Building local content is a lifeline away from supply-chain crisis 
Enhancing local content has become crucial, especially during periods of global crisis such as the COVID-19 pandemic that struck the world in 2020.
The world has suffered from disruptions in supply chains. The necessity to enhance local content arises from recurring global geopolitical conflicts, which disrupt the flow of goods and services, resulting in increased shipping and insurance costs.
The Saudi government has recognized the significance of enhancing the local content of goods and services produced and consumed in the Kingdom, particularly those that may be adversely affected during a global crisis.
Local content is defined as a national agenda that contributes to the development of the economy through the participation of all economic segments, including the government and private sector, state-owned companies and individuals.
Additionally, local content is defined as the national inputs used to produce products and services in a country, encompassing raw materials, labor force, capital and technical assets.
The Local Content and Government Procurement Authority was established in Saudi Arabia in 2018 to formulate and monitor policies and regulations, develop local opportunities, promote transparency and leverage national purchasing power in partnership with the public and private sectors to enhance local content in the national economy and improve government procurement processes.
The primary objective of the authority is to enhance local content in government procurement and in the private sector.
Increasing local content will also create job opportunities for Saudi nationals and enhance the Kingdom’s non-oil gross domestic product.
Additionally, the aim is to establish regulatory tools and methods to promote local content, enhance government procurement processes, and empower innovation and digital transformation.
The authority has launched the Local Content Award, which aims to stimulate and honor the public and private sectors, individuals and state-owned companies, fostering the enhancement of local content in various sectors of the economy and improving their performance in implementing contracts and projects.
In its second outing, the award honored 23 winners in four categories in a ceremony with the slogan “We celebrate your contribution,” sponsored by Bandar Alkhorayef, the minister of industry and mineral resources, and chairman of the board of the authority.
Alkhorayef said that enhancing local content and localization was a national dream that has become a reality. He cited the localization of the insulin hormone as an example.
Another success story related to the increase of local content is the rise in localization percentage in the military industries from 2 percent to 13.7 percent in 2022. The goal is to increase it to 50 percent by 2030, aligning with the Saudi vision.
I believe that Saudi Arabia has succeeded in enhancing local content to mitigate any unexpected risks associated with disruptions in the supply chain due to unforeseen global crises.
Increasing local content will also create job opportunities for Saudi nationals and enhance the Kingdom’s non-oil gross domestic product.
Establishing the Local Content and Government Procurement Authority to regulate local content efforts in the Kingdom has resulted in a growth of local content in Saudi Arabia to reach 43 percent, accompanied by a 20 percent increase in spending.
The introduction of the Local Content Award has incentivized the public and private sectors, state-owned companies and individuals to enhance local content in various economic sectors in the Kingdom. This initiative has improved compliance with regulatory requirements and promoted the culture of local content through increased awareness.
• Talat Zaki Hafiz is an economist and financial analyst. X: @TalatHafiz
