Although only 3 years have passed since its establishment, the Local Content and Government Procurement Authority succeeded in supporting the national industry and giving it priority in various projects through 4 mandatory lists, and achieving gains of 18 billion riyals in a number of projects until the end of last year. The establishment of the Local Content Authority came in late December 2018, to achieve a package of the goals of the Kingdom’s Vision 2030, foremost of which is maximizing the non-oil domestic product, and enhancing the Kingdom’s capabilities for self-sufficiency. The term local content was launched with the launch of the vision in 2016, and the authority defined a national definition of local content, which is the total expenditure in the Kingdom through the participation of Saudi elements in the workforce, goods, services, production and technical assets, and it was also included as an essential element in the new government competition and procurement system through The list of preference for local content, local small and medium enterprises, and companies listed in the financial market in business and procurement.
Attracting international companies to set up factories in the Kingdom
The Ministry of Industry has recently implemented the contracting method for the localization of industry and the transfer of knowledge, as a government procurement method developed in the new government procurement and competition system. According to the ministry, the new method contributes to achieving the goals of the Kingdom’s Vision 2030, by providing new industries, developing local supply chains, developing government procurement and contracting methods, in addition to rationalizing government spending and upgrading government procurement. She explained that this method was approved by the new government competition and procurement system as a modern purchasing and contracting method managed and supervised by the Local Content Authority in cooperation with the relevant authorities, indicating that it represents a qualitative leap in the development and development of local content by attracting major international companies to establish factories in the Kingdom, and what This involves the generation of job opportunities, the transfer of knowledge and technology, and the creation of new supply chains. This will meet the government’s demand for the beneficiaries in a faster time, lower cost, and higher quality. It will also promote the unification of procedures and rationalization of government spending by providing sustainable and highly efficient national products. The authority is responsible for activating the contracting method for industry localization and knowledge transfer, evaluating the proposed opportunities for industry localization and knowledge transfer, and accepting or rejecting them, according to specific criteria, in addition to supervising the implementation of agreements after their signing, as well as preparing or reviewing feasibility studies for industries targeted for localization.
17 agreements to support local content partnerships
The authority worked to unify efforts aimed at developing local content for the public and private sectors through the Local Content Partnerships initiative, which resulted in more than 17 cooperation agreements aimed at developing local content and incorporating its requirements in different sectors, in addition to establishing a local content coordination council with the membership of major national companies and government agencies. Related. Its membership includes Saudi Aramco, SABIC, Maaden, STC Group, Saudi Arabian Airlines, the Saudi Electricity Company, as well as the Council of Saudi Chambers, the Ministry of Energy and the Ministry of Industry and Mineral Resources. These partnerships also aim to coordinate joint efforts, by activating the general framework, governance, mechanisms and targets concerned with developing local content, sharing best practices and experiences, and defining a baseline for local content with government agencies and the private sector.
Applying local content requirements to 23,000 government competitions
The authority is working to follow up the commitment of government agencies to the requirements of local content, and the results of the follow-up showed that 23,000 government competitions worth 90 billion riyals meet the requirements of local content since the beginning of the activation of the new government competition and procurement system, and these competitions represent 77% of government competitions, and the inclusion of Correctly local content requirements for 19,000 government competitions.
With the aim of raising awareness of the mechanisms for preferring local content, the authority held more than 120 workshops with the public and private sectors, and communicated with 400 government agencies to ensure that local content requirements are included in its competitions, and dealt with more than 6,000 inquiries and answers from the public and private sectors. Achieving these gains comes through 4 local content mechanisms that the authority has included in the new competition system, one of which is the mandatory list of national products that government contractors must purchase as national products.
3 Mandatory lists in construction, medicine and medical preparations
The authority issued 3 mandatory lists of national products in the sectors of building and construction, medicine and medical preparations, and medical supplies. The first list included 114 products in the building and construction sector, the second 100 products in the pharmaceutical and medical preparations sector, in addition to the third list, which included 29 products in the medical supplies sector. The follow-up results indicated that approximately 16,000 government competitions worth 37 billion riyals apply to the mandatory lists of national products, and the mandatory lists contribute to supporting national industries and products by giving them priority in government procurement. The price preference mechanism for national products, in addition to 281 high-value competitions with a value of 50 billion riyals, to which the mechanism of weighing local content in the financial evaluation and the minimum required mechanism for local content applies.
Amending the value of the high contracts to 50 million riyals
The authority amended the value of high-value contracts to which the mechanism of weighing local content in the financial evaluation and the minimum local content mechanism is applied to become 50 million riyals, with the aim of increasing the contribution of government procurement to economic development. The Local Content Authority, in cooperation with the Ministry of Industry and Mineral Resources and the Spending Efficiency Achievement Center, announced the launch of the additional price preference initiative, to support 208 national products in the pharmaceutical and medical preparations sectors, the medical supplies sector, and a group of other products from various industrial sectors, and the initiative aims to increase the price preference ratio. Which are granted to these products when compared to their foreign counterparts in the offers of applicants for government competitions, which were determined by the list of preference for local content, local small and medium enterprises and companies listed in the financial market in business and procurement at a rate of 10%, to raise the percentage after the launch of the initiative to a maximum of 30%.
Campaign to raise awareness of local content
The authority launched its communication campaign, “From Us and Fina”, with the aim of raising awareness of the concept of local content and its elements, which include the workforce, products, services, assets and local technologies.
According to the Minister of Industry Bandar Al-Khorayef, the campaign keeps pace with the high priority given to local content in the “Kingdom’s Vision 2030”, for its pivotal role in diversifying sources of income and maximizing the value of non-oil GDP, in addition to creating new industries and generating more job opportunities for the sons and daughters of the country. Contribute to the localization of supply chains locally, and attract more foreign investments. He pointed out that the results of the authority’s work during the past year showed great progress in the number of government competitions that meet the requirements of local content, stressing the move forward in following up the commitment of the authorities to implement the mechanisms and requirements of local content in their work, which contributes to enhancing local resources and achieving the desired economic transformation. .
Encouraging the private sector to support local content
In accordance with the regulations, the authority encourages the private sector to contribute to the development of local content, and it has the right to set incentives and programs that contribute to achieving this, and to develop the necessary tools, methodologies and programs to empower government agencies, raise their capabilities, and contribute to training national cadres in relation to the development of local content and the advancement of government procurement.
The authority also has the right to prepare studies, research and reports related to local content and work with the Ministry of Finance in coordination with the relevant government agencies to develop and update an information base for suppliers and manufacturers, to serve the objectives of the authority, and to propose initiatives for developing local content and the bodies responsible for their implementation, and raise this to complete the procedures regularity in it.