Saudi Arabia - Country Commercial Guide
Defense & Security
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Saudi Arabia ranked as the fifth-largest defense spender in the world in 2022 behind the United States, China, , Russia, and India.  According to the Stockholm International Peace Research Institute, Saudi Arabia imports nearly 80 percent of its arms from the United States.  According to the 2023 budget released by the Saudi Arabia Ministry of Finance in December 2022, the Kingdom will spend $69 billion in defense in 2023 – approximately 23% of its total budget, which increased by 50% from last year’s defense budget.

Saudi Arabia’s defense spending has grown substantially over the last decade, in part due to a significant procurement drive fueled by the war in Yemen.  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.

Key Saudi Arabian Defense Entities

  • Ministry of Defense (MOD): MOD is responsible for Saudi Arabia’s national security.  It includes the Royal Saudi Land Forces, the Royal Saudi Air Forces, the Royal Saudi Naval Forces, the Royal Saudi Air Defense Forces, and the Royal Saudi Strategic Missiles Forces.  The Institute of Strategic Studies estimates that there were roughly 277,000 people serving across Saudi Arabia’s military branches.


  • General Authority for Military Industries (GAMI): GAMI, established in 2017, is the regulator, enabler and licensor of Saudi Arabia’s military industries sector.  GAMI proposes new policies, strategies, and regulations that are relevant to the military industry and complementary sectors.  It also provides final approval for military procurement of all defense platforms and services, not just for the MOD, but also for other government agencies, such as MOI and the Saudi Ministry of National Guard.


  • Saudi Arabian Military Industries (SAMI): SAMI is a state-owned defense company launched in May 2017 by Saudi Arabia’s Public Investment Fund to provide military products and services in Saudi Arabia and to reduce the country’s reliance on foreign purchases of military products.  It operates across aeronautics; land systems, including military vehicles; weapons and missiles; and defense electronics.         


  • Ministry of the National Guard (SANG): SANG defends Saudi Arabia’s land, borders, sanctities, and properties and maintains internal security and stability.


  • Saudi Arabian Royal Guard (SRG): SRG is a unit in the Saudi military forces.  Originally an independent military force, the Royal Guards were incorporated into the Armed Forces.

Presidency of State Security (PSS): PSS is a Saudi Arabian security body created in 2017 that maintains counterterrorism forces, forces for the protection of critical infrastructure, domestic intelligence services. 

Ministry of Interior (MOI): MOI is one of the governmental bodies of Saudi Arabia responsible for national security, naturalization, immigration, and customs in Saudi Arabia.

National Military Industries Sector Strategy

GAMI’s National Military Industries Sector Strategy is comprised of three pillars: Military Acquisition, Military Industry, and Military Research & Technology.  These pillars are designed to drive the strategic priorities of strategic autonomy, military readiness, sustainable local military industry, interoperability within and across entities, and transparency and efficiency of spending. 

Defense Budget

According to the 2023 budget released by the Saudi Arabia Ministry of Finance in December 2022, Saudi Arabia will increase its military spending by 50 percent to $69 billion in 2023 – approximately 23 percent of its total budget.  The significant increase in the defense budget comes as part of Saudi Arabia’s Vision 2030 goals and requirements to localize 50 percent of government spending in the defense sector.

The 2023 military budget funds 19 government bodies with priorities such as developing the capabilities of the Royal Saudi Land Forces (RSLF), Saudi Armed Forces, Royal Guard, defense research and development, military training and development, military health services, and military cities and bases.    Key projects include construction of facilities at the King Salman Airbase, the relocation and establishment of the King Faisal Air Academy, the modernization of the Ministry of the National Guard, and the continued localization of 50 percent of defense procurement expenditures.

U.S.-Saudi Arabia Security Cooperation Relationship

Saudi Arabia is the United States’ largest foreign military sales (FMS) customer. Nearly eighty percent of Saudi Arabia’s defense acquisitions are with the United States. The U.S. maintains $140 billion in FMS cases with Saudi Arabia.

Doing Business in Saudi Arabia’s Defense Sector

Saudi Arabia’s Procurement Law regulates all government procurement in Saudi Arabia.  The Ministry of Finance is the overarching authority for the law and its implementation, and administers the procurement portal, Etimad (, which serves as a centralized repository for all government tenders.  While companies may find defense-related tenders on the Etimad Portal, the Saudi Arabian Government allows direct purchases in the defense and security sectors.  In practice, most defense procurement are negotiated on a case-by-case basis.  Although entry points into the defense sector exist via various portals, such as the Saudi Ministry of Investment (MISA), Bureau of Industry, MOD, SAMI, and GAMI, the government by-laws aim to establish GAMI as the central point of defense article procurements in the coming years.

U.S. companies should be aware that the new localization requirements are onerous and unlike the previous “offset” program that was often established upfront as a future cost. Localization requirements must now be agreed to up front. U.S. companies that can leverage localization requirements to their advantage, sometimes via cooperation with other U.S. defense companies, stand to benefit from these new requirements. As localization increases and U.S. companies find themselves in potential contractor/sub-contractor roles, they will need to be vigilant about International Traffic in Arms Regulations (ITAR).  ITAR puts the onus of enforcement and compliance on the U.S. company, not on the Saudi company. 

The Ministry of Investment publishes and periodically reviews a negative list of business functions that foreign companies are unable to undertake within Saudi Arabia.  In 2020, MUSA published a list that includes catering for military sectors and security/detective services. However, international companies and contractors have been able to carry out ancillary services after selling military systems to the government, including maintenance, repair and overhaul (MRO), training, spare parts, mounting and installation of equipment and technical support.

U.S. defense companies who wish to establish a defense manufacturing presence or a service company in Saudi Arabia must obtain the required licenses from GAMI to fully operate in the Saudi market. However, most companies elect to have a local partner or establish a joint venture. Unlike in other non-defense sectors in Saudi Arabia, one of the challenges that foreign firms face when doing business in Saudi Arabia is the legal prohibition on paying commission fees to agents for the sale of military equipment to Saudi Arabian Government agencies (Council of Ministers Resolution no. 1275).  However, U.S. companies can engage a local Saudi Arabian agent and comply with this law by offering such agents payment of success fees comprised of fixed onetime payments each time a contract is awarded, or by hiring the agent as an employee and remunerating the agent through an adjusted salary scale.

Another path for entry in Saudi Arabia’s defense sector is via establishing a joint venture company with a Saudi partner. SAMI is the lead government agency for the establishment of joint ventures. Most recent joint ventures entailed the local partner focusing on business development and winning government contracts while the foreign partner manufacturer established production lines.  

The Saudi Arabian Government is increasingly pushing foreign investors towards forming a local LLC or other business organization in Saudi Arabia with a Saudi partner as a condition to winning government contracts and requires foreign companies to publish an industrial development plan that fulfills localization requirements.  In many cases, GAMI and SAMI provide a list of terms that they wish to see incorporated in the articles of association of locally formed entities.  Companies should be aware that the Ministry of Investment announced that by 2024, all international companies would be limited in doing business with the government unless their regional headquarters are located in Saudi Arabia.  However, companies pursuing tenders not contained within the Etimad Portal, such as within GAMI’s Military Industry Marketplace, should verify requirements with the relevant authority. For more information on RHQ, please refer to Doing Business with the Public Sector.

Those wishing to start a business in Saudi Arabia must obtain the appropriate license from the Ministry of Investment, in cooperation with the Ministry of Foreign Affairs and the Ministry of Commerce. 

In addition to licensing by the Ministry of Investment, companies must also ensure they have the appropriate GAMI permits and licenses.  To increase the number of licensed local and international companies operating in Saudi Arabia’s defense sector, GAMI has streamlined its permitting and licensing processes, and now allows foreign companies 100 percent ownership of foreign investments.  At the end of June 2022, GAMI had issued a total of 291 new licenses to local and foreign defense companies with a growth of 195% from last year.   According to H.E. GAMI Governor Ahmad Al Ohali, localization in the defense sector stands at 12.6 percent with a target of 50 percent by 2030. To apply for a military industrial license, visit  

In August 2021, GAMI launched its Military Industry Marketplace, an online platform designed to help connect companies that have been authorized and licensed by GAMI to work in the military sector.  The platform lists opportunities for registered users, to help with the identification of work required and the transfer of workshare and technology.  To access the portal, visit GAMI’s website.

Industrial Participation Program

GAMI launched its Industrial Participation Program (IPP) in 2019 as the successor of Saudi Arabia’s Economic Offset Program.  The IPP aims to expand the local military industries sector’s base in value-added sectors; provide a network of services and technical support for the sector; stimulate strategic partnerships with international companies in the sector; facilitate technology transfer; support SMEs and ensure their participation in the local supply chain, and to develop trained professionals capable of working in specialized industries. 


GAMI is focusing its localization efforts on land-based systems as they are generally easier to produce and can be sped up/slowed down in accordance with cash flow.  Air and air defense will remain a GAMI priority with especially strong demand for aircraft parts.  According to the Ministry of Finance’s 2023 budget, key projects include construction of facilities at the King Salman Airbase, the relocation and establishment of the King Faisal Air Academy and the modernization of the Ministry of the National Guard.  According to Arab news, the authority’s ambition to localize more than 50 percent of Saudi Arabia’s defense expenditure has led to a supply chain localization program identifying more than 70 investment opportunities in the defense sector in Saudi Key.  According to U.S. credit ratings company Fitch Solutions, moving forward in 2023, there will be strong Saudi demand across all segments of the industry including for ground and air equipment, naval and air defense capabilities, cybersecurity, C4ISR equipment, UAV capability, aircraft engines, Tactical Communications Systems, MRO capabilities, rotorcraft capabilities, Military Fixed-Wing Aircraft, and structural component manufacturing.


  • Saudi Ministry of Defense 
  • Saudi Ministry of Interior
  • General Authority for Military Industries
  • Saudi Arabian Military Industries 
  • U.S. Commercial Service Saudi Arabia 


  • World Defense Show 
  • Association of the U.S. Army 
  • IDEX Abu Dhabi 
  • Dubai Air Show 
  • DSEI Show Search Results 

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