Airbus has signed an investment agreement worth more than US$6.7 billion to build military and civilian helicopters in Saudi Arabia with a local defence company.

Airbus and Scopa Industries agreed to develop a helicopter manufacturing facility in Saudi Arabia, with construction of the plant expected to begin early next year, Fawaz Alakeel, Scopa CEO, said in an interview from Paris. The plant will be able to produce up to 100 military and commercial helicopters by the end of the decade, he said.

Building up the domestic defence industry is part of Crown Prince Mohammed Salman’s plan to diversify the oil dependent Saudi economy. He wants half of the kingdom’s military expenditure to be spent locally by 2030. Saudi Arabia has one of the world’s biggest defence budgets, behind the US, China, Russia and India.

“We’ve been working with Airbus on this deal for the last year until we reached this agreement,” Alakeel said.

Prince Mohammed is currently in France with a large delegation of Saudi officials and businessmen, and last week met with President Macron.

The Saudi helicopter facility will be Airbus’s first in the region, and could be used to export to other countries in the Middle East in the future, Alakeel said. BLOOMBERG

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