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RIYADH, May 18 (Reuters) - Saudi Arabia's Public Investment Fund (PIF) on Wednesday announced the launch of a state-owned military industrial company aimed at contributing more than 14 billion riyals ($3.7 billion) to the Kingdom's gross domestic product by 2030.
The new Saudi Arabian Military Industries will seek to provide over 40,000 jobs by 2030, the PIF - the kingdom's top sovereign wealth fund - said in a statement.
The move could alter decades of practice in which Saudi Arabia - one of the world's largest buyers of foreign arms - and other Gulf Arab states recycled a major part of their oil wealth back into Western economies via arms purchases and investments.
Last year, the powerful deputy crown prince and defence minister, Prince Mohammed bin Salman, launched his Vision 2030 reform scheme to boost jobs and revenue to prepare for a future with lower oil income.
"The company will seek to be a key catalyst ... to localize 50 percent of total government military spending in the Kingdom by the year 2030," up from just 2 percent now, bin Salman was quoted as saying by state news agency SPA.
"It will lead the military industries sector to increase local content, increase exports and bring foreign investment to the kingdom by entering into joint ventures with major international military industry companies," he added.
The company will work in repair and maintenance of planes as well as in the manufacture of unmanned aircraft, according to the statement.
Additionally, it will do work on military vehicles, ammunition, radar, communications systems and electronic warfare.
Saudi Arabia has been leading a military coalition fighting for over two years in a war in neighbouring Yemen and accuses arch-rival Iran of encircling it by backing armed proxies throughout the region.
The kingdom also spearheaded the creation last year of the Islamic Military Counter Terrorism Coalition, which will be headquartered in Riyadh and comprised of dozens of countries from throughout the Muslim world.
U.S. President Donald Trump is set to make his first overseas visit starting in Saudi Arabia this weekend, in large part focused on defense and security ties.
The United States is close to completing a series of arms deals with the kingdom totaling more than $100 billion, a senior White House official told Reuters earlier this month. (Reporting By Mostafa Hashem, Noah Browning and Katie Paul; Editing by Kevin Liffey and Jonathan Oatis)