Additional Price Preference Initiative

The Additional Price Preference Initiative, launched by the Local Content and Government Procurement Authority in collaboration with the Ministry of Industry and Mineral Resources and the Expenditure and Projects Efficiency Authority (formerly known as the Center of Spending Efficiency) on September 21, 2020, aims to support 208 national products in the Kingdom of Saudi Arabia. These products include pharmaceuticals, medical supplies, and some products from various industrial sectors. The initiative is intended to alleviate the financial and economic impact on these sectors amid the "COVID-19" pandemic.

The work mechanism of the initiative involves providing a price preference for products listed in the initiative's dedicated list of up to 20 percent, in addition to the price preference specified in the regulation, which is 10 percent. After the launch of the initiative, the percentage increased to a maximum of 30 percent, according to specific criteria for each sector.

The Additional Price Preference Initiative aims to increase the percentage of price preference offered for health sector products and certain products from a host of other industrial sectors when compared against foreign products, such as during the solicitation of government tenders. It was determined at 10 percent by the Local Content, small and medium-sized enterprises (SMEs), and Listed Companies’ Preference Regulations in business and procurement.

The products included in the Additional Price Preference Initiative are defined according to different criteria in each sector, depending on their nature. The initiative revolves around granting a price preference for products listed in the dedicated list, up to 20 percent, divided into two parts: the first 10 percent and the second 10 percent. Each part is allocated based on specific criteria for each sector targeted by the initiative.

Products identified in the pharmaceutical and medical supply sector are given a preference of up to 10 percent for the first part by their inclusion in the regulations. If the product consists of locally manufactured active ingredients, another 10 percent is added.
Products identified in the medical supplies and other industrial sectors are also given an additional preference of up to 10 percent for the first part as per the regulations. The second part is added if the factory's local content ratio is no less than 30 percent, and in some products, 40 percent.

The Local Content and Government Procurement Authority seeks to develop local content and support national products through the Additional Price Preference Initiative. Moreover, the initiative will strengthen and reinforce supply chains in targeted products and achieve self-sufficiency. The authority expected that the estimated spending on national factories during the implementation period of the initiative would reach a total of between SAR2 billion and SAR3 billion.