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JEDDAH: ����ֱ��’s military equipment manufacturing sector is undergoing a significant expansion, emerging as a pivotal element of the Kingdom’s Vision 2030 economic diversification strategy to boost domestic industrial capacity.

Supported by robust government backing, strategic global partnerships, and growing local innovation, the defense industry is becoming a critical contributor to national security and a promising source of non-oil revenue.

Under Vision 2030, ����ֱ�� aims to localize 50 percent of its military spending by the end of the decade. The sector’s regulator, the General Authority for Military Industries, reported notable progress, with localization rising from 4 percent in 2018 to 19.35 percent in 2024 — reflecting steady advances toward self-sufficiency in defense manufacturing.

The Kingdom’s military expenditure reached $75.8 billion in 2024, according to official estimates, representing 3.1 percent of global defense spending. Using its own methodology, the Stockholm International Peace Research Institute estimates the figure slightly higher at $80.3 billion.

The country has allocated about $78 billion for the military sector in its 2025 budget — 21 percent of government spending and 7.2 percent of gross domestic product — supporting its goals to diversify the economy and reduce oil dependence.

GAMI is driving efforts to attract investment, support small and medium-sized enterprises, and develop a strong defense industry spanning aerospace, armored vehicles, and missile systems, as well as electronic warfare, and UAVs — boosting both national security and long-term industrial growth.

Global defense spending hits $2.7tn

According to its April 2024 report Trends in World Military Expenditure, SIPRI said global military spending exceeded $2.7 trillion in 2024, marking a decade of continuous annual growth and a 37 percent increase between 2015 and 2024.

“The 9.4 percent increase in 2024 was the steepest year-on-year rise since at least 1988. The global military burden — the share of the world’s GDP devoted to military expenditure — increased to 2.5 percent in 2024. Average military expenditure as a share of government expenditure rose to 7.1 percent in 2024, and world military spending per person was the highest since 1990, at $334,” the report added.

The US, China, Russia, Germany, and India are the top five military spenders, making up 60 percent of global defense expenditure. The US leads with $997 billion — more than three times China’s $314 billion, while Russia’s spending rose 38 percent to $149 billion. Germany and India spent $88.5 billion and $86.1 billion, respectively.

SIPRI estimated Middle East military spending at $243 billion in 2024, up 15 percent from 2023. 

����ֱ�� led the region with $80.3 billion, ranking seventh globally, just $1.5 billion behind the UK.

“Its spending was 1.5 percent higher than in 2023 but 20 percent lower than in 2015 when its oil revenues peaked,” the independent institute said.

Sector key to economic diversification

Khaled Ramadan, chairman of the International Center for Strategic Studies in Cairo and an economic expert, described the Saudi military industries sector as a cornerstone of the country’s economic diversification efforts and a vital pillar of Vision 2030.

“Localizing military industries reduces reliance on imported weapons,” Ramadan said, emphasizing the sector’s role beyond defense. “It also supports advanced industries such as electronics, telecommunications, aviation technology, and advanced manufacturing, contributing broadly to non-oil economic growth.”

amadan projected the military manufacturing sector will contribute SR14 billion ($3.7 billion) to the Kingdom’s GDP by 2030, with military exports expected to reach $666 million. “This will boost non-oil revenues and create more job opportunities for Saudi youth,” he said.

He also said the sector had 300 licensed firms by 2024, reflecting rising investor interest, with 40,000 jobs expected by 2030, mainly in technical fields like engineering and electronics.

“This is in addition to skills development through specialized training programs conducted in partnership with global institutions to enhance competencies in technologies such as artificial intelligence and cyber warfare,” he said, adding the sector’s growth boosts demand in manufacturing and tech, supports private jobs, cuts unemployment, and promotes hiring of young Saudis.

Qualitative partnerships and technology transfer

In May, ����ֱ�� produced its first THAAD missile components with US-based aerospace and defense company Lockheed Martin, while agreements with Turkish firms Baykar, Fergani Space, and Aselsan will boost UAV, space, and defense electronics capabilities.

Moreover, the launch of BAE Systems Arabian Industries, formed by merging BAE Systems Saudi Development and Training with the Saudi Maintenance and Supply Chain Management Co., aims to accelerate localization in maintenance and technical services.

Highlighting how vital global collaborations are to ����ֱ��’s military manufacturing goals, Ramadan pointed to partnerships with leaders like Lockheed Martin for THAAD missile components, Boeing for aircraft support, and France’s CMN for HSI32 fast interceptor boats, providing access to advanced technologies and expertise.

“These partnerships are examples of a balanced strategy combining foreign technology acquisition with domestic capacity building,” he said. 

This approach is supported by the establishment of 21 research centers focused on developing military technologies, especially in electronic warfare and drones, targeted for 2030.

Ramadan said local and foreign investments in military manufacturing are projected to reach SR37.5 billion by 2030, with SR6 billion allocated by GAMI specifically for research and development.

He added that domestic military procurement has already reached SR13 billion, with local production covering drones, defense systems developed by sustainability-focused firms, and fast interceptor boats.

Despite this progress, Ramadan said that achieving localization goals will require intensified investments and overcoming legal and technical obstacles.

Talent development and inclusion

Launched by ����ֱ��n Military Industries in 2024, the Women in Defense program supports sector growth by empowering Saudi females through training and leadership initiatives. Overall, the military industries sector is expected to generate 60,000 indirect job opportunities by the end of the decade, supporting broader economic diversification goals.

The economic expert described this initiative as part of SAMI’s broader collaboration with international universities to enhance national expertise in engineering and advanced manufacturing.

Ramadan said that the sector’s expansion is expected to create thousands of jobs, particularly in high-demand areas such as engineering and electronics, while driving the need for labor in related industries and strengthening private sector participation.

SAMI’s transformation as a catalyst

SAMI marked 2024 as a turning point, launching the Kingdom’s first combat management system, expanding its workforce to over 7,000, and securing global partnerships.

Echoing Ramadan’s insights, Youssef Saidi, research fellow at the Economic Research Forum and a member of the Saudi Economic Association, told Arab News that the Kingdom is undertaking ambitious and wide-ranging initiatives to attract foreign investment into the defense sector.

“The ����ֱ��n Military Industries is leading these efforts through strengthening strategic partnerships and joint ventures with major global companies,” Saidi said, adding that the Kingdom is firmly committed to technology transfer, local defense manufacturing, and investing in national talent and research and development as integral parts of international defense contracts.

He further said that GAMI is working to foster an attractive investment climate, support manufacturers, and leverage ����ֱ��’s considerable defense spending to position the Kingdom as both a regional hub and a global exporter of military products.

Reflecting on SAMI’s development, Saidi highlighted the company’s “profound transformation and rapid growth” since its establishment, which has made it a cornerstone of Vision 2030.

“SAMI has achieved remarkable growth in its revenues and contracts, expanded its employee base by 633 percent to reach 2,500 male and female employees by 2022, and successfully entered the list of top 100 global defense companies, advancing 19 places to rank 79 in 2023,” he said.

Saidi added that, supported by the Kingdom’s status as one of the world’s top defense spenders, these efforts have shifted ����ֱ�� from a major arms importer into an ambitious, self-reliant player and trusted partner, making it an “international prize” for global defense companies seeking strategic and profitable partnerships.
 

PARIS: World food commodity prices rose in July to their highest in over two years, as a jump for vegetable oils and record levels for meat outweighed falling cereal, dairy and sugar prices, the UN’s Food and Agriculture Organization said.

The FAO Food Price Index, which serves as a global benchmark for food commodity prices, averaged 130.1 points in July, a 1.6 percent increase from June, FAO said.

That was the highest reading since February 2023, though the index was 18.8 percent below its peak of March 2022, which followed Russia’s full-scale invasion of Ukraine.

FAO’s meat price index hit a new all-time high of 127.3 points, up 1.2 percent from its previous peak in June, as strong import demand from China and the US boosted beef and sheep meat prices, the agency said.

US beef imports have climbed after drought led to a decline in the domestic cattle herd. China shipped in record amounts of beef last year amid growing popularity of the meat, though an official probe into imported beef has raised uncertainty about Chinese demand.

In other meat markets, poultry prices rose slightly following the resumption of imports of Brazilian chicken by major buyers after Brazil regained its avian influenza-free status following action against a first farm-level outbreak.

In contrast, pig meat prices declined due to sufficient supplies and lower demand, particularly in the EU, FAO added.

The agency’s vegetable oil index surged to 166.8 points, up 7.1 percent month-on-month and the highest level in three years.

This increase was driven by higher quotations for palm, soy, and sunflower oils due to robust global demand and tightening supplies, though rapeseed oil prices fell as new-crop supplies arrived in Europe, FAO said.

FAO’s cereal price benchmark eased to its lowest in almost five years, reflecting seasonal supply pressure from wheat harvests in the Northern Hemisphere.

Its separate rice index dropped 1.8 percent last month, driven by ample export supplies and weak import demand.

Dairy prices edged down for the first time since April 2024, with declines for butter and milk powders offsetting further gains for cheese.

FAO’s sugar price index eased for a fifth consecutive month on expectations of increased production in Brazil and India, despite indications of recovering global sugar import demand, the agency said.

FAO did not update its cereal supply and demand estimates this month.