As a manufacturer looking to new markets, perhaps you have already considered exporting to Saudi Arabia. Maybe you decided to go ahead, or did you feel the risks were too high?
Around the globe, we hear a lot of confusing and conflicting reports about the Middle East in general, and Saudi Arabia seems to be high on the international media’s watch-lists for bad news. However, there are unprecedented changes afoot and these present exciting opportunities for those exporters and traders who are prepared to study this market well. Just this week, Japanese company Canon announced plans to open up in KSA, employing 300 staff. According to Arab News, Anurag Agrawal, managing director, Canon Middle East, said, “Saudi Arabia is witnessing a transformation into a more diversified economy with several industries developing and establishing a presence in the region’s largest market.” Experience tells us that many of the world’s top companies have already been successful in growing within the Kingdom, which incidentally was only established 86 years ago.
Saudi Vision 2030
As a fairly new country, Saudi Arabia has some very strict laws, ideas and practices which may never have existed in other countries, or have long become “outdated”, but the Kingdom is rapidly changing mainly due to Crown Prince – and Chairman of the Council of Economic and Development Affairs – Mohammad bin Salman bin Abdulaziz Al Saud’s plan to modernise some aspects of life in the country. The plan – known as Vision 2030 – is to diversify the economy away a reliance on oil and mineral wealth and introduce new revenue streams from tourism, trade and investment.
Recent changes and future plans
- Lifting of the ban on women drivers – with the first driving licences issued in June 2018.
- Modernisation and restructuring of the government with moves to continuously closely monitor and benchmark government expenditure and performance, making government departments more accountable. The aim overall is to promote accountability and transparency.
- Measures to transform the Public Investment Fund into the world’s largest sovereign wealth fund.
- A strategy to manufacture half of the countries own military equipment internally.
- Revision of the company law, the non-governmental organizations’ law, and many other laws which were viewed as outdated or in need of reforms.
- Plans to invest in the country’s “human capital”, to support the government agencies with staff, studies, consultations and strategic partnerships. This may bring opportunities for companies providing education, training and HR related services.
- The Strategic Partnerships program aims to create a trade hub connecting three continents and enhance the country’s exports.
- Privatisation of some sectors, potentially moving away from the state-owned monopolies that currently exist. This includes selling about 5 percent shares in Saudi Aramco in what would most likely be the world’s biggest international public offering (IPO) – earmarked for 2019 – with the goal to transform the company from an oil producing company into a “global industrial conglomerate”.
- Creation of a General Authority for Entertainment (GEA) in 2016. For a very interesting and account of how times have changed in this regard over recent years, check out this presentation by Lebanese-American comedian Nemr to Harvard University last year – the part about Saudi Arabia starts at 36 minutes in. The first-ever Saudi Comic Con took place in 2017. The gravity of this should certainly not be underestimated – it is a major culture shift.
- Also in 2017, plans were unveiled to develop tourist resorts on some 50 islands off the kingdom’s Red Sea coast through partnerships with international investors and hoteliers. The 34,000 km2 Red Sea Resort will offer luxurious beach hotels, a nature reserve, heritage sites and diving in coral reefs and is expected to create a staggering 35,000 jobs. In order to attract tourists, the proposal is to have much more relaxed laws in the resort than in the rest of the country, based on international standards, but the exact details of how that will work in practice seem to be still under discussion.
Vision 2030 is a radical overhaul of the country and the way it currently operates, and we are already seeing major changes taking place. These ground-breaking initiatives will transform the country from one which has traditionally thrived on oil revenues and Islamic tourism to a Kingdom which invests in its own human resources, operates an efficient and transparent governance and welcomes partnerships from overseas companies whilst allowing foreign tourists and visitors greater freedoms. It will be a drastic transformation and has the potential to create an even more attractive marketplace for foreign investors and exporters.
If you are interested in or already trading with companies in Saudi Arabia, Cedar Rose offers KYC, Credit Reporting and a comprehensive range of Due Diligence services on Companies, Directors and Shareholders. Contact Us for a quotation or search cedar-rose.com for instant or freshly investigated information on your current or potential Saudi partners.
Furthermore, you can extensively read about other products that Cedar Rose has to offer by checking out our detailed newsroom which is full of intriguing articles.
Written by Christina Massaad, Managing Director
*** The sole purpose of the article above is to generate public discussion, it has no intention to constitute legal advice. ***