Saudi Arabia, a Kingdom with a rich history, large oil reserves, and vast deserts, is on its way to becoming a global economic powerhouse. Its strategic effort to transform into a non-oil-dependent country is achieved by attracting foreign investments. Vision 2030, Riyadh Expo 2030, construction of mega and giga projects, etc aids its effort to become a world player in the global economy. The efforts of Saudi Arabia are bearing fruit, as more and more companies around the world are migrating to Saudi Arabia for business setup in Saudi Arabia and expand their operations to this Arab Kingdom. A conducive business environment, strategic geographical location, great economic reforms, powerful leadership, etc are the other favourable factors attracting foreign business to the Kingdom of Saudi Arabia.
According to a survey, more than 660 companies are planning to expand their businesses to Saudi Arabia. Around half of the companies participating, are planning to move into Saudi Arabia in the next coming months. Also, a survey says, the demand for Saudi Arabia as an ideal business location has been on the rise since 2018, due to the favourable business environment the country provides to its investors. Thirty per cent of the business expansion is from the United States of America and the United Kingdom. The major reason for this boost in the expansion compared to 2018 is due to red tape reduction, which allows the companies to set up their business in the Kingdom within 2 months, compared to 8 to 12 months of long period back in 2018, when the country was on its baby steps to diversify its economy.
The government investment to drive its economy is also on the rise, as it is in its effort to drive its foreign direct investment to $100 billion, compared to $ 33 billion in 2022. In order to get access to a government contract worth SAR 1 million, regional companies have to open Saudi offices. A commercial code was introduced last December to gear up the opaqueness of the legal system. With the construction of giant projects like Neom, Diriyah, Jeddah Central, Qiddiya, Red Sea Global, and numerous special economic zones, Saudi Arabia is the most preferred by real estate consultancies and is often described by them as the “world’s biggest ever construction site”
As Riyadh hosts World Expo 2030, a lot of infrastructural development is on its way, as the whole world will be eyeing Saudi Arabia from October 2030 to March 2031. Saudi’s potential for development is immense, even after winning regional venture capital funding, worth $ 1.4 billion in 2023, there is even more room to provide funding to the incoming business in the country.
Now let’s look in detail what are the factors that make Saudi Arabia a preferred business set up location.
1. Vision 2030
Launched in 2016 by Crown Prince Mohammed bin Salman, the main aim of Vision 2030 is to diversify the economy of Saudi Arabia from an oil-dependent country to a non-oil-dependent country. The major focus of this initiative is on sectors with high potential like tourism, renewable energy, technology, and entertainment, which is expected to create huge business opportunities for both domestic as well as foreign businesses. In order to achieve its Vision 2030 goals, the country has introduced various reforms to make Saudi Arabia more business-friendly. By making reforms in regulations, easing business licensing processes, and offering incentives to foreign investors, the country is transforming itself into a business-friendly nation. Special Economic Zones and industrial cities are aiding the aim of Saudi Arabia to become a global business hub.
2. Strategic Geographic Location
The strategic geographic location of the country at the crossroads of Asia, Europe, and Africa, makes it an ideal location for business setup, as it enables them to access the vast market of the Middle East. The Kingdom is also a gateway to the Gulf Cooperation Council countries, which is an ideal location as it has a combined GDP of over $1.6 trillion. Companies in Saudi Arabia can also access the emerging markets of Asia and Africa, as the proximity is near. The infrastructural development of the country also aids the movement of logistics and makes the country a logistics and distribution hub.
3. Favorable Economic Reforms
The government of Saudi Arabia has implemented a vast number of economic reforms to build a favourable condition to run the business in Saudi Arabia, aiming for more foreign investment in the country. The Kingdom has come up with a lot of regulatory laws to protect the investors and promote transparency in business, thus promoting ease of doing business in the Kingdom. The Commercial Franchise Law, for example, is a law that was introduced to ease the process for a foreign company to enter the Saudi market by providing a clear legal framework for franchising. Also, the move of the government of Saudi Arabia to increase the foreign ownership of the companies to full ownership has been beneficial to companies belonging to industries like healthcare, retail, education, etc. where foreign investors previously had limitations. The introduction of the Saudi Arabian General Investment Authority (SAGIA) has also been beneficial to attract foreign investments in the country. SAGIA plays a crucial role in driving foreign investments, as it provides support and guidance throughout the investment process in the country. This has significantly increased the number of foreign companies in the Saudi market.
4. Diverse Opportunities
As part of the economic diversification effort of the Kingdom, Saudi Arabia has now become the land of opportunities. Ample opportunities are available in various industries like Technology, Tourism, Healthcare, Renewable Energy, etc.
Tourism: As part of Vision 2030, the country is greatly promoting tourism and related activities. Saudi Arabia is expecting 150 million visitors by 2030. Mega projects like NEOM, Red Sea projects, Qiddiya, etc. are expected to transform the country into a major tourism hub.
Technology: Companies specialising in AI, Fintech, Cybersecurity, E-commerce, etc. are finding a fertile land for their business expansion in Saudi Arabia. Initiatives like the Saudi Vision 2030 National Industrial Development and Logistics Program (NIDLP) and the Saudi Data and Artificial Intelligence Authority (SDAIA) are expected to drive the technology sector of the Kingdom.
Healthcare: The government is promoting the participation of the private sector in healthcare through various initiatives like public-private partnerships (PPPs) and making investments in healthcare infrastructure. This has significantly impacted the flow of healthcare providers, medical device manufacturers, pharmaceutical companies, etc. to this Arab Kingdom.
Renewable Energy: Sustainability being a primary goal, the country is promoting renewable energy projects, like solar and wind power. The geographic landscape of the Kingdom, with its vast deserts, offers favourable conditions to produce solar energy. With the launch of the Sakaka solar power plant and the Dumat Al-Jandal wind farm, the country is on its way to becoming the global power of renewable energy.
5. Sustainability and Green Economy
The Saudi Green Initiative was launched in 2021, and it aims to reduce its carbon footprint and plant 10 billion trees across the country. This initiative helps the country to be a fertile ground for various businesses engaged in waste management, sustainable agriculture, water conservation, etc.
Apart from the points discussed above, other factors like the cultural and social landscape of the kingdom, developing entrepreneurial system, development of human capital, etc. are also favouring business setup in Saudi Arabia, attracting foreign investors.
Planning to Start a Business in Saudi Arabia?
Are you also planning to set up a business in Saudi Arabia? But facing difficulty with the complex process involved? Don’t worry, by choosing the right business consultants in Saudi Arabia, like Analytix, you can be relieved of the complex processes and procedures involved. We have been in the industry for more than a decade and have helped numerous foreign investors with business setup in Saudi Arabia. No matter which country you belong to, or the type of business you are planning to start in Saudi Arabia, our professionals are there to help you with their expertise in the field. Hiring a business consultant would surely help you ease the process of obtaining licences from various ministries. Also with our professional and diligent approach, we will surely help you set up your business in Saudi Arabia hassle-free.
So what are you waiting for, grab the phone and contact us today to discuss your project.
Conclusion
Got the answer why hundreds of companies consider Saudi Arabia? The answer is simple, the country’s effort to become a global player in the international economy, by diversifying its income. Through various projects like Vision 2030 and the construction of numerous mega and giga projects, the country is trying its best to diversify its economy and build a sustainable future for its citizens.
Hope you are clear about the topic discussed in this blog. If you need any professional assistance to expand your business to the Kingdom of Saudi Arabia, don’t be hesitant, ring us today! Let’s discuss your project in detail.
