MODON, GAMI Ink Deal to Promote Investments in Saudi Arabia’s Defense Sector

A new strategic cooperation between the Saudi Authority for Industrial Cities and Technology Zones (MODON) and the General Authority for Military Industries (GAMI) aims to encourage the localization of military industries in the Kingdom, according to the Saudi Press Agency (SPA).

The new cooperation “supports the localization of 50 percent of the expenditure in military industries through Vision 2030, making it an important pillar for economic development, increasing its contribution to local products and opening job opportunities for Saudis. Through this cooperation, the two parties will seek to guide licensed investors toward targeted fields in Saudi industrial cities affiliated with MODON, who will provide incentives to investors,” the SPA reports.

His Excellency Ahmed bin Abdul Aziz Al-Ohali, governor of General Authority for Military Industries (GAMI)

His Excellency Ahmed bin Abdul Aziz Al-Ohali, governor of General Authority for Military Industries (GAMI)

Localizing military production is a key part of Saudi Arabia’s Vision 2030 economic and social reform plan. Saudi Arabia is one of the world’s largest spenders on defense, in the top five along with the United States, China, India and France. Developing the ability to produce military goods will be of economic benefit to the the Kingdom in the medium-to-long term.

Earlier this week, GAMI confirmed that the Kingdom will increase support for scientific research from its military budget to 4 percent during the next 10 years, “in order to convey technology, weapons industry and military industries in general,” according to Arab News, citing comments from the governor of the GAMI Ahmed bin Abdul Aziz Al-Ohali. He stressed that the Kingdom currently spends the equivalent of 0.2 percent, but in the coming years it will seek to raise this rate.

Speaking to IHS Jane’s on November 11th, Al-Ohali said that the new Industrial Participation Program “includes improved governance mechanisms and greater transparency, as well as incentives to manufacturers that commit to add value, transfer technology, and provide employment opportunities for Saudi nationals.”

Al-Ohali was appointed as governor in March 2019 after 20 years as CEO of Saudi petrochemical company Sipchem. He reports directly to GAMI chairman Crown Prince Mohammad bin Salman, IHS Jane’s notes.