Saudi Arabia and Paramount sign defence co-operation agreement


Saudi Arabian Military Industries (SAMI) and Paramount Group signed a collaboration agreement as part of the Gulf kingdom’s efforts to develop its domestic defence industry.

The agreement was announced on 3 July. It will see development of technologies and capabilities across the land, sea and air domains, as well as system integration, in support of Vision 2030, Saudi Arabia’s economic development plan, which sets the objective of increasing the domestic share of military equipment expenditure to 50% by 2030.

Chief Executive of SAMI, Dr Andreas Schwer, said: “The collaboration between SAMI and Paramount Group will play a large part in helping achieve the objectives of Saudi Vision 2030. This will contribute significantly to further enhancing the capability of Saudi Armed Forces and increasing local content, in addition to creating new job opportunities and training Saudi youth to increase their contribution and raise their role in this vital industry and the national economy in general.

“Paramount Group has an established track record of working in partnership with customer countries, helping to create local defence industrial capabilities through technology and skills transfer. We believe there are many synergies between our companies that can be leveraged to build the defence industrial capability Saudi requires.”

Group Chairman of Paramount Group, Ivor Ichikowitz, said: “Saudi Arabia is important to Paramount Group as much of the technology we have created over the years has been developed with the Middle East in mind. We share the vision of the Crown Prince and his economic development plan. We are sensitive to the requirements of our customers to establish strategic industrial capability and put a strong focus on assisting governments in creating domestic manufacturing capacity.

“Paramount Group has, for many years, been a world leader in the development of technology for asymmetrical conflict, primarily from our experience in Africa. Both the technology and expertise have huge relevance to the security realities facing the Middle East. We have also invested heavily in developing some of the most modern land forces, aviation and naval platforms in the world. These platforms allow us to compete among the best in the world for both developed and emerging markets.”

Ichikowitz said that, “Paramount Group’s portable manufacturing model has been successfully implemented in a number of countries around the world. Over the years, we have refined this model, now perfectly aligned with the declared intent of Saudi Arabia. Where many organisations are still learning this approach, Paramount Group has been implementing projects on this basis for many years and is a viable major partner even in the most sophisticated markets.”

Schwer told Reuters last year SAMI had approached a number of South African defence companies to help fulfil its domestic defence needs.

The deal with Paramount is the first with a South African firm to be announced.

Saudi Arabia made a $1 billion bid last year for a broad partnership with struggling state defence company Denel that would have included a minority stake in its joint venture with Germany’s Rheinmetall.

Despite a desperate need for cash, Denel failed to strike a deal by the end of the year, the deadline which SAMI set for concluding an agreement.

SAMI was created to lead restructuring of Saudi Arabia’s military manufacturing capability which is expected to contribute SR14bn ($3.7bn) to the country’s GDP by 2030, create over 40,000 jobs for Saudi engineers and technicians and invest SR6bn ($1.6bn) in research and development.

SAMI has expanded rapidly and has made a number of acquisitions across different domains this year. It also signed partnership agreements, most recently with South Korea to manufacture ammunition.