(Adds background, context)
RIYADH May 18 Saudi Arabia's Public Investment
Fund (PIF) on Wednesday announced the launch of a state-owned
military industrial company aimed at contributing more than 14
billion riyals ($3.7 billion) to the Kingdom's gross domestic
product by 2030.
The new Saudi Arabian Military Industries will seek to
provide over 40,000 jobs by 2030, the PIF - the kingdom's top
sovereign wealth fund - said in a statement.
The move could alter decades of practice in which Saudi
Arabia - one of the world's largest buyers of foreign arms - and
other Gulf Arab states recycled a major part of their oil wealth
back into Western economies via arms purchases and investments.
Last year, the powerful deputy crown prince and defence
minister, Prince Mohammed bin Salman, launched his Vision 2030
reform scheme to boost jobs and revenue to prepare for a future
with lower oil income.
"The company will seek to be a key catalyst ... to localize
50 percent of total government military spending in the Kingdom
by the year 2030," up from just 2 percent now, bin Salman was
quoted as saying by state news agency SPA.
"It will lead the military industries sector to increase
local content, increase exports and bring foreign investment to
the kingdom by entering into joint ventures with major
international military industry companies," he added.
The company will work in repair and maintenance of planes as
well as in the manufacture of unmanned aircraft, according to
Additionally, it will do work on military vehicles,
ammunition, radar, communications systems and electronic
Saudi Arabia has been leading a military coalition fighting
for over two years in a war in neighbouring Yemen and accuses
arch-rival Iran of encircling it by backing armed proxies
throughout the region.
The kingdom also spearheaded the creation last year of the
Islamic Military Counter Terrorism Coalition, which will be
headquartered in Riyadh and comprised of dozens of countries
from throughout the Muslim world.
U.S. President Donald Trump is set to make his first
overseas visit starting in Saudi Arabia this weekend, in large
part focused on defense and security ties.
The United States is close to completing a series of arms
deals with the kingdom totaling more than $100 billion, a senior
White House official told Reuters earlier this month.
(Reporting By Mostafa Hashem, Noah Browning and Katie Paul;
Editing by Kevin Liffey and Jonathan Oatis)