Saudi Arabia’s government invites investors to open more cinema theaters

26/07/19

Saudis watch composer Yanni perform at Princess Nourah bint Abdulrahman University in Riyadh, Saudi Arabia, December 3, 2017. (Reuters)
  • A statement said the invitation is aimed at easing procedures for investors and provide them with the necessary permits for operation

RIYADH: Saudi Arabia’s General Authority for Audiovisual Media has invited investors who are interested in opening or operating cinema theaters in small cities to communicate with the authority.
A statement issued by the Saudi Press Agency said the invitation is aimed at easing procedures for investors and provide them with the necessary permits for operation.
The move comes after the Kingdom’s cinemas ranked third place across the Middle East for its record ticket sales during the second quarter of 2019.
So far, seven theaters have been established in three main cities in the Kingdom. Around 27 more theaters are expected to open in seven cities by the end of 2019 to meet the increasing demand, SPA added.

This article was first published in Arab News

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Spotlight on $30bn franchise in the Middle East market

30/06/19

Munir Mohammed Nasser. (SPA)
  • Saudi Arabia has acquired 50 percent of the market value of the franchising market in the Middle East and North Africa

MADINAH: With a market value of $30 billion and an annual growth rate of 27 percent, franchising is the fastest-growing non-oil sector in the Middle East region, according to Munir Mohammed Nasser, chairman of the Madinah Chamber of Commerce and Industry.
Nasser was speaking at the World Franchise Exhibition held at the chamber’s exhibition center in Madinah. The event, which the chamber has organized in cooperation with Three Dimensions for Events and Exhibitions, coincides with the UN’s Micro, Small and Medium-sized Enterprises Day.
Nasser said that the exhibition promotes local talent and products, gathers international brands and develops investment in the province. He said franchising is the ideal model for both the small and medium enterprise (SME) sector as it contributes 4 to 5 percent of a country’s GDP and provides 6 percent of private sector jobs in countries with advanced franchising systems.
The Kingdom has acquired 50 percent of the market value of the franchising market in the Middle East and North Africa, which has become the fastest-growing non-oil sector, he said.
The exhibition has expanded its presence, with 56 participants from around the world, 12 from Madinah and 17 from outside Saudi Arabia. SPA Madinah

This article was first published in Arab News

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Saudi Arabia relaxes ownership limits for foreign investors

Time: June 27, 2019  

Mohammed El-Kuwaiz, Chairman of the Capital Market Authority (Reuters/File photo)
  • Capital Market Authority chairman, Mohammed El Kuwaiz said, ownership in the Saudi capital market by financial investors had increased threefold this year
  • The move aims to help enhance the market’s efficiency and attractiveness and to expand the institutional investments base

RIYADH,: Saudi Arabia has relaxed a 49 percent limit for foreign strategic investors in shares of listed companies, aiming to attract billions of dollars of foreign funds as the Kingdom opens up the region’s largest bourse to a more diverse investor base.
The country has introduced a raft of reforms in recent years to make its stock market, the region’s biggest, attractive to foreign investors and issuers.
The move aims to help enhance the market’s efficiency and attractiveness and to expand the institutional investments base, the regulator, the Capital Market Authority (CMA), said in a statement on its website.
The Saudi stock market, which opened to foreign investors in 2015, has seen an upsurge in foreign fund flows since the start of the year due to its inclusion in the emerging markets indexes.
“In the beginning of this year, we had only one percent ownership in the Saudi capital market by financial investors, today it is over three percent, that’s more than a threefold increase,” CMA chairman, Mohammed El-Kuwaiz told Reuters in an interview.
“Our hope is that we can see a similar increase in terms of pace and magnitude as we start to create more avenues for foreign investors to come in to the market,” he added.
There will be no minimum or maximum ownership limit, although the owners must hold the shares for two years before they can sell.
Kuwaiz said huge demand from non-financial foreign investors pushed the CMA to grant approval on an exceptional basis to a number of strategic foreign investors to increase their holdings in Saudi listed companies. These included transactions at an insurance firm and a local bank.
Foreign investors have been net buyers of Saudi equities over the past few months, with purchases worth 51.2 billion riyals ($13.6 billion) until May 30. They currently own 6.6 percent of Saudi equities, of which 3.15 percent is owned by strategic foreign investors.
Local shares were incorporated into the FTSE emerging-market index in March and the MSCI emerging market benchmark in May this year. The country’s Tadawul All-Share Index is up 11 percent year-to-date.
Strategic foreign investors can take stakes in listed companies by buying shares directly on the market, or through private transactions and via initial public offerings.
Asked how this move would reflect on the Aramco IPO, planned for 2021, Kuwaiz said it would assure that the market has the physical regulatory and investor infrastructure to accommodate a company as large and as extensive as Saudi Aramco.

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High-level investment forum aims to further boost business between Saudi Arabia and Japan

Time: June 18, 2019  

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More than 300 officials took part in the gathering. (SPA)
  • Japan is one of Saudi Arabia’s most important economic partners

TOKYO: More than 300 government, investment and industry leaders on Monday took part in a high-level gathering aimed at further boosting business opportunities between Saudi Arabia and Japan.

The Saudi Arabian General Investment Authority (SAGIA) welcomed key figures from the public and private sectors to the Saudi-Japan Vision 2030 Business Forum, held in Tokyo.

Hosted in partnership with the Japan External Trade Organization (JETRO), the conference focused on the creation of investment opportunities in strategic sectors of the Kingdom. Delegates also discussed key reforms currently underway to enable easier market access for foreign companies.

Speaking at the event, Saudi Economy and Planning Minister Mohammed Al-Tuwaijri, said: “Today’s forum is a testimony to the success of the strategic direction set by the Saudi-Japanese Vision 2030 two years ago, which seeks to drive private-sector involvement, both by partnering with public-sector entities.”

SAGIA Gov. Ibrahim Al-Omar said: “At SAGIA, we have been working on creating a more attractive and favorable business environment in Saudi Arabia, which is making it easier for foreign companies to access opportunities in the Kingdom.”

Japan is one of Saudi Arabia’s most important economic partners. It is the Kingdom’s second-largest source of foreign capital and third-biggest trading partner, with total trade exceeding $39 billion.

JETRO president, Yasushi Akahoshi, said: “Saudi-Japan Vision 2030 has made great progress since it was first announced. Under this strategic initiative, the number of cooperative projects between our two countries has nearly doubled, from 31 to 61, and represents a diverse range of sectors and stakeholders.”

Since 2016, the Saudi government has delivered 45 percent of more than 500 planned reforms, including the introduction of 100 percent foreign ownership rights, enhancing legal infrastructure and offering greater protection for shareholders.

As a result, the Kingdom has climbed international competitiveness and ease-of-doing-business rankings, with foreign direct investment inflows increasing by 127 percent in 2018 and the number of new companies entering Saudi Arabia rising by 70 percent on a year-on-year basis in the first quarter of 2019.

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Saudi investment fund PIF ‘has $300bn in assets and counting

10/06/19

Saudi Arabia’s Vision 2030 reform plan is expected to transform the country’s key wealth fund into one of the world’s largest sovereign investment vehicles. (Shutterstock)

  • Boost in Kingdom’s wealth fund ‘will improve country’s international investment position,’ study shows

LONDON: Saudi Arabia’s key wealth fund has about $300 billion in assets and its growing size is set to “improve the country’s international investment position,” a new report has found.
Roughly a quarter of the Kingdom’s Public Investment Fund (PIF) holdings are overseas, with investments in companies like electric car maker Tesla and SoftBank’s Vision Fund, according to the Institute of International Finance (IIF) analysis.
A raft of privatization deals and the planned $69 billion sale of a controlling stake in petrochemicals giant Saudi Basic Industries (SABIC) to Saudi Aramco is set to further boost the fund’s coffers, according to the IIF.
That means it is likely PIF will hit a target of $400 billion in assets by 2020, something the fund’s representatives have previously suggested is on track.
“The expected further increase in the PIF’s assets abroad will improve the country’s international investment position,” the IIF report said.
“We now estimate PIF’s assets at about $300 billion, of which one-fourth are invested abroad, including in … Blackstone’s infrastructure fund, Egypt’s investment fund, Russia’s investment fund, and Uber. Proceeds from privatization (a target of about
$200 billion) and the eventual 5 percent sale of Aramco (a target of $100 billion) will further boost the PIF’s assets.”
However, the IIF noted that the privatization drive has been delayed due to legal impediments, concerns about implications for the labor market, and — in the case of the planned sale of a 5 percent stake in Saudi Aramco — regulatory procedures that need to be addressed.
The Vision 2030 reform plan envisions the transformation of the PIF into one of the world’s largest sovereign investment vehicles, managing $2 trillion by 2030.
The Sovereign Wealth Fund Institute estimates PIF’s current assets at $320 billion, higher than the IIF’s assessment, making the Saudi entity the 10th largest fund of its type globally. Representatives of PIF did not immediately respond to a request for comment.
The IIF report also found that Saudi Arabia’s holdings of US government bonds climbed to a peak of $170 billion in March 2019. The Kingdom has also “repositioned” its assets from euro and UK pounds to US dollars, the institute said.
“The increase in the Saudi appetite for US bonds coincided with relatively higher US yields and unfavorable investment sentiment in (emerging markets) and the euro zone,” the report noted.

This article was first published in Arab News

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Saudi Arabia most improved economy for business

Time: May 28, 2019  

IMD’s chief economist noted the efficiency of public-sector finance and the stability of Saudi Arabia’s tax regime as factors in the improved ranking. (Reuters)
  • The Kingdom rose 13 places in the latest edition of IMD’s annual survey, jumping to 26th in the world
  • IMD’s Christos Cabolis: Saudi Arabia spends 8.8 percent of its gross domestic product on education, against a global average of 4.6 percent

DUBAI: Business competitiveness in Saudi Arabia has improved more than any other country in the world, according to a new survey by Switzerland-based business school and think tank the International Institute for Management Development (IMD).
The Kingdom rose 13 places in the latest edition of the annual survey, jumping to 26th in the world. IMD highlighted Saudi investment in education, where the country achieved the highest ranking in the world, as well as the quality of public and business finance, as factors behind the improvement.
Christos Cabolis, chief economist and head of operations at IMD’s World Competitiveness Center, said the Kingdom invested nearly double the global average on education. “Saudi Arabia spends 8.8 percent of its gross domestic product on education, against a global average of 4.6 percent.”
He also noted the efficiency of public-sector finance and the stability of Saudi Arabia’s tax regime as factors in the improved ranking. “The message is to keep up the good reforms and attempt to be more transparent.”
The UAE was the highest-ranked regional performer in the survey, becoming the first Middle East country to break into the top five, with particular praise for its business efficiency.
Cabolis said that the improvement for both Saudi Arabia and the UAE came despite challenges in the economic performance of their oil-dominated economies. But non-oil exporters in the Middle East, such as Turkey and Jordan, suffered because of inflationary and other fiscal challenges.
Singapore emerged as the most competitive economy in the world, replacing the third-placed US, last year’s top economy. Hong Kong was ranked second.
“Singapore’s rise to the top was driven by its advanced technological infrastructure, the availability of skilled labor, favorable immigration laws, and efficient ways to set up new businesses. Hong Kong SAR held on to second place, helped by a benign tax and business environment and access to business finance,” IMD said.
“The initial boost to confidence from President Donald Trump’s first wave of tax policies appears to have faded in the US, according to the ranking. While still setting the pace globally for levels of infrastructure and economic performance, the competitiveness of the world’s biggest economy was hit by higher fuel prices, weaker hi-tech exports and fluctuations in the value of the dollar,” it added.
Ireland rose five places to rank 7th, while the UK — partly as a result of Brexit uncertainty — slipped to 23rd. In Saudi Arabia, Cabolis said that the strategy of economic diversification under the Vision 2030 plan was “slow but noticeable” and had contributed to the Kingdom’s rise.
However, the Kingdom performed comparatively poorly in some categories, notably international trade, technology and infrastructure, health and environment.
Challenges remain for Saudi competitiveness, IMD said. Policymakers have to continue government efforts to boost the non-oil economy, as well as to increase employment opportunities for young Saudi men and women under the human capability development program.
They should also continue reforms to restructure and streamline procedures and fees for licensing activities, and increase efforts to attract foreign direct investment.
“Economists regard competitiveness as vital for the long-term health of a country’s economy as it empowers businesses to achieve sustainable growth, generate jobs and, ultimately, enhance the welfare of citizens,” IMD said.

This article was first published in Arab News

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Saudi Arabia seeks private money to transform Red Sea beaches

Time: May 22, 2019   

Saudi Arabia seeks private money to transform Red Sea beaches
By Bloomberg

Saudi Arabia is seeking private sector investment to turn an archipelago islands, desert and mountains – an area about the size of Belgium – on its Red Sea coast into a global tourism destination.

The oil-rich kingdom’s sovereign wealth fund has committed financing for the project’s first phase, while the Red Sea Development Co is in talks with banks to raise debt, according to the head of the firm managing the process. The project will cover 90 islands and 28,000 square kilometres (10,810 square miles), according to the company website.

“The funding is backed by the Public Investment Fund — they’re funding the equity and we will source senior debt,” John Pagano, chief executive officer of Red Sea Development, said in an interview in Riyadh. “While there’s no absolute need for capital, bringing in private sector investors is seen as a good thing. We are actively engaged in discussions with numerous investors.”

The company would seek to structure the investments as joint ventures and expects interest from domestic and regional investors, Pagano said.

Sun-Seekers

Saudi Arabia is transforming its Red Sea coastline as part of plans to transform the economy and cut its reliance on oil. Bringing sun-seekers to the kingdom’s beaches could transform a tourism industry that relies almost solely on Muslim pilgrims. However, past mega-projects to diversify the economy have struggled to get off the ground.

The first phase of the Red Sea project, due to be to be completed in 2022, will include 14 hotels and a commercial airport. The development is expected to be fully completed by 2030.

Pagano also said: “We have much more to build over the coming years, so there will be an opportunity at the end of each stage to either convert into a real estate investment trust, which would then allow us to monetise these assets and recycle capital.

“There will be many options that we will consider. IPO being among those options but depends on market appetite at the time.” The company expects the development to create 70,000 jobs and contribute about 22 billion riyals ($5.9 billion) to the country’s gross domestic product.

This article was first published in Arabian Business

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Rights and benefits of the Saudi ‘Green Card’

Time: May 20, 2019  

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The Kingdom is continuing its development and reform plans within Vision 2030 to develop its economy and enhance the attractiveness of its investment environment. (AFP)
  • New visa move will allow residents and expatriates to play a more active role in Saudi economy
  • Media reports suggest the “Privileged Iqama” could cost as much as SR800,000 for a long-term version or SR100,000 for the one-year version

JEDDAH: The Um Al-Qura newspaper, the official gazette of the Saudi government, has published new information concerning the laws and regulations of the Privileged Iqama, widely known as the Saudi “Green Card.” It also carried the conditions under which the Iqama can be canceled.
Following the announcement of the Saudi Cabinet’s approval of the Privileged Iqama residency permit, as previously reported by Arab News, the new information offers a further look at the Privileged Resident Permit (iqama) scheme.
The iqama was first proposed in 2016 by Crown Prince Mohammed bin Salman and was approved by the Cabinet last week. It will for the first time allow foreign nationals to work and live in Saudi Arabia without a sponsor.
The scheme will enable expatriates to permanently reside, own property and invest in the Kingdom. An authorized draft of the new Privileged Iqama system offers a number of benefits to highly skilled expatriates and owners of capital funds that will not require a Saudi sponsor.
A special committee has been given 90 days to determine regulations governing the mechanisms of the scheme, such as fees for applicants, which have not been yet determined by the authorities.
Fahad bin Juma, vice chairman of the Shoura Council Financial Committee said that eligibility for the Saudi Green Card will be determined by a number of bodies headed by the Ministry of Commerce and Investment, as reported by Al-Watan newspaper.
He also added that in order to be eligible, applicants must possess scientific or professional skills that are not abundantly available in the Kingdom, or they should be company owners who can invest in the country.
The holder of the Privileged Iqama will be deemed resident for the purpose of applying other statutory provisions, especially tax provisions, regardless of how much time he spends outside the Kingdom in the course of the year.
The applicant must be over 21 years of age, must have a valid passport, must not have a criminal record, and must provide a health report dated within 6 months of the application presenting proof that the applicant is free of infectious diseases. In the case of applications from within the Kingdom, the applicant must obtain a legal resident permit before applying.
The Privilege Iqama rights include possession of private means of transport and any other movable properties that an expat is allowed to acquire as per the Saudi law, employment in private sector establishments and transfer between them (this includes the beneficiary’s family members) except for occupations and jobs from which non-Saudi nationals are banned. The rights also include freedom to leave the Kingdom and return to it independently, use of the queues designated for Saudi nationals when entering and exiting the Kingdom through its ports, and doing business under the foreign investment system.
Under the system, two categories are provided to applicants, an extended iqama and temporary iqama subject to renewal.
Upon approval of the application, according to Article 5, the applicant must pay the fees specified by the designated authorities; the holder will be deemed resident for the purpose of applying other statutory requirements, especially the tax provisions, regardless of how much time he spends outside the Kingdom in the course of the year.
The Privileged Iqama does not entitle the holder to Saudi citizenship.
The holder of the Privileged Iqama, will enjoy several rights, including residence in Saudi Arabia with his family, the right to issue visitor’s visas for relatives as defined by the MOI regulations, the recruitment of domestic workers, the possession of property for residential, commercial and industrial purposes with the exclusion of Makkah, Madinah and border areas as per the regulations. The holder will also be able to utilize property in Makkah and Madinah for a period not exceeding 99 years.
The Ministries of Justice and Commerce and Investment shall establish the necessary mechanisms to ensure the beneficiary’s access to an instrument of utilization issued by the Notary Public. This right will be enforceable by transfer to others according to the rules set by the committee.
Saudi Arabia’s minister of Economy and Planning, Mohammad Al-Tuwaijri, said that the Privilege Iqama law approved by the Saudi Cabinet confirms that the Kingdom is continuing its development and reform plans in accordance with Vision 2030 to develop its economy and enhance the attractiveness of its investment environment.
The Privilege Iqama aims to make residents and expatriates an active part of the Saudi economy, promote consumption growth by increasing quality purchasing power and economic activity in various sectors, establish more small and medium enterprises, and generate jobs for Saudi citizens.
The Privileged Iqama can be canceled if the holder did not comply with the obligations stipulated in Article 7 of the law, waivered his residency, and/or passed away or was no longer eligible.
Several matters could lead to the cancelation of the Iqama, such as providing false information in the application, a conviction for a crime punishable by imprisonment for a period exceeding 60 days and/or a fine exceeding SR100,000, or a judicial decision to deport the holder from the Kingdom.
The cancelation or termination of the Privilege Iqama does not entail the transfer of the rights and benefits, obtained in accordance with Article 2 of the law, to the holder’s family. However, if a family member met the conditions of this law and its regulations, he may apply for the Privileged Iqama.
In the event of the cancelation or termination of the holder’s Iqama or any of his family members, the Privilege Iqama Center will, in coordination with the designated authorities, consider and remedy any consequences that may result therefrom in accordance with the law and its regulations.

This article was first published in Arab News

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What does the Saudi ‘green card’ mean for entrepreneurs?

Time: May 16, 2019  

Call it the “Privileged Iqama” system or “Saudi green card,” the end result is still the same. This new residency scheme that has just been approved by the Saudi Cabinet will allow skilled foreigners, capital investors and entrepreneurs to live and work in Saudi Arabia without the need for a sponsor.

Having lived in the US, the UK and other countries in my youth and adulthood, I saw the impact of residency schemes that encourage people to migrate for opportunities, and experienced first-hand the growth that these schemes brought to these countries. I am very optimistic that this Saudi scheme will also bring more non-oil dependent economic growth and prosperity to our country, that will help us achieve our 2030 vision.

So what will this scheme mean for foreign entrepreneurs wanting to enter the Saudi market? Well, first and foremost, it will allow them to freely declare their actual status as “entrepreneurs,” and work full time on their startups without taking a full-time day job in order to have legal status in Saudi. That alone is a big burden lifted. Focusing on their startups is what will take entrepreneurs to the next level, and expand their businesses. Giving them the freedom to do what they need to expand their businesses and recruit who they see fit is essential.

Speaking to my American co-founder, Tim Abbott, at our company Upskillable about what this may mean to him as a part-time entrepreneur in Saudi, was revealing. Tim told me: “I think this scheme will bring a wave of innovation to the Kingdom, and encourage many bright minds to set up shop here. Additionally, some expats believe it will eliminate the exploitation they feel has happened in the past when trying to start businesses with local partners with no legal framework. Furthermore, it will allow entrepreneurs to build some of their innovative ideas in the Kingdom, instead of going to other jurisdictions when they don’t really want to do business in those places. The excitement around this new development is contagious and people are simply waiting for the details to be ironed out.”

This is going to be a big economic stimulus for Saudi Arabia.

• Dr. Taghreed Al-Saraj is a best-selling Saudi author, an international public speaker and an entrepreneurship mentor.

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No sponsor? No problem: Saudi Shoura Council approves new ‘green card’ residency

Time: May 08, 2019  

Saudi Arabia’s Shoura Council on Wednesday approved a new “Privileged Iqama” system for expatriate residents.
  • The new Privileged Iqama system will offer a raft of benefits to highly skilled expatriates and owners of capital funds

JEDDAH: Saudi Arabia’s Shoura Council on Wednesday approved plans to attract entrepreneurs and investors from overseas with a “green card”-style residency scheme.

The authorized draft of the new Privileged Iqama system will offer a raft of benefits to highly skilled expatriates and owners of capital funds. Unlike the existing iqama system, such residents would not require a Saudi sponsor or employer.

The benefits on offer include the ability to recruit of workers; ownership of property and transport; employment in the private sector, commerce and industry; freedom of movement and exit from the Kingdom and return; and the use of designated queues at airports.

Under the system, which requires a guarantee of specific fees, there are two categories: An extended iqama and a temporary one.

Eligible expatriates must have a valid passport with a credit report, a health report and no criminal record.

Last month, the Ministry of Labor and Social Development announced the launch of its Gold Card extended residence program.

The ministry called on consultants and agencies to analyze the possibility of providing incentives to beneficiaries.

The Gold Card program is part of the Quality of Life Program 2020, which was launched in 2018 by the Council of Economic and Development Affairs.

The aim of the Gold Card program is to promote expatriates’ engagement with Saudi culture, and to increase acceptance of other cultures among Saudis.

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