Saudi Arabia Forms New Defence Company

Saudi Arabian Military Industries wants to be a Top 25 global defence company by 2030.

Anita Hawser
23 May 2017

 

 

 As part of its Vision 2030 initiative for promoting economic growth in non-oil sectors, the government of Saudi Arabia has launched a new national defence company. Saudi Arabian Military Industries (SAMI), created by the Saudi Arabian Public Investment Fund, will initially 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 aerial vehicles; Land Systems, including the manufacturing and repair of military vehicles; Weapons & Missiles  including ammunition; and Defence Electronics, which includes radars and sensors, as well as communication systems and electronic warfare.

SAMI, which is wholly government owned, will establish companies through joint ventures with global original equipment manufacturers (OEMs), as well as cooperating with local military companies. 

HRH Prince Mohammad bin Salman bin Abdulaziz Al Saud, Deputy Crown Prince, Minister of Defense and Chairman of the Public Investment Fund said: “While the kingdom is one of the world’s top five spenders on security and defense overall, only around two percent of our military procurement is domestic”. His Royal Highness emphasized that SAMI will be a major contributor in achieving the goals set out in Vision 2030, which states that 50% of Saudi Arabia’s military procurement spending will be localised.

 

 

 

Currently, Saudi Arabia is the world’s second largest importer of weapons with a 7% global market share behind India (14%), according to the Stockholm International Peace Research Institute (SIPRI). 

The UK and the US are the principal arms suppliers to Saudi Arabia, but the establishment of SAMI appears to be an attempt by the kingdom to reduce its dependence on foreign military sales, which have come under harsher scrutiny recently due to the kingdom’s military operations in Yemen, where weapons supplied by foreign countries have been implicated in civilian deaths and casualties.

US president Donald Trump recently approved arms sales to Saudi Arabia and Bahrain. The sales were blocked by his predecessor, Barack Obama, however Trump sees Saudi Arabia as a vital ally in the fight against ISIL or Daesh and to act as a counter against Iran.

Wholly government-owned, SAMI aims to become one of the world’s top 25 defence companies by 2030. It will directly contribute around 14 billion Saudi riyal to the kingdom’s GDP in 2030, investing more than 6 billion riyal in research and development by 2030, and creating more than 40,000 jobs, many of which will be in the engineering and technical fields.

By partnering with universities, SAMI will provide students with apprenticeships and careers in cutting-edge technologies, which were previously unavailable in the kingdom. 

SAMI’s four business units closely complement the Kingdom’s future military requirements and build on existing local capabilities. SAMI will establish companies through joint ventures with global original equipment manufacturers (OEMs), as well as cooperating with local military companies. SAMI will consider creating new business units, to ensure the company is aligned with the latest developments in the military industries sector