Ghassan Al Shibl, Senior Advisor to the Board of Directors and Former CEO, Advanced Electronics Company: Interview

Interview: Ghassan Al Shibl

With the third-highest defence budget worldwide, how far can Saudi Arabia localise spending?

GHASSAN AL SHIBL: It is extremely encouraging that in Vision 2030 there is a focus on localisation. Much of the necessary infrastructure is already in place, so the goal of reaching 50% local, value-added content is achievable. Given the geopolitical environment, it is clear the Kingdom will have to continue its defence spending for the foreseeable future, and Saudi Arabia ought to be self-reliant in terms of defence and in supporting the fielded defence systems. One significant aspect of this is the ability to repair and to develop our own military technical capabilities, which will require developing the industrial and the manufacturing capabilities to support this objective. Human resources and training will also play a central role in achieving this. In Saudi Arabia we have people coming out academic institutions with the right education, but these graduates must be put on the right track through on-the-job development and training. Graduates can become creative and productive leaders if they are put on that path and made part of a team where they learn professionalism and gain the technical expertise on which the Saudi industry will be built.

Is it realistic that advanced equipment could eventually be produced within the Kingdom?

AL SHIBL: The Saudi defence industry will be able to expand on its capacity and capabilities. Whether non-essential items are produced locally or bought from abroad will have a limited impact on the overall size of the defence industry here. However, Saudi Arabia can develop an industry capable of producing the most advanced military technologies because, though the platform is complex, if broken down into electronics, mechanics, airframes and engines, then it becomes an achievable task. The real challenge will be the systems engineering capability to put all components into a single advanced system. This will take time, but it is achievable and will also create a stronger base for sector growth. Encouraging development is also important, so it is necessary to put extra effort into creating an environment driven by creativity, parallel to technology transfer. This research and development culture will be key to future advancements and for keeping pace with the rest of the world, while also contributing to a diversified Saudi economy.

How will strategic partnerships with foreign firms assist in creating a robust local defence industry?

AL SHIBL: Strategic partnerships are necessary to achieve the development of local capabilities, particularly in the area of defence. Technology and technology transfer are not the primary challenges, the commercial and contractual terms are; we have many examples of Saudi success in this. Know-how does not come overnight, and as Saudi Arabia is building its own capability, it can be a very strong regional partner for these global companies. The Kingdom is open to doing business with anyone in the world who is able to align with our vision of localisation and building a sustainable economy.

What should be done to renew the offset programme and grow its contribution to GDP?

AL SHIBL: Given the circumstances, the offset programme achieved a great deal, though much more could have been achieved with better governance. The incentives for the programme were unclear, and it was based on “best efforts” without any penalties. The programme now requires reinventing as a centralised programme, with oversight for different sectors and with rights, obligations and benefits made very clear to international companies. The concept is something that all countries address in some way in their localisation policies. Rather than looking at it as a programme, it should be seen as a part of the economic way of life and also as part of Vision 2030.