US defense companies begin setting up industries in Saudi Arabia

The number of US companies in the Kingdom has increased to more than 370 companies. (Reuters)

Since the announcement of Saudi Vision 2030, international companies, particularly American ones, have started planning to invest in Saudi Arabia.

The number of US companies in the Kingdom has increased to more than 370 companies, with investments exceeding $53 billion, equating to 200 billion riyals, by last February.

When the previous edition of the Armed Forces Exhibition for Diversity of Requirements and Capabilities (AFED) was held in Riyadh, 70 international companies signed up along with 150 Saudi companies.

While the participation of international companies seems to be a good opportunity to sell their products, the contracts of the military industries in Saudi Arabia are not limited to selling. For every commodity sold, Saudi Arabia requires the manufacture of some parts locally.

The new requirement, which emerged from the Vision 2030, enabled the growth of domestic manufactured military products by 30 times between 2010 and 2017. It also boosted employment created by the military industries.

Strengthened economic relations

The Saudi Crown Prince Mohammed bin Salman’s visit to the United States aimed to strengthen the economic relationships between Riyadh and Washington.

The United States is one of the largest investors in the Kingdom, where 373 US companies invest in the country with total investments exceeding $55 billion, equating to 207 billion riyals, until last February.

Prince Mohammed bin Salman’s efforts have attracted some of the bigger US companies. Last year, 16 US companies joined the Saudi market.

In the United States, Saudi exports are present in various sectors which include mining, chemical products, fertilizers, aluminum and others.

The relationship between Saudi Arabia and the United States dates back to the 1930s with the inauguration of the trade flow of Saudi oil and King Abdul-Aziz Al Saud’s, the founding king, decision to grant the right of oil exploration to American companies.

But the future of this economic relationship will not solely depend on oil. Joint investments are witnessing new prospects, from military industry to artificial intelligence and entertainment.

Last Update: Wednesday, 20 May 2020 KSA 09:51 - GMT 06:51