Saudi-Arabien Wirtschaftshandbuch Saudi Arabia Business ... - Ghorfa

The IT-sector and the most important infrastructure sectors
are also undergoing change. In recent years, the Saudi
telecommunications sector has been restructured. The
state monopoly was turned into a telecommunications
company subject to economic criteria (Saudi Telecommunication
Company – STC) and around 30% of its capital
stock was sold on the stock exchange. Furthermore, the
telecommunications sector was opened up to allow free
competition under the supervision of the telecommunications
authority.
A similar program is currently being pursued in the energy
sector. Four regional electricity companies (Saudi
Electricity Companies – SCECO) and six smaller electricity
producers were merged into one company (Saudi
Electricity Company – SEC) that will be privatised in the
near future. It is estimated that Saudi Arabia will need
between 1,000 to 2,000 MW electro-energy every year
by the year 2015; this in turn will necessitate investments
of around 10 billion US$.
Other areas in which privatization is due to take place
include air traffic, rail, ports, postal service, mining, water
supply and disposal, desalination of seawater and the
education and health sectors.
Without a doubt, the clearest indication that the Saudi
economy is opening up and becoming more liberal is the
Foreign Investment Act that allows foreign investors to
own plants and the associated real estate to 100%. The
law not only guarantees that domestic and foreign investors
are treated the same, it also reduces the profit tax
from 45% to 20% and allows the free return of capital,
profits and dividends to the home country. Also, a real
estate law that was passed somewhat later allows foreign
investors to purchase residential real estate. The foreign
investors are subject to all bilateral investment protection
and promotion agreements signed by the Saudi state.
Foreign employees working for an approved project are
granted concessions when obtaining the entrance and exit
visas, and residential and work permits.
On 11th November 2005, the General Council of the
WTO approved the entry of Saudi Arabia to the World
Trade Organisation. Saudi Arabia is the 149th state to
achieve full membership. All GCC states are now members
of the WTO. In light of the previously achieved economic
reforms, acceptance into the WTO is particularly
significant as it shows that Saudi Arabia has agreed to
further liberalise its own trading regime and to further
promote the integration of the country into the world
economy by improving and adapting its trade and invest-
WirTSchAfTliche unD POliTiSche eckDATen – – ImPortAnt economIc And PolItIcAl dAtA
ment regulations to the WTO standards. This means that
the country assumes responsibility for the further liberalisation
of the world trade in compliance with its active role
in the development and stabilisation of the world economy
by means of its membership in economic and regional
organisation such as the World Bank, the International
Monetary Fund, the OPEC and the “Group of 20”.
Entry into the WTO will lead to further reforms in the
Kingdom. The negative list of business activities to which
foreign investors are excluded will be further reduced.
This includes continued opening of the insurance market
and banking sector, the disbandment of monopolies (e.g.
in the telecommunications sector), the lifting of export
and import restrictions and the further phase-out of subsidies
for agricultural production. Saudi Arabia will join
important international initiatives such as the agreement
relating to information technology or the harmonisation
of chemical products. The plan is to slash all duties on
computers, semi-conductors and other IT products by
2008. Saudi Arabia has also committed to doing away
with duties on pharmaceuticals. Any goods covered by
the WTO agreement relating to the civil aircraft trade
will also be relieved of custom duties. In general, the binding
reduction of the custom duties and the restrictions on
import quantities planned for the next few years will also
create more favourable underlying conditions for German
industrial exports to Saudi Arabia.
The process of opening the market for foreign banks will
be continued. The entry into the WTO means that foreign
banks can now open offices in Saudi Arabia. The upper
capital limit for foreigners in joint-venture banks will be
raised from 40% to 60%. All foreign companies in the financial
sector have the guarantee that they will receive
the same treatment as national companies. Even foreign
insurance companies will be able to open branch offices in
Saudi Arabia in the future. Here again, the upper limit for
capital for foreign interests is now 60%.
In the wholesale or retail trade sector, the former national
protection privilege has been lifted. This means that companies
that have a foreign capital interest of 51% will be
approved in the wholesale sector. From the end of 2008
onwards, this kind of joint-venture trading enterprise may
have a foreign capital interest of 75%. Whilst this applies
to the sales of vehicles, car workshop operations do not
fall under this ruling.
Its acceptance into the World Trade Organisation further
consolidates Saudi Arabia’s position as a leading market
in the Middle East.
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