Visionary leadership lays the groundwork for vast opportunities that are leading to an economic revitalisation of the Kingdom
AS the economy of Saudi Arabia continues to stabilise despite the impact of the COVID-19 pandemic, significant opportunities are opening up for business development at an unprecedented rate. This shouldn’t come as much of a surpise given the Kingdom’s Vision 2030 agenda for moving away from a fossil fuels-centric economy to a more multi-faceted expansive business landscape.
EASING OF VISA REGULATIONS
This new outlook is what now informs and outlines all of Saudi Arabia’s business and economic persuasions. The easing of visa regulations is also pivotal to a new outlook for international players looking to grab the business opportunities in KSA.
An added incentive is KSA also continuing to ease its ‘doing business’ rules, by giving the go-ahead for 100% ownership in certain Saudi companies and the acquisition of specific real estate projects by foreign nationals. The recent announcement of a new investment law by the KSA Ministry of Investment under which the local and foreign investors will be treated equally, is estimated to increase international business by 50%.
This gives a further thrust to Saudi Arabia’s appeal as a burgeoning international business hub. Official data from the World Bank projected the country’s GDP to reach US$820bn by the end of 2022, in comparison to US$700bn in 2020. However, this recent development, which will see foreign investors enjoy neutral treatment without any discrimination, could see KSA’s business activity spike significantly to counter the World Bank’s projections.
LARGEST FREE ECONOMIC MARKET IN MID-EAST
What makes Saudi Arabia so attractive also for new businesses is that it is the largest free economic market in the Middle East and North Africa (MENA) region. It’s also a key member of the Gulf Cooperation Council (GCC) and has free trade agreements with the Greater Arab Free Trade Area (GAFTA), the European Free Trade Association (EFTA), as well as Singapore.
NEW SECTORS OPENING UP
Opportunities are rapidly opening up in KSA in the Small and Medium Industries, Industrial Services and Products, Real Estate, Manufacturing, Infrastructure, Technology, Water and Wastewater projects, Nuclear Energy, Education, Tourism and Hospitality, Entertainment and Media sectors.
TWO SPECIAL SECTORS FOR CONSIDERATION
Also worth noting are the new areas for consideration. For example there are also major opportunities in the field of water desalination which according to recent estimates is an US$80 billion industry. A designated “investment zone” called NOEM is bound to attract more than US$500 billion in funding and provide another direct alternative when it comes to investing capital in the region.
OPPORTUNITIES IN FINTECH, FINANCE & ENERGY
Saudis are looking at ways to modernize and improve their financial system with new technologies. The “fintech” industry is spreading out roots in Saudi Arabia. The revolution of the Saudi banking system as it moves toward digital and paperless designs, and even looking at cryptocurrency and blockchain digital ledger technologies for the purposes of financial organization. The Saudi Arabia stock exchange – the Tadawul, with its index of about 150 companies, offers investment opportunities in fields like finance and energy. The privatization of industries like telecom is one other factor in evolving foreign investment climate. That said, the Saudi market is highly competitive and business transactions can take place only on the basis of quality, cost and punctuality in delivery.
“What makes Saudi Arabia so attractive also for new businesses is that its the largest free economic market in the Middle East and North Africa (MENA). It’s also a key member of the Gulf Cooperation Council (GCC) and has free trade agreements with the Greater Arab Free Trade Area (GAFTA), the European Free Trade Association (EFTA), as well as Singapore.”
NEW SERVICE FOR EASE IN ESTABLISHING BUSINESS
A new service announced by the Ministry of Investment in partnership with the Ministry of Foreign Affairs and the Ministry of Commerce, allows investors and companies to establish and start a business in the kingdom from outside the country. The service is aimed at supporting companies and investors to receive investment licences “quickly and easily”, as reported by the Saudi Press Agency (SPA). Under the new service, investors can complete the process of authenticating the agency and attesting the establishment contract in three easy steps. This new development is part of the kingdom’s reforms implemented to improve the ease of doing business in the country.
STARTING A BUSINESS
The first thing to keep in mind is that its important to do actual research on the ground or get more detailed information about what Saudis are doing right now, since the country is quickly changing (see box story on Federation of Saudi Chambers of Commerce).
For those who have already decided to do business there can benefit by striking up partnerships with Saudi companies to enjoy lower rates of taxes.
To establish a new business this would entail some basic groundwork that involves a registration process for new businesses. Business leaders should anticipate bringing documents to the Saudi consulate and submitting an application to the Saudi Arabian General Investment Authority (SAGIA).
There’s also necessary interaction with the company’s Department of the Ministry of commerce and registration with the general Department of passports ministry of interior and the ministry of labour to take care of any Saudi visa requirements.
Other essentials include opening a Saudi bank account and getting the articles of Association notarized for business. When a business has obtained a file number and a certification of business, commencement, business leaders can register with the general organization of social insurance. With all of this in place, one can look toward various opportunities such as direct exporting for integrating a foreign business into the national economy.
NEW COMPANY LAWS
In June this year the new Companies’ Law passed by the Kingdom’s Council of Ministers will help the nation develop its commercial sector by protecting companies and enabling the private sector to keep pace with international best practices.
According to news reports by the Saudi Gazette, under the law, a new form of company has been created called the ‘simplified joint stock company’ that meets the needs and requirements of entrepreneurship and venture capital growth. It will also serve as an investment arm that enables non-profit companies to advance to the third sector, stimulate social responsibility, and allow them to generate returns in their businesses and spend them on non-profit purposes.
The new law brings down the statutory requirements and procedures for small, medium and micro companies, in addition to simplifying the requirements and procedures for establishing companies. It gives flexibility to include special terms and conditions in the contracts of incorporation of companies or their articles of association, and created possible mechanisms for entrepreneurs, owners of venture capital and private ownership.
REMOVAL OF RESTRICTIONS
The law removes many restrictions at all stages including establishment, engage in business and exiting the market as well as restrictions on company names, and allowed the limited liability company to issue debt instruments or negotiable financing instruments. The law modified the provisions of transformation and merger between companies, permitting the company to be divided into two or more companies, and allowing the owners of individual entities to transfer their assets to any types of companies.
With regard to attracting investment, the law allowed the issuance of different types of shares with varying categories and rights, privileges or restrictions, and the possibility of issuing shares allocated to employees to attract and motivate talent. It also allowed the distribution of profits temporarily or annually with governance that ensures that the company’s creditors obtain their rights.
FSC – Facilitator for Networking and New Business Opportunities
The Kingdom of Saudi Arabia is one of the largest economies in the Middle East with its position as a high-growth market, and offers numerous opportunities for new businesses and investment, which come well supported by the Federation of Saudi Chambers of Commerce. The Council for Saudi Chambers of Commerce and Industry is the official federation for the 28 Saudi Chambers and has its head office in Riyadh. The FSC offers support to enhance efforts of research and shed light on available commercial opportunities for the local and international investors community. For more info visit: www.fsc.org.sa