Over the past two years, the Kingdom of Saudi Arabia has been steadily implementing its Vision 2030 plan, the Kingdom’s flagship initiative that is centered on establishing a modernized legal and investment framework that boosts private sector activity, attracts foreign investors and encourages the employment of Saudi workers in line with the Kingdom’s Saudization program. As part of this initiative, Saudi Arabia has put into place substantive legal and institutional reforms to enable facilitated market entry, promote greater administrative efficiency and create further investment incentives for investors looking to establish or expand their presence in the Kingdom.
Noteworthy recent developments relating to the Kingdom’s Vision 2030 program include the following:
SAGIA Instant Online Services
The Saudi Arabian General Investment Authority (SAGIA) now has a government website offering (i) an “Instant Renewal Service,” which allows users to efficiently validate documents online, and (ii) an “Instant License Service,” which allows qualified investors to obtain investment licenses instantly. Qualified investors in this context are defined as any company that:
- Is listed on a local or international stock market; and
- Has any one of the following:
- At least SAR 70 million (approximately USD 19 million) in revenue for the preceding two years;
- Assets worth at least SAR 100 million (approximately USD 27 million) (partner assets can be counted towards this requirement);
- Net profits equivalent to at least SAR 50 million (approximately USD 13.5 million) (net profits attributable to an entity’s partner can be counted towards this requirement);
- Employee count of at least 10,000 (a partner’s global branches can be counted towards this requirement);
- At least three branches in other countries; or
- Possession of an invention patent approved by the Saudi Patent Office.
Five-Year Investment Licenses
SAGIA now offers five-year investment licenses to all existing and new investors. Previously, investment licenses were limited to one-year terms.
100 Percent Foreign Ownership of Trading Entities
Qualified foreign investors are now permitted to obtain 100 percent ownership of a trading entity in Saudi Arabia if they already have a presence in three countries before entering the Kingdom. Entry into the Saudi market with 100 percent ownership can be accomplished through (i) the investment of SAR 300 million (USD 80 million) over an initial five-year period, with a minimum of SAR 30 million (USD 8 million) in paid-in capital, or (ii) an investment of SAR 200 million (USD 53 million) over an initial five-year period, with a firm commitment to promote local manufacturing, invest in research and development and establish a regional sales hub in the Kingdom.
100 Percent Foreign Ownership of Engineering Services Firms
Qualified foreign investors are now permitted to wholly own engineering services companies operating in the Kingdom. In order to qualify, foreign companies must be at least 10 years old and engaged in operations in at least four countries.
100 Percent Foreign Ownership of Manufacturing Entities
While SAGIA has yet to publish an official announcement on full foreign ownership of manufacturing entities in Saudi Arabia, its May 2017 Service Manual appears to indicate that 100 percent foreign ownership of such entities is permitted. Mayer Brown’s Middle East team is actively monitoring SAGIA’s updates relating to the manufacturing sector and in general.
MOCI Online Services
The Saudi Ministry of Commerce and Industry (MOCI) now allows existing commercial and investment entities to renew their commercial registration status electronically. Additionally, commercial entities are now permitted to file their Articles of Association online.
Saudi Arabia officially announced that, as part of Vision 2030, it is seeking to increase investment opportunities in the mining sector. While further details relating to proposed changes to the mining sector framework are yet to be published, we note that companies operating in this space are entitled to import their equipment and other technology into Saudi Arabia on a tax-free basis.