المملكة: urgent.. "Local content" It imposes obligations of up to 25% on foreign companies to localize technology

Introduced Local Content and Government Procurement Authority Draft “Participation Economic» To maximize development goals and empower foreign companies in the Saudi market, commitment rates of up to 25% on government contracts for imported goods and services.

The Authority revealed that the new legislation applies immediately upon its entry into force on government procurement whenever the value of the competition reaches 75 million riyals for one foreign company.

The document stated that the minimum cumulative amount in cases of consolidated purchase amounts to 100 million riyals for the foreign company across multiple contracts during two consecutive calendar years.

The approved policy specified precise progressive commitment rates, reaching 25% for purchases ranging between 75 and 300 million Saudi riyals.

The systems indicated a decrease in the compliance rate to reach 20% for the category exceeding 300 million and up to 500 million riyals, to reach 15% for purchases exceeding half a billion.

The regulations indicated a package of eligible activities that include “investment, localization of industries, research and development, and transfer.” Technology Knowledge, and export development».

The system pointed out the innovation of the “balance multiplier” tool, which ranges from 1 to 4 degrees, to evaluate projects and reward them based on the level of added value achieved for the national economy.

The draft touched on making the “outputs” path available for major contracts whose value exceeds 500 million riyals, which is a qualitative path that depends on assessing the actual economic impact rather than the volume of spending.

The mandatory instructions stressed the need for the contractor to provide an executive financial guarantee equivalent to 10% of the total value of economic participation obligations.

The supervisory department stressed that it monitors performance annually, while implementing a mechanism to deduct amounts from the financial guarantee according to a specific formula in the event of failure to achieve the required targets.

The Authority permitted foreign companies to create a “preemptive balance” by implementing strategic projects before the obligation arises, in order to use it as a financial instrument to meet future government contract obligations..