The Saudi Arabian Public Investment Fund (PIF) announced the establishment of a new national military industries company, named Saudi Arabian Military Industries (Sami).

According to the Saudi Press Agency, the new company 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 and missiles including ammunition; and defence electronics, which includes radars and sensors as well as communication systems and electronic warfare.

In line with Saudi Vision 2030, the company will contribute to diversifying Saudi economy in the 21st century by reducing dependence on oil, while protecting and strengthening national security.

Wholly government-owned, Sami aims to become one of the world's top 25 defence companies by 2030, and is expected to exceed the kingdom's GDP by SR14 billion, and it will allocate about SR6 billion to invest in research and development by 2030. The firm will also provide more than 40,000 jobs, many of which will be in engineering and technical fields. By partnering with universities, Sami will provide students with apprenticeships and careers in cutting edge technologies, which were previously unavailable in the kingdom.

The SPA quoted Prince Mohammed bin Salman bin Abdulaziz, Saudi Deputy Crown Prince, Minister of Defence and Chairman of the PIF, as saying: "While the kingdom is one of the world's top five spenders on security and defence overall, only around two percent of our military procurement is domestic."

He emphasised that the company will be a major contributor in achieving goals set out in Vision 2030, which states that fifty percent of Saudi Arabia's military procurement spending will be localised.

 

IMF sounds caution

Meanwhile, the International Monetary Fund warned Saudi Arabia not to tighten fiscal policy too fast, saying rapid cuts to the government's budget deficit could damage the economy.

Tim Callen, head of an IMF team which held annual consultations with Saudi officials last week, said Riyadh's goal of balancing its budget was appropriate. Low oil prices in the past couple of years have pushed it deep into the red.

But Callen added: "The target of balancing the budget, however, does not need to be met in 2019 as set out in the Fiscal Balance Programme given Saudi Arabia's strong financial asset position and its low debt.

"A more gradual fiscal consolidation to achieve budget balance a few years later would reduce the effects on growth in the near term while still preserving fiscal buffers to help manage future risks," he added

Source: Khaleej Times