RIYADH — A regulation granting local content, and Saudi SMEs and publicly listed companies preference in public tenders was affirmed by the Council of Ministers. The regulation, part of the new Tenders and Procurement law, was developed jointly by the Local Content and Government Procurement Authority (LCGPA), in cooperation with the Ministry of Finance and relevant government entities. The regulation incorporates a new local content development framework with several local content policies that aim to boost local capacities and develop national industries as well as ensure national products are given priority in the price preference policy in public tenders. The endorsed regulation includes a mandatory list of national products that must be purchased from local manufacturers or suppliers. LCGPA will cooperate with the Center of Spending Efficiency to determine the types of projects where other local content mechanisms may apply.

In this context, Dr. Ghassan bin Abdulrahman Al-Shibl, LCGPA Chairman, expressed his appreciation for the continuous support that has been given to LCGPA to develop effective local content policies, and extended his gratitude to the Custodian of the Two Holy Mosques King Salman Bin Abdulaziz and Crown Prince Muhammad bin Salman, Deputy Prime Minister, Chairman of the Council of Economic and Development Affairs. He also valued the Council of Ministers’ approval of the Local Content Preference regulation.

Dr. Al Shibl described the new regulation as a breakthrough resulting from LCGPA’s efforts to realize its strategic objectives, which include developing local content in all sectors and localizing promising industries in line with the kingdom’s obligations to the World Trade Organization (WTO). He added that the regulation will contribute to providing opportunities for the private sector, through new procurement procedures that will grant preference to local content, in addition to granting SMEs a 10 percent price preference in sourcing and services contracts, excluding high-value contracts. “Applying these policies will enhance the private sector’s capacities and fortify its role in national economic development thus contributing to a growth in non-oil GDP and creating jobs,” he said.

Government entities are required to implement local content policies within their tenders. Al Shibl addressed LCGPA’s role in ensuring compliance to the preference regulation. "The contracting parties shall be responsible for abiding by the local content requirements in their tenders, and adhering to the mandatory list of products to be purchased from national manufacturers in all contracts whose scope of work involves products included in the list,” he said. — SG