Local content: raise your ratio before the next tender — not after

Local content is no longer a side clause in tender documents. It is decisive in awarding government competitions and major corporate contracts — and a weight in the financial evaluation itself. Yet many entities only remember their ratio when a certificate is demanded: the worst possible moment.

What is actually measured?

In short, the local-content ratio is the share of your spending that remains inside the Saudi economy. It is calculated under the Local Content & Government Procurement Authority methodology and covers key elements including:

• Salaries and wages — amounts paid to Saudi nationals count as local content; amounts paid to non-Saudis count partially under defined rules.
• Purchases of goods and services — counted at your suppliers’ own local-content ratios, not merely because they are Saudi-registered companies.
• Depreciation and assets — locally manufactured or supplied assets raise your ratio.
• Training and development and other items under the approved model.

The point that surprises most entities: your suppliers’ ratios are part of yours. Buying from a “local” supplier with a low local-content ratio does less for you than you think.

Why “before the tender, not after”?

Because the ratio is the outcome of a full financial year — not a document you extract on demand. The certificate is issued on past financial statements and actual data, so today’s tender ratio was set by last year’s operating decisions. An entity that discovers a 20% ratio when the tender requires 30% has no quick fix — only an expensive lesson.

Five practical levers to raise the ratio

1. Reorder your supplier chain. Ask key suppliers for their local-content certificates and make the ratio a selection criterion. Shifting even 20% of purchases toward a higher-ratio supplier can move your number more than almost any other step.
2. Review headcount rationally. Saudisation here is not a slogan — it is arithmetic: Saudi roles raise the numerator directly. Start where qualified local supply exists.
3. Steer upcoming capital spend locally. When expanding or replacing assets, an equivalent local option supports your ratio across the full depreciation life.
4. Document what you already do. Many entities’ true ratio is higher than the calculated one because data is not documented as the methodology requires — incomplete invoices, contracts that omit supply components, unclassified payroll.
5. Tie the ratio to an annual plan. Set a target from the tenders you intend to enter, and monitor the gap quarterly — not when the certificate is requested.

Where we stand

We are an accredited auditor with the Local Content & Government Procurement Authority: we audit your ratio and issue the certificate directly, and we build the improvement plan beforehand — from diagnosing your current position, to restructuring spend data, to targeting the ratio your tenders require. No intermediary between you and your certification.

What is your local-content ratio today? If you cannot answer with a number, that is your signal. Contact us for a diagnostic session.

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