Saudi anti-concealment law to protect consumers and small businesses

Time: 09 March 2021

An aerial view shows a deserted highway due to the COVID-19 pandemic, on the first day of the Eid al-Fitr feast marking the end of the Muslim holy month of Ramadan, in the Saudi capital Riyadh, on May 24, 2020. – Saudi Arabia, home to Islam’s holiest sites, began a five-day round-the-clock curfew from May 23, in a bid to stem the spread of the novel coronavirus. (Photo by FAISAL AL-NASSER / AFP)

The regulations support the reporting of crimes and violations by protecting whistleblowers and motivating them through rewards. (File/Shutterstock)

The measures relate in large part to the business relationship of Saudis and foreign investors and aim to ensure that they do not circumvent the Kingdom’s commercial law

RIYADH: Saudi Arabia’s “anti-concealment” laws aim to protect consumers and small businesses from financial crime according to the Ministry of Commerce, Al Arabiya reported.
The measures relate in large part to the business relationship of Saudis and foreign investors and aim to ensure that they do not circumvent the Kingdom’s commercial law about how such partnerships are created and what happens when they are dissolved.
The regulations support the reporting of crimes and violations by protecting whistleblowers and motivating them through rewards.
Talat Hafiz, a Saudi economist, financial analyst, and board member of the Saudi Financial Association, said commercial concealment is a major financial crime that “works against fair and unjustifiable commercial trading and causes significant harm to the economy and to its gross domestic product.”
“The government of Saudi Arabia has been alerted to such risks and consequences of commercial concealment, and has introduced a very powerful national program to combat such economic and commercial disease,” he added.
Several government bodies are combating concealment besides the Ministry of Commerce, including, the Ministry of Municipal and Rural Affairs and the Ministry of Human Resources and Social Development.

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Saudi Industrial Center mulls $10.66bn worth of projects

29/11/20

The Kingdom’s industrial strategy aimed at enhancing the target business segments, and attracting top-notch industrial investments over the coming years, which will boost the sources of the non-oil income. (Shutterstock)

The National Industrial Development Center (NIDC), in cooperation with the the Ministry of Industry and Mineral Resources, is studying the development of more than SAR 40 billion ($10.66 billion) worth of industrial projects in target business divisions, Al Eqtisadiah newspaper reported, citing Chief Executive Officer Nizar Y. Al-Hariri.

These investment opportunities include the development of a combined zinc-lead-copper smelting facility, alumina refinery, phosphorus production facility, local tuna processing facility, in addition to manufacturing dialysis machines, vial injectors, as well as vaccines.

The Kingdom’s industrial strategy aimed at enhancing the target business segments, and attracting top-notch industrial investments over the coming years, which will boost the sources of the non-oil income and provide job opportunities, the CEO said.

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New law to cut red tape in the business world

Time: 15 July, 2020

A proposed new Saudi corporate law, a draft of which has gone out for public consultation, marks a paradigm shift to a new and innovative path that will encourage the rapid growth of the corporate sector and enable it to keep pace with the latest developments.

One of the aims of the new law is to cut out many of the bureaucratic procedures that currently dampen the enthusiasm of people who want to establish companies, and red tape that has no place in the modern business world — for example, eliminating restrictions on company names, allowing the use of innovative titles derived from the purpose of the company.

Among the most prominent and significant features of the proposed law is the introduction of a new kind of company — the simple joint-stock company, established by one or more founders without a minimum requirement for capital. The new law is also flexible about different scenarios for managing the company — by a general manager or one of the board of directors. The company’s management mechanism and the majority required to implement decisions are subject to the founding agreement, as are the types of shares and debt instruments that may be issued.

The new law also offers amended solutions that can help companies to overcome any financial difficulties they may face, especially during this particularly challenging time. For example, if a financial loss represents half the capital value of a limited liability company, it need not immediately cease trading, as is currently the case; although of course, concerned parties may still petition the competent judicial authority to dissolve the company.

A committee will be established at the Ministry of Trade, comprising a minimum of three members at least one of whom is a specialist in the law and related regulations, to consider possible offenses and related penalties.

The new law includes and replaces some provisions of previous law related to companies, which it supersedes. Any provisions in previous laws that contradict the new law will be canceled when the new law is approved. Consolidating the laws that govern such a vital sector as business and commerce will assist the public perception of companies, address the needs of businesses and their owners, and develop and improve the entire sector.

The completion and implementation of this new law in coordination with all the relevant parties is a challenge; successfully completed, it will make procedures and regulatory requirements easier, stimulate the attraction of capital investment, and help to revitalize the economy.

• Dimah Talal Alsharif is a Saudi legal consultant, head of the health law department at the law firm of Majed Garoub and a member of the International Association of Lawyers. Twitter: @dimah_alsharif

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Saudi Shoura Council approves economic cities and special zones authority

Time: 30 June, 2020

Shoura Council President Dr. Abdullah Al-Asheikh chairs a virtual session. The council discussed several important issues on Monday. (SPA)
  • Members then voted to accept the committee’s recommendation to progress with the process of privatizing the authority

The Saudi Shoura Council has given the go-ahead for a project to reorganize the system of cooperative societies in the Kingdom.
During a virtual session headed by the council’s president, Dr. Abdullah Al-Asheikh, delegates also listened to a presentation by the culture, information, tourism, and antiques committee chairman, Dr. Mohammed Al-Hizan, on the annual report of the authority responsible for radio and television.
Members then voted to accept the committee’s recommendation to progress with the process of privatizing the authority.
Dr. Yahya Al-Samaan said the council also gave the green light for the Economic Cities and Special Zones Authority to develop a system of regulatory and financial legislation while putting forward more incentives and initiatives to enhance the competitiveness of cities and special economic areas to attract quality industries and global investors.

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Forum to feature 5,000 investment opportunities in Saudi Arabia

16/02/20

The forum seeks to expand the base of competitors for the investment opportunities presented by all of Saudi Arabia’s municipalities in various economic fields. (SPA)
  • The forum seeks to expand the base of competitors for the investment opportunities presented by all of Saudi Arabia’s municipalities in various economic fields

RIYADH: The Ministry of Municipal and Rural Affairs announced the first Municipal Investments Forum, called Furas — Opportunities — to be held on Feb. 24 at the Riyadh International Convention and Exhibition Center.
“The forum seeks to expand the base of competitors for the investment opportunities presented by all of the Kingdom’s municipalities in various economic fields, which would contribute to the Saudi cities’ development,” said the ministry’s deputy minister for planning and programs, Khalid Al-Dughaither.
“It also introduces investors and the private sector to the initiatives focused on developing the municipal sector’s investment system and the future trends in light of the Kingdom’s Vision 2030,” he said.

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Minister: ‘Mind-blowing’ prospects for Saudi mining

25/01/20

  • Bandar Alkhorayef, the Kingdom’s minister for industry, says multibillion riyal program underway

DAVOS: The opportunities presented by Saudi Arabia’s mining industry are “mind-blowing,” the country’s minister for industry and mineral resources told Arab News.

Speaking on the sidelines of the World Economic Forum in Davos, Bandar Alkhorayef — who was appointed to the newly created post last summer — said many of the Kingdom’s mineral resources were “untapped,” and that a multibillion-riyal investment program was now underway to find and exploit new sources of natural wealth.

Saudi Arabia has launched a five-year geological survey of its natural resources, hoping to identify and quantify new wealth in the form of gold, phosphates and other valuable minerals.

Some experts believe that the Kingdom could be a source of precious earth metals valued in hi-tech production processes.

If these are found in significant quantities, it could help stimulate domestic high-tech manufacturing processes in Saudi Arabia.

“The government has linked mining with industry. We’ll export raw materials of course, but we’re more interested in the wider value chain,” Alkhorayef said.

A new mining law will soon be enacted, allowing for a revamped regulatory regime in the mining industry, and new investment in mining infrastructure that could reach tens of billions of riyals, he said, adding: “It shows you how serious we are about the mining industry.”

He joined the government after 26 years at the top of private sector business, with the Alkhorayef Group industrial conglomerate.

“The core of the Vision 2030 strategy is to diversify the economy, and industry and mining are key parts of that. My view as a minister is to be an enabler for the transformation of those sectors,” he said.

A key agency is the Saudi Industrial Development Fund, which aims to distribute funds to the private sector to encourage expansion.

Its available capital has been increased from SR65 billion ($17.3 billion) to $100 billion, and its mandate has changed to cover new industrial and technological sectors, Alkhorayef said.

“Both industry and mining are capital intensive and need long-term stability and visibility. Our aim is to be profitable in order to compensate investors for the risk they take,” he added.

DECODER

Saudi Arabia’s National Industrial Development and Logistics Program

The National Industrial Development and Logistics Program aims to transform the Saudi economy by encouraging investment in economic growth via the creation of special economic zones across the Kingdom.

“Investors always look at risk and return, and they make decisions based on that. Our vision is to open up opportunities for local and foreign investors.”

His ministry is also closely involved in the rollout of the National Industrial Development and Logistics Program, the big strategy to transform the Saudi economy launched a year ago by encouraging investment in economic growth via the creation of special economic zones across the Kingdom.

“It’s going great,” Alkhorayef said. Two zones have already been opened in Riyadh and Jeddah, and there are further projects under review.

He met with investors in the logistics sector while in Davos, and further investment is expected.

He said in Saudi Arabia’s case, the advantages presented to investors by the Kingdom’s natural resources, demographics and geographical location outweigh any geopolitical risk.

Alkhorayef added that it is relatively risk-free in terms of currency fluctuations because of the dollar peg and freedom of capital. “I worked in a global company, so I understand those kinds of risks,” he said.

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SAGIA chief to lead delegation to WEF meeting in Davos as number of overseas firms starting business in Saudi Arabia breaks record

20/01/20

Al-Omar will lead the SAGIA delegation as part of a significant Saudi presence at the World Economic Forum (WEF) annual meeting in Davos, which begins on Tuesday. (Photo/Markus Schreiber)

DUBAI: Foreign investors are flocking to Saudi Arabia as the reform program under the Vision 2030 strategy accelerates, new official figures show.

In 2019, according to statistics released by the Saudi Arabian General Investment Authority (SAGIA), there was a 54 percent increase in the number of international companies setting up operations in the Kingdom, with 1,131 new foreign businesses launched — a record year.

“Leading growth sectors include construction, manufacturing and information and computer technology, as demand in these industries increases alongside infrastructural development and progress of the Kingdom’s giga projects driving forward in line with Vision 2030,” said SAGIA’s Invest Saudi report.

“During 2019, 193 new construction, 190 manufacturing and 178 ICT (information and communications technology) companies were established, compared to 111, 113 and 111 established in the three sectors in 2018 respectively.” The pace of new foreign startups accelerated in the final quarter, the report said.

SAGIA Gov. Ibrahim Al-Omar said: “Guided by Saudi Vision 2030, our country is undergoing a remarkable economic transformation. The continued prosperity of the Kingdom depends on sparking innovation, attracting foreign investors and empowering the private sector.”

He added: “The positive growth numbers that we have seen in the final quarter of 2019 — and indeed throughout the entire year — represent a significant milestone on the road to 2030.”

The Kingdom’s growing foreign investment landscape is underpinned by sweeping economic and social reforms made throughout 2019, aimed at improving Saudi Arabia’s business climate and attracting new investments.

The impact of these reforms is being recognized on a global scale: Saudi Arabia was ranked the world’s top improver and reformer by the World Bank, climbing 30 places in its Doing Business 2020 report, SAGIA said.

“The goal of our reform program is to help realize the potential that Saudi Arabia holds for the benefit of Saudi nationals and improve our competitiveness,” said Al-Omar, who will be among the Saudi delegation at the forthcoming World Economic Forum (WEF) annual meeting in Davos.

Snow falling in Davos, Switzerland, where around 3,000 political and business leaders will gather for the World Economic Forum this week. (Shutterstock)

“The investment opportunities that the Kingdom offers international companies also creates opportunities for the transfer of skills, expertise and best practice to local communities across the Kingdom, while providing new private sector job prospects for young Saudi men and women,” he added.

“We consider foreign companies who look to Saudi Arabia as growth partners for their business expansions — whether they seek a joint venture with Saudi companies or choose to set up on their own,” he said.

“Out of the new international companies setting up in Saudi Arabia in 2019, 69 percent were full foreign ownership, while 31 percent were joint venture partnerships with local investors. Our 2019 figures therefore demonstrate how integral new international businesses are to the success of our journey toward 2030.”

The Invest Saudi report found that the growth in the number of foreign startups came from “long-standing and strategically-important Saudi partners” such as the US and UK, with 100 UK companies and 82 US ones setting up in 2019, compared to 24 for both countries in 2018.

India, Egypt, Jordan and China were also among the top countries represented, with India’s share of the market increasing dramatically from 30 companies established in 2018 to 140 in 2019, driven by high-profile royal visits to the country in February 2019.

Other top countries from 2018, Jordan and France, were well-represented in 2019, the report said.

FASTFACT

The number of international companies setting up in Saudi Arabia rose by 54 percent last year.

SAGIA is continuing to introduce new measures to make setting up in the Kingdom easier and more efficient.

“We want to make it easier for foreign companies to set up and do business in Saudi Arabia,” said Al-Omar.

“We have taken global best practice models and combined them with local knowledge and insights in order to eliminate unnecessary barriers to doing business, while making it easier for our new partners from abroad to understand our unique Saudi culture and customs and how they can better integrate and contribute.”

SAGIA has increased its global profile, and will have a prominent presence at the forthcoming WEF annual meeting in Davos.

“We have played an important role in attracting foreign companies to establish operations in the Kingdom throughout 2019, facilitating a series of high-level investor forums in countries such as China, India, Germany and South Korea, as well as hosting delegations to the Kingdom from the US, UK, Japan and Russia,” Al-Omar said.

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Saudi Arabia jumps 72 global positions in key World Bank logistics ranking

Time: December 20, 2019

  • The Kingdom jumped 72 global positions in “Trading Across Borders” measure
  • It is an indicator which compares the time and cost of exporting and importing goods

LONDON: Saudi Arabia has been ranked as the world’s top ease of doing business improver by the World Bank Group’s Doing Business 2020 report.

The Kingdom jumped 72 global positions in “Trading Across Borders” measure — an indicator which compares the time and cost of exporting and importing goods.
The reforms included reducing customs clearance from seven to ten days to 24 hours, the reduction of the manual inspection rate at customs from 89 percent to 48 percent, and the reduction of the number of documents required to import from 12 to 2 and to export from 8 to 2.
“The recognition of Saudi Arabia’s progress by the World Bank confirms our sustained efforts to drive efficiency and competitiveness in the country’s logistics sector,” said Saleh bin Nasser Al-Jasser, transport minister and Saudi Logistics Hub chairman. “The Saudi Logistics Hub is now inviting foreign investors and business partners to join our ambitious journey to consolidate Saudi Arabia’s status as a leading logistics hub.”

Earlier this year, the Saudi Logistics Hub unveiled a $35 billion spending plan to transform the Kingdom into a global logistics center.
The Saudi Logistics Hub is currently on a two-month global roadshow, with a final stop in Germany in January 2020, which aims to promote investment opportunities in Saudi Arabia’s logistics industry. It also took in the UAE, Jordan, Egypt, China, Japan, Singapore, India, and Germany.
Saudi Arabia has invested more than $100 billion into transport and logistics infrastructure over the last decade which aims to capitalize on the 12 percent of global maritime trade that passes through the Red Sea.
The Saudi Logistics Hub is a government initiative formed by transport and logistics groups in Saudi Arabia with a mandate to support growth in the sector.

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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.

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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

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