Cabinet OKs 100% foreign ownership of companies in retail sector

JEDDAH: The Saudi Council of Ministers has approved rules opening the kingdom’s retail sector to greater foreign investment as part of wide-ranging economic reforms.
In its weekly session chaired by Custodian of the Two Holy Mosques King Salman at Al-Salam Palace in Jeddah on Monday, the cabinet agreed to allow 100 percent foreign ownership of companies in the wholesale and retail sectors.
“The aim is to encourage investment in the country, as part of plans to create jobs for citizens under Vision 2030,” the Saudi Press Agency (SPA) said in a report on Tuesday, quoting Essam bin Saad bin Saeed, acting minister of culture and information.
The report added that the decision is in line with the Vision 2030 plan to wean the kingdom off oil.
The previous foreign investment limit was up to 75 percent.
Crude oil has dropped in price by about half since 2014 but is still Saudi Arabia’s biggest revenue source.
Vision 2030 and the National Transformation Program (NTP), which sets targets for implementing it, seek to boost non-oil revenues and employ more Saudis.
As part of the effort, Vision 2030 talks of “attracting both regional and international retail investors and... easing restrictions on ownership and foreign investment.”
The plan calls for an additional one million Saudi jobs by 2020 in a growing retail sector, while increasing the relatively low proportion of e-commerce.
Cabinet also approved rules for implementing a 2.5 percent tax on undeveloped urban land.
Revenue will go to the ministry of housing which, under the NTP, wants 52 percent of Saudis to own their own homes by 2020.
The current home ownership level is 47 percent.
The application of fees, to be collected by the Housing Ministry, would be “in stages” outlined as: On undeveloped land of 10,000 square meters and more; developed land belonging to one owner of no more than 10,000 square meters; and developed land belonging to one owner of no more than 5,000 square meters. The ministry would be responsible for penalyzing tax evaders.
At an NTP press conference last week in Jeddah, Housing Minister Majed Al-Hogail said he wants both local and foreign investors to develop the housing sector, which has traditionally depended on government spending.

Other actions taken
During Monday’s meeting, the Cabinet was briefed on plans prepared by various government and private agencies to serve those performing Umrah and visiting the Prophet’s Mosque, which outlines the commitment of the leadership to provide top quality services.
Essam bin Saad said the Cabinet also hailed the announcement of the National Transformation Program 2020, part of Vision 2030, for outlining concrete plans to achieve sustainable economic growth in the country.
The Cabinet announced several decisions, including tasking the General Authority of Civil Aviation to assist in forming a board of directors for Saudi Arabian Airlines, with a president appointed by the prime minister.
The board should consist of four people representing the government and five from the private sector for a period of three years, renewable once. The chairman of the board has to be appointed by the head of the Council for Economic and Development Affairs.
The Cabinet decided to approve the protocol amending the Marrakesh Agreement on the establishment of the World Trade Organization, and authorized the Ministry of Foreign Affairs to sign the document.
The Cabinet further authorized the Ministry of Labor and Social Development to sign a draft executive cooperation pact with Jordan, under the auspices of the Saudi-Jordanian Joint Committee.
In another decision, the Cabinet approved King Saud University’s signing of a draft memorandum of academic cooperation with Moscow State University in Russia; and decided that the minister of transport shall be the chairman of the Saudi Railways Organization, and that the company shall be the owner of the country’s rail infrastructure.
The Cabinet was briefed on the proposal from Finland to reactivate the Saudi-Finnish Joint Committee, and ordered that the European country be informed that it agreed to this plan for greater economic and technical cooperation. The committee would be overseen on the Saudi side by the Ministry of Commerce and Investment.

New appointments
The Cabinet approved the following appointments: Mughaddi bin Misfer bin Mughaddi Al-Wadaai as director general of the office of the governor of Asir Region, rank 14; Abdulrahman bin Abdullah bin Hamad Alhanitah as director general of a department at the Ministry of Defense, rank 14; Badr bin Abdul Mohsen bin Abdullah Al-Mqahm as minister plenipotentiary at the Ministry of Foreign Affairs; and Khalid bin Nasser bin Saleh Al-Aqeel as planning consultant engineer at the municipality of the Eastern Region, rank 14.