Saudi Aramco Achieves 70% Localisation Milestone, Driving $280 Billion GDP Growth and Job Creation
Saudi Aramco, the largest integrated energy and chemicals company in the world, has reached a significant milestone by achieving a 70% local content benchmark in its supply chain through its In-Kingdom Total Value Add (iktva) program. This achievement is a crucial part of Saudi Arabia’s Vision 2030 initiative, aimed at enhancing domestic industrial capacity and diversifying the economy. The success of this program has already led to substantial economic benefits, including job creation and increased foreign investment.
Understanding the iktva Program and Its Importance
The iktva program was launched in 2015 with the goal of maximizing economic value within Saudi Arabia by localizing the procurement of goods and services. This initiative encourages the development of local supplier and aims to create a competitive national industrial ecosystem. By achieving a 70% local content rate, Saudi Aramco has shifted its procurement spending significantly, ensuring that most of its expenditures remain within the Kingdom. This transition marks a departure from previous years when a majority of materials and services were imported. The localization of procurement not only strengthens the resilience of Saudi Arabia’s supply chain but also reduces vulnerability to global disruptions. Furthermore, it lays the groundwork for a robust industrial base that can support both energy and non-energy sectors. Looking ahead, Aramco plans to increase local content to 75% by 2030, indicating a commitment to further enhancing national capabilities and competitiveness.
Economic Impact: Job Creation and Investment Growth
The success of Aramco’s iktva program has had a profound impact on employment and economic growth in Saudi Arabia. The initiative has generated over 200,000 jobs, both directly and indirectly, through local manufacturing, services, and supply chain development. Since its inception, the program has contributed more than $280 billion to Saudi Arabia’s gross domestic product (GDP), highlighting the macroeconomic significance of localization efforts. Additionally, Aramco’s initiatives have attracted over 350 investments from companies across approximately 35 countries, bringing in around $9 billion in foreign capital. These investments have facilitated the local production of 47 strategic products for the first time in the Kingdom. The outcomes of the iktva program demonstrate how it has strengthened connections between local suppliers and Aramco’s global operations, creating a multiplier effect that fosters job creation, skills development, and supplier capability upgrades.
Driving Economic Diversification Beyond Oil
Saudi Arabia’s Vision 2030 envisions the energy sector as a catalyst for broader economic transformation. By localizing procurement spending, Aramco is contributing to this vision by nurturing local manufacturing, boosting exports, and reducing reliance on foreign supply chains. The focus on local procurement incentivizes suppliers to enhance their capacity and quality, thereby improving the competitiveness of Saudi Arabia’s industrial sector. This strategy encompasses various sectors, including chemicals, metals, services, electrical components, and machinery, laying the foundation for future export growth. Moreover, localizing procurement helps mitigate risks associated with global supply chain disruptions, ensuring that critical energy infrastructure is supported by a robust domestic ecosystem.
Skills Development and Global Engagement
A key aspect of the iktva strategy involves collaboration with both private and public partners to enhance workforce training. Aramco has established national training centers that equip thousands of Saudi workers with essential skills, aligning human capital development with industry needs. These training initiatives help Saudis enter technical, management, and advanced manufacturing roles, contributing to broader workforce localization efforts. Additionally, Aramco’s localization drive extends beyond domestic focus; the company has hosted regional supplier forums to attract global investors and manufacturers. These events facilitate the integration of Saudi Arabia into global supply networks, expanding opportunities for local and international firms alike. As local suppliers mature and scale their capacity, the strategy also supports export capabilities, enabling Saudi-made products to reach international markets.
Saudi Aramco’s achievement of a 70% local content benchmark is a significant step toward its 2030 target of 75% local content. This accomplishment reflects over a decade of strategic efforts and positions Saudi Arabia for a future where domestic capabilities are as vital as its hydrocarbon wealth. The iktva program is recognized as one of the most effective supply-chain-led industrial transformation models globally, merging energy-sector leadership with broader economic diversification. As the global energy landscape evolves, Saudi Arabia’s ability to develop local industries, create jobs, and attract investment will be crucial for its long-term economic resilience.
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