Saudi Arabia
JordanA Breakthrough in the Retail Sector in Saudi Arabia – 100% Ownership to Foreign Investors
Under the current economic situation in Saudi Arabia subject to the 2030 vision of the kingdom of Saudi Arabia, the Council of ministers of Saudi Arabia granted the decision to allow foreign companies to invest in retail and wholesale trading sector with 100% full ownership
the most important Highlights disclosed regarding this decision are as follows:
firstly: the capital share
The capital share shall be 30 million riyals for companies that will be working in retail and wholesale trading sector in Saudi Arabia. By comparing that with exciting SAGIA investment rules with respect to the same type of trading with the Saudi partner, in this case the foreign percentage should not exceed 75% with the minimum share for the Saudi partner being 25% in addition to the total capital share which should be no less than 27 million riyals
Secondly: Investment amounts over the next five years:
According to the announced conditions, a foreign company wishing to practice retail and wholesale trade with a percentage of 100% ownership within the Kingdom of Saudi Arabia must invest an amount of no less than 200 million Saudi riyals during the first five years from the date of obtaining the SAGIA license,. Provided that this amount would be considered the liquid capital share in the future.
Thirdly: – Hiring & Saudization:
Based on the announced rules, the foreign companies should respect and comply with the rules of the Saudization which is expressly stated in the GOSI rules, labor law and Nitaqat as well as its updates
Fourthly: – training:
The company must commit to training 30% of Saudi employees annually, and by comparing that with what is applied according to the regulations of SAGIA with regards to practicing trade in the case of a Saudi partner, we’ll find that the training rate is 15% of Saudi employees annually.
Fifthly: – Presence in Global Markets:
The special regulations and conditions stipulated in the announced rules state that the company wishing to obtain this type of license must have a presence in at least three other global markets, and the purpose of this condition is to ensure the strength of these companies and ensure that they have a global presence as well as a global customer base.
In addition to the aforementioned, the terms and conditions of this license stipulate that the company must fulfill at least one or more of the following requirements during the first five years.
- 30% of the products distributed locally must have been manufactured in the Kingdom of Saudi Arabia, and of course such condition will significantly contribute to the improvement of the industry and gradually increase the Saudi local product, which may reflect positively on the Kingdom's vision in 2030
- Programs and centers for research and development must be established by allocating 5% as a minimum of the company's sales to establish such programs and centers within the Kingdom of Saudi Arabia.
- Centers should be established to provide distribution of logistics services as well as after-sales services.
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