The Localization of the Bus Industry in the Kingdom of Saudi Arabia is an effort to transfer bus manufacturing knowledge and localize the industry within the Kingdom. As part of this effort, the Local Content and Government Procurement Authority (LCGPA) signed an agreement with the Joint Venture (JV) Company for bus manufacturing on March 30, 2022, to localize the bus industry and transfer manufacturing knowledge. The agreement represents one of the new government procurement methods within the new Government Tenders and Procurement Law. It aims to localize the manufacturing of various types of buses to fulfill the Ministry of Education's need for school buses. This includes providing buses equipped with modern engine technologies, such as hydrogen-powered and electric buses, as well as internal combustion buses running on gasoline and diesel.
The JV Company for bus manufacturing comprises Tatweer Educational Transportation Services Co., Saudi Arabian Industrial Investments Co. (Dussur), and Chinese CHTC KINWIN (Nanjing) Automobile Co., Ltd.
By adopting a contracting method for knowledge transfer and industry localization, the LCGPA seeks to augment benefits from government procurement, develop new industries locally, transfer manufacturing knowledge, respond to government demand with high quality, lowest cost, swift turnaround, and provide sustainable national products that help rationalize spending.
Objectives of the bus industry localization agreement
The bus industry localization agreement aims to achieve the objectives of Saudi Vision 2030, in terms of reducing oil dependence and diversifying the economy. It will reduce imports by more than 30 percent and curb capital outflow, especially in light of the Kingdom’s need for the bus industry at the strategic level. Total bus import expenditure in 2018 marked SAR2.2 billion. The plant's total production capacity is expected to reach three thousand buses per year. The deal also targets the creation of job opportunities, with the Saudization rate reaching 80 percent.
Economic impact of bus industry localization
The agreement is expected to directly contribute about SAR8 billion to the gross domestic product revenue throughout its duration, and more than SAR40 billion indirectly, as a result of the localization of the bus industry.
Related quizzes
