Coronavirus: Setting up a business in Saudi Arabia is now much easier, says expert
Setting up a business in Saudi Arabia has become much easier despite the coronavirus pandemic as the Kingdom’s temporary economic stimulus has made the process faster and cheaper than before, according to an expert in the field.
Governments across the world have put their countries into lockdown as the COVID-19 coronavirus continues to spread. Saudi Arabia is no exception and has instituted a curfew to limit public movement and shut incoming international travel.
These measures have had a severe effect on economic activity, with the Kingdom’s Minister of Finance Mohammed al-Jadaan noting on Sunday that more “painful” steps for the economy are ahead.
However, as part of its economic stimulus, Saudi Arabia has made it significantly easier to set up a business – meaning now may be the best time to enter the Kingdom’s vast market.
“Companies seeking to expand into Saudi Arabia are [now] able to get their investment license without having to attest the documents. That’s a game changer for companies that we've been speaking with since that process is often time consuming and can also be costly,” said Muhammed Mekki, founding partner of AstroLabs, a foreign business incubator focused on Saudi Arabia.
According to Mekki, companies should be aware that the widespread economic shutdown caused by coronavirus will pass – with business activity returning to the Kingdom in the future.
Under the temporary new rules due to the Kingdom’s economic stimulus packages, the process of attesting documents – necessary to setting up a business – now takes a matter of days rather than months.
“Instead of this one to two months timeframe to get everything attested, we went straight into the application process and got investment licenses issued within one to two days enabling us to go straight into the process and work with the Ministry of Commerce to be able to fully set up the company,” he said.
The new process will also save businesses money, Mekki added.
The process of attestation could cost anywhere up to around 20,000 riyals ($5,333), depending on the complexity of the mother company, and “can often be a source of delay and confusion,” he added. Businesses can save this money by applying under the current measures.
Most businesses that have begun their expansion plans into Saudi Arabia despite the coronavirus were already looking to do so, Mekki explained.
“There's a lot of companies based in the UAE in particular, whether they’re global companies with an office in Dubai or local, whose next step is going into Saudi Arabia … That's where the majority of our client base ends up being from,” he said.
Given the timeframe that it takes for the full business to be set up, it is in the interest of companies make the leap into the largest consumer marketplace in the Arabian Gulf while the procedure has been eased, Mekki concluded.
Protecting the private sector
The Kingdom has instituted numerous policies to protect its private sector from the economic fallout of the coronavirus pandemic.
On Sunday, Saudi Arabia’s General Organization for Social Insurance (GOSI) disbursed approximately 1.2 billion riyals ($319 million) to more than 400,000 Saudi nationals working in private sector companies which were affected by the impact of the coronavirus pandemic.
Overall, more than 120 billion riyals, which is equivalent to about 4 percent of Saudi gross domestic product, has been allocated to implement fiscal and economic measures to lessen the impact of the coronavirus.
Nine billion riyals has been allocated to protect the Saudi citizens working in the private sector from losing their jobs and providing alternative income for those who lose income from their jobs.
The Saudi government allocated 50 billion riyals to expedite the payment of the dues of the private sector.
The Kingdom also announced the deduction of 30 percent of electricity bills for the commercial, industrial and agricultural sectors, with a budget of 900 million riyals.