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2024 يملاعلا عافدلا ضرعم ةخسن ريه سنفيد

authority for the law, and administers the procurement
portal, Etimad, which serves as a centralized repository for
all government tenders. Although entry points into the
defense sector exist via various portals, the government
by-laws aim to establish GAMI as the central point of de-
fense article procurements.
The companies should be aware that the new localization
requirements are onerous and unlike the previous “off-
set” program that was often established upfront as a fu-
ture cost. Localization requirements must now be agreed
to up front.
Defense companies who wish to establish a defense man-
ufacturing presence or a service company in Saudi Arabia
must obtain the required licenses from GAMI. However,
most companies elect to have a local partner or establish
a joint venture. One of the challenges foreign firms face
when doing business in Saudi Arabia is the legal prohi- Another path for entry into the defense sector is via joint
bition on paying commission fees to agents for the sale venture company with a Saudi partner. SAMI is the lead
of military equipment to Saudi Government agencies. government agency for the establishment of joint ven-
However, the companies can engage a local Saudi Arabian tures. Recent joint ventures entailed the local partner fo-
agent and comply with this law by offering such agents cusing on business development and winning government
payment of success fees comprised of fixed onetime pay- contracts while the foreign partner manufacturer estab-
ments each time a contract is awarded, or by hiring the lished production lines.
agent as an employee. The Saudi Government is pushing foreign investors to
form a local LLC or other business organization in Saudi
Arabia with a Saudi partner as a condition to winning
government contracts and requires foreign companies
to publish an industrial development plan that fulfills lo-
calization requirements. In many cases, GAMI and SAMI
provide a list of terms that they wish to see incorporat-
ed in the articles of association of locally formed entities.
Companies should be aware that the Ministry of Invest-