Establishing startups for foreigners in the Kingdom of Saudi Arabia is an important matter for everyone interested in the field of investments inside the Kingdom, so we will dedicate this article to talk about it in addition to shedding light on the most important investment opportunities within the Saudi territory and the most prominent challenges facing foreign investors on its territory.

Procedures for establishing startups for foreigners in Saudi Arabia

There are standardized procedures that must be followed to establish startups for foreigners in Saudi Arabia, and these procedures are summarized below:

1. Investment License

This license is obtained through the Ministry of Investment and requires the company’s commercial register and financial statements for the most recent year, both of which must be certified by the Saudi Embassy.

2. Signing the Articles of Incorporation

This contract is signed by the Ministries of Justice and Commerce and Industry, and if the investor is required to open a branch of a foreign company in Saudi Arabia, it is sufficient for the investor to submit a decision approving the opening of this branch of the rest of the foreign company to issue the commercial register.

3. Commercial Registry

The Ministry of Commerce and Industry is the competent authority to issue the commercial register in the case of establishing foreign startups in Saudi Arabia: Commercial register of the parent company – Approval decision to open a branch of the foreign company in Saudi Arabia (if opening a branch of a foreign company in Saudi Arabia) – Notarized incorporation contract of the company (if the company to be established in Saudi Arabia) new) – General Manager’s appointment decision and proof of identity.

4- Opening company files

This procedure is done through the following government agencies: General Authority for Zakat and Income – Ministry of Human Resources and Social Development – General Organization for Social Insurance.

5. Issuance of the General Manager’s Visa

The issuance of this visa requires the General Manager’s appointment decision and proof of identity, and the competent authority to issue it is the Ministry of Human Resources and Social Development.

Startup opportunities for foreigners in Saudi Arabia

The Kingdom of Saudi Arabia seeks to attract and motivate investors in order to establish startups for foreigners in Saudi Arabia, by providing facilities and services to investors to encourage them to invest on its lands, and one of the most prominent facilities provided by the Kingdom is the various loan programs, which we mention:

1- Startup loans for foreigners in Saudi Arabia

The loan program for public and private investment projects is one of the most important investment opportunities offered by the Kingdom for those who wish to establish startups for foreigners in Saudi Arabia. These opportunities lie in the low interest rate, the grace period ranging from four to six years, and the long-term loans extending up to 22-25 years.

2- Development and Economic Reform Loans

Through the Arab Development and Economic Reform Loans Program, Arab member states can benefit from loans and facilities to address their overall balance of payments deficit. The Development and Economic Reform Loans Program includes four types of loans, each of which differs in size, conditions, and maturity.

3. Transaction Finance Services

Through these services, Saudi Arabia refinances exports created in Arab countries through credit lines such as pre-export credits, post-shipment credits, buyers’ credits and finally import credits, all through financing services for trade transactions of Arab-origin goods.

4. Political and commercial risk insurance program for investments

One of the opportunities offered by the Kingdom for those wishing to establish startups for foreigners in Saudi Arabia is the political and commercial risk insurance program for investments, in addition to the export credit guarantee, and this program is a scheme and guarantees aimed at encouraging investments on the territory of Saudi Arabia and all Arab countries, in addition to promoting local Arab trade and exports of Arab countries to foreign countries.

5. Supporting productive projects

Through the Equity and Debt Financing Program, the Kingdom of Saudi Arabia provides member states with various financing schemes to support their investment capital, in addition to granting loans and accepting deposits in order to mobilize financial resources, all within the framework of adherence to the provisions of Islamic Shari’ah.

Investment opportunities in Saudi Arabia

There are many sectors in which a foreign investor can enter, such as pharmaceuticals and biotechnology, healthcare, tourism, agriculture and food industries, transportation and logistics and other investment opportunities within Saudi Arabia, and below are examples of some of these investment opportunities.

Healthcare and Life Sciences Sector

Investors can establish startups for foreigners in Saudi Arabia in the healthcare sector by taking advantage of the opportunities that the Kingdom provides for them in this sector, including:

• Public hospitals and medical cities: Through the establishment of public hospitals or medical cities to provide secondary and specialized health care.
• Medical laboratories: To establish medical laboratories and provide medical diagnostic services in immunology, biochemistry, microbiology, virology, genetics and hematology.
• Hospitals for women and childbirth: To establish specialized hospitals to provide women’s and maternity services.
• Medical clinic complexes: They provide healthcare services that include day surgery, urgent care, dentistry, radiology, laboratory and similar primary and secondary healthcare services.

Agriculture and Food Industry

A foreign investor can take advantage of one of the following opportunities in the agriculture and food industry to invest in Saudi Arabia:

• Establishing a meat substitute business.
• A project to manufacture and process primary and secondary value-added derivative fish.
• Fish farming projects such as: Barramundi fish, squid, Atlantic salmon, trout, Nile tilapia or sea tilapia, and other fish farming projects.

Industry and manufacturing sector

Foreigners can establish startups in Saudi Arabia that specialize in one of the following opportunities in the following industrial and manufacturing sectors:

• CCTV cameras: A video system made up of cameras positioned in a certain way to record footage, which is then transferred to displays for real-time viewing as well as playback of the recorded footage.
• Storage (SAN) for the data center: A network of data storage devices used to provide shared storage that can be accessed by multiple servers.
• Leather processing machines: Investment in this area is being made by Saudi Arabia attracting major players from around the world to set up leather processing machinery in the Kingdom.
• Fiber optic machinery: This investment opportunity is also specific to attracting the world’s top players to Saudi Arabia to set up machinery for its fiber optic manufacturing base.
• Brake systems: By manufacturing brake discs for original equipment manufacturers (OEMs).
• Glass Factory: It is specialized in manufacturing laminated and tempered automotive glass for the local market.

Saudi Startup Program

This program aims to enable local, regional and global startups and entrepreneurs to succeed in Saudi Arabia by providing them with customized services and benefits designed to achieve the following goals:

• Accelerating the growth of their businesses in Saudi Arabia by supporting them and providing the resources needed for their success.
• Brand elevation through business promotion, reaching target audiences and enhancing market presence.
• Collaboration between competitors and investors leads to stronger relationships and long-term business success.

The program targets startups, investment funds, investors, ecosystem facilitators and innovators.

The services provided by the Startup Program and how it helps establish startups for foreigners in Saudi Arabia

The Startup Program offers its clients the following services:

• Studying the market to understand the needs of target customers and industry trends, thereby developing the strategy that the client follows.
• Providing consultations and guidance to the program’s clients to help them make sound decisions based on accurate knowledge bases.
• Providing licensing and setup services, which saves customers from setting up their business in the Kingdom of Saudi Arabia.
• Forming strategic partnerships with industry enablers, leading to mutual success for the collaborating parties.
• Providing suitable and available opportunities in the Kingdom, as well as facilitating access to the right partners.
• Offering a variety of financing and incentive programs to support customers’ financial needs and promote the growth of their businesses within Saudi Arabia.
• Provide organized visits and tours to learn about business opportunities and the local culture of Saudi Arabia.
• Organizing events and participations that help to communicate and interact between members of the entrepreneurial community, and showcase the work to the target audience.

Regional Headquarters Program

The Regional Headquarters Program is an initiative to establish regional offices on Saudi territory, and it is one of the largest investment opportunities offered by the Kingdom of Saudi Arabia to investors, and the competent authorities for this program are the Ministry of Investment and the Intellectual Property Authority of Riyadh, and the Kingdom of Saudi Arabia offers these investment opportunities to foreign companies because these offices have an important role in transferring knowledge and increasing national expertise and competencies, and most importantly, making the Kingdom a leading regional center for multinational companies.

What are multinational corporations?

Multinational corporations are companies that have a foreign parent company and conduct business in more than one jurisdiction through the parent company or its subsidiaries, or branches of the parent company or its subsidiaries.

What are regional headquarters?

RHQs are the headquarters of multinational companies, established in accordance with the provisions of Saudi law, and the goal of the RHQ program is to invite companies around the world to relocate their RHQs to Saudi territory.

Why is Saudi Arabia the ideal place to set up regional headquarters?

Because Saudi Arabia represents the largest GDP and consumer market in the Middle East and North Africa, in addition to the Kingdom’s strategic location, where Saudi Arabia connects three continents – Asia, Europe and Africa – the Kingdom is the most suitable place for multinational companies that want to establish regional headquarters.

Challenges of setting up a startup for foreigners in Saudi Arabia

Despite the facilities and opportunities offered by Saudi Arabia to foreign investors, there are many challenges facing those who wish to establish a company for foreigners in Saudi Arabia, such as:

• Difficulty in knowing the information and data of the economic sectors, especially the investor coming from a more developed role in this regard.
• Routine procedures in some government agencies, which is in stark contrast to the speed and ease of procedures carried out through GAFI.
• One of the most difficult challenges for foreign startups in Saudi Arabia is the lengthy process of resolving commercial disputes between foreign investors and their opponents through the judiciary.
• Poor transportation, shipping, unloading, packing and other support services and infrastructure.
• Most foreign investors rely on self-marketing despite its high cost, due to the lack of advanced marketing services that help investors market their services and products.
• Inflation and its direct impact on the vulnerability of investments within Saudi Arabia.

Saudi Arabia’s updated investment system and how it supports foreign startups in Saudi Arabia

The updated investment system is a system prepared to replace the foreign investment system, in line with Vision 2030, and the aim of this system is to:

• Developing the investment environment in Saudi Arabia, which contributes to increasing economic growth.
• Increasing the amount of job opportunities through increased foreign investment being attracted to Saudi Arabia.
• Facilitate theestablishment of startups for foreigners in Saudi Arabia.
• Guaranteeing investors’ rights.
• Ensure fair treatment between local and foreign investors, and ensure equal opportunities for all investors.
• Providing and facilitating transparent and fair procedures for investors and their investments.

Investor Rights in the Updated Investment Law

The Saudi regulator has stipulated a set of rights for investors who wish to Establishing startups for foreigners in Saudi Arabia or local investors, the most important of these rights:

• Equal treatment of investors in similar circumstances, whether the investors are foreign or local.
• Treat the investor fairly and equitably.
• No investments will be confiscated in whole or in part without a final court ruling, and no property will be expropriated directly or indirectly except in the public interest, provided that this is done in exchange for appropriate compensation and that the expropriation is done in accordance with the statutory procedures in the Kingdom of Saudi Arabia.
• Full freedom for the investor to transfer his funds inside or outside the Kingdom of Saudi Arabia without any delay, and this transfer shall be through regular channels and using recognized currencies, and among the funds belonging to the investor mentioned by the Saudi regulator in the system, for example, but not limited to investment returns, profits, sale or liquidation.
• The investor’s freedom to manage his investment within the Kingdom of Saudi Arabia, the legal disposition of this investment, and the investor’s ownership of what is necessary for the conduct of his business and investments.
• Protect confidential business information and intellectual property.
• Providing support to the investor and facilitating administrative procedures by the competent authorities.
• In the event that measures are taken to fulfill the investor’s international obligations to the Kingdom of Saudi Arabia, or to preserve public order in the Kingdom or for security considerations, the competent authority to take these measures must take into account the rights guaranteed by the Saudi regulator to the investor within the Saudi territory.
• The Ministry of Investment is obligated to provide information or statistical data available to the investor in accordance with the regulations, as well as to provide the necessary services to facilitate the procedures related to his investment, in addition to the need to seek to address complaints submitted by the investor according to clear and transparent procedures.

Ministry of Investment services for investors

The Ministry of Investment provides support and services to investors through the Invest in Saudi ArabiaThe Ministry aims to provide high-value services to facilitate investors to conduct their business and expand their investments in Saudi Arabia, and among the services that are provided to investors through Invest in Saudi Arabia:

• Issuing different types of investment licenses without differentiating between local and foreign investors.
• The online investor portal through which the investor conducts business.
• Investor Services Guide It is a guide to clarify the requirements of the services provided by the Ministry of Investment and the procedures required to obtain them.
• Contact Center It is dedicated to providing support and answering all inquiries related to investments in Saudi Arabia, as well as investor complaints.

Thus, we have finished talking about establishing startups for foreigners in the Kingdom of Saudi Arabia, and an explanation of the most important investment opportunities and the most prominent challenges facing investors, and for more information you can contact Invest Global, where our experience exceeds fifteen years in providing company establishment services in the Kingdom of Saudi Arabia, and providing commercial, legal and accounting consultations in this field.

Sources

• Invest in Saudi Arabia
• Ministry of Investment
• The legal foundations supporting foreign investment in Saudi Arabia according to Vision 2030.
• Foreign investment in Saudi Arabia under Saudi Vision 2030.