2017 has been a big year for business in Saudi Arabia, the past 12 months we have seen some unexpected changes and one or two surprises.
The introduction of tourism, 100% business ownership and initial public offerings to name only a few of the changes; Saudi Arabia showed huge growth and development in 2017. King Salman’s Vision 2030 continued to have positive impact and the Kingdom brought reform, innovation and development to the forefront of all its decisions.
In 2017, Saudi Arabia announced that the state-owned entity, Saudi Aramco, would release its’ initial public offering. The world’s largest oil company will list on Riyadh’s stock market, Tadawul plus one of more foreign exchanges. The overseas market is yet to be announced although both London and New York have seen multiple mentions in the media. The Saudi Aramco stock listing is still on on track to be released in the second half of 2018 and will be the largest listing the world has ever seen.
A look on 2017 cannot be complete without mentioning one of the more surprising updates, the announcement that women in Saudi Arabia will be able to hold a driving licence in the very near future. The official decree is due to be announced in 2018 and supports the previous updates to encourage more women into the workplace.
Saudi Contractors Authority
The Saudi Contractors Authority (SCA) was introduced in 2017 to regulate the contracting industry and increase the acquisition and mergers in the industry. The SCA are also responsible for addressing labour issues, drafting industry regulations, publishing industry data and supplying statistics to the government.
The SCA were able to award many contractor companies projects throughout 2017. They also created a platform for potential clients to search for contractors and contractors to register and classify their business, due to be released in 2018.
Foreign investor 100% ownership
In the trading sector, Saudi Arabia General Investment Authority (SAGIA) announced a licence change that allowed 100% ownership of companies. This licence change was implemented mid August and immediately saw Dow Chemical Co. receive a full ownership licence.
Additionally, we saw the beginning of entrepreneur licenses being distributed for the first time at the recent Misk Global Forum.
The Red Sea
The Red Sea Tourism project was announced in 2017 and is a major project for Saudi Arabia. Initial investments will be provided by the Public Investment Fund (PIF) and later on the project will be open to foreign investors and partnerships, with Richard Branson being the first foreign investor to commit to the project.
The luxury resort will be built using eco-friendly methods, to preserve Saudi’s resources to the highest ability. The project will be spread over a length of 200km and will cover 34,000km2. The resort will increase tourism to the Kingdom, outside of pilgrims visiting Mecca and Medina.
The announcement of Neom, the $500 billion city, is a mega project created to increase the local investment opportunities and reduce the money leaving the Kingdom. The city’s initial investment will come from the Public Investment Fund (PIF), local and international investors and is home to industries such as energy and water, biotechnology, food, manufacturing and entertaining.
Saudi Arabia’s Commission for Tourism and National Heritage (SCTH) reportedly issued their first license in Jeddah, allowing travel agencies ability to issue tourist visas. Authorised agencies in category D are now able to issue tourist visas inside and outside the Kingdom for tourism, educational and medical purposes.
Vision 2030 and the National Transformation Plan increased the number of foreign investment opportunities in the Kingdom. Multiple projects were announced across a range of industries, including; energy, education, training, construction, mass transport, security and defense, healthcare and trade. There was much interest in the projects with companies from the United States, the United Kingdom and Asia all looking to bid.
Some of the notable projects of 2017 are;
- Sadara Petrochemical Project
- Red Sea Natural Gas Project
- Independent Water and Power Projects (IWPPs)
- Infrastructure Program and Affordable Housing Project
- Urban Transport Projects
- Saudi Landbridge Project
- Northern Border Security Project
Saudi Arabia plans to release a record of 68 new hotels across major cities. The hospitality sector is experiencing rapid growth in Saudi Arabia, with the busiest areas being Riyadh, Jeddah, Al Khobar and Makkah. Hotels that have been announced include:
- Assila Hotel Rocco Forte
- TIME Qurayyat Hotel
- Nobu Hotel Riyadh
- Swiss-Belhotel Al Khobar
- Abraj Kudai Towers (the world’s largest hotel)
The Jumeirah Group announced their plans to open a hotel in the holy city of Makkah. The agreement was signed with Jabal Omar Development Company to develop the five-star Jabal Omar Jumeirah Makkah Hotel.
The hotel will be made up of four towers with 1033 rooms and 93 villas, close to the Holy Mosque and encompassing views of the Masjid-al-Haram. The hotel’s expected operating date is early 2019.
Update on Vision 2030 reform
As a part of Vision 2030, the privatization of many state owned departments and entities was announced. The privatization is a major objective to help grow the economy and welcome more foreign investors into the country.
The most notable privatization plans include; the Saudi Aramco IPO, the privatization of the King Abdulaziz International Airport and plans to privatize whole or parts of state-owned companies, such as Saudi Postal Corp, soccer teams in the Saudi Professional League, Saudi Arabian airlines, Saudi Electricity Co and Saline Water Conversion Corp.
Value Added Tax (VAT)
The official announcement of VAT in Saudi Arabia was an announcement that will affect the entire country and made headlines in almost every news publication.
The General Authority of Zakat and Tax (GAZT) announced VAT will be commencing on January 1 2018, however, mandatory registration was required for entities that exceed the 375,000 SAR income threshold by December 20, 2017.
Saudi Arabia showed tremendous growth, development and innovation throughout 2017. Much progress was made on the National Transformation Program and Vision 2030 objectives. Saudi Arabia welcomed modern transitions into the the country socially, politically and economically, allowing for major growth. Two thousand and seventeen was a successful year for Saudi Arabia and shows increasing promise for 2018.