INTERVIEW: Head of SAMI explains how he wants to build Saudi Arabia’s defenses through homegrown industry

INTERVIEW: Head of SAMI explains how he wants to build Saudi Arabia’s defenses through homegrown industry
Illustration by Luis Grañena
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Updated 10 January 2021

INTERVIEW: Head of SAMI explains how he wants to build Saudi Arabia’s defenses through homegrown industry

INTERVIEW: Head of SAMI explains how he wants to build Saudi Arabia’s defenses through homegrown industry
  • The head of SAMI, Saudi Arabia’s military manufacturer, on the mission to grow an indigenous defense giant

Saudi Arabia spends more on defense than all but a few other countries, but until now it has imported virtually all of its military equipment from abroad. Walid Abdulmajid Abukhaled aims to change that completely and irrevocably.

Abukhaled, with a long career in the international defense industry, is CEO of Saudi Arabian Military Industries (SAMI), the company charged with expanding the Kingdom’s indigenous defense industry, with the goal of localizing at least 50 percent of supply by 2030.

That is a challenging target compared with a level of around 3 percent when SAMI was set up in 2017, but he is confident he can achieve it. “I’m shooting for a minimum of 60 percent, maybe more,” he told Arab News.

His ambitious goal received a significant boost recently when SAMI acquired the Advanced Electronics Co. (AEC), buying out the 50 percent stake held by British defense giant BAE Systems.

It was quite a coup for SAMI to acquire a company that Abukhaled described as the “jewel of defense electronics in the region,” making it a 100 percent Saudi-owned company for the first time in its 32 year history. 

No value was formally put on the acquisition when it was announced, but it was “definitely in the billions,” he said.

SAMI was set up with five main divisions: Aeronautics, land systems, defense electronics, weapons and missiles, and emerging technologies. 

One of its main mandates — under the regulatory supervision of the General Authorities for Military Industries — is to support research and development of new defense technology.

The aim is for SAMI to be ranked among the top 25 defense companies in the world by 2030, and the acquisition of AEC has given it a big push in that direction, taking many years off the timescale toward that goal.

The deal also completed a personal journey for Abukhaled, who was a senior regional executive of BAE Systems for several years. 

Despite the change of ownership, he expects the relationship with the UK company to continue and become even more supportive in the new setup.

“They’ve been in the Kingdom for 50 years, and I have no doubt they’ll continue their full commitment to AEC projects,” he said.

The deal also brings AEC under the umbrella of the Public Investment Fund (PIF) — the Kingdom’s sovereign wealth fund and owner of SAMI — and the multibillion-dollar resources the PIF has. 

“Any investment has to make big sense, and it has to have synergy, and it should be aligned to Vision 2030,” Abukhaled stressed, adding that the PIF has been “extremely supportive” of SAMI.

Throughout its history, Saudi Arabia has relied on international partnerships to supply its defense needs, and has remained “one of the safest places to live in the region for the past 60 years,” Abukhaled said. So what has changed now to prompt the move to grow its own defense industry?

“I think what’s changed is that we have an amazing leader now, with great vision to make our economy diversified from being totally dependent on oil,” he said.


BIO

BORN: 1966, AlUla, Saudi Arabia.

EDUCATION

  • Secondary school in Great Yarmouth, UK.
  • Degree in engineering, University of South Florida, Tampa, US.
  • Executive education at University of Pennsylvania.

CAREER

  • Head of strategy, BAE Systems.
  • Board director, International System Engineering.
  • Board director, Advanced Electronics Co.
  • Chairman, Aircraft Accessories and Components Co.
  • President and CEO (KSA and Bahrain), General Electric.
  • Deputy minister for industrial affairs, Saudi Ministry of Commerce.
  • CEO Middle East, Northrop Grumman.
  • CEO, Saudi Arabian Military Industries.

“We have one of the largest defense budgets in the world, and it’s an unusual opportunity for the Kingdom to ensure that this industry can localize to the point where we can satisfy our own needs, and then look regionally and abroad in the future. It should’ve happened 40 or 50 years ago.”

The global defense industry is a multitrillion-dollar business, at the cutting edge of technology and extremely competitive between American, European and Asian companies. 

It is also deeply involved in the sensitive world of international politics, and at the sharp end of geopolitical tensions.

Abukhaled recognizes that there are limitations as to the kind of equipment and systems the Kingdom will be able to manufacture on its own.

“To design and manufacture very sophisticated fifth-generation fighter jets, for example, isn’t going to happen in the near future. It’s a huge amount of investment,” he said.

“But I think I’d turn the question around and ask what kind of things we can’t make. There are so many things that can be done immediately. Maintenance, repair and overhaul for example, UAVs (unmanned aerial vehicles), defense electronics, land systems — all these are feasible now.”

SAMI already has in its portfolio the Jeddah-based Aircraft Accessories and Components Co., one of the largest providers of maintenance and overhaul services in the Middle East.

In the highly innovative sector of defense electronics and avionics, SAMI is ready to take on the world. 

“UAV is the future of aviation. In the near future, I’ll be very surprised if any country announced a new product in fighter jets that men actually fly,” Abukhaled said.

“For Saudi Arabia, an unmanned fighter plane is absolutely doable. We’re already in collaboration with some Saudi research centers to work on unmanned planes.”

Such ambitious plans are now feasible because Saudi Arabia has a cadre of well-trained and experienced engineers who have learned their skill at some of the biggest international defense companies, and are ready to apply those skills at home.

“There are so many thousands and thousands of Saudis who studied abroad in the best universities in the world, and they’re coming back home and they’re doing great. We really have great talent that we’re so proud of in the Kingdom,” Abukhaled said.

AEC’s workforce is 85 percent Saudi citizens, and the plan to further localize SAMI’s growing 2,500-strong workforce is a key element in his strategy.

“Without local talent I don’t think there will be a future, so preserving that is absolutely vital. We want to attract the best of the best, really that cream of the cream, when it comes to Saudi talents,” he said, highlighting the establishment of the SAMI Academy as a key part of the localization plan.

Saudi Arabia’s other great advantage is the wealth of international partnerships it has built up over decades as a good customer in the defense business, in addition to the relationship it has with BAE Systems. 

Abukhaled believes these relationships will remain and become stronger as SAMI seeks to build up its own industry at home.

“The world leaders in defense are the US, the UK and Europe, and they’ll be our key focus. There are good companies in South Africa and in South Korea that we’ll work with,” he said.

Saudi Arabia has been developing closer economic and investment ties with Russia and China in recent years, but has largely held off doing business with these countries in the defense sector. Might this change as SAMI seeks to broaden its group of international partners?

“We’ll always get direction from the leadership of the Kingdom. My focus is that we already have partnerships with many other companies. I want to do what’s best for my country and what’s best for my partners because I made a commitment to them,” Abukhaled said.

“I’m not going to upset my existing partners, because my commitment to our partners is that we’ll work with full transparency. We’ll do what’s best for both of us.”

The other big issue in the international sphere is that Saudi Arabia is the subject of pressure in political circles in the US and European countries, where some politicians have talked about restrictions on sales of defense equipment to the Kingdom.

US President-elect Joe Biden, was outspoken on the campaign trail about considering further limitations on defense sales to Saudi Arabia, a move that could — counterintuitively — be seen as an impetus to SAMI’s strategy of building up an indigenous defense industry.

“We have to do what’s best for the Kingdom of Saudi Arabia. We fully respect our leadership to point us in the right direction and take the right decisions,” said Abukhaled.

“Like any other company, we have to work with restrictions and we’ll always respect them. But we’ll have to do what’s best for the Kingdom, and this will come through the direction of the leadership of the Kingdom.”

In some ways, with the restoration of relations between Qatar and Saudi Arabia, as well as between Israel and several Arab countries, the region looks like a less dangerous place. But the big confrontation between Iran and its Arab neighbors shows no sign of resolution.

Such matters, Abukhaled says, are beyond his area of responsibility at SAMI. “Again, we follow the direction of our great leadership, and we do what’s best for the Kingdom,” he said.


Bitcoin tests the $40k resistance level

Bitcoin tests the $40k resistance level
Updated 30 July 2021

Bitcoin tests the $40k resistance level

Bitcoin tests the $40k resistance level

RIYADH: Bitcoin traded higher on Thursday, rising by 0.03 percent to $39,670.54 at 4:02 p.m. Riyadh time. Ether, the second-most traded global cryptocurrency, was up 0.44 percent to $2,291.72.05, according to data from CoinDesk.

Below is the latest news from the world of cryptocurrency:

Bitcoin buyers have been profitable, as the cryptocurrency tests the $40,000 resistance level. Sentiment has improved significantly over the past week, although some analysts believe it is time to pause before rallying again.

In a CoinDesk report, Justin Chuh, a senior trader at Wave Financial, said: “Bitcoin easily broke through $35,000, but I think it will probably have a harder time going through $40,000 this time.”

But attitudes could easily shift from bullish to bearish as bitcoin was still in a consolidation phase with strong resistance, the report added.

HIGHLIGHT

Bitcoin buyers have been profitable, as the cryptocurrency tests the $40,000 resistance level. Sentiment has improved significantly over the past week, although some analysts believe it is time to pause before rallying again.

Meanwhile, in a research paper published on Wednesday, Bank of America described central bank digital currencies as a more efficient payment system than cash. The second-largest bank in the US by total assets, said that digital central bank currencies could completely replace cash in the distant future.

A report released in May by blockchain infrastructure platform Bison Trails found that around 80 percent of central banks were exploring using digital currencies, with CoinDesk reporting that 40 percent were already testing proof-of-concept programs.

London-based Fabric Ventures has closed a $130 million fund to invest in early stage blockchain companies. One of its supporters is the European Investment Fund, which provided $30 million, marking the first time a European Commission company had invested in a fund focused on digital assets, said CoinDesk.

Stock and cryptocurrency trading app Robinhood has received a $32 billion valuation with its initial public offering and was set to debut on the Nasdaq on Thursday.

In a press statement on Wednesday, Robinhood priced its offering at $38 per Class A common share. The price is at the lower end of the $38 to $42 share price range that the company had targeted, and it planned to sell 5.5 million shares targeting an increase of $1.89 billion.

The firm is trying to reshape its image and said it was working on a new feature that would help protect users from cryptocurrency price volatility, while hiring a former Google graduate to improve the overall product design, according to CoinDesk.


Arab celebrity message app Yela raises $2.2 million funding

Yela has secured over a hundred A-list celebrities who fans can connect with, including Amr Diab. (Supplied)
Yela has secured over a hundred A-list celebrities who fans can connect with, including Amr Diab. (Supplied)
Updated 30 July 2021

Arab celebrity message app Yela raises $2.2 million funding

Yela has secured over a hundred A-list celebrities who fans can connect with, including Amr Diab. (Supplied)
  • The interactions on the platform can range from direct text messages to video clips

JEDDAH: Yela, a platform allowing users to get personalised video messages from their favorite Arab celebrities, has secured $2.2 million in funding, it was announced on Thursday.

Set to launched in August, Yela secured funding from US and UK investors with offices in London, Cairo, and Dubai. Participating from Silicon Valley is Razmig Hoghavian, a board member of Rakuten and General Partner at Graph Ventures.

The application was founded by Alex Eid, who said in a statement: “It’s incredible to see the support that Yela has already received from all sides, investors, celebrity creators, and fans.”

The first round of funding was also led by US investors Justin Mateen, a co-founder of Tinder and the General Partner of JAM Fund, and Sean Rad, a general partner at RAD Fund and also a co-founder of Tinder.

Yela has secured over a hundred A-list celebrities who fans can connect with including Amr Diab, Haifa Wehbe, Youssra, Mohamed Henedy, and Ahmed AlSakka. The interactions on the platform can range from direct text messages to video clips, with prices starting from $100.

 

 


Saudi Arabia to use 4IR to transform energy sector, fight climate change

Economy and Planning Minister Faisal Al-Ibrahim (L), Saudi Energy Minister Prince Abdul Aziz bin Salman (C) and Finance Minister Mohammed Al-Jadaan at the 4IR forum. (Screenshots)
Economy and Planning Minister Faisal Al-Ibrahim (L), Saudi Energy Minister Prince Abdul Aziz bin Salman (C) and Finance Minister Mohammed Al-Jadaan at the 4IR forum. (Screenshots)
Updated 29 July 2021

Saudi Arabia to use 4IR to transform energy sector, fight climate change

Economy and Planning Minister Faisal Al-Ibrahim (L), Saudi Energy Minister Prince Abdul Aziz bin Salman (C) and Finance Minister Mohammed Al-Jadaan at the 4IR forum. (Screenshots)
  • Ministers laud the technology at forum for Fourth Industrial Revolution in Riyadh
  • 4IR is a way of describing the blurring of boundaries between the physical, digital, and biological worlds

DUBAI/RIYADH/JEDDAH: Saudi Arabia is aiming to use Fourth Industrial Revolution (4IR) technology to fundamentally transform the energy sector, enhance the security of its water and food resources, and fight climate change, senior ministers announced.

“Our vision is to transform the energy sector through the application of data and technology,” Saudi Energy Minister Prince Abdul Aziz bin Salman said during the 4IR forum in Riyadh on Thursday.

“Saudi Arabia has a rich resource of youthful innovators who can be entrusted with the task of seeing this transformation through to fulfillment. The synergy between youth and technological innovation will make Saudi Arabia a dynamo for the digital transformation of the energy sector.”

4IR is a fusion of advances in artificial intelligence, robotics, the Internet of Things (IoT), genetic engineering, quantum computing, and more. It is a way of describing the blurring of boundaries between the physical, digital, and biological worlds.

The application of 4IR technology in energy will enable the Kingdom to lead the way in the battle against climate change, the Saudi energy minister said. 

“Perhaps the most important area where technology and energy can combine to the benefit, not just of the Kingdom, but of all mankind, is in the search for cleaner energy,” Prince Abdul Aziz said. “Here, we can use the technology of the 4IR to accelerate the energy transition, and meet the goals for the reduction in greenhouse gas emissions.”

His view was echoed by Ahmed Al-Zahrani, assistant minister for energy, who highlighted the potential of 4IR technologies like IoT and Blockchain. 

“These will help our endeavors to improve efficiency and reduce emissions,” Al Zahrani said.

The Kingdom is known for its energy security as it has been endowed with huge energy resources, but when it comes to food and water security, the country is facing challenges. Adding 4IR applications can address these challenges, Saudi Minister of Environment, Water and Agriculture Abdul Rahman Al-Fadli told the conference. 

Al-Fadli also said 4IR applications such as the use of remote sensors, artificial intelligence, and robotics will help the farming sector in Saudi Arabia as the technologies will provide better data from the fields. He also mentioned that these applications will assist the Kingdom in its plan to plant billions of trees under its green initiative.

“The challenge we all face is to tackle the great issues of the world today, like post-pandemic economic recovery, energy reliability, and sustainability,” Prince Abdul Aziz said.

In other developments from the forum, Ahmed Al-Saadi, senior vice president for technical service at Saudi Aramco, said the oil company had developed its technology for many years, notably in monitoring conditions in oil reservoirs. He said Aramco had made great strides in technology and was among the “best in class” operators in the global energy peer group.

Mohammed Abunayyan, chairman of ACWA Power, the utility developer backed by Saudi Arabia’s Public Investment Fund, told the forum most of its operations were now digital and that essential maintenance was controlled and managed through digital functions.

Abunayyan also said the involvement of the private sector in the digitization of energy was crucial: “The private sector will always deliver better value than the public utility model.”

Jason Bordoff, Dean of the Columbia Climate School in New York, had a warning about the slow progress towards the Paris Agreement goal of reducing CO2 emissions.

“We are not on track to meet those goals,” he said. “We need emissions to decline faster.”

Melissa Lott, research director at Columbia’s energy policy center, said carbon capture, utilization, and storage — a big element in Saudi Arabia’s Circular Carbon Economy framework — was crucial to efforts in reducing emissions.


New center to lead Saudi role in ‘4th industrial revolution’, economic minister says

New center to lead Saudi role in ‘4th industrial revolution’, economic minister says
Updated 30 July 2021

New center to lead Saudi role in ‘4th industrial revolution’, economic minister says

New center to lead Saudi role in ‘4th industrial revolution’, economic minister says
  • The Saudi minister said the new center will contribute to global discussions on the use of 4IR technology, such as 5G and artificial intelligence

DUBAI: The Saudi Centre for the Fourth Industrial Revolution (4IR) will lead the Kingdom’s role in utilizing advanced technologies and their local and global implications, Minister of Economy and Planning Faisal bin Fadel Al-Ibrahim said.

The Saudi minister said the new center will contribute to global discussions on the use of 4IR technology, such as 5G and artificial intelligence, especially amid the COVID-19 pandemic that has introduced new challengers to countries.

“COVID-19 intensified the need for data and evidence-based iterative policymaking supported by technology-driven and innovation-based solutions,” he said at the first Saudi 4IR forum held in Riyadh.

The Kingdom has become a global role model in deploying digital technology at peak of the health crisis, Al-Ibrahim said, enumerating Saudi efforts to manage the pandemic.

The Kingdom is known for its energy security as it has been endowed with huge energy resources, but when it comes to food and water security, the country is facing challenges.
(Shutterstock)

Saudi Arabia ranks 4th in the world in 5G connectivity, he added, and a robust digital infrastructure helped the Kingdom overcome challenges in the education and finance sectors.

Over 850 thousand daily classes were executed for over 6 million students in 2020, and around 2.8 billion digital payment transactions were made.

“This demonstrates Saudi`s leadership in having the most modern digital platform and world class capabilities to design local and global solutions at the technological frontier,” the minister said.

A recent report by the United Nations Conference on Trade and Development said the technology market could reach the value of 3.2 trillion dollars in 2025, increasing by almost 10 times from 2018 figures.

Al-Ibrahim said the Saudi economy could benefit from this by capturing a slice of the industry over the next five years.

The Kingdom is already in a good position, he explained, saying it “has its work cut out for it to move up the Global Innovation Index rankings where we plan to be among the leading pack of our G20 peers.”

“We are passionate about the objectives and vision of the Center, and look forward to working closely with its team in bringing the public and private sectors as well as the science and technology community together,” he added.


Brent crude back above $75 on US inventory draw, positive Fed outlook

Brent crude back above $75 on US inventory draw, positive Fed outlook
Updated 29 July 2021

Brent crude back above $75 on US inventory draw, positive Fed outlook

Brent crude back above $75 on US inventory draw, positive Fed outlook
  • US report showing falling oil supplies boosts market
  • Oil majors Royal Dutch Shell, Repsol post higher profits on oil gain

LONDON: Oil gained for a second day on Thursday as traders remained buoyed by yesterday’s data showing a bigger-than-expected drop in US inventories, while the Federal Reserve painted an optimistic picture of the American economy.

Brent crude gained 0.7 percent to $75.23 a barrel at 2:44 p.m. in London, set to close above the $75 mark for the first time in two weeks. US Benchmark WTI also added 0.7 percent, to $72.87.

Brent, the global benchmark, passed $75 a barrel in June for the first time in more than two years but has fallen below $69 on July 17 on concerns over the spread of the Delta coronavirus variant and an OPEC+ deal to increase production over the coming months.

Crude in storage fell to the lowest since January 2020, while distillate supplies posted the biggest decline since April, the US Energy Information Agency said in its weekly report on Wednesday. Fuel inventories fell by more than 2 million barrels.

The US economy is continuing to recover even as COVID-19 infections increase, the Federal Reserve said on Wednesday, sparking speculation as to when it will begin to taper its bond purchase program.

In a separate report from the US Commerce Department today, the economy was shown to have grown at a 6.5 percent annual pace in the second quarter, below the 8.5 percent predicted in a Reuters poll of economists, but still enough to bring the economy back to its pre-pandemic size.

“The (oil inventory) falls suggest the rise in cases of COVID-19’s Delta variant is having little impact on mobility,” ANZ analysts said in a note on Thursday.

Oil prices also benefited from a statement from Iran blaming the US for stalled progress in talks over its nuclear ambitions, potentially delaying the return of Persian crude to world markets.

Global oil companies, including Royal Dutch Shell and Spain’s Repsol reported blockbuster earnings today as higher oil prices boosted returns.

Shell boosted its dividend and launched a $2 billion share buyback program on Thursday as it reported the highest second quarter profits in more than two years.

Shell Chief Financial Officer Jessica Uhl said that global fuel demand was at 90 percent to 100 percent of its pre-pandemic levels, but consumption of aviation fuel remained weak.


Spanish energy giant Repsol booked a net profit of 587 million euros ($700 million) foer the second quarter, compared to a loss of 1.9 billion euros in the same period last year.

“Demand has also increased, thanks in large part to vaccination rollout,” it said.

Repsol said revenues at its petrol stations in Spain jumped by 63 percent in the second quarter when compared to the same period last year as travel picked up following the easing of lockdowns.