Doing Business with KSA

Hand Book on doing business in KSA

Basic Facts about Saudi Arabia

Geography

Area:
2,150,000 square kilometers

Location:
Southwestern corner of Asia. Occupies most of the Arabian Peninsula.

Climate:
Hot Desert Climate except in Asir Province. Coastal cities subject to high humidity.

Topography:
Mostly sandy desert, no rivers or permanent bodies of water. Highest peak 3,133 meters.

Main Cities:
Riyadh: capital of Saudi Arabia
Jeddah: main seaport and business city in western region
Dammam: main seaport and business city in eastern region
Makkah and Madinah: Islamic holy cities

International Airports:
Riyadh's King Khalid International: 35 km from Riyadh, with hotel, buffet, bank, post office, shops and car hire.

Jeddah's King Abdul Aziz International: 18 km north of Jeddah, with hotel, restaurants, bank, post office, shops, car hire ans special pilgrimage facilities.

Dammam's King Fahd International: 50 km northwest of Dammam, with ultra modern facilities including mosque, cargo terminal, restaurant and duty free shop.

Main Seaports:
Dammam: containers, grain, terminal, ro-ro
Jeddah: bulk cement and grain facilities, containers, ro-ro tankers
Jubail: containers, dry and liquid bulk, tankers
Yanbu: bulk cement, containers
Riyadh: containers dry dock; linked to Dammam by railroad.

Time:
GMT + 3 hours

Population

Total Population
21.4 million (2000)

Annual Growth Rate
3.5 %

Life Expectancy
Males 70 years; Females 74 (1998)

Infant Mortality Rate
22 (1998)

Urban population
85%

Age structure
0-14 43%
15-64 54%
over 65 3%

Ethnic Groups
Arabs: 90%
Afro-Asians: 10%:

Economic Indicators (2000)

Nominal GDP (US$ bn)
168.80

Real GDP Growth %
4.50

GDP per Capita (US$)
7,743

Cost of Living(change%)
-1.0

Exports US $
80 billion

Imports
46 billion

Working Hours and Holidays

Working Week:
Saturday to Wednesday is the working week.

Thursday and Friday are the usual weekly holidays, although most shops remain open on these days.

Working Hours:

Business:
0830 - 1200, 1630 - 1930 in Riyadh;
0900 - 1330, 1630 – 2000 in Jeddah;
0730 - 1200, 1430 - 1730 in Eastern Province
(Closed Thursday afternoon and Friday).

Government
0730 - 1430 (closed Thu, Fri);
0930 - 1430 during Ramadan.
Offices close four times a day for prayer for up to half an hour.

Banking
(Sat-Wed) 0800/0830 - 1200, 1600/1630 - 1900/1930
1000 -1330 during Ramadan.

Shops
0800/0830 - 1200, 1600 - 2100/2200;
Closed four times a day for prayer for up to half an hour.

Weekly Holiday :
Public Sector: All day Thursday and Friday.
Private Sector: Thursday afternoon and all day Friday.

Public Holidays:
Only two official public holidays are observed each year according to the Islamic calender:
Eid al Fitr : 25th Ramadan – 5thShawal
Eid al Adha : 5th – 15th Thul-Hijja

Entry Regulations

All Visitors to Saudi Arabia are required to obtain entry visa from Saudi embassies abroad prior to arrival.

Passports are required and must be valid for at least a period of six month beyond the proposed stay.

Single-entry Visa:
A letter of invitation must accompany visa application from a Saudi sponsor, a visa number and a no objection certificate and fees.

Work Visa:
Visa application must be accompanied by a copy of the signed contract, a letter from the Saudi employer certified by the Saudi Chamber of Commerce indicating the employment block number and date. In addition, the following is also required:

• A certified and notarized copy of the applicant’s university degree, and an official transcript or a certified and notarized copy of the diploma.
• A letter of release if the applicant has previously worked in Saudi Arabia.
• Visa fees
• A police clearance report.
• An Embassy medical form, filled out completely and submitted with three photographs.

Business Visa:
Visa application must be accompanied by:

• An original copy of a letter from a Saudi company, in Arabic, on company letterhead sponsoring the applicant, stamped by a Chamber of Commerce in Saudi Arabia. The letter should include the name of the visa applicant, his/her passport number, company name and address, approximate dates of visit, and the reason for the visit. (Alternatively, the sponsor in the Kingdom can apply directly to the Ministry of Foreign Affairs.)
• A letter from the applicant’s company indicating the name of the Saudi Arabian sponsoring company, the nature of the applicant’s visit, the length of stay, and financial responsibility. The letter must include the corporate stamp or seal.
• Visa fees.

Saudi Market

Saudi Arabia is a country with immense trade and investment potential for the Indian businessmen. It pursues a liberal trade policy based on the concept of Free Trade . Imports and wholesale and retail are in the hands of the Saudi private sector. No price or quantity restrictions apply to importers except for alcoholic beverages and pork products, which are not allowed to be imported. However, it should be noted that the Saudi market is highly competitive and business transactions can take place only on the basis of quality, cost and punctuality in delivery.

Important Regulations for Exports

Only Saudi nationals and companies 100% owned by them may import goods to the Kingdom. Importers are required to be licensed by the Ministry of Commerce and should consult appropriate Ministry about goods or materials to be imported (for example, the Ministry of Agriculture and Water for agricultural products and Ministry of Health for medicines).

Goods can be exported unless they are antiques, regional horses, livestock or subsidised goods and materials, such as food products. Depending on their products, exporters need an industrial or agricultural license, or both.

Customs Duties:

• Most of the consumer products are duty free, e.g., rice, tea, un-roasted coffee, cardamom, barley, corn, livestock and meat (fresh or frozen), etc.
• Customs duties imposed on some commodities for the purpose of the protection of Saudi industries are 20%.
• Import duty on other items is 12% ad valorem on the c.i.f (cost, insurance and freight) value.
• A limited number of items are subject to customs duties calculated on the basis of metric weight or capacity, rather than ad valorem. However, the rates for these items are fairly low.
• Detailed information about Custom duties can be obtained from www.customs.gov.sa

Members of the Arab League who are signatories to the Agreement to Facilitate Trade and Exchange and to organize Transit between the Arab League States are granted special concessions. Imports from the Arab states with which Saudi Arabia has bilateral trade agreements are entitled to further reductions of duty.

Customs Valuations

Customs duty is calculated on the CIF value of imports, which is converted to Saudi riyals at the exchange rates published by SAMA applicable on the date of the declaration. Customs duty is payable in cash or by a certified cheque drawn on a local bank.

Tariffs

To encourage local production , the Government grants tariff protection from competing imports to locally produced, quality goods. Rates can be as high as 20%.

Shipping Documents

The documents required for all commercial shipments to the Kingdom of Saudi Arabia, irrespective of value or mode of transportation, are:

• commercial invoice;
• certificate of origin;
• bill of lading (or airway bill);
• steamship (airlines) company certificate;
• insurance certificate (if goods are insured by the exporter);
• packing list.

Depending on the nature of goods being shipped, or upon certain requests from the Saudi importer or clauses in a contractual document, specific certificates may also be required.

Legalisation of Documents

It is important to note that authentication of these documents is the responsibility of the exporter, who must see that they are certified in the following specified order.

All documents must be :

• Notarised by a Notary Public.
• Sealed and certified by a local Host Country Chamber of Commerce.
• Legalized by one of the Embassies/ Consulates General of Saudi Arabia.

The Saudi Arabian Embassy or Consulate will legalize the respective documents for a specified charge per document/page (original or copy).

Each document should be prepared in an original and a copy. The Chamber/ Embassy/Consulate will retain the copy. The original copy is legalized and returned. All documents (original or copy) should bear the hand written signature of the person issuing the document. Facsimile signatures are not accepted. All documents sent in by mail must enclose a self addressed stamped envelope.

Some tips for Indian Exporters

The following points should be kept in mind while you plan to export to Saudi Arabia:

• Foreign individuals/ firms contemplating business in or wishing to export their products to Saudi Arabia should consider appointing an import agent or local representative in Saudi Arabia. The local agents appointed and the market coverage they provide are extremely important for success in exporting to Saudi Arabia.
• The Commercial Wing of the Embassy can be contacted to find out a representative, distributor, partner or agent in Saudi Arabia. The addresses of Saudi importers of various products can be obtained from the Commercial Wing. Such details can also be obtained directly from anyone of the Saudi Arabian Chambers of Commerce.
• Individual Chambers of Commerce publish trade directories for their members. The Council of Saudi Chambers of Commerce and Industry publishes a comprehensive trade Directory. The directories can be obtained from the respective Chambers.
• Various advertising agencies and newspapers in the Kingdom can be contacted if the product/service need to be advertised. Additionally some of the major Chambers of Commerce and Industries have their own periodicals and may publish the information relating to commercial offers/ advertisements.
• Market should be constantly reviewed for product adaptation and change.
• Exporters should ensure regular supplies as per specifications, at the specified time and place already agreed upon and the stipulated prices.
• Exporters should check with Saudi importers or directly with Saudi Arabian Standards Organization about the precise implementation of Saudi Standards pertaining to their exported products to the Kingdom. For obtaining information about SASO standards, SASO may be contacted at www.saso.gov.sa
• Products to be exported should be properly branded and labelled both in English and Arabic.
• In case of machinery and equipment; after sales service, including warranties, maintenance and the provision of spare parts, should be prompt and efficient.