Foreign investors free to sit on Saudi business chamber boards

The pandemic has quickened momentum for Saudi business reforms. (AFP)
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Updated 04 December 2020

Foreign investors free to sit on Saudi business chamber boards

Foreign investors free to sit on Saudi business chamber boards
  • Council of Chambers to become the Chambers Association

LONDON: Foreign investors are to be allowed to sit as directors on the boards of Saudi chambers of commerce for the first time.

The move is aimed at boosting  competitiveness and business activity in the Kingdom, the Saudi Ministry of Commerce said in a statement.

The new system will also mean that more than one chamber of commerce can be established in the same region.

Reforms to the country’s business chambers come as part of a broader push to modernize the economy, slash bureaucracy, and create jobs for Saudis.

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New companies will be exempted from the chamber’s subscription fees for a period of three years starting from the date of commercial registration.

In addition to revoking the Saudi citizenship rule, companies joining business chambers will be exempt from paying subscription fees for three years. The reforms also scrap the requirement to take out a new subscription for additional company branches.

“This is an encouraging development for overseas investors looking to expand in the Kingdom,” said Ed O’Reilly, executive director of Dubai-based 4Front Consultants, a technology company with operations in Saudi Arabia.

Under the new plans, the old Council of Chambers will become the Chambers Association and the changes will also see the creation of a supervisory body to monitor performance, while allowing the holding of meetings and voting through electronic means.

Saudi Arabia carried out a record number of business reforms last year, according to the World Bank Group’s Doing Business 2020 report, helping to put the country into the top 10 of global business climate improvers.

The Kingdom made the greatest improvement in the area of starting a business — costing 5.4 percent of income per capita for an entrepreneur to set up, compared with the wider regional average of 16.7 percent.


WEEKLY ENERGY RECAP: Despite long-term challenges, oil prices remain in healthy range

WEEKLY ENERGY RECAP: Despite long-term challenges, oil prices remain in healthy range
Updated 21 min 21 sec ago

WEEKLY ENERGY RECAP: Despite long-term challenges, oil prices remain in healthy range

WEEKLY ENERGY RECAP: Despite long-term challenges, oil prices remain in healthy range

Oil prices have been stable since early January, with Brent crude price hovering around $55. Brent crude closed the week slightly higher at $55.41 per barrel,
while West Texas Intermediate (WTI) closed slightly lower at $52.27 per barrel.

Oil price movement since early January in a narrow range above $50 is healthy, despite pessimism over an increase in oil demand, while expectations of US President Joe Biden taking steps to revive energy demand growth are
still doubtful. The US Energy Information Administration (EIA) reported a hike in US refining utilization to its highest since March 2020, at 82.5 percent. The EIA reported a surprise weekly surge in US commercial crude stocks by 4.4
million barrels. Oil prices remained steady despite the bearish messages sent from the International Energy Agency (IEA), which believes it will take more time for oil demand to recover fully as renewed lockdowns in several countries weighed on oil demand recovery.

The IEA’s January Oil Market Report came as the most pessimistic monthly report among other market bulletins from the Organization of the Petroleum Exporting Countries (OPEC) and EIA. It forecast oil demand will bounce back to 96.6 million bpd this year, an increase of 5.5 million bpd over 2020 levels.

Though the IEA has lowered its forecast for global oil demand in 2021 due to lockdowns and vaccination challenges, it still expects a sharp rebound in oil consumption in the second half of 2021,
and the continuation of global inventory depletion.

The IEA reported global oil stocks fell by 2.58 million bpd in the fourth quarter of 2020 after preliminary data showed hefty drawdowns toward the end of the year. The IEA reported OECD industry stocks fell for a fourth consecutive month at 166.7
million barrels above the last five-year average. It forecast that global refinery throughput is expected to rebound by 4.5 million bpd in 2021, after a 7.3 million bpd drop in 2020.

The IEA monthly report has led to some short term concern about weakness in the physical crude spot market, and the IEA has acknowledged OPEC’s firm role in stabilizing the market.

Controversially, the IEA believes that a big chunk of shale oil production is profitable at current prices, and hence insinuated that shale oil might threaten OPEC market share.

It also believes that US shale oil producers have quickly responded to oil price gains, winning market share over OPEC producers. However, even if US shale oil drillers added more oil rigs for almost three months in a row, the number of operating rigs is still less than half that of a year ago, at 289 rigs.

The latest figures from the Commodity Futures Trading Commission show that crude futures “long positions” on the New York Mercantile Exchange are at 668,078 contracts, down by 18,414 contracts from the previous week (at 1,000 barrels for each contract).