GCC companies rush into Saudi Arabia

Companies in the GCC are expanding in Saudi Arabia to tap the massive opportunities being created by $3 trillion worth of foreign investment entering the kingdom as part of the Saudi Vision 2030, by either setting up a totally new business license or opening up a branch, as the country undergoes massive development works.

As many as 88,858 new business licences were issued by Saudi Government authorities in the first quarter of 2023, according to Small and Medium Enterprises General Authority, also known as Monsha’at. More than 40,000 new companies were added to this in the third quarter. With this, the total number of small and medium enterprises (SMEs) exceeded 1.27 million in the third quarter of 2023.

The Saudi government seeks to attract $3 trillion in foreign investment to promote economic development, transfer foreign expertise and technology to Saudi Arabia, create jobs for Saudi nationals, and increase Saudi Arabia’s non-oil exports, according to a latest report by the US Department of State.

Earlier, the Saudi Government also announced the new Shareek programme, an initiative designed to generate $3.2 trillion of domestic investment – by the government, the Public Investment Fund, and the private sector – into Saudi Arabia’s economic development.

In October 2021, Saudi Arabia announced its National Investment Strategy, which will help it deliver on its Vision 2030 goals. The National Investment Strategy outlines investment plans for sectors including manufacturing, renewable energy, transport and logistics, tourism, digital infrastructure, and health care, it says.

“The strategy aims to grow the Saudi economy by raising private sector contribution to 65 per cent of total GDP and increasing foreign direct investment to 5.7 per cent of total GDP. The National Investment Strategy aims to raise net foreign direct investment flows to $103 billion annually and increase domestic investment to about $450 billion annually by 2030,” the report says. “Investment opportunities in Saudi Arabia’s mining sector continue to expand. In June 2020, the Saudi Arabian Government approved a new law allowing foreign companies to enter the mining sector and invest in the kingdom’s untapped domestic mineral wealth, projected at $1.3 trillion.”

With the development of infrastructure, housing, investment in energy, power, utility and industries, Saudi Arabia will need hundreds of thousands of new professionals and workers to manage this transformation. That is why owners of businesses in the GCC countries are now setting up companies in Saudi Arabia to tap the opportunities.

Aziz Ali, chief executive officer of Evergreen Businessmen Services, says, “Business licensing is still a complex process in Saudi Arabia and the cost of a business licence ranges from 55,000 to 130,000 Saudi riyals – depending on the types of business, including government fees and the partnership fees paid to the local partner, wherever applicable. “The government fee for the Ministry of Investment Saudi Arabia (MISA) business license ranges from 2,000 to 62,000 Saudi riyals. One needs careful guidance on the local laws and regulation in order to obtain the right kind of license without much hassle. However, lack of guidance, help and support could land a foreign investor in delays and additional cost burden.

Saudi Arabia is launching an $800 billion project to double the size of Riyadh city in the next decade and transform it into an economic, social, and cultural hub for the region. The project includes 18 “mega-projects” in the capital city to improve liveability, strengthen economic growth, and more than double the population to 15-20 million by 2030. The Saudi Government is seeking private sector financing of $250 billion for these projects with similar contributions from income generated by its financial, tourism, and entertainment sectors.