The Kingdom of Saudi Arabia has one of the fastest growing economies in the GCC, making it an enticingly sustainable market for foreign investment. There are some key factors to consider on how to enter the Saudi market that will determine whether this transition will be suitable for your business.
- Economic environment
With the introduction of King Salman’s Vision 2030, there are an increasing number of opportunities in Saudi Arabia for foreign investment, with plans implemented to promote the growth of key industries. The objectives of Vision 2030 and the National Transformation Plan 2020 (NTP) has lead the government to make significant investments in industries that will diversify the economy.
In addition, to promote the growth of the private sector, the government has implemented exclusive advantages for foreign investors that enter the private sector. These benefits differ for each sector and range from exclusive distribution rights to expedited legal processing.
Opportunities for foreign investment are high in industries such as: power and renewable energy, mining, water and waste management, oil, gas, petrochemicals, tourism and hospitality, communications, data and IT, transport, healthcare and pharmaceuticals, agriculture, aquaculture and construction of affordable housing and transport.
- Labour – Saudization or expats
In Saudi Arabia, the Labor Law provides companies with employment guidelines and regulations, such as working hours, visas, benefits, vacation, salary, safety standards and termination of employment.
Saudization ensures that the local workforce are given a fair opportunity to contribute in the market. This initiative requires businesses to hire a certain percentage of Saudi nationals, depending on the size of your business, industry and other factors. Therefore, it is important to consider the time period to allow to complete the recruitment process of hiring expatriates and Saudi nationals.
Companies entering the Saudi market need to consider their recruitment strategy, whether they will transfer current employees to Saudi or hire expatriates already in the Kingdom and how they will implement Saudization in their business strategy. For more information and support on Saudization contact our team on +966 (11) 411 1127 or firstname.lastname@example.org.
- How you establish your business – LLC, partner, joint venture, franchise?
Deciding the method in which you enter the market, will determine the way your business operates and what entitlements you are eligible for. There are several ways to enter the Saudi market, the most common are; a Limited Liability Company (LLC), joint ventures, partnership, branch office, sole proprietors and technical services office (TSO). Each entry type comes with it’s own advantages and disadvantages.
With each form of company formation, you must consider the initial capital required, the support you will need to complete the legal process, the number of employees you require to set up and the recruitment process including Saudization and visas for expatriates.
It is vital to do complete and thorough research before entering the Saudi market. Allowing time to properly consider how each of these factors would affect your business when transitioning and how you can adjust to them will allow you to make a proper evaluation.
For more information or support, contact Proven on +966 (11) 411 1127 or email@example.com.