New Saudi firm to boost kingdom's defence production

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The Saudi government wants 50 percent of its security and defence spending to be local - currently it stands at two percent

Saudis take pictures with their mobile phones on 10 March 2016 during military exercises in Hafr al-Batin, 500km north east of Riyadh (AFP)
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Thursday 18 May 2017 11:23 UTC
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Already one of the world's biggest defence spenders, Saudi Arabia said on Thursday that it is creating a new military industries firm as part of efforts to boost the kingdom's defence production.

The government-owned company, Saudi Arabian Military Industries (SAMI), "aims to become one of the world's top 25 defence companies by 2030," a statement from the Public Investment Fund (PIF) said, two days before the arrival of US President Donald Trump in the kingdom for a series of summits.

American defence contractors are major suppliers of weapons to Saudi Arabia, which has led a coalition conducting air strikes and other operations against rebels in Yemen for more than two years.

SAMI will be both a manufacturer and service provider, PIF said.

This will include maintenance and repair of fixed-wing aircraft, production of drones, and military vehicle repair and manufacture.

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The company will also be involved with weapons and missiles, plus radars and other defence electronics.

It will contribute about $3.7 billion to the kingdom's gross domestic product and invest more than $1.6 billion in research and development by 2030, creating more than 40,000 jobs, PIF said.

Saudi Arabia's government says only about two percent of its security and defence spending is local, but that is targeted to reach 50 percent by 2030.

The Stockholm International Peace Research Institute (SIPRI) said in an April report that Saudi Arabia last year was the world's fourth-largest military spender, at $63.7 billion.

Moving away from oil revenues

"SAMI will establish companies through joint ventures with global original equipment manufacturers, as well as cooperating with local military companies," the PIF said.

Among those local firms is Military Industries Corporation, a separate entity whose governor told AFP in December that it would take "a few years" to cut the reliance on foreign arms.

The kingdom has already begun developing spare parts, armoured vehicles and ammunition.

Boosting local defence manufacturing is part of the Vision 2030 project, which aims to wean Saudi Arabia off oil revenue by expanding the industrial, business and investment base of the kingdom.

As part of the plan, the PIF aims to become the largest sovereign wealth fund in the world.