Saudi Arabia, one of the world's biggest military spenders, seeks a major boost to its small local defence industry under a wide-ranging plan unveiled Monday to transform the oil-dependent economy.

Currently only two percent of the kingdom's defence spending is within its borders, but this will rise to "30 percent to 50 percent to endow the country with a new industry", Deputy Crown Prince Mohammed bin Salman said, unveiling the Vision 2030 plan.

Saudi Arabia has traditionally bought its weapons from the United States, Britain and France but "has a strong demand that we should satisfy locally", the prince, who is also defence minister, told Saudi-owned Al-Arabiya television.

"From now on the ministry of defence and other security and military agencies will only place a contract with a foreign supplier if it is linked to a local industry," he said in an interview.

"We are proceeding with a restructuring of several of our military contracts to link them to a Saudi industry."

For the past 13 months Saudi Arabia has led an Arab coalition conducting air strikes and other military support for Yemen's government against Iran-backed rebels.

An 84-page booklet outlining Saudi Arabia's economic transformation plan says the kingdom is the world's third-biggest defence spender.

But its local defence sector currently consists of just seven companies and two research centres.

It has already begun developing spare parts, armoured vehicles and ammunition but will expand "to higher value and more complex equipment such as military aircraft", the plan says.

Homegrown defence industries help to reduce military spending while stimulating other sectors and creating jobs, it adds.

Saudi Arabia has the best-equipped military in the Gulf, with more than 233,000 personnel.