Doing business

Saudi Arabia

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Setting up a company | FDI in figures | Why you should choose to invest | Procedures relative to foreign investment | Finding assistance for further information

Setting up a company

Types of companies and capital (max/min)	Number of partners/shareholders and liability
The Sole Proprietorship is a single-partner company. No minimum capital.	1 person The individual entrepreneur is liable for debts the company on his personal possessions.
Sharikat Al-Mossahamah (S.A.M) is a Public Limited Company. Minimum SAR 10 million.	Minimum 5 partners. Liability is limited to the amount contributed.
SHARIKAT ZAT MASSOULIYYAH MAHDOOAH (S.M.M) is a Private Limited Company. Minimum SAR 2 million.	Minimum 5 partners. Liability is limited to the amount contributed.
Sharikat Tadhamou is a General Partnership Company Minimum SAR 500,000	Minimum 2 partners. Liability is unlimited.
Sharikat Tawsiyah Bel-ashom - Ashom is a partnership limited by shares. Minimum SAR 1 million.	Minimum 2 partners and maximum 50. At least one partner must have an unlimited liability. Liability of other partners is limited to the amount contributed.

Business setup procedures

Setting up a company	Saudi Arabia	Middle East & North Africa
Procedures (number)	4.0	8.1
Time (days)	5.0	20.0

Source: Doing Business.

For further information: Consult Doing Business Website, to know about procedures to start a Business in Saudi Arabia.
The Ministry of Commerce and Industry, for Business licenses.
The competent organization: Ministry of Commerce and Industry

Ministry of Finance

Department of Zakat and Income Tax

FDI in figures

Foreign Direct Investment	2008	2009	2010
FDI inward flow (millions USD)	38,151	32,100	28,105
FDI stock (millions USD)	111,631.2	142,300.0	170,450.0
Performance Index*, ranking on 141 economies	33	17	-
Potential Index**, ranking on 141 economies	29	-	-
Number of Greenfield investments***	106	141	-
FDI inwards (in % of GFCF****)	46.0	299.2	-
FDI stock (in % of GDP)	23.9	40.5	-

Source:

Note: * The UNCTAD Inward FDI Performance index is based on a ratio of the country's share in global FDI inflows and its share in global GDP. ** The UNCTAD Inward FDI Potential index is based on 12 economic and structural variables such as GDP, foreign trade, FDI, infrastructures, energy use, R&D, education, country risk. *** Green field investments are a form of foreign direct investment where a parent company starts a new venture in a foreign country by constructing new operational facilities from the ground up. **** Gross fixed capital formation (GFCF) measures the value of additions to fixed assets purchased by business, government and households less disposals of fixed assets sold off or scrapped.

Why you should choose to invest Saudi Arabia

Strong points

Once Saudi Arabia became a member of WTO in 2005, the foreign investment climate in the Kingdom substantially improved. From an investor's point of view, the country's strong points are economic stability, the large local market with a high spending power (and a population of over 27 million), sound infrastructures and a well-regulated banking system.

Weak points

The week points are the inadequate legal framework in resolving commercial disputes, the lack of transparency in applying the intellectual property legislation, the government imposed quotas of Saudi employees in companies, the delayed payment of some government contracts, a restrictive visa policy for all workers, a very conservative cultural environment and enforced segregation of the sexes in most business and social settings.

Government measures to motivate or restrict FDI

According to the law on foreign direct investment, foreigners are now allowed to invest in all sectors of the economy, except for specific activities on a “negative list”. This list continues to shrink as Saudi Arabia attempts to liberalize trade.

Foreign investors are no longer required to take local partners in a number of sectors and may own real estate for company activities. They are allowed to transfer their company money outside the country and can sponsor foreign employees.

In order to facilitate investments in the Kingdom, the Saudi Arabian General Investment Authority (SAGIA) has set up an Investment Services Centre (ISC). The ISC must decide to grant or refuse a license within 30 days of receiving an application from an investor.

Bilateral investment conventions signed by Saudi Arabia

Saudi Bilateral Investment Agreements

Procedures relative to foreign investment

Freedom of establishment: Not guaranteed
Acquisition of holdings: Possible
Competent organization for the declaration: Ministry of Finance, Saudi Arabia
Requests for specific authorizations: Saudi Arabia maintains a Negative List that tabulates sectors not open to foreign investment (visit SAGIA site). The sectors currently closed to foreign investment include three manufacturing categories and 13 service industries. The list includes real estate investment in Mecca and Medina, some sub-sectors in printing and publishing, audiovisual and media services, land transportation services excluding the inter-city transport by trains, and upstream petroleum. SAGIA periodically reviews the list.

Finding assistance for further information

Investment aid agency: Saudi Arabian General Investment Authority (SAGIA)
Other useful resources: Saudi Chamber of Commerce and Industry
Riyadh Chamber of Commerce and Industry
Jeddah Chamber of Commerce and Industry