Doing Business in Saudi Arabia - International Franchise Association
Doing Business in Saudi Arabia - International Franchise Association Doing Business in Saudi Arabia - International Franchise Association
• The largest private investment in Saudi Arabia will center on the Economic Cities that will be built in some remote sites of Saudi Arabia to enhance the region’s economy and to create jobs in that area. These economic cities are expected to attract close to $80 billion in investments. The frontrunner is the King Abdullah Economic City at Rabigh, which will focus on promoting energy and transportation related industries. The Prince Abdulaziz bin Mousaed Economic City in Hail will be designed around transportation and related logistical services. The Knowledge Economic City in Medina will include a Technology and Knowledge-Based Industries zone, an advanced IT studies institute, an interactive museum on the life of Prophet Muhammad (PBUH), a center for Islamic civilization studies, a campus for medical research and biosciences, an integrated medical services zone, a retail zone, a business district, and residential zones. The fourth economic city in the southern city of Jizan will have an industrial zone, a logistics service center, an energy/desalination plant, a residential zone and a seaport. “Soft” term financing is available from specialized credit institutions: the Saudi Agricultural Bank, the Saudi Credit Bank, the Public Investment Fund, the Saudi Industrial Development Fund (SIDF), and the Real Estate Development Fund. The Saudi banking system is well capitalized and well provisioned. SIDF loans are available to finance foreign-owned businesses in Saudi Arabia under the Foreign Investment Law. The Embassy is not aware of any “cross-shareholding” or “stable shareholder” arrangements being used by private firms to restrict foreign investment through mergers and acquisitions. Nor is the Embassy aware of any laws or regulations that specifically authorize private firms to adopt articles of incorporation/association, which limit or prohibit foreign investment, participation, or control. GSM credit guarantees are not available in Saudi Arabia. The U.S. Export-Import Bank is involved in Saudi Arabia supporting trade with private Saudi companies. OPIC does not provide coverage in Saudi Arabia. The Government of Saudi Arabia may use the facilities of International Financial Institutions to support major infrastructure and projects. Project financing is also available for longer-term loans by the local commercial banks and Saudi specialized credit institutions such as the Saudi Industrial Development Fund or the Public Investment Fund. The International Finance Corporation (IFC), which finances and provides advice for private sector ventures and projects, has been quite active in the Saudi market. IFC has been active in Saudi Arabia since 1999 when it took $2.4 million equity in the Saudi Orix Leasing Corporation, helping SMEs get access to asset-backed financing and help develop the Saudi non-bank financial institutions. Since then, IFC has made a number of investments and/or provided advisory and technical assistance to Saudi entities. The IFC’s website lists the organizations’ commitments and projects in Saudi Arabia. The Islamic Development Bank fosters the economic development and social progress of member countries and Muslim communities. It participates in equity capital and grants loans for productive projects and enterprises, besides providing financial assistance to member countries in other forms for economic and social development. In addition, the Council of Saudi Chambers of Commerce and Industry is assisting with the set up of a Saudi-Japanese company to finance small and medium-sized companies in Saudi Arabia.
Recently, the Saudi Fund for Development began to offer financing for Saudi exports to countries where there is no commercial bank coverage, no correspondent banks and/or highrisk country/bank. The Islamic Corporation for the Insurance of Investment and Export Credit (ICIEC) provides Export Credit guarantees on exports to member states and to companies owned/partly owned by member states. In addition, the corporation provides investment insurance and guarantees against country risks to member states. Other regional organizations that also provide for project and trade financing to promote investments and social development in the Arab world include: • Arab Fund for Economic and Social Development, which is an autonomous regional Pan- Arab development finance organization. Members include all Arab states in the League of Arab Nations. • Arab Industrial Development and Mining Organization, which is also a Pan-Arab organization for the encouragement of industrial and mining investments. • Arab Monetary Fund, a 21-member regional Arab organization aiming to improve the balance of payments of member states, to promote Arab monetary cooperation as well as trade among member states. The organization also advises member countries on policies with respect to their foreign investments. • Inter-Arab Investment Guarantee Corporation, which aims to promote and facilitate inter- Arab investments and trade. Web Resources Return to top Export-Import Bank of the United States Export-Import Bank of the United States, Country Limitation Schedule Small Business Administration, Office of International Trade Overseas Private Investment Corporation U.S. Agency for International Development United States Department of Agriculture, Commodity Credit Corporation United States Trade and Development Agency Arab Fund for Economic and Social Development Arab Industrial Development and Mining Organization Arab Monetary Fund Council of Saudi Chambers of Commerce and Industry Inter-Arab Investment Guarantee Corporation Islamic Corporation for the Insurance of Investment and Export Credit Islamic Development Bank Saudi Orix Leasing Corporation Saudi Agricultural Bank Public Investment Fund Real Estate Development Fund Saudi Credit Bureau – SIMAH Saudi Arabian Monetary Agency Saudi Fund for Development Saudi Industrial Development Fund
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Recently, the <strong>Saudi</strong> Fund for Development began to offer f<strong>in</strong>anc<strong>in</strong>g for <strong>Saudi</strong> exports to<br />
countries where there is no commercial bank coverage, no correspondent banks and/or highrisk<br />
country/bank.<br />
The Islamic Corporation for the Insurance of Investment and Export Credit (ICIEC) provides<br />
Export Credit guarantees on exports to member states and to companies owned/partly owned<br />
by member states. In addition, the corporation provides <strong>in</strong>vestment <strong>in</strong>surance and guarantees<br />
aga<strong>in</strong>st country risks to member states.<br />
Other regional organizations that also provide for project and trade f<strong>in</strong>anc<strong>in</strong>g to promote<br />
<strong>in</strong>vestments and social development <strong>in</strong> the Arab world <strong>in</strong>clude:<br />
• Arab Fund for Economic and Social Development, which is an autonomous regional Pan-<br />
Arab development f<strong>in</strong>ance organization. Members <strong>in</strong>clude all Arab states <strong>in</strong> the League of<br />
Arab Nations.<br />
• Arab Industrial Development and M<strong>in</strong><strong>in</strong>g Organization, which is also a Pan-Arab<br />
organization for the encouragement of <strong>in</strong>dustrial and m<strong>in</strong><strong>in</strong>g <strong>in</strong>vestments.<br />
• Arab Monetary Fund, a 21-member regional Arab organization aim<strong>in</strong>g to improve the<br />
balance of payments of member states, to promote Arab monetary cooperation as well as<br />
trade among member states. The organization also advises member countries on policies<br />
with respect to their foreign <strong>in</strong>vestments.<br />
• Inter-Arab Investment Guarantee Corporation, which aims to promote and facilitate <strong>in</strong>ter-<br />
Arab <strong>in</strong>vestments and trade.<br />
Web Resources Return to top<br />
Export-Import Bank of the United States<br />
Export-Import Bank of the United States, Country Limitation Schedule<br />
Small <strong>Bus<strong>in</strong>ess</strong> Adm<strong>in</strong>istration, Office of <strong>International</strong> Trade<br />
Overseas Private Investment Corporation<br />
U.S. Agency for <strong>International</strong> Development<br />
United States Department of Agriculture, Commodity Credit Corporation<br />
United States Trade and Development Agency<br />
Arab Fund for Economic and Social Development<br />
Arab Industrial Development and M<strong>in</strong><strong>in</strong>g Organization<br />
Arab Monetary Fund<br />
Council of <strong>Saudi</strong> Chambers of Commerce and Industry<br />
Inter-Arab Investment Guarantee Corporation<br />
Islamic Corporation for the Insurance of Investment and Export Credit<br />
Islamic Development Bank<br />
<strong>Saudi</strong> Orix Leas<strong>in</strong>g Corporation<br />
<strong>Saudi</strong> Agricultural Bank<br />
Public Investment Fund<br />
Real Estate Development Fund<br />
<strong>Saudi</strong> Credit Bureau – SIMAH<br />
<strong>Saudi</strong> <strong>Arabia</strong>n Monetary Agency<br />
<strong>Saudi</strong> Fund for Development<br />
<strong>Saudi</strong> Industrial Development Fund
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