Additional price preference initiative launched by Saudi LCGPA for local products

By Rahul Vaimal, Associate Editor
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The Local Content and Government Procurement Authority (LCGPA) in Saudi Arabia has unveiled an additional price preference initiative to support 208 national products in the fields of medicine, pharmaceuticals, medical supplies and other industries.

The initiative which been implemented in collaboration with the Ministry of Industry and Mineral Resources and the Expenditure Efficiency Center is set out to increase the percentage of price preference given to these goods as compared to international counterparts in government competitions during the bidding process.

The percentage, previously estimated at 10 percent by the local content preference regulations, was raised to a maximum of 30 percent, based on the standards of each industry. In the midst of the COVID-19 pandemic, these steps are expected to reduce the economic and financial effects on certain fields.

The authority said the products are determined based on criteria that vary from region to region by nature.

The new system is based on giving priority to prices of up to 20 percent for products falling within the scope of the enterprise; 10 percent under the initiative  and another 10 percent as per price preference rules. Each 10 percent priority is based on the particular criteria of each sector.

An additional preference of up to 10 percent is granted to products recognized in the medicine and pharmaceutical industries if they are included in the list, and the other 10 percent if the product contains a domestic active pharmaceutical ingredient (API).

The initiative is based on Article 10 of the Laws, in which local content produced by Saudi SMEs and publicly listed companies are given priority. It aims to gain regional self-sufficiency and strengthen the supply chain of targeted products.

LCGPA expects the projected expenditure on national factories to range between $530 million (SAR 2 billion) and $800 million (SAR 3 billion) during the initiative period ending on 31 December 2021.

The items were identified after a thorough review by the project’s work team, said authority. 10,000 items were included in the study, except those on the mandatory list.

The authority said that a list of targeted national products and additional preference prices for each product will be provided in detail, and each product will be distributed according to the section within the additional price preference initiative.