Economic Participation Program
The Economic Participation Program stands as an enabling tool for fostering national economic growth. This is accomplished by generating investment opportunities and enhancing local capabilities in strategic sectors. The Program is applied to all government procurements on the imported goods and services that meet the minimum level specified in the Policy.
Economic Participation Program's Objectives:
- Maximizing the benefit of government procurements through localization of specific industries and services, enhancing local content, and supporting scientific research and development.
- Fostering and developing national industrial capabilities that contribute to sustainable economic development.
- Transferring technology and knowledge in critical fields of Priority for the national economy.
- Contributing to the enhancement of local companies' capabilities, and qualifications, thereby increasing their exports and their contribution to global supply chains.
Enhancing human resources capabilities through training, development, knowledge transfer, and providing sustainable job opportunities.
Scope of Application:
The Economic Participation Program is applied to all government procurements on the imported goods and services that meet the minimum level specified in the Policy. This results in the establishment of an economic participation obligation equivalent to 35% of the value of imported goods and services. Obligors can then make qualitative investments in specific economic activities outlined in the Policy, aiming to create additional economic value equal to the value of the obligation.
Qualified Activities:
The obligors are encouraged to assess different activities to fulfil their EP obligations with the aim of maximizing the value creation in the Kingdom. The eligible activities are detailed below:- Investment: Through capital injection dedicated to establishing, expanding, or upgrading a manufacturing or service facility, Joint venture or an entity in Saudi Arabia.
- Localization of Manufacturing or services: Supporting local beneficiaries to establish new services or manufacturing capabilities within their service portfolio. This can be achieved through transfer of manuals, tools and document, training or establishment of dedicated programs which focus on performance improvement and optimization of operations of local services or manufacturing capabilities.
- Subcontracting: Purchasing local products and services from a local company as part of a commercial agreement between the local beneficiary and the obligor.
- Export Promotion: Purchasing local goods and services by foreign companies for export and launching new markets for national products to enter global supply chains.
- Research and development: Conducting applied research according to a structured framework to find a solution to a specific problem or to develop a new product, which is carried out within the Kingdom to meet the needs of national strategic sectors.
- Technology transfer: Transfer of technology from an obligor to the local beneficiary. The transfer of technology includes the transfer of technical tools and techniques as well as training and technical assistance related to the technology to the local beneficiary by the obligor. The technology transfer can also include the implementation of the technology to make it accessible by the local beneficiary.
- Knowledge transfer: Knowledge transfer refers to the transfer of technical know-how from an obligor to the local beneficiary. Knowledge transfer is a dynamic process that refers to all activities and mechanisms of interaction that promote the dissemination, adoption, and implementation of the new skill by the local beneficiary.
To view the Economic Participation policy, click here.
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