“Local Content” imposes obligations of up to 25% on foreign companies to localize technology

Introduced Local Content and Government Procurement Authority Draft “Participation Technology, knowledge, and export development.”

The system pointed to the creation of the “balance multiplier” tool, which ranges between 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 based on the assessment of the actual economic impact. Instead of 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 authorized foreign companies to create a “preemptive balance” by implementing strategic projects before the obligation arises, to use it as a tool. Financial to meet future government contract obligations.