Saudi Arabia Defence & Security Report

Providing expert analysis, independent forecasts and competitive intelligence on the defence & security industry.

Report includes: BMI Industry View, Industry SWOT Analysis, Industry Forecasts, BMI's Security Risk Reward Index, Company Profiles and Global, Regional and Country Industry Overviews.

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Saudi Arabia Defence & Security Report
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BMI View: Reduced government revenues amid lower oil prices will negatively impact Saudi military spending growth in the short term. H owever, facilitated by high oil production and a strong fiscal position, the kingdom ' s defence budget will see robust long-term expansion driven by Riyadh ' s rivalry with Tehran, risks of spillover from instability in neighbouring states and rising threats from Islamist militancy, sectarian violence a nd social unrest. Efforts to secure land borders, fight terrorism and assist allies in regional conflicts will drive procurement of ground and air equipment, while the need to protect the kingdom ' s territory and shipping routes from Iran will drive investment into strengthening naval, as well as air defence capabilities . Work to develop the local defence sector under Vision 2030 will take many years, and domestic defence companies' ability to meet requests for technologically advanced equipment will remain limited over our forecast period .

Defence Expenditure Headline Forecasts (Saudi Arabia 2015-2020)
2015e 2016f 2017f 2018f 2019f 2020f
e/f = BMI estimate/forecast. Source: BMI, US Dept. Of State WMEAT
Defence expenditure, USDmn 74,061 78,806 84,247 92,427 100,843 109,482
Defence expenditure, USD, % y-o-y -8.2 6.4 6.9 9.7 9.1 8.6
Defence expenditure, % of GDP 10.8 10.8 10.8 10.8 10.8 10.7

Recent Developments

  • As part of its Vision 2030 plan, the Saudi government seeks to increase the share of defence spending on locally-produced equipment and services to 50% in the next 15 years.

  • Cuts in public spending and subsidies are being undertaken, and may raise the longer-term potential for social unrest.

  • Tensions between Saudi Arabia and Iran have intensified. Riyadh's execution of prominent Shi'a cleric Nimr al-Nimr - which in turn sparked an attack on the Saudi embassy in Tehran - led to a severance of diplomatic ties between the two countries in January 2016.

  • Following Riyadh's execution of al-Qaeda militants convicted of terrorist crimes in January 2016, the group's leader al-Zawahiri called for new attacks on Saudi Arabia. Meanwhile, several Islamic State attacks have occurred in Saudi Arabia in the last few months.

  • Riyadh has stated that it is considering an intervention against IS in Syria.

  • Riyadh suspended its USD3bn aid package to Lebanon in February 2016.

  • KACST, Taqnia and DigitalGlobe (US) announced in February 2016 a joint venture (JV) to develop a network of small satellites capable of collecting 80cm resolution imagery.

  • In May 2016, Taqnia and KACST entered a JV with Skyware Technologies (US) and Crescent to manufacture and market Saudi Arabia's first high throughput satellite terminal.

  • In January 2016, KACST revealed it is building a satellite - Saudi SAT 5B - to 'support remote sensing services in the kingdom' in cooperation with China (Arab News).

  • In March 2016, the Saudi government opened a new artillery projectiles factory in al-Kharj, in cooperation with South Africa's Rheinmetall Denel Munitions.

  • Alsalam and UK's BAE Systems announced in July 2015 the establishment of a repair, maintenance and overhaul (MRO) facility in Saudi Arabia.

  • In August 2015, Alsalam, Boeing (US) and Saudi Aerospace Engineering Industries (SAEI) agreed to set up a helicopter MRO centre in Saudi Arabia.

  • The US Department of Defense (DoD) announced in April 2016 that the Saudi air force is set to receive two Beechcraft King Air 350 ER aircraft equipped with ISR/SAR capability.

  • In March 2016, Italy's Finmeccanica announced it had received an order for delivery of six air traffic control (ATC) systems to the RSAF.

  • Taqnia signed a memorandum of delivery for 30-An-178 airlifters to the Saudi Air Force in December 2015.

  • Also in December, the US DoD announced that Saudi Arabia had awarded a contract to Sikorsky for the delivery of 10 MH-60R Seahawk helicopters for the Saudi navy.

  • In October 2015, the US and Saudi governments signed an agreement for the latter to purchase 320 PAC-3 missiles.

  • Also in October, the US DoD approved a request from Riyadh to purchase an additional nine Sikorsky UH-60M Black Hawk utility helicopters.

  • The UK defence ministry announced in January 2016 that Saudi Arabia had prepared its Panavia Tornado IDS strike aircraft with capability to carry the MBDA Brimstone air-to-surface missile.

  • In January 2016, media reported that Riyadh had rejected an offer from the US navy for the manufacture of four armed versions of its Lockheed Martin Littoral Combat Ship (LCS) citing issues with costs and targeted delivery date.

  • According to a statement by Spain's Navantia in February 2016, the company is 'set' to receive a USD3.3bn order from Riyadh for five of its Avante corvettes.

  • In February 2016, the EU parliament voted in favour of an EU-wide arms embargo on Saudi Arabia due to the 'disastrous humanitarian situation' created by the 'Saudi-led military intervention in Yemen'. The vote is not legally binding.

Defence Industry Risk Reward Index

Saudi Arabia's local defence industry remains underdeveloped, leaving the country's armed forces heavily reliant on imports of military equipment. Meanwhile, the Saudi government is one of the largest defence spenders globally, and we expect steady growth in the military budget between 2016 and 2025, creating substantial opportunities for foreign companies. The country boasts reasonably high levels of economic and investment openness, as well as relatively low levels of corruption on a regional comparison - in addition to a high number of defence collaboration agreements, which facilitate trade. As a result, Saudi Arabia's score in the BMI Defence Industry Risk Reward Index stands at 53 out of 100, placing the country joint third regionally, alongside Jordan and the UAE.

BMI Industry View
Table: Defence Expenditure Headline Forecasts (Saudi Arabia 2015-2020)
SWOT Analysis
Defence Industry SWOT
Industry Forecast
Defence Expenditure
Table: Defence Expenditure (Saudi Arabia 2014-2019)
Table: Defence Expenditure (Saudi Arabia 2020-2025)
Defence Trade
Industry Risk Reward Index
Defence Industry Risk Reward Index
Table: Middle East and Africa - Defence Industry Risk Reward Index
Market Overview
Defence Market Overview
Domestic Defence Sector
Domestic Defence Market
Armed Forces Overview
Armed Forces
Table: Armed Forces Personnel (Saudi Arabia 2008-2013)
Security Overview
Domestic Threats
Regional Threats
International Threats
Company Profile
BAE Systems
Thales International
Industry Forecast Methodology
Risk/Reward Index Methodology
Sector-Specific Methodology
Table: Defence Risk/Reward Index Indicators
Table: Weighting of Defence Risk Reward Index

The Saudi Arabia Defence & Security Report features BMI Research's independent forecasts for national and international security, the defence industry, military expenditure, employment in arms production, and arms imports and exports, as well as examining industry trends and prospects, national and multinational arms producers and the regulatory environment.

BMI's Saudi Arabia Defence & Security Report provides professionals, consultancies, government departments, regulatory bodies and researchers with independent forecasts and regional competitive intelligence on the Saudi defence and security industry.

Key Benefits

  • Benchmark BMI's independent defence and security industry forecasts on Saudi Arabia to test other views - a key input for successful budgetary and strategic business planning in the Saudi defence and security market.
  • Target business opportunities and risks in the Asia defence and security sector through reviews of latest industry trends, regulatory changes and major deals, projects and investments in Asia.
  • Assess the activities, strategy and market position of your competitors, partners and clients via our Company Profiles (inc. KPIs and latest activity).


Global and Regional Political Outlooks

A strategic overview of the world’s major political risks, identifying countries facing leadership successions and nations at risk of upheaval, inter-state conflict, or separatism and insurgencies, plus a summary of the world’s ‘wild card’ low-probability high-impact risks.

SWOT Analysis

Snapshot evaluation of the major issues affecting the defence and security sectors, economy and politics, with issues subdivided into strengths, weaknesses, opportunities and threats.

BMI Industry Forecast Scenario

Historic data series and forecasts to end-2019 for key industry indicators supported by explicit assumptions, plus analysis of key downside risks to the main forecast.

  • Defence Expenditure: Defence expenditure (local currency and USDbn); defence expenditure (% of total budget); defence expenditure per capita (USD); defence budget (local currency and USDbn).
  • Armed Forces (to 2012): Manpower available for military service, manpower fit for militaryservice, army personnel, navy personnel,air force personnel, total armed forces, (‘000) (% population).
  • Arms Trade: Arms and ammunition exports and imports (USDmn); bombs, grenades and missiles exports and imports (USDmn); revolver and pistol exports and imports (USDmn); weapons excluding guns and swords exports and imports (USDmn).

Political Risk Assessment

Drawing on BMI’s heritage of more than 25 years of Country Risk analysis, this comprehensively evaluates the key risks to domestic politics and foreign relations, focusing on issues most likely to affect either domestic security or the defence sector.

Security Risk Analysis

BMI’s proprietary Security Risk Indices provide investors with a reliable and country-comparable guide to conflict, terrorism and criminal risk, backed up by our analyst’s latest assessment of each component. Furthermore, drawing on our Country Risk expertise, we assess the state’s vulnerability to a serious, or prolonged, terrorist campaign.

Armed Forces Spending/ Expenditure

The reports contain a detailed breakdown of areas of expenditure by the armed forces, these include spending on international deployments, WMDs and missile defence systems as well as individual breakdowns of the cost-per-soldier.

Competitive Landscape

The domestic security overview lists the various potential internal security threats facing a country, ranging from internal security issues such as terrorism, cyber terrorism, crime and drugs, to external security issues including general defence procedures and potential threats from specific countries. The reports also provide a regional overview which details specific issues and flashpoints affecting the Americas, along with potential risks in the coming year.

Company Profiles*

Examines the competitive positioning and short- to medium-term business strategies of key industry players. Strategy is examined within the context of BMI’s industry forecasts, our macroeconomic views and our understanding of the wider competitive landscape. The latest financial and operating statistics and key company developments are also incorporated within the company profiles, enabling a full evaluation of recent company performance and future growth prospects.


The Defence & Security Market reports draw on an extensive network of primary sources, such as multilateral organisations, government departments, industry associations, chambers and company reports.

*Company profiles are not available for every country. Those reports instead contain information on the current activities of prominent companies operating in the market.