Expats face obstacles in obtaining Saudi licenses

Updated 14 July 2012

Expats face obstacles in obtaining Saudi licenses

Expatriate businessmen are searching for ways to legally establish a business in Saudi Arabia, but find they are not eligible for a license and find it virtually impossible to find alternative methods to obtain one.
An alternative to setting up a business without the need for a Saudi sponsor could be through the Saudi Arabian General Investment Authority (SAGIA). In that case, SAGIA acts as the general Saudi sponsor for those expatriates planning on setting up businesses in the Kingdom.
Naser Al-Tawayan, head of media at SAGIA, said that Article 6 of the Executive Rules of the Foreign Investment Law states, “The license applicant should have come to Saudi Arabia for investment. Expatriates who currently reside in Saudi Arabia cannot apply for a foreign investment license.” Al-Tawayan added that, “SAGIA is responsible for granting foreign investment licenses to foreign investors. The establishment of 100 percent foreign owned companies is permitted in most cases. All sectors are open for foreign investment, except a few that were deemed to be closed for sovereign or infant industry nature.”
According to Ali Shah, CEO of business-consulting firms ASCS and VRS, there are many reasons the government does not allow expatriates to set up their businesses legally.
“One of the major reasons is the influence the 'free' presence of foreign entities of different scales may have on the traditions, culture, social structure or even security of the Kingdom,” Shah said.
Shah said Saudi society is nonetheless being compromised because of the ever-increasing population of expatriates. He suggests that a regulated and well-monitored system of allowing expatriates to run their businesses can legally be implemented.
The Foreign Investment Law further states that SAGIA is responsible for granting a foreign investment license to foreign investors.
“Allowing expatriates to set up businesses legally on their own will definitely add to the economy,” says Shah. “The only harm I can see is the entrance of undesirable crime-oriented entities, but that can be countered through effective law enforcement and intelligence.”
Expatriates residing in the Kingdom claim that the government should pay attention to the foreigners who have been already living in the country for several years.
“I believe they should be given the opportunity to buy homes and have some sort of a permanent residence free of sponsorship that leads to citizenship based on track record,” said Shah.
Paul Gamble, chief economist and head of research at Jadwa Investments, assumes the government does not allow expatriates to set up their businesses legally because it could undermine the position of locally owned businesses.
“There is no reason that foreign-owned business would harm the Saudi economy,” says Gamble. “If it is a good business – one that generates products and services that are better than, cheaper than or different to those already available – then everyone benefits. Foreigners may choose to transfer more of their profits abroad, but if their business is successful they may prefer to invest more in the Kingdom. They will face the same restrictions on hiring foreign labor as locally owned firms.”
Many expatriates from countries like Egypt and Syria demand investing in the Kingdom rather than back at home due to the revolutions.
Shah says it is a good opportunity for Saudi Arabia to attract such investors if the main focus is on reduction of unemployment and contribution to the market.
“If this privilege is given, monitors and regulations also have to be set up to protect everyone's rights,” said Shah. “In the case of Syria, I think they should be given any and every concession and privilege possible under the current conditions.”
“The Kingdom has proven to be one of the most stable investment destinations in the region,” said Gamble. “It also has one of the strongest and best performing economies. It is therefore an attractive opportunity for investors from across the region.”
“The original policy of SAGIA to allow any expatriate should be brought back, and in fact, the umbrella of SAGIA should get much bigger and accommodate expatriates that have been here a long time,” says Shah.
He adds, “The condition that they leave on exit-only does not help. This will totally resolve the Saudization issue if a major condition is for businesses to train and hire locals.”

Saudi Arabia joins club of Middle East’s ‘green energy’ leaders

Updated 20 January 2020

Saudi Arabia joins club of Middle East’s ‘green energy’ leaders

  • Government plans to invest up to $50bn in renewable energy projects by 2023
  • Demand for electricity in the Kingdom is forecast to rise by up to 120 GW by 2030

ABU DHABI: Saudi Arabia has become one of the Middle East and North Africa (MENA) region’s leaders in the race to use renewable energy, according to a new study.

The Solar Outlook Report 2020 was launched at the Solar Forum of the World Future Energy Summit, a highlight of this year’s Abu Dhabi Sustainability Week (Jan. 11-18).
The report, prepared by Middle East Solar Industry Association (MESIA), the largest regional body of its kind, said Saudi Arabia and Oman have joined the UAE, Morocco and Egypt as leaders in the renewables race.
“Saudi Arabia is now in the third year of implementation of its massive target of 60 gigawatts (GW) of renewable energy generation by 2030,” it said.
Martine Mamlouk, secretary-general of MESIA, said that investment in solar energy is evident across MENA countries. “Saudi Arabia has a target of almost 60 gigawatts of renewable energy, out of which 40 gigawatts are solar,” she told Arab News.
“This is in line with the Kingdom’s objective of diversification and Vision 2030. While the industry is reaching grid parity, it is great to see the deployment of new innovative technologies to increase efficiency of systems, production management and grids.”
Upcoming solar projects in the Kingdom include Madinah, Rafh, Qurayyat, Al-Faisaliah, Rabigh as well as Jeddah, Mahd Al-Dahab, Al-Rass, SAAD and Wadi Ad-Dawasir, along with Layla and PIF.
Saudi Arabia’s energy demand has been rising steadily, with consumption increasing by 60 percent in the past 10 years, according to data provided by market researchers Frost & Sullivan. Demand for electricity in 2019 reached 62.7 GW and is forecast to rise by up to 120 GW by 2030.
The value of solar-power projects in the MENA region is estimated at between $5 billion and $7.5 billion. By 2024, that figure is expected to approach $15 billion to $20 billion.
Under its Vision 2030 program, the Kingdom aims to reduce its dependency on oil revenues, diversify its energy mix and tap its renewable energy potential.

Saudi Acwa power-generating windmills that have been erected in Jbel Sendouq, on the outskirts of Tangier, Morocco. (Reuters)

After the Renewable Energy Project Development Office (REPDO) was set up within the Ministry of Energy, the goals for the Kingdom’s National Renewable Energy Program (NREP) were revised upwards in 2018, resulting in a five-year target of 27.3 GW and a 12-year target of 58.7 GW.
The Saudi government plans to invest up to $50 billion in renewable energy projects by 2023.
“At MESIA, we are excited to see solar developments in the MENA region accelerating and reaching attractive tariffs, while lowering the carbon footprint of regional economies,” Mamlouk said.
“The total investment in renewables in MENA between 2019 and 2023 is expected to be $71.4 billion, representing a 34 percent share of the total investment in the power sector, which is valued at $210 billion.”
Changes introduced by Saudi Arabia include a focus on local developers and easing of regulations for local manufacturers of solar panels.
A Local Content and Government Procurement Authority has been established to oversee and audit local content compliance.
Separately, a Renewable Energy Financing package has been launched by the Saudi Industrial Development Fund to support the growth of utility and distributed-generation sectors.
After solar photovoltaic panels were installed on the roof of a mosque in Riyadh, the King Abdullah Petroleum Studies and Research Center recommended a similar move at other mosques.
Meanwhile, plans for the use of solar panels in the Saudi agro-industry have led to burgeoning interest in the technology, with several industrial facilities expected to have their own units in the not-too-distant future.
For good measure, a regulatory framework to allow exchanges with the power grid is being studied by the Electricity Co-generation Regulatory Authority.
Flexible storage solutions, such as hydrogen, will give intermittent renewable energy a greater share in the energy system, Mamlouk said. “It may enable present-day oil and gas exporters to become key renewable energy exporters tomorrow. The solar industry is thrilled and proud to participate in this profound transformation of Saudi Arabia’s energy system.”
In the past year solar tariffs have fallen to record low levels in the MENA region, mainly due to tremendous cost declines that have brought the goal of grid parity within reach.
With installed solar electricity capacity worldwide standing at 617.9 GW, MENA governments are staying focused on energy diversification with the help of large-scale projects.
In the UAE, Dubai is targeting the completion of a 5 GW facility by 2030 at the Mohammed Bin Rashid Al-Maktoum Solar Park. Abu Dhabi has “engaged” its second-largest solar project and is considering the roll-out of more units by 2025.


62.7GW - Demand for electricity in Saudi Arabia in 2019

Morocco aims to reach 52 percent contribution by renewables in its energy mix by 2030. The figures for Tunisia and Egypt are 30 percent and 20 percent, respectively, by 2022.
Oman expects solar-power plants totaling 1.5 GW to come on stream by the end of 2022. Even Iraq, with all its political troubles and administrative paralysis, has not ignored solar power in drawing up plans for its future energy mix.
“Investments in renewable energy have reached billions in all Arab countries,” Mohammed Al-Taani, secretary-general of the Arab Renewable Energy Commission, said.
“Jordan is spending more on renewable energy, and we encourage people to have more independence with renewables by generating their own electricity to reduce their bills.”

Nevertheless challenges remain when it comes to implementing projects in rural and isolated areas, according to Mustapha Taoumi, a technology expert at the EU-GCC Clean Energy Technology Network. “With regard to issues of power grid and access to the people, we have to prepare for everything and be ready to receive new technology because there are communities with little income and education,” he said.
“Then there is the challenge of implementation on the part of different actors and sectors. Social acceptance is also important as we come with new technologies and (information on) how to use them.
“We have to be innovative when it comes to financing the facilitation process. We have to be fair and democratic,” he said.
Although this is an exciting time for the region, governments will have to step up their efforts since they are still subsidizing the cost of power, Taoumi said.
“Technologies are evolving quickly, so decision-making must keep pace,” he said. “We could end up having smart meters in rural and isolated areas in two to three years.”