Saudi MoF launches financial claims platform for private sector

Saudi MoF launches financial claims platform for private sector
The finance ministry said this new platform would allow projects to be implemented in a transparent and efficient way. (Shutterstock)
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Updated 13 April 2021

Saudi MoF launches financial claims platform for private sector

Saudi MoF launches financial claims platform for private sector
  • It means that contractors and suppliers from the private sector can submit their financial claims directly to government agencies

RIYADH: The Saudi finance ministry has launched an online service to handle claims from contractors and suppliers.

The “Etimad” platform was established in partnership with the National Center for Government Resource Systems (NCGR), the Saudi News Agency reported.

It means that contractors and suppliers from the private sector can submit their financial claims directly to government agencies, CEO of the NCGR, Ahmed Alsuwaiyan, the CEO of NCGR said.
Major construction projects typically produce a number of contractual claims triggered by unanticipated circumstances, variations to original designs and a number of other factors caused by the client, contractor or both.

The finance ministry said this new platform would allow projects to be implemented in a transparent and efficient way.

It comes as the Saudi government encourages more private sector companies to get involved with major projects planned across the Kingdom.


Saudi property market adapts to new tax

Saudi property market adapts to new tax
Updated 5 min 10 sec ago

Saudi property market adapts to new tax

Saudi property market adapts to new tax

RIYADH: The Saudi Zakat, Tax and Customs Authority registered over 543,000 transactions related to the Real Estate Transaction Tax (RETT) since its implementation in October 2020, the official Saudi Press Agency (SPA) reported.

The highest number of tax transactions was reported in Riyadh with 125,110 followed by Jeddah (55,680), Buraidah (50,462), Makkah (18,955) and Madinah (18,557).

“This gives a positive impression to the property market,” Khaled Almobid, CEO of Riyadh-based Menassat Reality Co. told Arab News.

He said many thought the new tax might contribute to a decline in the demand of property but “the market started to adapt to it,” which is a positive sign for the Kingdom’s real estate sector.

Property deals in Saudi Arabia are exempted from a 15 percent value-added tax (VAT) as the government seeks to support the real estate sector.

Instead a 5 percent tax was introduced last year to boost the economy as it was hit hard by the impact of the coronavirus disease (COVID-19) pandemic and weaker oil prices.

“The buyer used to pay a value-added tax (VAT) of 15 percent, and due to the real estate conditions in the Kingdom, it was turned into a tax paid by the seller, not the buyer, called the real estate transaction tax, and it was reduced to 5 percent,” Almobid said.


Tabby raises $500 million, eyes new GCC markets

Tabby raises $500 million, eyes new GCC markets
Updated 6 min 18 sec ago

Tabby raises $500 million, eyes new GCC markets

Tabby raises $500 million, eyes new GCC markets

RIYADH: Tabby, the leading buy now, pay later (BNPL) provider in Saudi Arabia and the UAE has raised $50 million in a new equity round valuing the company at $300 million.

Global Founders Capital and STV led the funding round, with participation from Delivery Hero and CCVA. Existing investors, including Arbor Ventures, Mubadala Investment Capital, Raed Ventures, Global Ventures, MSA Capital, VentureSouq, Outliers VC, JIMCO, and HOF, also participated.

This comes one month after the firm raised $50 million in debt financing bringing its total funding to over $130 million in less than two years.

The fintech firm’s Series B financing will be used to expand its product portfolio and enter new markets.

The funding will help tabby further service the growing demand for its BNPL products as customer usage continues to soar, especially in Saudi Arabia, the firm’s largest market.

Ahmad Al-Shammari, a partner at STV, said: “As the global BNPL market is expected to grow at 30 percent CAGR over the next five years, we estimate that MENA will grow at least twice as fast, further accelerated by a rapid switch to contactless payments, e-commerce growth, and access to credit.”

Financial technology startups in Saudi Arabia and the UAE offering online short-term credit say they are enjoying exponential growth as the coronavirus pandemic drives a shift in consumer spending online.

BNPL purchasing is relatively new to the region where consumers have traditionally been skeptical of paying for goods before getting them.

But Saudi-based Tamara and UAE’s Spotii, Tabby, and Postpay all say the take-up has far exceeded initial expectations. And investors are paying attention. Tamara recently raised $110 million in debt and equity, a large amount for an early-stage Middle East startup.

“With global players consolidating the MENA BNPL space, we are proud to continue building a local business and work with investors who understand its value. This investment will enable us to deliver the most rewarding and relevant shopping experience for regional consumers and retailers,” said Hosam Arab, CEO, and co-founder of the fintech firm.

This investment marks Delivery Hero’s first fintech investment in MENA. Delivery Hero, which owns and operates several regional food and grocery delivery companies including Talabat, InstaShop, and Hunger Station, has one of the largest customer bases in the Middle East and Africa (MENA) region.

“We are excited to be investing in tabby as our first FinTech investment in MENA, a strategically important region for Delivery Hero. We see great potential in tabby to drive the industry forward and are proud to be supporting the company on its growth journey,” Mark Venema, senior vice president, strategy at Delivery Hero, said.


Inflation in Saudi Arabia likely to decline in coming months

Inflation in Saudi Arabia likely to decline in coming months
Updated 35 min ago

Inflation in Saudi Arabia likely to decline in coming months

Inflation in Saudi Arabia likely to decline in coming months
  • Credit to private companies will increase, depending on the Saudi economy recovery, says Al-Sudairi

RIYADH: The inflation rate in Saudi Arabia is expected to be 3.2 percent and the rate would decline because of a higher base, Mazen Al-Sudairi, head of research at Al-Rajhi Capital, told Arab News.

The cost of living index of Saudi Arabia remained in the positive trajectory and increased by 6.2 percent year-on-year in June 2021, mainly driven by a rise in value-added tax (VAT) from 5 percent to 15 percent in July 2020, according to Al-Rajhi Capital.

Saudi spending in the local market, especially in the retail, food, and beverages, and health segments continues to support the economy, it added.

Point of sales transactions continued their uptrend, increasing 4.6 percent in June 2021 compared to June of last year, primarily driven by an increase in restaurants and hotels, clothing and footwear, and health segments, Saudi Central Bank (SAMA) data revealed.

Credit to the private sector increased 16.8 percent year-on-year in June, while bank claims on the public sector increased 9.6 percent and the deposits grew by 10.2 percent, the official data showed.

Credit to private companies will increase, depending on the Saudi economy recovery, said Al-Sudairi.

SAMA also pointed out in its latest monthly report that remittances from Saudi nationals increased by 56 percent year-on-year in June 2021, while remittances growth from non-Saudi nationals declined 3.4 percent.

Remittance for Saudis increased due to an increase in travel while for expats the trend remains broadly flat, Al-Sudairi added.

The International Monetary Fund (IMF) said that Saudi Arabia’s economy is recovering well from the pandemic, and the Kingdom opened its doors to vaccinated foreign tourists on Aug.1.


Saudi Arabian youth use less cash as Kingdom pushes for cashless society

Saudi Arabian youth use less cash as Kingdom pushes for cashless society
Updated 04 August 2021

Saudi Arabian youth use less cash as Kingdom pushes for cashless society

Saudi Arabian youth use less cash as Kingdom pushes for cashless society
  • Only 18 percent of Saudis aged between 16 and 22 years use cash
  • Almost half of people 60 and above use cash

RIYADH: Youth in Saudi Arabia are using less cash compared to other age groups, a sign that the Kingdom’s plans to create a cashless society is on course.

Only 18 percent of Saudis aged between 16 and 22 years use cash, while almost half of people who are 60 and above use cash till date, a report by Fintech Saudi showed.

The report also showed that 20 percent of the population in central region of Saudi Arabia, which includes the capital Riyadh, use cash in their everyday transactions, while 37 percent of those living in the western region use paper money in their daily dealings.

However, paper currency is far from total demise even as the overall number of transactions carried out using cash have declined. Fintech Saudi’s survey results showed that around 60 percent of individuals Kingdom-wide still rely on paper money at least once a week and one out of four people in Saudi use cash every day.

Under Saudi Vision 2030, the Kingdom aims to increase the number of non-cash transactions to 70 percent in 2025.

“The COVID-19 outbreak has led to an acceleration in cashless activity with digital payments increasing by 75 percent over the past year, whilst cash withdrawals from ATMs and other payment points have declined by 30 percent over the same period,” the report said.


UAE’s ADNOC sells first cargo of blue ammonia to Japan

UAE’s ADNOC sells first cargo of blue ammonia to Japan
Updated 04 August 2021

UAE’s ADNOC sells first cargo of blue ammonia to Japan

UAE’s ADNOC sells first cargo of blue ammonia to Japan
  • Shipments were sold at an attractive premium to grey ammonia
  • CO2 from the ammonia production process will be captured and transferred to Al Reyadah

ABU DHABI: Abu Dhabi National Oil Company (ADNOC) said it has partnered with Fertiglobe to sell its first cargo of blue ammonia to Itochu in Japan, for use in fertilizer production.

The shipments represent the first production milestone of a planned scale-up of blue ammonia production capabilities in Abu Dhabi, which is expected to include a low-cost debottlenecking program at Fertiglobe’s Fertil site, UAE state news service WAM reported, citing a statement from ADNOC.

They were sold at an attractive premium to grey ammonia, underscoring the favorable economics for blue ammonia as an emerging source of low-carbon energy, it said.

Ammonia is a carrier fuel for hydrogen. A report earlier this year by Dii Desert Energy and Roland Berger said the Gulf region could create a $200 billion green hydrogen industry by 2050. The Gulf benefits from its strategic geographic location between European and Asian markets.

Green hydrogen is created with renewable energy and water, while blue hydrogen uses the traditional Haber-Bosch method but captures the carbon emissions.

CO2 from the ammonia production process will be captured and transferred to Al Reyadah, the first commercial-scale carbon capture plant in the Middle East and the world’s first commercial facility to capture CO2 from the iron and steel industry. The CO2 is subsequently used in ADNOC Onshore’s Rumaitha and Bab fields where it is stored underground. Each year, Al Reyadah captures up to 800,000 tons of CO2 from local UAE steel production.

Fertiglobe, the world’s largest seaborne exporter of nitrogen fertilizers, is a 58:42 joint venture between Dutch-listed chemical producer OCI and ADNOC. In June, Fertiglobe, ADNOC and ADQ said they would partner in a one million metric ton per annum blue ammonia project at TA’ZIZ in Ruwais, subject to regulatory approvals.

In April, it was reported that ADNOC and OCI had hired banks, including Morgan Stanley and Citigroup, for a possible $7 billion IPO of Fertiglobe.

“Today’s announcement builds upon ADNOC’s commitment to expanding the UAE’s position as a regional leader in the production of hydrogen and its carrier fuels, meeting the needs of critical global export markets such as Japan,” said Sultan Ahmed Al Jaber, minister of industry and advanced technology and ADNOC group CEO.

Ammonia can be used as a low-carbon fuel across a wide range of industrial applications, including transportation, power generation, refining and industries, including steel, wastewater treatment, cement and fertilizer production. For Japan, in particular, hydrogen and its carrier fuels, such as blue ammonia, are expected to play an important role in the country’s ongoing industrial decarbonization efforts.