The Public Investment Fund announced the establishment of a new national military industries company, named the Saudi Military Industries Company, which represents an important component of the Saudi Vision 2030, and a turning point in the growth of the Saudi military industries sector. It will become a sustainable platform for providing military products and services that meet the highest international standards.
The company's strategic goal is to reach the ranks of the 25 largest global military industries companies by 2030, making the Kingdom of Saudi Arabia a strong partner in the military industries sector on the global stage.
It is expected that the company's direct contribution to the Kingdom's gross domestic product will reach more than 14 billion Saudi riyals. The company will also allocate about six billion Saudi riyals to invest in research and development operations. The company will provide more than 40,000 job opportunities in Saudi Arabia, most of which are in the field of advanced technologies and engineering. The company will also contribute to generating more than 30,000 indirect job opportunities and creating hundreds of small and medium-sized companies.
Localization of competencies
To ensure the localization of such skills and the development and retention of Saudi competencies, the company plans to announce a wide number of training and sponsorship programs and opportunities for students in universities and technical and technical colleges in all regions of Saudi Arabia.
The Crown Prince, Deputy Prime Minister, Minister of Defense, and Chairman of the Board of Directors of the Public Investment Fund, Prince Muhammad bin Salman, indicated: “Although Saudi Arabia is considered one of the five largest spending countries on security and defense in the world, internal spending today does not exceed 2% of that spending.” ».
He explained that the company will seek to be a major catalyst for transformation in the military industries sector, and a supporter of the growth of the sector. To be able to localize 50% of the total government military spending in Saudi Arabia by 2030.
He pointed out that the company will positively affect the Kingdom's gross domestic product and its balance of payments. This is because it will lead the military industries sector towards increasing local content, increasing exports, and attracting foreign investments to Saudi Arabia by entering into joint ventures with major global military industry companies. In addition to the above, the company will increase the demand for local products of components and raw materials, such as iron and aluminum, as well as logistics and training services.
4 vital areas
The company will offer its products and services in four vital areas, complementing each other, and providing the main needs of the military sector in Saudi Arabia in the future, while benefiting from the current military industrial capabilities in Saudi Arabia. These four areas are: the field of air systems, which includes maintenance and repair of fixed-wing aircraft, and the manufacture and maintenance of unmanned aircraft. And the field of ground systems, which includes the manufacture, maintenance and repair of military vehicles. And the field of weapons, ammunition and missiles. And the field of defense electronics, which includes radars, sensors, communication systems and electronic warfare.
SAMI will work to establish subsidiaries in each of these four areas, through joint ventures with OEMs, and by benefiting from local military industries companies. In the future, the Saudi Military Industries Company maintains the structural flexibility to establish more business units, according to what may emerge from developments at the level of modern technologies and trends in military industries.
It is noteworthy that the Public Investment Fund owns a diversified portfolio, which includes approximately 200 investments, 20 of which are listed on the Saudi stock market (Tadawul). In addition to its listed assets, the Public Investment Fund owns a number of unlisted stock investments, international investments, real estate assets, loans, bonds and sukuk.
Investments consistent with the vision
After the transfer of supervision of the Public Investment Fund from the Ministry of Finance to the Saudi Council of Economic and Development Affairs last year, the fund underwent a restructuring program divided into phases in order to implement an updated strategy and new tasks. This includes expanding the management and investment teams and service and support offices, strengthening the rules of governance and dealing with a diversified portfolio, and implementing an investment strategy in line with Vision 2030. A new board of directors has been appointed for the fund, headed by Crown Prince Mohammed bin Salman Al Saud.
The Public Investment Fund works to build a world-renowned portfolio of domestic and foreign investments, and leads efforts to diversify the country's sources of income by achieving huge long-term financial returns from its investments inside and outside the Kingdom of Saudi Arabia.
On the other hand, economists unanimously agreed that the Saudi Military Industries Company, whose establishment was announced by the Public Investment Fund, is a building block for the establishment of the military industries sector, and a major turning point to diversify sources of income and advance the industry to become a global competition, and a tributary to the wheel of the economy, and it will create job opportunities for young people, Pointing out that "the company, in addition to adding more than 14 billion riyals to the domestic product, will absorb thousands of jobs for Saudi youth," and they said that its results will appear before 2020, while its gains will be achieved after 2020, by reducing spending on maintenance of military parts.
They pointed out that the Kingdom will be transformed through this company from an importer to a factory and a global competitor, which is a major challenge in the coming years.
Small business support
They believed that the establishment of a military industries company, at the initiative of the Public Investment Fund, would support small and medium enterprises, by establishing a partnership between the company and small factories to diversify industries, and that large factories deal with small enterprises to produce their industry, and thus work to support and expand small factories, as well as work on Localization of jobs for Saudi men and women.
They said that the Kingdom is one of the five largest countries in the world in military spending, and therefore it needs the presence of a military industry, noting that the most important thing facing the Kingdom in the military industry is the transfer of experience, technology and technology, which is considered expensive in the short term, but its return will be great in the long term. Remote in the formation of a global military industry.
They explained that companies in their infancy transfer foreign and American experiences and expertise, then shift to conducting strategic studies and addressing the challenges facing the industry, which is expected to be the first in the region, pointing out that the Kingdom imports 99% of the military need, so the presence of a huge military industry will enhance the strength of the economy. Saudi.
Rehabilitation of human power
Regarding the challenges facing the industry, they considered that the most prominent of them is the qualified human force, especially since the industry is considered new in the country and there is no qualified force for it, and investment now in human capital is the biggest challenge, in addition to transferring technology to the Kingdom, so there will be a need for scholarships Human cadres to companies that wish to enter the Kingdom to work for and train, in addition to the fact that the establishment of a national company for military industries will contribute to the development of the military industry in the Kingdom and its rapid development and keeping pace with external developments.
They added that the company will work to localize purchases instead of being from abroad, it will be from the inside, as 50% of them will become local, pointing out that the Saudi Military Industries Company is a building block for the establishment of the military industries sector, and it needs three years to come out with outputs or results before 2020, As for after 2020, gains will be achieved, and the company will reduce the burdens of government agencies in employing young people, especially since cooperation with the private sector is part of the "vision".
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