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What expats in Saudi need to know

Saudi Arabia is home to a variety of expat workers – a mixture of skilled, semi-skilled and professional foreign workers. Many entrepreneurial expatriates have successfully started their own businesses in the Kingdom. However, an expatriate seeking to start a business should do so only through the legal channels. Failure to do so can lead to serious consequences.

“Expatriates can initiate business activities in industry, contracting and other services.  The SAGIA (Saudi Arabian General Investment Authority) that was formed a decade ago has laid down relevant rules and regulations for foreign businessmen to run their businesses in the Kingdom,” said Abdul Aziz Shehzad, legal advisor in the Riyadh Chamber of Commerce and Industry (RCCI).

The SAGIA offices that are located in different regions of the Kingdom will answer any questions. The authority’s website (www.sagia.gov.sa) provides all the required information, he added.

Expatriates can make investments in various areas, such as the industrial sector, services sector, real estate - except in Makkah and Madina - and in the agri-business sector. The most popular businesses for expats to invest in are garment and textile shops, baqalas (grocery shops), carpets, tailoring, and construction.

The capital requirements for each of these businesses vary. They are: SR1 million for industrial licenses and SR500,000 for service licenses. There is a minimum project value of not less than SR30 million for real estate, and a capital of not less than SR25 million for agri-business investments.

A business license should be obtained by the expat either under their own name or under a Saudi national’s name. This must be accompanied by a letter of ‘no objection’, in which a designated post in the business setup is assigned and a percentage of the sales profit is fixed between the Saudi investor and the expat.

“Under the Foreign Investment Act, expats can also request to partner with their sponsors, or request approval of their sponsors for a ‘no objection’ letter in order to establish their own business,” said Modar Al-Hijji, senior license analyst specialist at SAGIA.

He said that expats who want to set up a business in the Kingdom should pursue legal channels in order to avoid any “unwelcome circumstances”.

Source: www.investmentinternational.com
Publication date: 16 september 2009

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