Saudi Arabia - Country Commercial Guide
Defense & Security

This is a best prospect industry sector for this country. Includes a market overview and trade data.

Last published date: 2022-07-06


Saudi Arabia ranked as the sixth-largest defense spender in the world in 2021 behind the United States, China, India, Russia, and the United Kingdom.  According to the Stockholm International Peace Research Institute, Saudi Arabia imports nearly 80 percent of its arms from the United States. 

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

  • The Ministry of Defense 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.
  • The General Authority for Military Industries (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 manages the military procurement operations of arms, ammunition, equipment, supplies, military uniforms, maintenance and operation contracts for arming the security and military authorities. 
  • Saudi Arabian Military Industries (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.
  • The Ministry of the National Guard (SANG) defends Saudi Arabia’s land, borders, sanctities, and properties and maintains internal security and stability. 
  • The Saudi Arabian Royal Guard (SRG) is a unit in the Saudi military forces.  Originally an independent military force, the Royal Guards were incorporated into the Armed Forces.  The Presidency of State Security is a Saudi Arabian security body created in 2017 to combine the counterterrorism and domestic intelligence services.
  • The Ministry of Interior (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 2022 budget released by the Saudi Arabia Ministry of Finance in December 2021, Saudi Arabia will reduce its military spending by 10 percent to $46 billion in 2022 – approximately 18 percent of its total budget.  This marks the fifth consecutive year in which Saudi Arabia has reduced military spending.  The 2022 military budget covers 19 government bodies including the 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. has $126.6 billion in active government-to-government sales cases with Saudi Arabia under the FMS system. Since the May 2017 signing of the $110 billion commitment to pursue Saudi Armed Forces modernization, the U.S. has carried out an increase in FMS and Direct Commercial Sales cases.  To date, this initiative resulted in over $27 billion in implemented FMS cases. 

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, be advised that the Saudi Arabian Government allows direct purchases in the defense and security sectors.  In practice, most defense procurement is negotiated on a case-by-case basis.  Companies are more likely to find opportunities at the aforementioned GAMI Military Industry Marketplace which can be accessed via the GAMI website. 

U.S. companies should be aware that Saudi Arabia is demanding not just a greater local workshare, but longer-term defense-capacity building as well. This will require U.S. firms to articulate the “win-win” aspects of these sales to both their Saudi customers and constituencies in governments, legislatures and the public writ large.  Fortunately, in most cases, Saudi jobs will add to, rather than replace, the employment generated by these defense exports. U.S. companies, who can localize their organization, workforce, and processes faster than the competition, will benefit from the changes underway in Saudi Arabia: more deals pushed through faster, more revenue, and greater employment in the defense sector.  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 on the U.S. company, not on the Saudi company. 

The Saudi Ministry of Investment publishes and periodically reviews a negative list of business functions that foreign companies are unable to undertake within Saudi Arabia.  In December 2017, it published a list that included the manufacturing of military equipment, devices, and uniforms, as well as catering services for military bases, private security and detective work.  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.

Succeeding in Saudi Arabia’s defense sector requires a legal partner with a proven track record.  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 commissions to agents for the sale of military equipment to Saudi Arabian Government agencies (Council of Ministers Resolution no. 1275).  However, U.S. companies 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 doing business in Saudi Arabia’s defense sector foreign defense contractors may also consider forming a local joint venture company with a Saudi partner to either sell armaments or other military equipment to the Saudi government or manufacture such equipment in Saudi Arabia.  A joint venture agreement can be negotiated where the local partner focuses on business development and winning government contracts, whereas the foreign partner manufactures and fulfills sales to the Saudi government through the joint venture. 

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.  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 barred from doing business with the government unless their regional headquarters were located in Saudi Arabia.  As of December 2021, the Ministry of Investment had not released a written regulation for this mandate.

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.  The Ministry has streamlined this process.  First, investors must request an attestation for a contract from the Ministry of Foreign Affairs.  Investors then apply for a business license from the Ministry of Investment.  Finally, they need to authenticate the establishment contract of the business and issue the commercial register with the Ministry of Commerce.  Investors are not required to appear in person at any of the ministries physically as these services are provided online.  

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 2021, a total of 99 local and foreign companies had obtained licenses, 85 percent of which were local companies.  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 2022 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 U.S. credit ratings company Fitch Solutions, moving forward in 2022, 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, MRO capabilities, rotorcraft capabilities, 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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