GCC firms rush into Saudi Arabia, seizing $3 trillion opportunities
The Saudi Vision 2030 initiative has attracted $3 trillion in foreign investment, and businesses in the GCC are flocking to the kingdom to take advantage of all the possibilities it presents.
In Q1 of 2023, the Saudi government granted licenses to 88,858 new businesses, and in Q3, an extra forty thousand businesses received permits.
This surge brought the total number of small and medium enterprises (SMEs) to over 1.27 million in Q3 2023. The Saudi government aims to attract $3 trillion in foreign investment to support economic development, transfer foreign expertise and technology, create jobs for Saudi nationals, and boost non-oil exports.
As part of its National Investment Strategy, Saudi Arabia introduced plans for various sectors, including manufacturing, renewable energy, transport, tourism, digital infrastructure, and healthcare. The strategy aims to increase the private sector's contribution to 65% of total GDP and raise foreign direct investment to 5.7% of total GDP. The goal is to attract annual net foreign direct investment flows of $103 billion and increase domestic investment to approximately $450 billion by 2030.
The infrastructure, housing, energy, power, utility, and industrial investments in Saudi Arabia are driving a need for a significant workforce. This has prompted businesses in the GCC to establish companies in Saudi Arabia to tap into these opportunities.
While business licensing in Saudi Arabia can be complex and costly, the potential benefits are substantial. The government fee for a Ministry of Investment Saudi Arabia (MISA) business license ranges from 2,000 to 62,000 Saudi riyals.
Although Saudi Arabia allows 100% foreign ownership in local businesses across most categories, many businesses still opt for a local partner due to lower costs and certain benefits, such as tax exemptions. The government fees for a trade license with a local partner range from 2,000 to 15,000 Saudi riyals. While a local partner can be advantageous, careful selection is crucial to avoid potential challenges.
Saudi Arabia, with a population of 32.2 million, boasts the largest economy in the Arab world and is the fastest-growing G20 economy, according to the International Monetary Fund (IMF). The government's ambitious projects, such as an $800 billion initiative to double the size of Riyadh, present extensive opportunities for businesses willing to invest in the country.