Why invest in Saudi Arabia?

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Time: 21 November 2016

The Kingdom of Saudi Arabia is transforming itself as one of the world’s most competitive economies, and therefore, one of most lucrative markets for strategic investment. Here’s why:

It’s all about the competitive advantages.

Saudi Arabia has a vast number of competitive advantages in many strategic sectors at regional and global levels, which yield significantly higher returns on investment. Of course, it is no surprise that Saudi Arabia is ranked first with regard to prices of energy provided for investment projects. As such, Saudi Arabia continues to be a natural choice for investors in all energy intensive industries.

But the competitive advantages in today’s Saudi Arabia run much deeper than just energy. It’s about creating a world-class business environment that combines an ease of conducting business with low costs. It’s about unfettered access to regional markets and financial services. Above all, it’s about our country’s vision, and our shared commitment, to seeing your business thrive.

As the world’s fastest reforming economy, the momentum behind this economic transformation is undeniable. It is therefore no surprise that, in just three years, Saudi Arabia has risen from 76th to 23rd position in the World Bank’s Ease of Doing Business Index and is currently number one in the Middle East.

Financially speaking, investment in Saudi Arabia realizes high profit ratios for local, foreign and shared projects, with low risk exposures, and a simple form of taxes and property registration fees. The Kingdom currently occupies the fifth rank regarding tax liabilities and fourth in property registration costs, according to business performance reports 2006/ 2007 issued by the International Bank.

Thus, under such a pro-business environment, firms in Saudi Arabia thrive. According to a comprehensive study published by Arab Forbes Magazine’s in late 2006 assessing the performance of (1616) joint-stock companies in the Arab world, the first three positions were Saudi companies. Out of the top 50 companies, 22 were Saudi companies when applying a number of rigorous standards such as operational efficiency, market value, sales, revenues, dividends, return on equity, return on two last year assets (2004 – 2005), and company expected growth.

In the banking sector, the ten Saudi banks are among the best banks in terms of profitability and growth potential in the Arab World. These Saudi banks comfortably rest within the list of biggest 1000 banks of the world, according to the Financial Times 2006. Also the 3 biggest banks in the Arab world are Saudi, ensuring comprehensive financial support for your business from every angle.

Monetarily speaking, the Saudi Riyal is one of the most stable currencies in the world, and offers great competitive advantages in the region. There has been no significant change in its exchange value during the last 3 decades. There are no restrictions on foreign currency exchange and outgoing money transfers. Inflation rates in Saudi Arabia are very low and the Kingdom is endeavoring to sign bilateral agreements with an increasing number of countries regarding investment encouragement, protection and arrangement of taxation issues.

A report issued by Milken International Corporation in Feb. 2007, noted all of the above points in bestowing upon the Kingdom of Saudi Arabia the first rank worldwide with respect to total economic environment classification (i.e. environment capability for project management and financing). Milken Corporation focused on Saudi Arabia’s low and stable interest rates, low inflation and low taxes, compared with international standards.

In addition to the Kingdom’s strong economic climate for investment, one of the country’s strongest advantages and incentives for foreign investment, however, is its people.

The majority of Saudi Arabia population is young, with 45% of the country under 15 years of age. Recognizing this as the country’s greatest potential asset, the Government has spent billions of dollars towards actively improving the human resources development pattern to better provide for the economic boom set to continue in Saudi Arabia for the near future. All of this provides investors with more opportunities to select the highest caliber labor for their projects.

Recently, the government launched the Human Resources Development Fund to train and recruit Saudis and provide many incentives for companies that employ nationals through the provision of aids and support for activities related to qualifying, training and recruitment of labor, contribution in the private sector Saudi laborers’ qualification and training costs, and even covering a percentage of the salary of Saudi labor employed by the private sector.

What does this all mean for your business? More productivity. Expanded output. Higher Profitability. And above all: boundless potential in the world’s fastest reforming business climate.

Need more reasons for investing in Saudi Arabia? Take into account the following statistics on Saudi Arabia:

  1. Availability of low price facilities and services.
  2. Low cost governmental financing opportunities.
  3. No. 1 in exports and imports size in the Arab world.
  4. Within the first 7 countries of least inflation rates in the world (IMD).
  5. The 7th country in total local savings (IMD).
  6. Within the first best 8 countries in exchange rate policies (IMD).
  7.    Biggest financial market in Middle East.
  8. Within the first 25 countries in total cash savings (index of Economic Freedom).
  9. Within in the first 24 countries of least cost loans from Saudi Industrial Development Fund.
  10. Losses carry over for coming years regarding profit taxes.
  11. Provision of assistance and consultancy by the General Investment Authority.
  12. Within the best 3 countries in the world as of proprietorship registration cost.
  13. Best country in the Middle East as of exchange rate index (Doing Business 2006).
  14. Biggest foreign investment balance in the Arab world since many years till now (Arab Investment Guarantee Corporation Reports).
  15. Biggest economy in the Middle East with gross local product exceeding 300 billion dollars, and a growth rate reaching 6% during the last 3 years.
  16. Within the first 6 countries having the least company taxes in the world according to (IMD) report.
  17. Biggest oil reserve – about 26% of the world’s reserve.
  18. Forth natural gas reserve in the world.
  19. Wide market serving a population of more than 22 million, and a gate to the markets of 205 million persons.
  20. High incomes and purchasing power.
  21. Strategic geographical location through which most significant international aviation lines pass, linking between three continents.
  22. Nonexistence of local disputes due to prolonged political stability.
  23. Nonexistence of multiple taxation (except profit taxes on foreign companies amounting 20%, allowing carrying over the losses of unlimited investments).
  24. Within the first five countries in the world having easiest labor recruitment and work hours flexibility.
  25. Nonexistence of work strikes.
  26. Availability of energy with the least prices in the world.
  27. A net of advanced banks with high technology and efficiency.
  28. Capital cost rate (IMD).
  29. Best in the world regarding financial solvency index (IMD).

Need more information? Please contact SAGIA at info@sagia.gov.sa

This article was first published in ARRIYADH

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