233 products will be required to meet minimum local content standards starting in 2026

In a strategic move aimed at bolstering domestic industry and empowering Saudi products, the Local Content and Government Procurement Authority announced a significant decision mandating a minimum local content percentage in the "Local Content Certificate" at the establishment level. This measure is a prerequisite for benefiting from the mandatory list of national products in government tenders and procurement, representing a qualitative shift in the mechanisms for supporting national products.

Product details and application timeline

The authority explained that the new decision will include 233 diverse products, and the date for applying the requirement to them has been divided into two time phases to ensure the readiness of the market and factories:

• Phase 1 (August 1, 2026): Includes ceramic and porcelain tile products, where the minimum local content requirement will be applied to them to ensure their eligibility in government procurement.
• Phase Two (August 1, 2027): The list expands to include other vital products such as split air conditioners, water pumps, water valves, copper wires, as well as a wide range of medical devices and supplies.

Context of the decision and the Kingdom's Vision 2030

This decision is perfectly aligned with the goals of the Kingdom's Vision 2030, which seeks to diversify the economic base and reduce reliance on oil as the primary source of income. For years, the Kingdom has been working to localize industries and enhance the efficiency of domestic supply chains. The concept of "local content" is a cornerstone of this vision, encompassing not only the final product but also its constituent elements, including raw materials, labor, and the technology used.

Expected economic impact

This decision is expected to have a broad and positive impact on the national economy, including:

• Boosting GDP: by increasing reliance on local factories and reducing imports.
• Creating job opportunities: Increasing local content rates requires employing and training national cadres in various industrial sectors.
• Attracting investments: The decision will encourage local and foreign investors to inject capital into establishing and expanding production lines within the Kingdom to benefit from the advantage in large government procurements.

Enhancing industrial capabilities and sustainability

The Authority confirmed that these percentages were determined after extensive studies of the market situation and the current capabilities of national factories. This phased implementation aims to give manufacturers sufficient time to adjust and develop their supply chains. The Authority seeks to expand the application of this requirement in the future to include the remaining products on the mandatory list, thereby enhancing the sustainability of the industrial sector and achieving genuine added value for the national economy, transforming government procurement into an effective development tool.