Saudi Arabia’s state-owned defense company signed an agreement with Spain’s Navantia for a joint venture to build warships in the Kingdom as one of the world’s biggest arms buyers tries to localize its military needs.
Saudi Arabian Military Industries and Navantia agreed to design and build five Avante 2200 Corvettes in a program that would begin this autumn and deliver the last unit by 2022, the Saudi Press Agency (SPA) reported.
The JV will create 6,000 jobs, including 1,100 direct jobs, over five years.
“This joint venture with Navantia will localize more than 60% of ships combat systems works,” Ahmed Al Khateeb, Chairman of SAMI, said.
“We will continue to explore collaborations and leverage partnerships,” he added.
Saudi Arabia’s sovereign wealth fund, the Public Investment Fund, created SAMI last year to help decrease the country's reliance on foreign arms purchases, diversify the economy away from oil and create jobs for Saudis. This comes under the Vision 2030 plan for economic and social transformation.
SAMI’s mandate is to localize more than half of the Kingdom’s total military spending, from about 2% currently. Saudi, which ranks among the top five spenders on defense and security, has earmarked $56 billion for military spending this year, the biggest item on its budget.
“The joint venture between SAMI and Navantia is an opportunity to develop capabilities in the country and jointly explore future opportunities,” Esteban Garcia Vilasanchez, Chairman of Navantia, said.
The JV will feature training opportunities for Saudi engineers in the kingdom, part of the plan to boost the participation of young Saudi nationals in the industry.
SAMI’s targets include contributing around 14 billion riyals ($3.7 billion) to the Kingdom’s gross domestic product and creating more than 40,000 direct jobs locally by 2030.
SAMI is mandated to manufacture defense products and provide maintenance services across units, including air and land systems, weapons and missiles, and defense electronics.