CWC Gulf has had a representative office in Saudi Arabia for many years. Although geared primarily for the for the promotion of Saudi British business, the KSA office can undertake any type of project and consultancy work throughout the whole region. Saudi Arabia is an important country for Britain being the largest economy in the Arab world. It accounts for 25% of the Arab world’s Gross Domestic Product [GDP]
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A focus on Saudi business
The UK has a long history with Saudi Arabia. The Kingdom is the UK’s largest trading partner in the Middle East and accounting for around £7 billion goods and services in 2014. The UK is Saudi Arabia’s joint 4th largest investor. Saudi Arabia owns about one quarter of the World’s oil reserves and has some US$1 trillion invested in the USA. Saudi Arabia is now looking to diversify by investing into new areas and countries. There has never been a more timely opportunity for British and EU business.
The Saudi Council of Ministers has approved the Ninth Five-Year Development Plan, which allocates $385 billion (SR1.4 trillion) to projects across all sectors through 2014. The plan focuses on improving the standard of living, increasing employment, balancing economic development across all regions, and increasing the competitiveness of the country’s economy. The budget for this plan is approximately 67 percent larger than the previous five-year plan.
Half of the government’s spending will be dedicated to human resource development, which includes education and training – reinforcing the Kingdom’s goal of creating a knowledge-based society. Social and healthcare development will receive 19 percent of the budget, while economic resource development will be allocated 15.7 percent, transportation and communications development 7.7 percent, and municipal and housing services 7 percent.Saudi Arabia’s fast-growing economy is creating opportunities for both exporters and investors. These are further boosted by moves to diversify the economy away from oil, and by economic reform programmes.
The Ninth Five-Year Plan includes increasing the capacity of primary, intermediate, and secondary schools to over 5.3 million students along with increasing the capacity of universities to 1.7 million students. A number of new facilities will be built, including 25 technology colleges, 28 technical institutes, and 50 industrial training institutes. The government will also expand and diversify the post-graduate programs offered within the Kingdom and seek to increase the amount of post-graduate students to 5 percent of all university students.
The plan also encourages innovation in science and technology by providing $240 million (SR900 million) in grants for research projects each year. Other initiatives include the establishment of 10 research centers, 15 university technological innovation centers in association with King Abdullah City for Science and Technology (KACST), and at least eight technology incubators at KACST and other universities. The government will also continue to promote university collaboration with international companies.
Social and Health Services
In an effort to provide Saudi Arabia’s entire population with integrated and comprehensive healthcare, the Ninth Five-Year Plan allocates $73 billion (SR273.9 billion) to various initiatives. Measures include the construction of 117 hospitals, 750 primary healthcare centers, and 400 emergency centers. Targets for improving the amount of hospital beds available as well as the ratio of physicians per bed have also been set.
The economic resources sector includes such industries as agriculture, water, electricity, mineral resources, and tourism. In addition to continuing efforts to reduce the amount of water and energy consumed, the Ninth Five-Year Plan contains measures to nearly double the capacity of desalination plants from 1.05 billion cubic meters per year to 2.07 billion cubic meters per year and increase the rates of reusing treated wastewater by 50 percent. Similarly, electricity production would be increased by 20,400 megawatts by the end of the plan.
In addition to the continued expansion of King Abdul Aziz International Airport in Jeddah and Prince Mohammad bin Abdul Aziz International Airport in Madinah and the completion of the country’s various railways, the Ninth Five-Year Plan also calls for the establishment of a port at Ras Azzour. The development of the country’s transportation infrastructure is an integral part of the Kingdom’s overall economic competitiveness, as greater means of transportation yield reductions in industrial costs.
The Saudi Government also aims to provide a secure and reliable infrastructure to meet the growing demand for telecommunications. The current ratio of internet users is 40.5 for every 100 people, and the Ninth Five-Year Plan seeks to raise that to 53.6 for every 100 people. Broadband coverage will also increase from 7.8 to 11.4 for every 100 people.
Municipal and Housing Services
To address the lack of affordable housing in the Kingdom, the Ninth Five-Year Plan increased its allocation for municipal and housing services by nearly 53 percent over the previous plan. By the end of 2014, 1 million residential units will be built, meeting 80 percent of the projected housing demand for that period.
All of these initiatives lead analysts to predict positive growth for Saudi Arabia in the coming years. The Ninth Five-Year Plan aims to achieve an annual GDP growth rate of 5.2 percent and reduce the unemployment rate from 9.6 percent in 2009 to 5.5 percent in 2014. Through continued investment incentives, private sector growth is expected to average 6.6 percent annually, representing 61.5 percent of GDP by the end of 2014.
Overall, the Ninth Five-Year Development Plan builds on a strong tradition of strategic planning and spending in areas that capture the Kingdom’s comparative advantages to optimize economic growth and improve social welfare, education, and conservation.
Occupying most of the Arabian Peninsula, the Kingdom of Saudi Arabia lies between the Red Sea and the Arabian Gulf. Countries bordering Saudi Arabia include Jordan to the north; Iraq and Kuwait to the north-east; Qatar and the United Arab Emirates to the east; and Yemen and the Sultanate of Oman to the south. The country has approximately 2,250,000 square kilometers (869,000 square miles) of land area, which includes the following regions:
- The Western Province (Hijaz) borders the Red Sea and contains the Muslim holy cities of Makkah and Medina, the major commercial port city of Jeddah and the industrial city of Yanbu.
- The Central Province (Najd) located on the central plateau, is the largest province. Riyadh, the capital of Saudi Arabia and the seat of government, is located in this province.
- The three cities of Al Khobar, Dhahran and Dammam form the centre of the Eastern Province. Ras Tanura, the oil port, and the industrial city of Jubail are also located here. Saudi Arabia’s oil reserves and related installations are located primarily in this province.
- The South-west Province (Asir), a mountainous region with peaks as high as 3,000 meters (9,800 feet), has some agriculture and is being developed as a tourist destination.
The central institution of Saudi Arabian Government is the Saudi monarchy. The Basic Law adopted in 1992 declared that Saudi Arabia is a monarchy ruled by the sons and grandsons of the first king, Abd Al Aziz Al Saud, and that the Qur’an is the constitution of the country, which is governed on the basis of Islamic law (Shari’a).
The Riyadh climate is mild in winter and very hot in summer. Jeddah has hot humid summers, with cooler less humid winters. The Eastern Province is similar to Riyadh, but with higher humidity.
No public religious expression is allowed other than Islam. The word “Wahhabi” is often incorrectly identified by Westerners as being the Saudi branch of Islam. Those who are labeled with this word do not themselves use this term, as it is used as a means of belittlement. The correct way of reference is by the term “Salafi”, as in Saudi Arabia it is “the way of the Salaf”. The Prophet Muhammad (may Allah raise his rank and grant him peace) and his companions.
Following the way of the Salaf is the way which has been legislated in the Quran and Sunnah, the very sources of Islam. The Prophet (may Allah raise his rank and grant him peace) said to his daughter Fatimah: “Indeed, I am for you a blessed Salaf.”
Arabic is the official language, although English is widely used in the main towns and is the main business language.
Alcohol and Pork Products
The import or possession of alcoholic beverages and pork products is strictly prohibited. Offenders are liable to severe penalties.
The unit of currency is the Saudi Riyal (SR) which is effectively tied to the US dollar at the rate of 1 US$ = SR3.75. The current rate of exchange in April 2016 with the pound sterling is around £1.00 = SR5.34
The Hijra calendar, based on lunar months, is the official calendar. A Hijra year begins 10-11 days earlier each year in the Gregorian calendar. The current Hijra year, 1426, started on 10 February 2005.
Saudi Arabia is three hours ahead of Greenwich Mean Time and two hours ahead of British Summer Time.
Private business offices are usually open from 0800 to 1300, and 1600 to 2000, Saturday to Wednesday inclusive and from 0800 to 1300 on Thursday. Government offices normally work from 0800 to 1430 Saturday to Wednesday inclusive. All offices and shops close four times a day for prayer. Working hours during the holy month of Ramadan are reduced – Government offices should be open from 1000 to 1500. In the private sector many businesses will open at night in Ramadan, normally 10 p.m. to 01 a.m.
It is generally best to avoid visiting Saudi Arabia in July and August (when many Saudi businessmen are out of the Kingdom) and close to the two Eid Festivals (see dates below). Visitors during Ramadan need to be prepared to do business outside western hours. The lead-up to the pilgrimage (Hajj) season is the peak-buying season for merchants in Jeddah, Makkah and Medina. The month of Ramadan is normally the peak period for sales of clothes, furniture and toys. Beginning in June, large numbers of Saudis and expatriates leave the country for the summer holidays.
The Saudi weekend is Thursday and Friday. Public holidays are observed for the two annual Eid Festivals when all government and business offices are closed. It is best to avoid non-essential business travel around these times, especially as the dates can move back or forward by a few days:
The best way to communicate is by telephone, fax or e-mail. Any other materials should be sent by courier. The mail is often slow and unreliable.
Direct publicity (by e-mail or fax) is an effective way to bring your products to the attention of potential customers. If you are planning to visit the Kingdom, time your mail shot 2 weeks before your arrival.
All nationals (except those of Bahrain, Kuwait, United Arab Emirates, Qatar and Oman) require a visa, to be obtained in advance from the Saudi Embassy in their country of residence, to enter the Kingdom. For a single entry visa, businessmen may now obtain a visa with a supporting letter from a UK Chamber of Commerce attesting to their status as a business visitor. For multiple entry visas, visitors are still required to have an invitation from a Saudi-based company or sponsor. The easiest way for a businesswoman to obtain a visa is to join an outward trade mission from the UK. Alternatively, the prior approval of the Ministry of Foreign Affairs in Riyadh is required. Passports bearing evidence of a visit to Israel will not be stamped with a Saudi visa.
Assisting Saudi/ UK Business
CWC Gulf are also assisting Saudi companies and organizations to invest into the UK and elsewhere. If you are a Saudi company and require assistance in the structure and establishment of a UK business entity or offshore corporation or need legal advice on commercial contracts then we can provide these services.
To undertake business in Saudi Arabia you must appoint a Saudi agent if you do not have a physical presence in the Kingdom. You must also have a physical presence in Saudi Arabia to be directly involved in the buying and selling of goods. Under Saudi investment law the establishment of a physical presence requires a joint venture with a Saudi partner. This can be either an active participant or a non exec/ dormant shareholder. CWC Gulf can assist with this and advise on the complex legal agreements required which usually consist of a shareholder agreement and a separate management agreement.
If you are a Saudi company wishing to do business in the UK or requiring an International partner for projects in Saudi Arabia then CWC Gulf are the right people to talk to.
If you are a British or International company looking to do business with Saudi Arabia then we can help.