The Council of Ministers have approved 100 percent ownership in the Saudi Arabian trading sector
The Government of Saudi Arabia has approved a change in licensing to allow foreign companies 100 percent ownership in the trading sector. The decision by the Council of Ministers comes after the National Transformation Plan (NTP) announcement as part of Vision 2030.
The new approval allows foreign companies more flexibility in their company structure, letting them apply for 100 percent ownership or operation through a joint venture. The aim is to attract more foreign investment into the Kingdom from large multinational corporations. It is one of many actions taken by the country to stabilize and diversify its economy and move away from the dependency on oil.
The Saudi Arabian General Investment Authority (SAGIA) is now accepting applications from companies for 100 percent ownership in the trading sector. Dow Chemical Co. is the first company to receive a full ownership licence following the change. The number one US chemical maker announced the update last week.
The Minister of Commerce and Investment, Dr. Majed Al Qasabi commented on the decision made by the Council of Ministers “The second pillar of Saudi Arabia’s Vision 2030 is to make our nation an investment powerhouse. Today’s announcement of allowing 100 percent foreign ownership in the trading sector will take us a step further towards achieving this”
The trading market is experiencing rapid growth and officials in Riyadh hope this move will generate new interest from multinational retailers and wholesalers to enter or expand in the sector. A young and fast growing Saudi population, growing at 2% annually, is fueling the market inflation. This demographic of consumers have a high degree of purchasing power compared to their regional peers. Between 2012 and 2017, compound annual growth is expected to reach 6%, making the Kingdom a leading country in the region for disposable income.
Commenting further on the retail and wholesale market, Dr. Al Qasabi explained “The Kingdom’s retail and wholesale sector has many solid fundamentals, creating a strong business case for investment. We have a young, growing and savvy consumer base; we have a growing retail sector, fueled by high consumer spending; and we have a strategic location that will allow investors to reach some of the world’s fastest growing and exciting markets.
With these qualities, we realized we have a chance to enable investors to enhance their success through 100 percent ownership. I would invite companies to explore this option, and the rest of what the Kingdom has to offer”