How to Invest in Defence in Saudi Arabia

Saudi Arabia is one of the world’s largest defence spenders, with annual military expenditure consistently ranking in the global top five. Vision 2030 has set an ambitious target of localising 50 percent of military procurement spending by 2030, transforming the Kingdom from a pure defence importer into a significant defence manufacturer. This localisation mandate creates a multi-billion-dollar industrial opportunity for international defence companies willing to partner with Saudi entities.

Strategic Context

The General Authority for Military Industries (GAMI) was established in 2017 to regulate and develop the Kingdom’s defence industrial base. Saudi Arabian Military Industries (SAMI), a PIF-backed holding company, serves as the national defence champion. SAMI has established subsidiaries and joint ventures spanning aeronautics, land systems, weapons and missiles, defence electronics, and naval systems.

Saudi Arabia’s defence budget exceeds USD 65 billion annually. The 50 percent localisation target implies domestic defence production of over USD 30 billion per year, a figure that would make Saudi Arabia one of the world’s largest defence manufacturers.

Investment Routes

Joint Ventures with SAMI. SAMI actively partners with international defence companies for technology transfer and co-production. Major partnerships have been established with Lockheed Martin, Boeing, BAE Systems, Thales, and Navantia. Joint ventures typically involve manufacturing, maintenance, and through-life support for military platforms.

Industrial Participation (Offset) Programmes. GAMI mandates industrial participation requirements for major defence procurement contracts. International defence companies must invest in Saudi industrial capabilities as a condition of contract award. These offsets can include manufacturing facilities, technology transfer, training programmes, and R&D investment.

Defence Services. Maintenance, repair, and overhaul (MRO) services for military platforms represent a large and growing market. The transition from imported services to domestically provided MRO creates openings for specialised companies.

Cybersecurity and C4ISR. Saudi Arabia’s defence modernisation emphasises command, control, communications, computers, intelligence, surveillance, and reconnaissance (C4ISR) systems. Cybersecurity for defence applications is a high-priority area. Technology companies can engage through direct contracting or partnerships with SAMI subsidiaries.

Unmanned Systems. The Kingdom is developing domestic capabilities in unmanned aerial vehicles (UAVs), unmanned ground vehicles, and autonomous defence systems. Manufacturing and integration opportunities exist for drone technology companies.

Ammunition and Small Arms. The Military Industries Corporation (MIC) produces ammunition and light weapons domestically, with plans for expanded capacity and capability.

Regulatory Framework

GAMI regulates all defence industry activities including licensing, export controls, and industrial participation requirements. MISA issues foreign investment licences, but defence sector investments require additional GAMI approval. Security clearances and end-user certifications are mandatory for sensitive technology areas.

Defence exports from Saudi Arabia require GAMI approval. The Kingdom is developing an export strategy for domestically produced defence products targeting regional and international markets.

Localisation Requirements

The 50 percent localisation target is structured through a mandatory industrial participation policy. Defence contractors must achieve specified levels of in-Kingdom content over defined timelines. GAMI monitors compliance and adjusts requirements based on technology sensitivity and industrial maturity.

Fiscal Terms

Defence manufacturing companies benefit from MODON industrial zone incentives. Saudi Industrial Development Fund financing is available. Standard foreign corporate income tax of 20 percent applies. Defence companies may benefit from additional incentives negotiated as part of government-to-government procurement agreements.

Key Risks

Defence investment carries inherent geopolitical sensitivity. Technology transfer regulations in both source and destination countries add complexity. Long procurement cycles mean revenue timelines extend over years. Competitive pressure from established defence manufacturers already present in the Kingdom is significant.

Getting Started

Engage GAMI for defence industry licensing and industrial participation planning. Connect with SAMI for joint venture opportunities. MISA facilitates the general investment licence. Participation in the World Defense Show, held biennially in Riyadh, provides networking and business development opportunities with Saudi defence stakeholders.

Saudi Arabia’s defence localisation programme represents one of the most ambitious military industrialisation efforts undertaken by any country in recent decades. For defence companies willing to commit to genuine technology transfer and industrial partnership, the Kingdom offers a market of extraordinary scale.

See our Defence Sector Profile and GAMI Institution Profile.