Saudi spent $1.4bn in incentives to boost local military industry

Saudi Arabia has spent SAR 5.1 billion ($1.4 billion) in incentives to boost its local military industry over the last two years, the governor of the sector’s General Authority said on Monday.

Ahmad Al-Ohali said the incentives included SAR 3.3 billion which was directed to research and development in the military industries in 2021 and 2022. The remaining SAR 1.8 billion was distributed to companies, including Saudi Arabian Military Industries (SAMI), Ohali said.

SAMI’s chief executive officer Walid Abukhaled said the company will focus on unmanned systems, radars and cybersecurity in coming years.

Both were speaking at a forum in Riyadh in the wake of the kingdom’s 2023 budget announcements.

Developing local industries, including in the military sector, is part of a bigger plan launched by Crown Prince Mohammed bin Salman to diversify the Saudi economy away from oil.

The kingdom hopes that building up a local military industry would help cut its massive defence spending — mostly in arms imports — which is forecast to reach SAR 259 billion in 2023, up from an estimated SAR 245 billion in 2022.

The government had initially budgeted SAR 171 billion for 2022, down from SAR 202 billion in 2021 as the war in Yemen had started to wind down.

“The kingdom had the third-biggest defence budget in the world, now it is the ninth thanks to spending rationalisation,” Abukhaled said.