Saudi Arabia is becoming an increasingly favorable location for foreign investment, with an opportune market and inviting business environment, it is one of the top locations for Middle East investment.
As the government aims to diversify the economy away from oil, Vision 2030 has been the guiding principle for reforms being made. Continual developments are being made to create an attractive environment for foreign investors and establishing a company in the Kingdom more accessible.
As part of planning to bring your business to Saudi Arabia, there are some key elements you need to consider;
The Saudi Arabian General Investment Authority (SAGIA) facilitates entry into the Kingdom with the following license types:
The most common setup types for foreign investors are the limited liability company (LLC) and the foreign office branch.
Under the setup options, there are a number of investment categories that companies can operate in, each with its own regulations for what activities are allowed:
Once businesses have established their company through one of the setup options mentioned above, they will need to build a team, either by hiring locally or relocating employees to the Kingdom. This can be challenging for companies with regulations to keep in mind such as Saudization which is covered in more detail below.
There are two main options for companies looking to hire expats in KSA; relocating your current team to the Kingdom or hiring expats locally. Both will depend on your current Saudization level – your industry and size, and job hiring regulations for the position.
Assuming your company is able to hire expats while remaining compliant with Nitaqat, here are the major differences your company may experience between the two options.
Relocating your team
Relocating your team to Saudi Arabia is an endeavor that requires a high investment in time, effort, and cost. For any individual moving to Saudi Arabia, relocation requires immense preparation and adjustment such as cultural training, accommodation and school search, a new way of life and language for the majority. This can be a very stressful time but with the proper support, employees are able to adapt well to the changes.
Another consideration with relocating a team member is the time required for adjustment, orientation, and settling in. This can cause delays to business operations and is something to factor in when deciding to relocate members or hire expats locally.
Additionally, when companies relocate their team, the company will absorb the cost of relocating the employee. Costs may include; visas, flights, accommodation, transport of personal goods, insurance, and import taxes or fees.
Hiring expats locally
For companies to hire expats, they can apply for a single visa for an individual or they can apply for a block visa. A block visa grants companies a quota of expats they can hire and is valid for a year.
Companies can hire expats who are already in Saudi Arabia, either an expat who has finished their contract with their current company or an expat who is transferring their Iqama from one company to another, or an expat from a company with a low or non-compliant level of Saudization.
Hiring an expat who understands the customs of doing business in Saudi Arabia and is familiar with laws and regulations can be a great asset for a company that has just relocated to the Kingdom. To hire an expat in this way, the company would need to ensure they are in mid-green level or higher compliance in Saudization.
Saudization is a crucial part of doing business in Saudi Arabia. It is the nationalization scheme the government created to increase the participation of Saudi nationals in the private sector. All companies operating in the Kingdom are required to participate and reach certain levels of compliance. Levels of compliance depend on the company’s industry and size, with mid-green, high green, and platinum levels of compliance granting companies more benefits.
When relocating or setting up your business in Saudi Arabia, there are many key factors to consider and it can be challenging for companies to know if they are making the best decisions for the future. Support from a trusted local partner gives companies more knowledge, guidance, and local expertise so they can make more informed decisions.