The Saudi Arabian Public Investment Fund (PIF) has announced the creation of a new national military industries company.
Saudi Arabian Military Industries (SAMI) will 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 air vehicles; Land Systems, which includes manufacturing and repair of military vehicles; Weapons & Missiles - including ammunition -; and Defense Electronics, which includes radars and sensors as well as communication systems and electronic warfare.
Wholly government-owned, SAMI aims to become one of the world’s top 25 defense companies by 2030. It will directly contribute around SAR 14 billion ($3.7 billion) to the Kingdom’s GDP in 2030, invest over SAR 6 billion ($1.6 billion) in research and development by 2030, and create over 40,000 jobs, many of which will be in the engineering and technical fields.
By partnering with universities, SAMI will also provide students with apprenticeships and careers in cutting edge technologies which were previously unavailable in the Kingdom.
In line with Vision 2030, SAMI will contribute to diversifying the Saudi economy for the 21st century by reducing dependence on oil, while protecting and strengthening national security.
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 2% of our military procurement is domestic.”
He further 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 localized.
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 also consider creating new business units, to ensure the company is aligned with the latest developments in the military industries sector.
The Saudi Arabian Public Investment Fund has a diverse portfolio made up of approximately 200 investments, of which around 20 are listed on the Tadawul, the Saudi Stock Exchange. PIF also has unlisted equity investments, international investments, real estate holdings, and loans, bonds and sukuks.
Since oversight of the Public Investment Fund was transferred from the Ministry of Finance to the Council of Economic and Development Affairs (CEDA), the Fund has been undertaking a phased transformation program to implement a redefined strategy and mandate. This includes expanding the management, investment and middle and back office teams, enhancing the governance structures, engaging with the diverse portfolio and implementing the investment strategy, which is closely aligned with Vision 2030.
A new Board has been appointed, chaired by the Deputy Crown Prince Mohammad bin Salman Al Saud.
PIF is building a world-class domestic and international investment portfolio, driving forward diversification of sources of income for the state, through achieving attractive long-term financial returns from its investments at home and abroad.