Miracle workers

Increasing interest: Of the 11 sectors on Saudi’s critical list of priorities is building an indigenous UAV business on a much larger sale. King Abdulaziz City for Science and Technology (KACST) has developed several versions of its Saker family of drones. Picture: Alan Warnes.

When, in 2017, Saudi’s Crown Prince Mohammad bin Salman launched his ‘Saudi Vision 2030’ strategy, he acknowledged that the country’s oil wouldn’t last forever.

The need to reduce the country’s dependency on oil meant a major restructuring of other industries in a bid to achieve diversity.

GAMI was formed in mid-2018 to regulate and boost the military sector. Its objective is to localise 50% of Saudi’s military equipment and services.

To meet that goal, the organisation has big ambitions – oversee the development of industries, facilitate research and technologies, develop the workforce, enhance exports through the long-term planning of military purchases, and provide incentives to local manufacturers.

A top priority is boosting the domestic military industry sector, ensuring it becomes a key component in the economy.

Five national priorities are to be served. They include increasing military readiness, enhancing strategic autonomy, enhancing interoperability within and across entities, developing a local military industries sector, and increasing transparency and efficiency of expenditure.

So how are things progressing?

“Since the inception, we have built GAMI’s internal infrastructures – the corporate structure, policies, strategies, procedures, and established the right connections with the stakeholders. We are now in operational mode,” said Al-Ohali.

He believes his biggest achievement so far is employing people who understand their mandate and are fully committed, loyal, and passionate about the job. “Such a group will work miracles,” he said.

As the industry regulator, GAMl is a public organisation, overseeing industry as well as research and development. “We are now looking for assistance from the champions of industry to create thousands of small and medium-sized businesses in either the kingdom’s private or government sectors,” explained Al-Ohali.

He pointed out that GAMI would provide the guidance, licencing and regulation to assist start-ups. Hopefully, in the future, it could also provide expert advice.

Discussing the wide-ranging scope of the organisation’s remit, he pointed out: “We are working with some very dynamic sectors – military operators, security services and ministries in Saudi Arabia. Then there are the foreign governments, with their armaments and technologies, and the original equipment manufacturers (OEMs), both international and local, that already cooperate or are interested parties in working with GAMI. We are in the middle of all that.”

His Excellency definitely looks upon people as one of the major enablers to a successful military industry. “Our vision is to localise more than 50% of our armament expenditure and services by 2030. You cannot do this without the right human capital serving the whole industry, and solving the needs of research and development in Saudi Arabia. This is one of the key issues we are building, by establishing relationships with education institutions and research centres, both in the kingdom and globally.”

Many local companies attending the Saudi International Airshow in 2019 wanted to bring more work in-country, like overhauling military helicopters and setting up flying training centres.

“Back then we identified 11 platforms in the industry that were critical to Saudi Arabia from a security and industry support point of view,” explained the governor. “Fixed-wing MRO is one of them, as we work on establishing an industry that could be worth more than 30 billion riyal ($8bn) over the next decade.

“We have established a clear programme on localising each segment of these 11 platforms over the next 10 years. There is massive potential in what we are trying to build. We are looking to employ 40,000 people directly and another 60,000 indirectly. It’s a big market and will be a huge contribution to our gross domestic product (GDP) by 2030.”

Included among the 11 sectors are fixed-wing aircraft, helicopters, and UAVs, which will all require, for example, electronics, and maintenance repair and overhaul (MRO) facilities.

Al-Ohali believes UAVs are a key advanced technology, requiring mechanical parts, electronics, and possibly a radar, in addition to a payload. He wants to develop all these needs, and build an indigenous UAV business.

“What we want, within the mandate of GAMI, is to provide conventional and advanced military industries. However, they cannot be sustained without the proper technology transfer, intellectual property (IP) rights, and human capital. Without these three elements, the industry cannot be sustained,” he said.

“Interoperability between various Saudi defence and research institutes is a must, as is creating a supply chain within the kingdom. At the same time, building relationships with other countries and international OEMs to access technologies and transfer of production capabilities is also important. The biggest challenge is putting all this together and building a strong plan at the same time.

“The 11 sectors identified as strategic are the most critical as we look to the next decade. We have seen several countries in the past seven or eight decades build up their military aerospace businesses, although our plans are more ambitious.”

One example of a so-called industry champion is Saudi Arabian Military Industries (SAMI), which was established to kick-start the sector within the kingdom. It is one of 68 Saudi companies that have received a license.

Funded by the kingdom’s public investment fund (PIF), it is a manufacturing company, licensed by GAMI, and being supported with contracts.

But what about other key stakeholders and long-term partners, like BAE Systems and Boeing. Where do they fit into the GAMI strategy?

“We have strong relationships with these companies; they have been in Saudi doing great business for more than five decades,” said Al-Ohali. “But I think now is the time for a better exchange of benefits between these OEMs and Saudi Arabia.

“Once the transactions were equipment for money; now I think it needs to include the exchange of IP and innovation, as well as investments across the country. That will be a win-win, situation for all of us.

“We have established a very good industrial participation programme, which in the past was called the offset programme. We have changed it; we have built it in a way that OEMs can transfer technologies and operations to local companies, which allows OEMs to have better access to the Saudi market.”

Late last year, GAMI announced the World Defense Show (WDS), which will take place in Riyadh from March 6-9, 2022. Undoubtedly, this will help foster new relations with businesses in the future, as well as marketing GAMI’s bright new world.

Al-Ohali believes WDS is coming at the right time, both for the kingdom and the global industry [with COVID-19 hopefully banished or in serious retreat].

“Saudi Arabia is one of the largest purchasers of armaments in the world. It is also one of the G20 economies and is situated in the centre of three continents. Coupled with its need to establish a presence in the military industry, WDS will be a global platform for our aspirations. It will bring all of Saudi’s related parties, all the stakeholders from government entities, industry, business development, education, as well as their international counterparts, under one roof.

“It’s an opportunity for the OEMs and foreign governments to exhibit their products or industries, while our existing, and interested, businesses can showcase their local capabilities for the supply chain. I think it’s going to open a great opportunity for both sides,” he concluded.