Five steps to setting up a business as private sector grows in Saudi Arabia
The kingdom aims to grow its private sector to 65 per cent of GDP by 2030
Saudi Arabia has taken far-reaching measures to expand its private sector in recent years, by making it easier for businesses – both domestic and foreign – to operate in the kingdom. Under its Vision 2030 economic diversification agenda, Saudi policy makers aim to grow the private sector’s contribution to the economy to 65 per cent of gross domestic product by 2030, from the current 40 per cent.
Positive regulatory changes include permitting foreign nationals to own 100 per cent of a Saudi-registered company from last year – previously they had to partner with a local firm that would own a majority stake in the business.
Then, in January, the Saudi Arabian General Investment Authority (Sagia) moved to slash the time taken to process new business licences by more than 92 per cent, to four hours from as much as 53 hours.Companies and businesses previously had to submit eight documents to the investment authority for licences to be issued, but now need only show financial statements and certified commercial registration. Licence renewals can be done online.
The National provides a speedy guide to setting up a business in Saudi Arabia.
1 – Do your due diligence. The kingdom has made significant changes to its business environment. Speak to local companies, lawyers and foreign firms with operations in Saudi Arabia, research the characteristics of different Saudi industries, have a clear idea of the markets you are targeting and make sure you know what actions are required to comply with commercial regulations.
2 – Incorporate your company. Sagia is the government entity that provides investment licences for foreign-owned companies to operate in the kingdom. It also issues entrepreneur licences to start-ups, both of which you can apply for online. Businesses will also need a commercial registration and certain activities will need further certification from the Chamber of Commerce. For this, you will need a registered address (see below). Once these licensing hurdles are crossed, companies can set up a bank account and allocate sponsor shareholders.
3 – Find office space. Once you have incorporated your business, you must find an office. This is not only necessary to start functioning, it is required to register your address, which is in turn required to obtain a municipality licence and complete your company’s registration.
4 – Get your municipality licence. Register with the Ministry of Labour and GOSI (the General Organization for Social Insurance). Once the address is registered, the national postal service registration – Wasel Commercial Service – is automatically activated.
5 – Start recruiting. Finally, you can start hire staff to get your company up and running. The process of obtaining visas from the Ministry of Labour takes several weeks, and companies must be cognisant of the kingdom’s Saudization policy, which aims to lower the unemployment rate among Saudi nationals to 7 per cent, from 12 per cent. Nitaqat is a sub-segment of the programme and divides companies into certain ‘zones’ dictating the ratio of Saudi nationals to foreign expatriates permitted in the workforce. This information can be found on the Labour Ministry’s website.
Updated: June 1, 2019 06:10 PM