IMPLEMENTATION LEVEL

National

AFFECTED FLOW

Inflow

ANNOUNCED AS TEMPORARY

No

NON-TRADE-RELATED RATIONALE

No

ELIGIBLE FIRMS

all

JUMBO

No

TARIFF PEAK

No
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Inception date: 01 Sep 2015 | Removal date: open ended
Still in force

FDI: Entry and ownership rule

According to consistent press reports, the government of Saudi Arabia liberalizid foreign investment into retail and wholsale trade in Septembre 2015. Under the new regime, foreigners may hold up to 100 % of such operations, up from 75 % before the rule change.
 
However, the liberalization comes subject to a series of conditions which were elaborated in Jun 2016 and include, among others, local content requirements. According to a press release of the Ministry of Commerce and Investment, dated 17 June 2016, days after the Council of Ministers approved new regulations for foreign direct investment, the first application for a fully foreign owned subsidiary was approved. The American company Dow Chemical successfully applied to the Saudi Arabian General Investment Authority.
 
The press release also stated: "The General Investment Authority explained the essential conditions for foreign investing companies to get 100% ownership licensed in the wholesale and retail trade sector. The company must have at least 3 presences in different markets, capital cash of 30 SR million 'USD 8 million', with the company's commitment to invest an amount not less than two hundred million Saudi riyals 'USD 53 million' (included the capital), within the first five years starting from the date of obtaining the investment license.
 
"The company will be committed to employing Saudis citizens in leadership positions in the first five years under the Ministry of Labor and Social Development regulations. Also, commit to training 30% of Saudi employees annually. Besides, it has to achieve one or more of the following within the first five years:

  •  Manufacturing: - so that 30% of its locally distributed products, made in the Kingdom.
  •  Research and development programs: assign (5%) - at a minimum - of total sales, to establish research and development programs in the Kingdom."

 
 

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