With Saudi businesses increasing by 16 percent in the final quarter of 2023 and a 23% increase in commercial registrations, business is booming in Saudi Arabia. The reforms ongoing in the country, both at the business and the social levels, are favorable for prospective investors.
As the world's biggest oil exporter, Saudi Arabia has been involved in international business relations for decades. However, the country has since expanded its industrial portfolio to include power, telecommunication, healthcare, tourism, hospitality, and more.
Today, the country's strong focus on diversifying its economy and attracting foreign investment has only strengthened. The Saudi Vision 2030 development plan prioritizes the opening of small and medium businesses, foreign investment in non-traditional business sectors, and the integration of the Saudi economy into the global business world. In 2017, Saudi Crown Prince Mohammed bin Salman launched the annual Future Investment Initiative dubbed Davos in the Desert to promote these ideas. Many of these initiatives are supported by the Public Investment Fund (PIF) which invests in business and projects inside and outside of Saudi Arabia. With a total estimated assets of over 900 billion dollars, it is a driving force for many businesses in the Kingdom.
The country's growing commitment to “openness” makes it a promising environment for entrepreneurs and investors looking for new markets and opportunities.
The economy of Saudi Arabia
While the petrochemical industry, followed by construction, is traditionally the country's profitable primary source, new spheres are developing. Following the boost of tourism and entertainment since September 2019, the Kingdom is welcoming visitors, issuing tourist visas, and removing archaic public regulations. Businesses in fields like hospitality, events, advertisement and tour operators are busier than ever.
Good to know:
To give an example of the scope of business in Saudi Arabia, between October and December 2023, the Ministry of Commerce issued 95,863 certificates of commercial registrations for business throughout the country.
Reforms in Saudi Arabia
It has been recently announced that business projects related to renewable energy will receive loans as support through the government program Mutjadeda. This is part of Saudi's Incentivized Programs in collaboration with the Ministry of Energy.
Positive reforms have been made for minor investors, ranking the Kingdom third globally on this indicator, along with New Zealand and Singapore - the two most accessible places in the world for doing business.
To tackle the high unemployment rate among the youth, Saudi Arabia is supporting companies and individuals of both local and foreign origin through a well-established entrepreneurial ecosystem.
Women in Saudi Arabia, who have been deprived of many opportunities so far, now enjoy equal rights to men in terms of opening bank accounts, setting up companies, operating financially, etc. This is also represented in the boom that women have enjoyed in their share of the labor force. According to the World Bank Annual Report, the number of women in the labor force was 22% in 2019 and almost 35% in 2023, which is beyond the 30% goal that had been set at the launch of the Vision 2030 program.
Opening a company in Saudi Arabia as an expat
Foreigners wishing to start a business in Saudi Arabia are quite likely to be supported by related authorities provided they comply with existing regulations. Unlike before, companies without a local partner can now obtain a license for doing business in Saudi Arabia and remain 100% foreign-owned — depending on the industry. For instance, service-related businesses can be 100% foreign-owned while companies involved in trading activity have a 25% local ownership requirement.
So, how do you create a company in Saudi Arabia? There are quite a few steps to the process.
The first step would be to obtain a foreign investment license from the Ministry of Investment (previously known as Saudi Arabia General Investment Authority — SAGIA). With it, you will be able to invest in the country legally. However, if you want to open a company or operate a foreign branch, you will also need to obtain a commercial registration certificate from the Ministry of Commerce and Investment.
Note that Ministry of Investment recognizes the following company types:
- Limited liability company (a company where each shareholder's financial liability is limited to the value of shares they hold and does not affect their personal assets).
- Joint-stock company (a type of business in which shares of a company's stock can be bought and sold by shareholders).
- And foreign company branch — a company fully owned by its parent company.
Visit the Ministry of Investment website for more information on registering a company in Saudi Arabia.
There is an updated list of opportunities for investment that is available online on the Invest Saudi website.
Your next step would be to obtain the documents of the Memorandum of Association via the Ministry of Commerce.
Next, you will need to obtain the Issuance of Commercial Registration. If you are opening a new company, you will need to provide the Memorandum of Association. Your company will also be required to appoint a General Director. If you are opening a branch of a foreign company, you will need to provide the Commercial Registration of the parent company and a document from the board of directors explaining the reason for opening the branch.
Visit the Ministry of Commerce official website for more information on related proceedings.
You will then complete the registration process at the Zakat, Tax and Customs Authority, The Ministry of Human Resources and Social Development and the General Organization for Social Insurance.
Finally, you will need to finalize the proceedings at the Ministry of Investment.
Business culture in Saudi Arabia
While the business culture in Saudi Arabia is adjusting to the opening economy, it is still primarily guided by conservative values and strict hierarchy. Being aware of the unspoken rules that guide the country's business interactions is essential for successful networking.
The first thing to be aware of when it comes to local business culture is that Saudi Arabia is a deeply hierarchical society — and you will find this hierarchy observed in the workplace, during business negotiations, in meetings, and more. Major decisions are typically made behind closed doors — and by the select few. Getting more of the team included in strategy and decision making is not customary here and brainstorming sessions are a very rare practice.
Another thing to keep in mind is that many businesses in Saudi Arabia are family-run. This often makes negotiations a family affair. Plus, large companies also find innovation to be a much slower process governed by corporate complications and bureaucratic delays.
When working in Saudi Arabia, be prepared to attend a lot of business meetings. These are often rather informal, taking place over lunch or coffee, with hotel lobbies and restaurants being popular business meeting venues. Note that initial business meetings are often used as an opportunity to get to know each other and build trust. Thus, be prepared to delay business matters till the next meeting.
During business meetings and negotiations, carefully listen to the other party. Do not interrupt your business partner or openly disagree with them. If there are sensitive issues to discuss, it's best to do it in the most neutral way possible to avoid placing any blame.
For more information on the overall code of conduct during meetings, negotiations, and day-to-day activities, read our article about the Etiquette in Saudi Arabia.
Labour conditions in Saudi Arabia
As of 2024, there is no minimum wage for non-Saudis working in the private sector. In the public sector, the minimum wage is SAR 3,000, however, it is worth noting that the public sector is almost entirely made up of Saudi citizens. There is a minimum wage for Saudi citizens working in the private sector and it is set at SAR 4,000. Given the ongoing Saudization process, employers are obliged to hire locals — the number depending on the business category.
The legal working week in Saudi Arabia consists of 48 hours, that is 8 hours a day for 5 days - from Sunday to Thursday, even though some businesses are starting on Saturday, with only one day off, or operating 6 hours daily. While businesses used to close for prayer times, it is not the case in most places any longer. Individuals will pray, for men usually in groups, during the given prayer time, but businesses will stay open. The exception is Jummah prayer around noon on Friday where businesses will close.
During Ramadan, shorter hours are in place and employees are expected to stay at their workplace for only 6 hours a day.
Business networking in Saudi Arabia
Meeting the right people can be a complicated task in Saudi Arabia. As only the top executives in a company tend to have decision making power, getting your foot through the door may be a long and challenging undertaking. This is why pre-existing connections can be very useful when doing business in Saudi Arabia, and you shouldn't hesitate to ask your contacts to help introduce you to decision-makers in your industry. Word of mouth and networking go a long way in Saudi Arabia.
With that, as the business environment in the country is becoming more and more open, new opportunities for networking and socializing are appearing. This includes professional exhibitions and conferences, business meet-ups, trade forums, and more. Professional events like these in your field can be a great way to expand your local and international network. Business associations like the Saudi British Joint Business Council or the American Business Association in the Eastern Province are great places to get started.
Online networking is also something to look into. While most socializing is done offline, professional networking platforms like Linkedin are quite popular for networking.
Women in business in Saudi Arabia
Merely a decade ago, the role of women in the workplace was very restricted in Saudi Arabia. However, things are now changing. As part of the Saudi Vision 2030 under Crown Prince Mohammed bin Salman, women are encouraged to take up more initiatives in the workplace as well as the country's economy in general.
As of 2024, close to one in three Saudi employees were female — and by 2030, this number is set to increase by at least 35%.
In the business world, Saudi women currently account for close to 40% of all registered entrepreneurs.
While the role of women in the country's economy is growing, there are still lots of challenges to overcome, including a considerable pay gap, with women making over 50% less than men in the same positions.
Conducting business in Saudi Arabia as a foreign woman can still be quite a challenge. Just several years ago, women couldn't travel to the country unaccompanied by men, and most restaurants and coffee shops would have segregated entrances for men and women. These restrictions are now being lifted — but attitudes will be taking longer to change. When doing business in Saudi Arabia as a woman, you may find it more comfortable to travel with a male partner, making day-to-day interactions substantially easier. When introduced to local business associates, do your best to establish your rank and hierarchy instantly. This can be done by emphasizing your job title and professional qualifications.
Building lasting business relationships will also be harder for businesswomen than businessmen in Saudi Arabia. For example, women won't be able to invite their male business partners for lunch meetings (unless as part of a larger group) and socializing outside of the office will also be problematic. These rules are naturally more lax if you are dealing with another woman, or with a non-Saudi man.
Complications of doing business in Saudi Arabia
Modern Saudi Arabia offers a promising environment for new and innovative business projects. With that, navigating the country's business culture will definitely require some patience and adjustments.
In 2017, Saudi Arabia launched a major crackdown on corruption, which affected a number of high-profile figures. The Kingdom has made substantial efforts to reduce all forms of corruption through its task force called National Anti-Corruption Commission, also known as Nazaha. The public is regularly informed of how many people have been investigated and caught under this program. Corruption aside, nepotism plays an important part in Saudi businesses to this day, as the culture values family and fellow citizens over foreign workforce.
Useful links:
Zakat, Tax and Customs Authority
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