Ohaily emphasized that local content development is a key priority under Saudi Arabia’s Vision 2030, with GAMI contributing to the growth of the sector.
The local content percentage in companies operating within the military industries sector has reached 38 percent, contributing SR5 billion to GDP.
To improve governance and attract investor confidence, GAMI has launched 11 policies and regulations for the sector. These efforts aim to boost local content, build new manufacturing and service capabilities, and create high-quality employment opportunities.
Further supporting local content development, the authority has signed over four framework agreements covering 70 product categories, including approximately 80 percent of military apparel, equipment, arms, and ammunition.
The total value of these contracts is estimated at SR1 billion, achieving a 20 percent cost savings. It is expected that the value of these agreements will grow to SR1.6 billion, all of which will be spent within the local market.
Additionally, domestic manufacturers have been supported through streamlined licensing processes and attractive investment environments for both national and international companies.
The initiatives include applying a zero VAT rate on locally manufactured military goods, providing financial incentives, and establishing industrial zones.
GAMI has signed more than 53 industrial participation programs valued at nearly SR35 billion with both local and international companies, including SR13 billion in local purchase orders.
Al-Ohaily also highlighted the GAMI’s investment in digital transformation technologies to develop local products that meet military market demands.
This includes the launch of a unified platform for military industries, integrating all services provided to beneficiaries, automating processes, and leveraging data science and artificial intelligence to forecast demand for military products and services.
Additionally, GAMI collaborates with the General Authority for Defense Development’s “JADD” platform on research and development programs for defense products, utilizing the latest digital transformation techniques and reverse engineering.
In 2022, GAMI launched a human resources strategy for the military industries sector, establishing the National Military Industries Academy, which annually accommodates 2,000 students in technical and engineering disciplines.
Moreover, an expatriation and scholarship program, along with educational and training initiatives, has benefited more than 850 employees working in the private sector.
