The recent regulatory change allowing foreign investors to be treated as Saudis under the Nitaqat system in Saudi Arabia has significant implications for foreign businesses operating in the country. This policy shift aims to enhance the investment climate, promote economic growth, and attract more foreign investment to Saudi Arabia.
Nitaqat System: Background
The Nitaqat system is a Saudization program implemented in Saudi Arabia to encourage the employment of Saudi nationals in the private sector. The program categorizes companies based on their Saudization levels and provides incentives for businesses that meet the required quotas for hiring Saudi employees.
Foreign Investors as Saudis
The regulatory change now allows foreign investors to be treated as Saudis under the Nitaqat system, providing them with certain benefits and privileges previously reserved for Saudi nationals. This policy adjustment aims to streamline the process for foreign companies operating in Saudi Arabia and create a more favorable environment for investment.
Benefits for Foreign Investors
Being treated as Saudis under Nitaqat offers foreign investors advantages such as increased flexibility in hiring practices, access to government incentives, and a more favorable standing in the labor market. This change is expected to attract more foreign businesses to Saudi Arabia and stimulate economic growth.
Compliance Requirements
To qualify for treatment as Saudis under Nitaqat, foreign investors must meet specific compliance criteria set by the Saudi government. This may include hiring quotas for Saudi employees, training programs, and other requirements aimed at promoting the employment of Saudi nationals in the private sector.
Impact on Employment
The policy change is likely to have a significant impact on employment opportunities for both Saudis and expatriates in the labor market. By encouraging the hiring of Saudi nationals and providing incentives for companies to comply with Saudization requirements, the regulatory adjustment aims to create a more balanced and inclusive workforce.
Investment Climate in Saudi Arabia
Saudi Arabia has been actively working to improve its investment climate and attract foreign investors through various reforms and initiatives. The regulatory change allowing foreign investors to be treated as Saudis under Nitaqat is part of the government's broader strategy to enhance the business environment and stimulate economic growth.
Business Expansion and Growth
Foreign investors in Saudi Arabia now have the opportunity for business expansion and growth, supported by the benefits of being treated as Saudis under Nitaqat. This policy change is expected to drive investment in key sectors and industries, contributing to job creation, innovation, and economic development in the country.
Regulatory Environment
The regulatory environment for foreign investors in Saudi Arabia is evolving, with a focus on creating a more investor-friendly landscape. Understanding the legal considerations, compliance requirements, and regulatory framework is essential for foreign businesses looking to establish or expand their presence in the country.
Industry Response
Industry stakeholders have responded positively to the regulatory change, recognizing the potential benefits for foreign investors and the overall business environment in Saudi Arabia. Foreign investors and business associations have welcomed the policy adjustment as a step towards fostering a more conducive climate for investment and growth.
Government Support
The Saudi government plays a crucial role in supporting foreign investors through various initiatives and programs. By facilitating investment processes, providing incentives, and promoting a business-friendly environment, the government aims to attract foreign capital, stimulate economic activity, and create opportunities for sustainable growth.
Future Outlook
Looking ahead, the regulatory change allowing foreign investors to be treated as Saudis under Nitaqat is expected to have a positive impact on foreign investment in Saudi Arabia. The policy adjustment is likely to attract more businesses to the country, drive economic growth, and contribute to the diversification and development of the Saudi economy.
The recent regulatory change allowing foreign investors to be treated as Saudis under Nitaqat marks a significant shift in the investment landscape in Saudi Arabia. By providing foreign investors with benefits and incentives previously reserved for Saudi nationals, the policy adjustment aims to enhance the business environment, promote economic growth, and attract more foreign investment to the country.
Non-profit sector in Saudi Arabia witnesses rapid growth in early 2024
04 Mar 2024 Written by Admin AdminThe sector witnessed the registration of 56 private associations, 8 private institutions, and 21 family funds in various priority development areas and several regions across the Kingdom
The National Center for the Development of the Non-Profit Sector in the Kingdom of Saudi Arabia announced the latest developments in the growth of the non-profit sector for February 2024. The sector witnessed the registration of 56 private associations, 8 private institutions, and 21 family funds in various priority development areas and several regions across the Kingdom.
The total number of registered non-profit entities in the Kingdom is now 4,656. The number of volunteers in 2024 has also reached over 113,000 in various fields, with over 4 million volunteer hours and 43,000 volunteer opportunities.
The center highlighted the continuous growth of the non-profit sector in terms of the number of non-profit entities, the number of volunteers, and the increase in the number of technical supervisory units in government agencies.
The center pointed to the progress achieved through the collaboration of all entities in the non-profit sector system and the development observed in the governance of non-profit entities, which achieved advanced levels of governance in 2023. This confirms the commitment of the sector's entities to comply with the targeted development roles.
As part of its supervisory and regulatory role, the center has issued decisions against several non-profit entities and individuals since the beginning of 2024.
These decisions included 11 warnings to civil associations, two decisions to dismiss the board of directors of a civil association, two decisions to reform the interim board of directors, the dissolution of two civil associations, and the start of their liquidation, and the referral of four civil associations to the Public Prosecution.
The center emphasizes the importance of non-profit entities' commitment to the rules and regulations, guidelines, and procedures governing the non-profit sector.
It invites all non-profit entities to communicate through customer care channels via the unified call center 19918, its website ncnp.gov.sa, and its social media accounts. The center stresses the need for integration between it and non-profit entities to contribute to the development of the non-profit sector and maximize the social and economic impact of the sector to achieve the desired national goals.
The National Center for the Development of the Non-Profit Sector aims to organize and activate the role of non-profit sector entities, expand them in development areas, and work on integrating government efforts in providing licensing services to these entities, financial and administrative supervision of the sector, and increasing coordination and support.
Source: Zawya
Experts: Saudi PIF’s Alat to Explore New Opportunities in Modern Sectors
03 Feb 2024 Written by Admin AdminSaudi Crown Prince Mohammed bin Salman announced on Thursday the launch of Alat - a Public Investment Fund company – with the aim to transform Saudi Arabia into a global hub for sustainable technology manufacturing that focuses on advanced technologies and electronics.
In this regard, experts told Asharq Al-Awsat that the new entity would explore new opportunities in modern sectors, in addition to supporting national companies and enabling them to launch investments in advanced technologies and industries.
Professor of Economics at the University of Jeddah, Dr. Salem Bajaja, stressed that Saudi Arabia would become a pioneer in the manufacture of electronics, by providing sustainable industrial solutions that rely on clean energy sources and meet the future needs of the sector.
Bajaja added that the Alat Company would be able to create more job opportunities in the local market, which would reduce the unemployment rate, pointing that the Kingdom enjoyed all the success ingredients to develop the advanced technologies and electronics sector.
He also emphasized that Alat would in turn explore untapped opportunities in this promising field to reach its desired goals.
Alat will work on manufacturing products that serve local and international markets within seven key strategic business units: advanced industries, semiconductors, smart appliances, smart health, smart devices, smart buildings, and next generation infrastructure.
The company, chaired by the crown prince, aims to enhance the capabilities of the Saudi technology sector, increase its contribution to local content, and raise the country’s attractiveness and its ability to create investment opportunities.
According to Bajaja, the launching of the new company keeps pace with the global evolution of Information Technology, which would contribute to transforming Saudi Arabia into a leader in electronics and open new horizons for the private sector and increase its contribution to the country’s GDP.
For his part, Economic Expert Ahmed al-Jubeir said: “It is important to rely on clean energy in the work of the new company, which focuses on modern industries, with the aim to meet the Kingdom’s directions in the next stage in creating promising investment opportunities.”
Al-Jubeir noted that Alat will have a positive impact on the national economy and will stimulate the private sector to invest in new industries and forge partnerships with the PIF.
Moreover, the new products that will be manufactured through Alat will raise the competition levels and will reflect on the prices in the local market, he said, noting that the new company will also help generate new job opportunities and develop human capabilities in these fields.
Alat will focus on manufacturing in more than 30 categories that serve vital sectors, mainly robotic systems, communication, advanced computers, digital entertainment products, and advanced heavy equipment used in construction, building and mining.
The new company aims to create 39,000 direct jobs in Saudi Arabia by 2030, and achieve a direct non-oil GDP contribution of $9.3 billion by the same year.
Source: AL-Awsat
Saudi Arabia Opens Doors to Investors with Worldwide E-Visa Service
02 Jan 2024 Written by Admin AdminInternational investors no longer have to visit a Saudi embassy to get a visa to travel to the Kingdom after the process for applying for the permit was moved online.
The government have introduced the second phase of the “Investor Visitor” e-visa service, expanding its coverage from nearly 60 nations to include all countries worldwide, as reported by the Saudi Press Agency.
This e-visa can be used for multiple entries and has a validity period of up to one year. Some beneficiaries may receive access immediately, enabling them to explore investment opportunities in the Kingdom directly.
This service is part of the Kingdoms’s ongoing efforts to align with the Vision 2030 initiative, with a focus on improving the investment environment and facilitating the start of business activities.
Mohammed Abahussain, deputy of Integrated Investors Services at the Ministry of Investment, explained that the visa is designed to provide international prospects and employees of foreign entities the opportunity to apply for an electronic visitor visa through the ministry’s platform.
It will manage the application process and digitally issue the authorization through the unified national visa platform of the Ministry of Foreign Affairs, eliminating the need for physical visits to Saudi missions abroad for biometric data collection.
This expansion includes individuals from countries listed on the “Invest in Saudi Arabia” platform, those holding valid tourist or business visas from the US, the UK, or Schengen countries, and those with permanent residency in the US, the UK, or EU countries.
Additionally, individuals holding valid residency for a minimum of three months in the Gulf Cooperation Council countries and entities licensed by the Ministry of Investment for three immediate visas per year can also benefit.
The Kingdom has seen a surge of over 135 percent in foreign investment licenses, reaching 2,192 permits during the third quarter of 2023 as part of a push to attract global businesses to set up operations in the Kingdom.
According to the Ministry of Investment, this is an increase of 1,261 licenses compared to the same period in 2022, excluding permits issued under the “Tasattur” anti-concealment campaign.
In the second quarter of 2023, the direct foreign investment balance in the Kingdom increased by 0.6 percent compared to the previous quarter, as shown in the ministry’s report for November 2023.
Total fixed capital formation experienced a 7 percent increase in the second quarter of 2023 annually, attributed to growth in both government and non-government sectors by 3.5 percent and 7.6 percent, respectively, during the same period.
The report also revealed that the capital of newly licensed factories in 2023 grew by 215 percent in the second quarter due to efforts to enhance industrial competitiveness, boost local content value, and support locally manufactured products.
Meanwhile, foreign trade experienced a 3.1 percent decline in the third quarter of 2023 annually, leading to a 55.4 percent decrease in the trade balance during the same period. This was mainly a result of a 31.8 percent decrease in total exports.
The data also indicated that government revenues reached approximately SR258.5 billion ($68.93 billion) in the third quarter of 2023, marking a 14.4 percent decrease on an annual basis, while government expenses totaled around SR294.3 billion in the third quarter, representing a 2.3 percent increase on an annual basis.
Source: Saudi Press Agency
Startups in the MENA region raise $101 million in funding in August 2023
17 Sep 2023 Written by Admin AdminStartups in the Middle East and North Africa succeeded in raising more than $101 million in August, an increase of 6% over the previous month, and a year-on-year increase of more than 73%.
The recent increase in the number of financing startups in the region comes in light of the relative decline and fluctuation in the volume of financing witnessed in financing startups in the region since last year. The value of startups' deals was divided into 26 deals.
Distribution of startup financing by country
Start-up companies topped the list of funding with about $54 million, distributed among 8 companies, noting that more than half of the funding ($27 million) went to the “Rawaa Inventory Management” company deal, and “Fly Akeed” travel technology services company also succeeded in raising $15.2 million. Million dollars.
Emirati startups came in second place, with a total funding of about $44 million distributed among 9 startups.
In continuation of the decline in the volume of financing for Egyptian startups, it came in third place, with a total financing not exceeding $1.5 million distributed over 5 financing deals, which represents a decrease of more than 406% compared to last month. Note that the number of financing deals for Egyptian start-ups for the month of August reached 5 deals, about half of which went to Talents Arena, a start-up company specializing in recruitment using artificial intelligence tools, as the size of the deal it obtained amounted to about 750 thousand US dollars.
In fourth place were Tunisian startups with a total funding of more than half a million dollars, followed by Moroccan and Palestinian startups, with a total funding of about 155 and 100 thousand dollars, respectively.
Distribution of financing for startup companies according to sectors
Although the financial technology sector was at the forefront in the volume of financing in 2022 and throughout almost all of 2023, the volume of financing deals for this sector declined in August, recording $5.9 million to occupy fourth place, noting that the financial technology sector remained..The number of financing deals reached 5 deals.
The sector that ranked first in the volume of funding for the month of August was the logistics services sector, in which startup companies raised about $32 million, equivalent to a third of the total funding for startup companies for the same period.
The logistics services sector came to the fore thanks to the previously mentioned “Rawaa Inventory Management” deal.
While the sectors of travel and tourism technology, health technology, and websites (Web3) received almost equal funding, amounting to about $15 million for each sector.
Saudi PIF-backed developer Roshn to spend $2.67bln on real estate projects
17 Sep 2023 Written by Admin AdminState-backed Saudi developer Roshn Real Estate is set to spend around 10 billion riyals ($2.67 billion) on projects across the Gulf state.
The company, owned by Saudi Arabia’s Public Investment Fund (PIF), has lined up the funds after securing a SAR6 billion revolving credit facility from three lenders in the kingdom earlier this year, Bloomberg reported on Thursday.
“We’ve got about 10 billion lined up in balance sheet credit although we haven’t drawn the first six yet because we actually have enough money within our business at the moment from our receipts,” Roshn Group CEO David Grover told the publication.
“But we will be drawing it down in the next three to nine months because we have some other investments that we need to make in terms of putting cash in to start projects.”
The developer awarded this month several contracts worth $2.4 billion. The deals cover the construction, primary and secondary infrastructure and fitting works in its development projects in the kingdom.
Roshn is looking to develop 400,000 new homes, 1,000 schools and nurseries and 700 mosques across Saudi Arabia by 2030.
Source: Zawya
Saudi Arabia announced the establishment of the Insurance Authority (IA), reflecting a significant step forward in building a strong, vital, and stable insurance sector in the Kingdom.
Health projects in the Kingdom are improving, as the sector expects 100 new projects in health services in partnership between the government and the private sector over the next five years, with an estimated capital investment opportunity at $13 billion.
Saudi Shura Council member Fadel al-Buainain believes the Insurance Authority would contribute to pushing and stimulating mergers and acquisitions between insurance companies.
Buainain said that the Authority is expected to enhance mergers and acquisitions in the sector to create strong entities capable of growing, meeting needs, and effectively contributing to the economy.
He explained that some companies in the sector suffer from weak solvency and accumulated losses, among other issues.
The private health sector witnessed significant growth and development because of the insurance sector, said Buainain, adding that the Authority is expected to contribute to the development of health insurance and boost insurance companies.
He explained that this would help the companies meet the needs of the health sector in the future with the privatization of the health sector, increasing the demand for insurance.
Meanwhile, a member of the Board of Directors of the Saudi Economic Association (SEA), Saad al-Thaqfan, confirmed that mergers and acquisitions in the insurance sector during the coming period would increase their shares.
He noted that two companies control approximately 50 percent of the market, while all companies share the other 50 percent.
Thaqfan pointed out that the Authority will positively impact the insurance sector by focusing on structuring, developing, and supervising it.
He asserted that these sectors would continue to grow, particularly with individuals entering the labor market.
During the past decade, the insurance sector could not establish insurance companies with high creditworthiness, except for a few major companies.
During January 2021, several companies were under mergers and acquisitions, such as Walaa Cooperative Insurance, MetLife, Gulf Union Insurance, and al-Ahlia Insurance.
In 2022, the insurance sector grew 27 percent, while the insurance sector index recorded a growth of 55 percent since the beginning of the current year 2023.
The insurance sector is worth over $14 billion, with a 2.09 percent share of gross domestic product.
- The health sector
Healthcare companies in the Saudi market achieved record revenues exceeding $4.5 billion during the past year, with a growth rate of 14.2 percent. Net profits amounted to more than $800,000,000 million, with a growth rate of 22.8 percent over the previous year.
The net profit margin of companies increased during the past year to 17.5 percent, compared to about 16.3 percent for the previous year.
The health and social development sector expenditures from the general budget during the first half of this year amounted to $34 billion, constituting about 21.2 percent of the budget expenditures for 2023 and 28.5 percent more than the corresponding period last year.
Source: Ashark-Alawst
Saudi Arabia’s manufacturing activity rises by 10% in May despite fall in IPI
11 Jul 2023 Written by Admin AdminManufacturing activity in Saudi Arabia increased by 10 percent in May compared to the same month of the previous year despite a slight fall in the Kingdom’s Industrial Production Index, official data showed.
According to the latest report released by the General Authority for Statistics, the Kingdom’s IPI in May 2023 decreased by 1.2 percent compared to April.
“Although the activity of the manufacturing industry and the activity of electricity and gas supply continued to rise, the decline in the mining and quarrying activity during May 2023 led to the decrease in the general index, given its high weight in the index,” said GASTAT in the report.
The relative weights of the mining and quarrying, manufacturing and electricity and gas supply sectors in the IPI are 74.5 percent, 22.6 percent and 2.9 percent, respectively. As a result, trends of IPI were heavily dependent on mining activities, it said.
The report added that mining activities in Saudi Arabia decreased by 5.5 percent in May as the Kingdom reduced its oil production to 9.9 million barrels per day.
“At a declining rate of 1.2 percent in the month of May 2023, the IPI continued its downward movement of previous months, however, reaching negative territory for the first time,” GASTAT said in the report.
The report added: “The index had peaked in early 2022, supported by growth rates of mining and quarrying activities, and manufacturing activities during that year. Since then, and in particular in 2023, growth rates have slowed down, mainly driven by mining and quarrying.”
The report further noted that electricity and gas supplies also increased by 12 percent year on year in May.
Compared to April 2023, overall IPI decreased by 3.1 percent driven by mining and quarrying sector which reduced by 4.8 percent.
Earlier this month, the Riyad Bank Saudi Arabia Purchasing Managers’ Index report, compiled by S&P Global, had suggested that non-oil business activities in the Kingdom witnessed a massive expansion in June driven by growth in construction and tourism sectors.
According to the report, the Kingdom’s PMI surged to 59.6 in June from 58.5 in May, and remained fractionally lower than the eight-year peak in February when the figure touched 59.8.
Source: ArabNews
The OPEC+ production cuts would lower overall real growth to 2.1% in 2023. Meanwhile, the non-oil growth is expected to average 5% and remain above potential
The International Monetary Fund (IMF) projected that the non-oil growth momentum in Saudi Arabia will remain strong in 2023, according to the financial agency’s report.
The OPEC+ production cuts would lower overall real growth to 2.1% in 2023. Meanwhile, the non-oil growth is expected to average 5% and remain above potential.
The report forecast that headline inflation will be contained this year, while the average consumer price index (CPI) will be slightly higher at 2.8% compared with 2022.
It also highlighted that strong currency, subsidies, and gasoline price caps offset inflationary pressures from diminishing labor market slack and a booming non-oil economy.
As for reserves, they are expected to stabilise at slightly lower levels of import coverage over the medium term, even if they remained well above standard reserve adequacy metrics.
As predictions of strong oil demand for the rest of the year persist, higher oil prices might change amid OPEC+ oil production cuts.
Furthermore, accelerated structural reforms and investment could boost growth.
On the other hand, a too-quick rise in non-oil investment could further hike domestic demand, hence adding pressure on prices and external accounts.
The headline seasonally adjusted Purchasing Managers Index (PMI) of Saudi Arabia retreated to 58.5 in May 2023 from 59.6 last April. However, the reading was still above the 50 growth mark and higher than its long-run average of 56.9.
Source: Zawya
Saudi Arabia offers major concessions to investors in newly launched SEZs
22 Apr 2023 Written by Admin AdminThe incentives offered to companies operating in the four newly launched Special Economic Zones (SEZs) in Saudi Arabia cover both fiscal and non-fiscal concessions, including competitive corporate tax rates, duty-free imports of machinery and raw materials, 100% foreign ownership, seamless set-up procedures, and flexibility in employing foreign labor.
Chairman of the Board of Directors of the Special Economic Cities and Zones Authority and Minister of Investment Eng. Khalid Al-Falih said: “This is an exciting moment.
We are proud to see the launch of these four special economic zones that offer the chance for foreign investors to have a stake in the world’s fastest-growing economy.”
The new zones, strategically situated across the Kingdom, are ‘King Abdullah Economic City (KAEC), Jazan, Ras Al Khair and Cloud Computing SEZ located in King Abdulaziz City for Science and Technology (KACST).
The SEZs reinforce further Saudi Arabia’s position as a global business hub and will play a major role in achieving Saudi Arabia’s economic development goals under the Crown Prince’s Vision 2030 strategy.
The Secretary-General of the Authority, Nabil Khoja, added, “With hugely attractive financial incentives, world-class infrastructure, business-friendly regulations and streamlined procedures for investors, there has never been a better time to be part of Saudi Arabia’s economic success story.
The zones will become engines of growth, increasing the Kingdom’s export competitiveness, attracting talent, boosting technology and improving our global links.”
Special economic zones – or SEZs – are geographically defined areas that facilitate specific economic activities, such as investment, trade and employment, by providing competitive advantages and legislative frameworks that differ from the base economy. With a bespoke regulatory and incentive scheme, SEZs constitute an attractive proposition in the increasingly attractive context of foreign investment.
This important program will enable Saudi Arabia to fast-track certain reforms and facilitate the ease of doing business across the country.
King Abdullah Economic City (KAEC) SEZ will serve as the premier destination for advanced manufacturing and logistics, from automobile supply chain and assembly to consumer goods, ICT to MedTech. Set in a prime location on the Red Sea, less than 90 minutes from Jeddah Airport, this 60km2 site offers unrivaled access to global trade routes through King Abdullah Port, ranked the world’s most efficient by the World Bank in 2022. Anchor investor Lucid, a leader in the global EV industry, will produce 150,000 EVs a year from its base in KAEC SEZ.
Jazan SEZ will be an industrial center and key platform for trade with fast-growing markets in Africa and Asia. Jazan SEZ offers access to the largest port in the region for the export of goods and import of materials, helping investors benefit from and contribute to large-scale infrastructure projects in Saudi Arabia and around the world, backed by easy access to both natural and industrial resources. Jazan is part of the Kingdom’s fertile southwestern region, providing opportunities for manufacturing, processing and distribution of food products to cater for growing regional demand and meet food security challenges across the region.
Ras Al-Khair SEZ is a launchpad on the Arabian Gulf for leaders in the maritime industry, Ras Al-Khair SEZ is a fully integrated marine ecosystem, with a rich network of existing investors – 40% of the zone is already spoken for – and myriad opportunities across shipbuilding and repair, offshore drilling and maritime value chains.
Cloud Computing SEZ, located in King Abdulaziz City for Science and Technology (KACST), will serve as a hub for emerging and disruptive technologies.
A direct manifestation of the Kingdom’s ‘Cloud First’ policy, the Cloud Computing SEZ underlines the Kingdom’s commitment to digital innovation and the fast-growing tech sector.
The Zone is based around an innovative hybrid model that allows investors to establish physical data centers and cloud computing infrastructure in multiple locations within the Kingdom.
Saudi Arabia’s favorable geographic location, at the heart of major trade routes and supply chains, with access to more than 70% of the world’s population within 8 hours, adds to the zones’ appeal, along with the Kingdom’s young, highly educated population of more than 34 million, expansive natural resources and stable, rapidly growing capital markets.
Source: Zawya
