South Korean defense majors Hanwha Corp. and LIG Nex1 Co. have turned attention to Saudi Arabia as the world’s largest weapon importer is readying to sharply increase arms production.

The Saudi Arabian government last April set the “Vision 2030” initiative with an aim to retool its economy by reducing its dependence on oil revenue and bolstering other industries. Under the plan, it sets a goal to boost the country’s military equipment and weapon production to about 50 percent by 2030 from current 2 percent. This plan can make the country a burgeoning market for defense equipment producers.

Hanwha has embarked on a feasibility study in the country. The company is currently mulling creating a joint venture with a local firm to ride on the transition turning the country from a major weapon importer to producer and seller under the Vision 2030 plan, an unnamed senior official at Hanwha said on Thursday. Hanwha hopes to draw orders for explosives and self-propelled artilleries from the country.

LIG Nex1 is also reviewing a plan to open its first Middle Eastern branch in Saudi Arabia to lay groundwork to make a foray into the country’s weapon industry, according to a company official.

Escalating tension and uncertainty in the Middle East due to the rise of the Islamic State (IS) has fueled demand for munitions in Saudi Arabia, industry observers said.

Market data provider IHS Markit Ltd. estimated Saudi Arabia’s weapon imports for 2015 at $9.8 billion, up 52 percent on year, the largest in the world. Stockholm International Peace Research Institute (SIPRI) said the country’s defense spending reached $87.2 billion last year, the third biggest following the U.S. which spent $596 billion and China $214.8 billion. Share of its defense expenditure compared to its gross domestic product (GDP) stood at 13.7 percent.

By Kim Jung-hwan and Kang young-woon

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