Aerospace & Defense Exporter Alert, Sep. 2023
September 2023
Welcome to the Aerospace & Defense Exporter Alert brought to you by the U.S. Department of Commerce’s, Industry & Analysis-Aerospace Office and U.S. Commercial Service.
Each edition highlights an important aerospace and defense market, industry policy and our signature events. We also include tools to export such as export statistics, market research, trade events and U.S. government advocacy.
Our mission is to increase U.S. exports, enhance job creation, strengthen national security, promote and protect U.S. commercial interests abroad, and deliver customized solutions to ensure that U.S. businesses compete and win in the global marketplace. Contact us to find your local International Trade Specialist.
MARKET OF THE MONTH
Saudi Arabia
Overview
Saudi Arabia’s defense market is overseen by the Ministry of Defense (MoD), which is responsible for Saudi Arabia’s national security, and has grown substantially over the last decade, in part due to a significant procurement drive fueled by the war in Yemen. As of 2023, Saudi Arabia has the fifth largest defense budget in the world following the United States, China, Russia, and India. According to the 2023 budget released by the Saudi Ministry of Finance in December 2022, the Kingdom will spend $69 billion in defense in 2023 – approximately 23 percent of its total budget, which increased by 50 percent from last year. The significant increase in the defense budget is part of the Saudi Vision 2030 goals and requirements to localize 50 percent of the Government spending in the defense sector.
Partnership between the United States and Saudi Arabia is based on over seven decades of close cooperation and cultural exchange, as well as abiding security ties. The United Staes and Saudi Arabia have a common interest in preserving the stability, security, and prosperity of the Gulf region and consult closely on a wide range of issues. Saudi Arabia is the United States’ largest foreign military sales (FMS) customer, with more than $84.3 billion in implemented FMS cases. According to the Stockholm International Peace Research Institute, Saudi Arabia imports nearly 80 percent of its arms from the United States. Through FMS, the United States supports three key security assistance organizations in Saudi Arabia – the Ministry of Defense, the National Guard, and the Ministry of the Interior.
Under the Vision 2030 economic diversification program, Saudi Arabia aims to localize 50 percent of its military procurement by 2030 under the aegis of two military industrial bodies: The General Authority for Military Industries (GAMI) and Saudi Arabian Military Industries (SAMI), which contracts directly with foreign companies. On numerous occasions, SAMI CEO Walid Abukhaled has stated the company’s goal to become a top 25 defense company by 2030, citing foreign partnerships and joint ventures as a route to rapid growth of the firm and the Saudi local defense industry as a whole. Though Saudi Arabia has legislation addressing defense procurement, in practice, most defense procurement is not formalized and instead is negotiated on a case-by-case basis. Success in Saudi Arabia’s defense sector requires a legal partner with a proven track record; for example, a joint venture agreement can be negotiated where the local partner focuses on business development and winning government contracts, while the U.S. partner manufactures and fulfills sales to the Saudi government.
Aerospace
While Saudi Arabia has normalized relations with Iran and maintained a lasting ceasefire with Yemen, aerospace, air defense and territorial defense remain strong government priorities. Key projects include construction of facilities at the King Salman Airbase and the relocation and establishment of the King Faisal Air Academy. Moving forward, GAMI has stressed the need for aircraft parts, and there is strong Saudi demand across all segments of the industry, including air defense capabilities, UAVs, aircraft engines, MRO capabilities, rotorcraft capabilities, military fixed-wing aircraft, structural component manufacturing, and space capabilities.
Defense
The Saudi Arabian MoD is a key player in the Gulf and broader Middle East as it continues to grow its defense capabilities and maintain regional stability. The Vision 2030 localization goal has led to a supply chain localization program identifying more than 70 investment opportunities in the defense sector in the Saudi market. Key projects include the modernization of the Ministry of the National Guard and the continued localization of 50 percent of defense procurement expenditures. GAMI is focusing its localization efforts on land-based systems as they are generally easier to produce and can be sped up or slowed down according to cash flow. Moving forward in 2023, there will be strong Saudi demand across all segments of the industry, including for ground equipment, cybersecurity, C4ISR equipment, Tactical Communications Systems, MRO capabilities, and structural component manufacturing.
Upcoming Events
Contact Information
Meet Hesham Alawad, Commercial Specialist
U.S. Commercial Service – Saudi Arabia
Email: Hesham.Alawad@trade.gov
We engage with events and trade shows to accelerate the global reach of the events. Providing participants the assurance that the U.S. Department of Commerce not only recognizes the event, but is committed to using the event to maximize opportunities for U.S. exporters.
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Webinar: Colombia UAS and C-UAS OpportunitiesSeptember 14, 2023, 8:00 - 9:30AM, Los Angeles, CA Speakers Include:
Questions: Lina Contreras, Luke Yanos |
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Webinar: Learn About Aerospace & Defense Supplier SummitSeptember 27, 2023, 11:00AM New York / 8:00AM Seattle Speakers
Questions: Diane Mooney or AJ Anderson |
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Virtual Global Chat with U.S. Embassy Commercial Specialists from the Middle EastSep. 27, Oct. 4, Oct. 11, 09:00-11:00PM EST Meet virtually one-on-one with U.S. Embassy Commercial Specialists from UAE, Qatar, Saudi Arabia, Kuwait, Egypt, Ethiopia, South Africa and India. Sign-up for Virtual Global Chat Questions: Jacqueline Roeder |
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Resources to Help You Export: U.S. Embassy Support through the U.S. Commercial ServiceMonday, Oct. 9, 2023, 1:00-1:45PM Join us and learn about the many ways we can support your international business. We can help you…
Questions: April Redmon or Paul Matino |
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World Defense Show 2024Riyadh, Saudi Arabia The U.S. Commercial Service has partnered with the World Defense Show through the Trade Events Partnership Program. Get more Information here…Questions: Erik Hunt |
Tools to Win! Trade Shows and Statistics
Our mission is to increase U.S. exports, enhance job creation, strengthen national security, promote and protect U.S. commercial interests abroad, and deliver customized solutions to ensure that U.S. businesses compete and win in the global marketplace. Export assistance is provided to U.S. companies who manufacture goods and/or provide services of at least 51% U.S. content.
We assist companies in the following areas:
- International Trade Counseling,
- Business Matchmaking,
- Market Intelligence,
- Customized Services, and much more.
Contact Us to find your local International Trade Specialist.
Please direct newsletter questions to Erica Ramirez at Erica.Ramirez@trade.gov.
