The Governor of the General Authority for Military Industries (GAMI), Ahmad Al-Ohali, has announced that Saudi Arabia has allocated $78 billion for defense spending in 2025, marking an increase from $75.8 billion in 2024. According to his official statement, this figure represents 21% of total government spending and 7.1% of Saudi Arabia’s gross domestic product (GDP).

These figures position the Kingdom as the fifth-largest defense spender in the world and the largest in the Arab world. Despite being one of the world's largest defense importers, Saudi Arabia is making significant efforts to localize its defense industry. This ambitious transformation is part of the Vision 2030 initiative, launched in 2016, which aims to localize 50% of all defense spending by 2030.

However, achieving this goal requires a substantial national effort. According to GAMI, as of the end of 2023, the localization rate of military industries remained below 20%. As part of Vision 2030, Saudi Arabia launched the "Invest in Saudi Arabia" initiative in 2023 under the Ministry of Defense (MoD). This initiative underscores the leadership’s commitment to attracting foreign investment and encouraging defense firms to establish regional headquarters in the Kingdom. A key objective is to create favorable conditions for investment in the Saudi defense sector.

In a recent interview, Al-Ohali revealed that there are 74 opportunities within Saudi Arabia’s military supply chains, which could significantly reduce future procurement costs by decreasing reliance on external suppliers. Additionally, zero value-added tax (VAT) on locally manufactured military goods and strategic framework agreements are among the key incentives under this initiative.

By dedicating 21% of its total government spending to defense, Saudi Arabia is not only reinforcing its national security but also securing its geopolitical interests. Building a self-sufficient and sustainable defence sector, and reducing its historical dependence on foreign suppliers, is a bold and strategic endeavor that requires careful planning and risk mitigation. Given the ongoing security pressures along Saudi Arabia’s southern border and tensions across the Persian Gulf, maintaining a credible and modern deterrent is critical to ensuring regional stability.

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