Planning on opening a business in Saudi? Think again.

The Middle East has been a hotspot for new business opportunities and Saudi Arabia was not going to miss out on the economic success of its Gulf neighbors. Saudi has been working round the clock to build up it massive economic city  near King Khaled Airport and is easing its regulations for Saudis and foreigners alike to obtain business licenses. I should mention this is a huge step forward, it used to be that non-Saudis had to have a Saudi partner to open any business. No need to mention that system did not work well and kept investors at a distance.

So what kind of market does Saudi have? Well, it seems no matter how many clothing stores or restaurants open in this country people are willing to spend on something new. Not only that, but the shear demand for  products not available in the Kingdom opens the way to new services and business opportunities.  This no doubt leads to more spending which leads to economic growth in all sectors. However, I am not here to teach economics. I barely got through macro-economics in college.

Instead I will share an experience. In light of the current rule changes to obtain a business license, a few friends and I thought this would be a golden opportunity to launch a project we had in mind for some time (follow the blog and you will know soon enough ) Back in the day, to obtain a license you had to be Saudi and apply at the Ministry of Commerce. Now, Saudi established SAGIA (Saudi Arabian General Investment Authority) which is your one stop online resource. The fact that there is even a working website is mind blowing. Unfortunately, the english was vague or maybe I did not understand the business language.

A copy of the participating enterprise commercial registration attested by the concerned authorities and Saudi Embassy

So we decided to visit SAGIA to inquire about the details. As I approached the gate, a security man stopped and asked for my ID. As he took a look at it, he let everyone else (Saudi) pass right through. As I watched in amusement (I have grown used to things like this), he told me I am not allowed to enter since I am not Saudi?? Dumbfounded, I took the guard for what he is and assumed he did not know better. After a little bartering, he allowed one of us to enter to ask our questions. After some time, our friend emerged with a list of steps for foreigners. Most of it is the typical checklist to obtain a license in any country. However, I quickly realized that the list was targeted to 1. big corporations outside the Kingdom and 2. made no clear instructions for foreigners living in the Kingdom. For example, since I am American, I would have to return home register my company there and pay taxes on a company that will be based and operated solely in the Kingdom?? Does that make any logic to you?  Me neither!

Ironically we resorted to having a Saudi friend sponsor us, since it was the simplest method of obtaining a license. The second time we visited SAGIA, we assumed having a Saudi on our team that we would have no problems entering. Nope, we (the foreigners) were rejected entrance again. This got me thinking, how in the world do you want foreign investors to invest in this country when you deny them entrance into the registation center?? Talk about a failed policy.

I hope this kind of discrimination is resolved before the economic city is completed, because this will only hurt the image of the Kingdom and its economic growth.

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