Invest in Saudi Arabia
Resources:
The Kingdom of Saudi Arabia is considered the biggest free economic market in the Middle East since it possesses 25% of the Arab Gross National Product. Moreover the Kingdom of Saudi Arabia possesses the biggest oil reserve in the world (25%) in addition to a number of promising natural resources in the mining sector.
The Kingdom’s geographic location makes it an easy passage for the markets of Europe, Asia and Africa. Its market is characterized with a high purchasing power and its local market is witnessing a continuous expansion (the demographic growth is estimated at around 3% annually).
Financial Sector:
The financial system in the Kingdom is composed of the Central Bank (Saudi Arabian Monetary Agency), the commercial banks, the specialized credit institutions and the stock market (stock exchange). The banking system in the Kingdom is subject to the banks control system issued by virtue of the royal decree in the year 1966.
The establishment of commercial banks is licensed by virtue of decisions issued by the Saudi Council of Ministers in the light of the recommendations of the Minister of Finance and National Economy after it is reviewed by the Monetary Agency as it is the Central Bank the Kingdom.
The Saudi government possesses a maximum of 10% of the commercial banks’ capital. The Saudi banks provide the liquidity necessary to finance at acceptable interest rates. The ten banks available in the Kingdom are considered among the best banks in the region and are all included in the list of the biggest one thousand banks in the world; moreover the three biggest banks in the Arab world are Saudi banks.
The financial system allows the foreigners to invest in the stock market through investment funds available in the commercial banks. The Saudi stock market is considered the biggest stock market in the world.
The Saudi Riyal is considered one of the most stable currencies and there are no restrictions imposed on the exchange, foreign currencies transfer, capital and profits transfer to abroad. As to the inflation rates in the Kingdom of Saudi Arabia, they are very low. The Kingdom also seeks after signing bilateral agreements with an increasing number of countries regarding the attraction and protection of investment and the prevention of dual taxation.
Foreign Trade:
The Saudi total foreign trade reached up to 104.3 billion US dollars in the year 2001 A.D. and the exports markets have witnessed a huge expansion after the Kingdom had signed a number of bilateral commercial agreements with many countries.
The Kingdom of Saudi Arabia benefits from the financing programs of the global and regional trade, the export guarantees provided by the Islamic Development Bank, the commercial financing program of the Arab Monetary Fund and the program of the Arab Investment Guarantee Corporation for insuring the exports and investments.
The United States of America, Japan, China, South Cora, Germany, France, Britain, Italy, Singapore, India, Holland, the United Arab Emirates and Switzerland are at the top of the list of the Kingdom’s partners in foreign trade.
The Kingdom’s exports have reached 73 billion US dollars represented as follows:
89 % oil exports
11 % non-oil exports
The Kingdom’s imports have reached up to 31.2 billion dollars in the year 2001 A.D. represented as follows:
20.5 % machines and equipments
21.7 % means of transportation
15.3 % food products
42.1 % others
The Kingdom occupies the 25th grade as to the international trade volume. The Saudi government has reduced custom duties from 12% to 5% in an approach to accelerate the custom duties unification between the Countries of the Gulf Cooperation Council which took effect starting from the year 2003 A.D.
Human Resources:
The vast majority of the Kingdom’s population is composed of the young age category that represents around 42% of the total Saudi population which is an ever-increasing rate since the age categories rate ranging between (less than 1 year and up to 15 years) represent around 45% of the total Saudi population. Most of the youth population is characterized by educated and highly qualified individuals.
Moreover, the government heavily concentrates on increasing the human resources development rate in order to cover all of the categories and ages which will give more opportunities for the investors to choose the required labor for their projects.
Many public and private educational institutes, research and development utilities have been established in the Kingdom which will fulfill a major part of the labor market needs in the Kingdom. Recently the Human Resources Development Fund has been established to train and employ the Saudis through the following:
Providing aids and supports to the activities related to the rehabilitation, training and employment of the Saudi workforce in the private sector.
Participating in the Saudi labor rehabilitation and training costs in the private sector.
Taking in charge a percentage of the Saudi workers salaries in the private sector.
Supporting the programs that aim at developing the possibility of employing the Saudi workforce and replacing the foreign workforce.
Providing the private sector institutions working in the training and rehabilitation field of the Saudi workforce the necessary loans to expand their activities and use the latest modern technologies.
Conducting studies and researches and providing the technical and administrative consultancies in the training and rehabilitation field of the Saudi workforce.
Competitive Capacity Enhancement Rules:
The foreign investment act for the foreigners allows the investment in all economic activities expect for the activities mentioned in the list of activities excluded from the foreign investment.
The act has granted the foreign investors the right to be guarantied and to have their employees guarantied on behalf of the authorized project and to possess the real estates special to their companies’ activities. The new real estate law allows the foreigners to possess real estate in any location with the exception of the two cities of Holy Mecca and Medina.
The Kingdom is currently working hard to review the laws related to investment in order to increase its transparency and enhance its competitive capacity on the global level.
Among the laws being currently reviewed there are the financial markets laws, the companies law, the insurance law, the mining law and the labor and laborers law.
Moreover, there is a persistent improvement in the Kingdom towards realizing transparency and accuracy of the economic and financial data of interest to the investors.
Investment Incentives:
All of the foreign investment projects benefit from the same characteristics, incentives and guaranties granted to the local projects. These incentives include the following:
1. All of the incentives stipulated by virtue of the National Industries Encouragement and Protection Law that includes the exemption of imported products and industrial equipments of custom duties and the preferential treatment of the national products in order to provide the governmental purchases.
2. The possibility to obtain plots of land in the industrial cities at a symbolic cost.
3. The possession of the real estates necessary for the project including the residence for the employees.
4. The available characteristics as per the bilateral and multilateral agreements related to taxes and investment.
5. The non-confiscation of any investment without an authorization from the court.
6. The possibility to transfer the capital and profits to abroad.
7. The freedom of movement of the partners’ shares in the project.
8. The guaranty of the foreign investor and his non-Saudi employees’ will be on the authorized project.
9. The availability of utilities and services at low prices.
10. The availability of loans from the Industrial Development Saudi Fund.
11. Transferring the losses to the next years regarding the profits taxes.