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Investment in Saudia Arabia

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Being one of the world’s top 10 most competitive economies make Saudi Arabia the perfect investment opportunity. But that’s not only the reason why:

1. Saudi Arabia is ranked 4th in the world for “fiscal freedom” and it’s the 7th most rewarding tax system in the world.

2. 7th freest labor market in the world.

3. One of the world’s 25th largest economies.

4. One of the fastest growing countries: per capita income is forecasted to rise from $20,700 in 2007 to $33,500 by 2010.

5. It’s the world’s best reforming business climate.

6. It’s the largest free market in the MENA.

7. Represents 25% of total Arab GDP.

8. It Has 25% of world’s oil reserves.

9. 13th out 181 countries for the overall ease of doing business globally and 7th in terms of ease of paying taxes.

10. 1st for the ease of registering property and d it’s the largest recipient of Foreign Direct Investment in the Arab world.

Brief History of Saudi Arabia

The Kingdom of Saudi Arabia is located in Southwest Asia on a wide area of the Arabian Peninsula. Its western limit is defined by the Red Sea; its northern limit is defined by the Hashemite Kingdom of Jordan, the Republic of Iraq and the country of Kuwait; its eastern limit is defined by the Arabian Gulf, the State of Qatar, the United Arab Emirates and the Sultanate of Oman; whereas its southern limit is defined by the Republic of Yemen.

The Kingdom of Saudi Arabia was officially established on the 21 Jamada Al-Awwal 1351 A.H. corresponding to 22 September 1932 A.D. but its roots go back to the year 1157 A.H. (1744 A.D.) when the first Saudi State was established by its Prince Mohammad Ben Saoud and has lasted around 75 years.

However the second Saudi state has started in the year 1340 A.H. (1834 A.D.) the year in which the Imam Turkey Ben Abdullah has occupied the city of Riyadh and liberated all of Najad from the control of Mohammed Ali Bacha.

This state lasted (75) years governed successively by nine individuals and in the fifth day of Shawwal in the year 1319 A.H. His Majesty King Abed Al-Aziz – May God Rest His Soul in Peace – was able to recuperate his ancestors property and govern Riyadh and within 22 years he established his young kingdom.


The population of the Kingdom of Saudi Arabia is estimated at around twenty million distributed according to the gender and nationality as per the date of the population’s general consensus held in the year 1993 A.D.

• 36.6 % Saudi males.

• 36.0 % Saudi females.

• 19.3 % non-Saudi males.

• 8.1 % non-Saudi females.

They are distributed on the Kingdom’s regions as follows:

• 23 % Riyadh

• 27 % Holy Mecca

• 15 % Eastern Province

• 8 % Assir

• 6 % Medina

• 5 % Jizan

• 4 % Qasim

• 12 % the rest of the regions

The Kingdom of Saudi Arabia is considered the biggest free economic market in the Middle East since it possesses 25% of the Arab Gross National Product. Moreover the Kingdom of Saudi Arabia possesses the biggest oil reserve in the world (25%) in addition to a number of promising natural resources in the mining sector.

The Kingdom’s geographic location makes it an easy passage for the markets of Europe, Asia and Africa. Its market is characterized with a high purchasing power and its local market is witnessing a continuous expansion (the demographic growth is estimated at around 3% annually).

Foreign Trade

The Saudi total foreign trade reached up to 104.3 billion US dollars in the year 2001 A.D. and the exports markets have witnessed a huge expansion after the Kingdom had signed a number of bilateral commercial agreements with many countries.

The Kingdom of Saudi Arabia benefits from the financing programs of the global and regional trade, the export guarantees provided by the Islamic Development Bank, the commercial financing program of the Arab Monetary Fund and the program of the Arab Investment Guarantee Corporation for insuring the exports and investments.

The United States of America, Japan, China, South Cora, Germany, France, Britain, Italy, Singapore, India, Holland, the United Arab Emirates and Switzerland are at the top of the list of the Kingdom’s partners in foreign trade.

The Kingdom’s exports have reached 73 billion US dollars represented as follows:

• 89 % oil exports

• 11 % non-oil exports

The Kingdom’s imports have reached up to 31.2 billion dollars in the year 2001 A.D. represented as follows:

• 20.5 % machines and equipments

• 21.7 % means of transportation

• 15.3 % food products

• 42.1 % others

The Kingdom occupies the 25th grade as to the international trade volume. The Saudi government has reduced custom duties from 12% to 5% in an approach to accelerate the custom duties unification between the Countries of the Gulf Cooperation Council which took effect starting from the year 2003 A.D.

Human Resources

The vast majority of the Kingdom’s population is composed of the young age category that represents around 42% of the total Saudi population which is an ever-increasing rate since the age categories rate ranging between (less than 1 year and up to 15 years) represent around 45% of the total Saudi population. Most of the youth population is characterized by educated and highly qualified individuals.

Moreover, the government heavily concentrates on increasing the human resources development rate in order to cover all of the categories and ages which will give more opportunities for the investors to choose the required labor for their projects.

Many public and private educational institutes, research and development utilities have been established in the Kingdom which will fulfill a major part of the labor market needs in the Kingdom. Recently the Human Resources Development Fund has been established to train and employ the Saudis through the following:

• Providing aids and supports to the activities related to the rehabilitation, training and employment of the Saudi workforce in the private sector.

• Participating in the Saudi labor rehabilitation and training costs in the private sector.

• Taking in charge a percentage of the Saudi workers’ salaries in the private sector.

• Supporting the programs that aim at developing the possibility of employing the Saudi workforce and replacing the foreign workforce.

• Providing the private sector institutions working in the training and rehabilitation field of the Saudi workforce the necessary loans to expand their activities and use the latest modern technologies.

• Conducting studies and researches and providing the technical and administrative consultancies in the training and rehabilitation field of the Saudi workforce.

• Competitive Capacity Enhancement Rules:

• The foreign investment act for the foreigners allows the investment in all economic activities expect for the activities mentioned in the list of activities excluded from the foreign investment.

• The act has granted the foreign investors the right to be guaranteed and to have their employees guarantied on behalf of the authorized project and to possess the real estates special to their companies’ activities. The new real estate law allows the foreigners to possess real estate in any location with the exception of the two cities of Holy Mecca and Medina.

• The Kingdom is currently working hard to review the laws related to investment in order to increase its transparency and enhance its competitive capacity on the global level.

• Among the laws being currently reviewed there are the financial markets laws, the companies law, the insurance law, the mining law and the labor and laborers law.

Moreover, there is a persistent improvement in the Kingdom towards realizing transparency and accuracy of the economic and financial data of interest to the investors.

Investment Incentives

All of the foreign investment projects benefit from the same characteristics, incentives and guaranties granted to the local projects. These incentives include the following:

1. All of the incentives stipulated by virtue of the National Industries Encouragement and Protection Law that includes the exemption of imported products and industrial equipment’s of custom duties and the preferential treatment of the national products in order to provide the governmental purchases.

2. The possibility to obtain plots of land in the industrial cities at a symbolic cost.

3. The possession of the real estate’s necessary for the project including the residence for the employees.

4. The available characteristics as per the bilateral and multilateral agreements related to taxes and investment.

5. The non-confiscation of any investment without an authorization from the court.

6. The possibility to transfer the capital and profits to abroad.

7. The freedom of movement of the partners’ shares in the project.

8. The guaranty of the foreign investor and his non-Saudi employees’ will be on the authorized project.

9. The availability of utilities and services at low prices.

10. The availability of loans from the Industrial Development Saudi Fund.

11. Transferring the losses to the next years regarding the profits taxes.