Category Archives: Latest News

Older posts
Newer posts

KSA Foreign Investment Reforms Boost License Issuance by 400%

Posted on March 3, 2022 - 9:47 am by

During the Invest Saudi Forum at Expo Dubai 2020, Dr. Saad Al-Sharani of the Ministry of Investment delivered positive news of a 400% increase in the issuance of Saudi Arabia (KSA) investment licenses. This dramatic leap was recorded in Q4 of 2021, in comparison with the same quarter in 2020.

By Q4 of 2021, the Ministry of Investment had issued 4,439 new foreign investment licenses alone. This promising surge in interest is thought to be due to economic recovery after the pandemic. While it currently ranks 25th globally, KSA aims to reach the top ten by improving foreign investment laws and fortifying investor protection.

It also plans to raise the contribution of small, medium, and finite enterprises from 20% to 30%, offering them superior economic privileges and effective participation in local markets. The 2030 initiative brings many advantages to foreign investors, who will now benefit from both the investment law reforms and the unprecedented increase in KSA opportunities.

 

The NIS has launched plans to improve the KSA investment environment.

The National Investment Strategy’s (NIS) recent initiatives demonstrated clear aims to boost the Saudi economy significantly. According to Dr. Al-Shahrani, the Kingdom is set to become one of the 15 largest economies worldwide. With approximately 40 new initiatives supporting legislative reforms in the Saudi investment environment, the goal certainly appears to be within reach.

The legislative reforms are designed to bring foreign investments into the region of $100b (SR388 billion) by 2030. The achievement will in turn assist the NIS in reaching and reviewing its annual targets, which are in place to give the necessary support to emerging sectors.

Entertainment, tourism, sports, transport, culture, and education are just a few of the sectors that will benefit from the promising KSA foreign investment reforms. As a result, many more jobs will open, and projections indicate that unemployment will be as low as 7% by 2030.

 

KSA investment regulations received more than 555 reforms.

KSA has big plans for its flourishing economy, and openly welcomes foreign investment in support of this ongoing expansion. As such, investment regulations in Saudi Arabia have been subject to over 555 reforms, all designed to enable flexible, smooth, and prosperous investments for foreign nationals.

The reforms included expediting the process of starting a business, which can now be done in 30 minutes, as opposed to the original 15-day waiting period. Another positive result was that in 2020, the number of SMEs also rose to over 626,000.

As foreign investment in Saudi Arabia is a top priority for the Saudi Government, its regulations and controls now ensure full support of international investors’ rights and investment goals. The aims include boosting market efficiency and function, broadening access, and improving transparency and corporate governance.

As a result, both liquidity and investor security have been enhanced, risks have been mitigated, and pricing is significantly less volatile. Furthermore, market practices are now fully aligned with international standards.

 

The current Saudi foreign investment licensing regulations.

The Ministry promotes investment in the Kingdom of Saudi Arabia, sets the foreign investment regulations, enables investors to enter the Kingdom and issues the required licenses.

Vision 2030 has opened up all areas of investments for foreigners in Saudi Arabia, with the aim to raise foreign direct investments from around 3.8% to 5.7% via the enactment of the new investment laws; it also plans to fully open up foreign ownership.

With the great attention the Kingdom has paid to reforming its investment regulations, the current investment climate in Saudi Arabia is now undeniably welcoming to foreign investors. Those looking to benefit from the country’s recent economic resurgence will now find it beneficial than ever before, however the legal landscape will need to be considered, specifically as navigation of this can becoming overwhelming during the initial investment and incorporation period.

KSA Announces Next Steps in Licensing Process for Khnaiguiyah Mining Site 

Posted on March 6, 2022 - 2:01 pm by

The Ministry of Industry and Mineral Resources (MIM) has announced the next steps in the process of awarding the license for the largest mining site in KSA. Khnaiguiyah, situated in Al Rayn Terrane, spans 350km2 and is part of the Arabian Shield. The site has a 3D geological model and has already been subject to much exploration work, with over 100,000 meters drilled to date. According to the Saudi Geological Survey, with its estimated 26 million tons of zinc and copper, the site’s geological potential is huge. 

Saudi Arabia’s mining sector has an estimated value of $1.3 trillion, and the country has 48 identified minerals, including large quantities of gold, phosphate, and copper. In addition, rare earth metals such as nickel and zinc are also mined in the Kingdom, generally for use in smart devices and computers.  

The KSA mining sector is set to receive high levels of foreign investment over the coming decade, and as such, the government has released further concessions for mining and quarrying to private firms. Saudi Arabia’s national mining champion, Ma’aden, is owned by both the government and private shareholders. As is demonstrated by this rapidly growing company’s international joint ventures, the Kingdom welcomes investment from the private sector. 

Since Saudi’s latest mining law was passed, more than 1,500 licensing requests have been submitted to the government. KSA aims to receive mining sector investments in the region of $170b by the end of the decade, and with rising demand for the metals required for the energy transition, this appears to be an achievable goal. 

Revisions to the Saudi mining investment laws and regulations 

The executive regulations of the Mining Investment Law offer many benefits for both the sector and its investors. A permanent committee will decide upon objections filed by government agencies and applications for allocation of the areas of mining complexes, and there are provisions for an Exploitation License and General-Purpose License in place of the Material Collection License. In addition, the export of mineral ores is subject to further regulation, and control procedures will support investors with licenses. 

There is an increase in licensing procedure efficiency, with all license procedures being made electronic. There is also a more comprehensive violations and penalties regime, with maximum fines of up to SR1m for law violations, and transparency will be increased by publishing licensing records. Data is to be provided for mineralized sites, and precise decision periods are determined. 

KSA has an estimated SR5 trillion in untapped mineral deposits, so revisions were designed to accommodate foreign investors with an interest in the mining sector and the Kingdom’s mineral industry. The revisions support the Vision 2030 reform plans, which aim to boost mining sector contributions to the overall national economy. The revisions were also backed by the Ministry of Energy, Industry and Mineral Resources (MEIMR), which aims to propel the mining sector’s contribution to GDP from $3b to $64b by 2030. 

Benefits to KSA mining workers and local communities 

 The SAR2bn Khnaiguiyah project is predicted to generate 2,000 to 3,000 direct and indirect jobs for mining workers in the region. It will also contribute to the development of neighboring regions and mining projects, employing local people from those regions and boosting numbers of purchases from the local markets. 

It will positively impact the development of communication networks in the areas surrounding the project and make a substantial contribution to the development of Saudi’s zinc and downstream copper industries. 

The Mining Investment Law revisions demonstrate a healthy, modern approach to the KSA mining sector and are likely to develop more mining and exploration programs. The subsequent licensing processes are also extremely supportive toward potential investors in the sector, having been brought in line with industry standards. As a result, KSA is openly welcoming mining companies and investors to take full advantage of the many opportunities its mining sector is offering. 

Saudi Arabia’s Vision 2030 Offers Exceptional Opportunities For French Investors

Posted on March 17, 2022 - 4:13 pm by

Saudi Arabia’s Vision 2030, which was launched by Saudi Crown Prince Mohammed bin Salman in 2016, is the major driver for current investment opportunities presented in the country. In the second quarter of 2021, Foreign Direct Investment in Saudi Arabia reached an impressive $1.4 billion. Through many incentivization programs and regulatory transformations, the government hopes to increase this to an annual figure of $100 billion by 2030.

With Saudi Arabia’s rapid economic recovery in the wake of the global pandemic, French companies and investors have an opportunity to leverage the array of new business and investment opportunities on offer within the Kingdom. However, to engage in business with the Saudi market, French companies will first need to familiarize themselves with the legal and regulatory factors that may affect their business operations in this rapidly transforming nation.

What Is Vision 2030?

The aim of Vision 2030 is to create a more diversified economy that is less reliant on oil revenue. As part of this process, the National Transformation Program seeks to increase non-oil government revenue from SR163 billion to SR1 trillion by 2030.

The government hopes to achieve this goal by the development of public-private partnerships (PPP), encouraging foreign investment in the country, introducing value-added tax (VAT), and privatizing several sectors including transport, education, and healthcare. The vision also includes plans to invest heavily in renewable energy and to develop the nation as a hub of technology and entrepreneurship in the MENA region.

So far, Vision 2030 has already seen significant success, with a string of major international companies, including Siemens and Google, committing to multi-billion dollar investments in the country. Since the program was first launched, the government has pledged over $1 trillion in development schemes. This has led to the creation of over 550,000 new jobs for local Saudis, with a further 1 million expected to materialize before 2030. In addition, foreign investment licenses nearly doubled from 700 in 2018 to 1300 in 2020, demonstrating that there is a keen interest from within the international venture capitalist community to make moves towards Saudi Arabia.

How Can French Business & Venture Capitalists Leverage This Opportunity?

In 2001, the Saudi-French Business Council was set up by the Saudi Arabian Chambers of Commerce & Industry with the aim to further develop business ties between both nations. French investment in Saudi Arabia now stands at $4.37 billion and trade between the two countries has nearly doubled over the past 10 years. French business leaders can build on this positive relationship history and take advantage of the plethora of new opportunities in the Kingdom created by Vision 2030.

The planned expansion of investments in infrastructure, healthcare, education, renewable energy, and tourism throughout the country will undoubtedly create a great number of prospects for French companies and investors across a broad range of sectors. Saudi Arabia has recently unveiled plans to invest over $100 billion to develop its renewable energy infrastructure and solar power capacity. France’s longstanding push towards increasing its use of renewable energy sources makes it a perfect partner for Saudi Arabia’s new infrastructure plans.

In addition to this, Saudi Arabia is positioning itself within the Gulf region as a hub of technological progress and development. However, achieving this status will be no easy feat without the assistance of foreign expertise and investment. French companies and technical experts may find themselves ideally positioned to enter this market given France’s highly developed digital sector.

Legal Considerations for French Businesses Entering The Kingdom

Off the back of the National Transformation Program, there has been a significant lifting of red tape. Local business regulations have been streamlined and simplified, to create a more transparent and agile process. But as with any new business venture, French companies need to be aware of the laws regulating Saudi Arabia’s commercial sector before commencing activities in the region.

Licencing Regulations

Expatriates can now have full ownership of their company based in Saudi Arabia without requiring the involvement of a local business partner. However, they will still need to obtain a MISA Entrepreneurial Licence issued by the Saudi Arabian General Investment Authority before commencing business within the Kingdom. Additionally, they will be required to apply for Commercial Registration and get a certificate from the Chamber of Commerce. For businesses operating in certain sectors, additional licensing may also be required.  With these documents, you will be able to open a bank account and start operating your business within Saudi Arabia.

Saudization (nitiqat) Rules

As a result of the government’s Saudization program, all companies operating within Saudi Arabia are required to employ a certain number of Saudis to maintain their business license. Employers are required to meet these quotas to ensure that the labor market continues to develop within Saudi Arabia rather than simply relying on imported foreign workers. This is particularly pertinent for companies operating in certain sectors such as marketing, where the percentage of Saudi employees must be at least 30% of the total workforce.

Other sectors, such as secretarial, translation, storekeeping, and data entry jobs, are prohibited from employing any non-Saudis. These new regulations will come into place in April of 2022. Any business operating in the Kingdom must adhere strictly to Saudization rules, or they may face penalties.

In addition to employment quotas, Saudi workers are also entitled to a minimum wage appropriate to their industry. This starts at 4000 SAR per month, but it increases to 7000 SAR for certain professionals, such as qualified dental professionals. If your company employs a Saudi national on a part-time basis, then they will only partially count towards your Saudization figures.

Taxation

Saudi nationals and GCC residents in Saudi Arabia are not subject to any form of personal income tax. Businesses owned wholly by Saudis are subject to Zakat, which is a form of Islamic taxation set at a flat rate of 2.5%. However, businesses owned wholly by non-Saudi/GCC nationals will be subject to income tax.

If business ownership is a combination of Saudi and non-Saudi/GCC nationals, then Zakat and income tax will be paid in proportion to ownership. Income tax is set at a flat rate of 20%, but this increases to between 50% and 85% if the income is derived from oil and hydrocarbon production revenue.

In 2018, Saudi Arabia introduced VAT at a standard rate of 5%. However, it has now increased to 15% with an exception for the financial sector.

A Mutually Beneficial Relationship

Vision 2030 has eased investment restrictions and streamlined registration processes for foreigners. This means that there has never been a better time for French investors to start doing business with the Kingdom.

France has always been a world leader in terms of innovation, so they are well-placed to accommodate the needs of Saudi Arabia’s growing technology sector. In the long term, this will be a mutually beneficial relationship for both French businesses and the people of Saudi Arabia.

French companies will have greater access to a market of almost 35 million consumers, where there is a growing middle class seeking innovative and high-quality products and services. As a rapidly developing and youthful nation, Saudi Arabia will benefit from more foreign investment and expertise, while they achieve their national transformation goals.

Unlocking Saudi Arabia with Hammad & Al-Mehdar

Hammad & Al-Mehdar is a new-age law firm bridging traditional and emerging business sectors for private sector companies, family offices and SMEs entering or operating in the Middle East.  We help navigate essential legal and regulatory requirements to grow and succeed in the Middle East, with specialty in the Kingdom of Saudi Arabia given our 40-year track record.  Our firm is forward thinking and has depth of knowledge in business of the past, present and future, and therefore well qualified to support French companies as they evolve their presence into Saudi Arabia and the wider MENA region.  To discuss your business presence and expansion in Saudi Arabia contact Senior Associate, Samy Elsheikh. 

How Technology Is Transforming Saudi Arabia’s Healthcare Industry

Posted on April 13, 2022 - 7:25 am by

The Saudi healthcare market is expected to generate US$464m in 2022, growing at a CAGR of 12.79% until 2025. Due to its young and growing population, it is estimated that Saudi Arabia will require more than 20,000 additional hospital beds by 2035. Innovations in technology and the global pandemic are amongst the key forces driving changes in Saudi Arabia’s healthcare industry at such an unprecedented rate. From patient care to medical research and training, every aspect of healthcare is being affected by technological advances and operational reforms.

Hospital stays are becoming shorter as more procedures can be carried out on an outpatient basis. This is thanks to advances in diagnostic techniques and treatments, as well as the availability of better-quality medical equipment. Over the coming years, it’s expected that healthcare will become increasingly digitised, improving the level of access and convenience for patients.

The Digitisation Of Healthcare

With the pressure of the global pandemic, Saudi’s healthcare industry has been forced to adapt to new ways of working at a pace that would have been unthinkable just a few years ago. The sudden and rapid increase in patient numbers has necessitated a more consolidated and connected approach to care. In response to this need, the Saudi government has begun working on the development of a unified vision of e-health provision across the Kingdom. It’ll enable patients to access streamlined, efficient, and high-quality care regardless of location.

At the heart of this transformation is the digitisation of healthcare. By making use of new and innovative technologies such as AI, big data, and cloud computing, Saudi Arabia’s healthcare system will be able to become more responsive to the needs of patients. What’s more, these tools will help to improve communication between different care providers, leading to better coordination and delivery of care.

New technologies are already being implemented across the Kingdom’s hospitals. AI is being introduced to interpret patient X-rays, taking some pressure off hospital staff. In the near future, Saudi doctors may be able to mine patient healthcare records using big data technology, to assist with diagnosis and the development of treatment plans. Health tech startups are also playing a crucial role in the digitisation of healthcare in Saudi Arabia.

There are currently 150 health tech startups operating within the Kingdom. One of these is Cura — a locally developed application that allows users to receive remote video consultations with doctors across 34 different specialities. Similarly, a new app named Labayh, gives users the ability to connect with a qualified counsellor or psychotherapist quickly and discreetly. These companies are developing innovative solutions that are making a positive impact on the lives of many patients.

Beyond Saudi Arabia’s borders, Neurosurgeons at John Hopkins performed their first augmented reality surgery in June 2021. VR headsets are also being deployed during medical training, to allow students to practice in a virtual environment before moving on to the real thing. This technology could be used to train the next generation of Saudi doctors, possibly in virtual spaces like the metaverse, to meet the Kingdom’s growing demand for qualified physicians.

How The Legal Industry Is Keeping Up With Development

As the healthcare industry evolves, the legal landscape must keep pace. With the wider proliferation of cloud data storage, the Saudi government introduced a new law that prohibits healthcare providers from storing the personal data of any Saudi national outside the Kingdom. The ongoing push towards Saudization also impacts the Healthcare industry. As it currently stands, each hospital must appoint a locally qualified doctor of Saudi nationality as a medical manager for the hospital, with some exceptions granted for hospitals in very rural or remote locations.

Negligence liability is still an area of Saudi law that does not yet have a well-defined framework. Saudi’s lack of legal precedence means that the results of civil cases are often unpredictable. This presents a challenge for both patients and practitioners when it comes to seeking damages for medical negligence. Most cases are resolved on the principle that a contract between two parties constitutes the law between two parties — unless it is in breach of some element of Shari’ah.

The way technology is impacting the healthcare industry is set to continue at an ever-increasing pace. As more countries around the world begin to adopt similar approaches, the potential for further improvement and efficiency is huge. For Saudi Arabia, the next few years will be crucial in shaping the country’s healthcare landscape for the future.

Renewable Energy In KSA

Posted on May 8, 2022 - 6:55 am by

The shift to renewable energy is essential for businesses in Saudi Arabia, as it provides a reliable, sustainable energy source that will help to support economic growth. In recent years, KSA has made major commitments to increase its use of renewable energy sources, including solar and wind power. These efforts are supported by new regulations and incentives that promote the adoption of clean technologies and sustainability practices across various sectors.

For businesses to succeed in KSA and compete in the global marketplace, they must consider renewables and cleantech as key factors in their overall business strategy.

Saudi Arabia’s Push Towards A Greener Future

Renewable energy has become increasingly important in KSA over the past few years as the country works to transition away from its reliance on fossil fuels. This transition has been supported by the Saudi Vision 2030 initiative, which aims to diversify the country’s economy and boost private sector growth. One of the primary focus areas of this plan is environmental protection, particularly through increased investment in clean energy sources.

This year, the government awarded two solar photovoltaic (PV) projects with an estimated value of $453m as part of a power-purchase agreement (PPA) that will increase the nation’s production capacity to over 1GW. This will help to align the country with its aim to derive 50% of its domestic electricity from renewable sources by 2030. The government hopes that its investment in renewable energy innovation will attract $20 billion in industry investments over the course of the next ten years.

The global energy trade is also expected to play an important role in the growth of renewable energy in KSA. As the world’s largest oil exporter, Saudi Arabia has historically been a global leader in energy production. However, as part of the worldwide shift towards greener energy sources, Saudi Arabia will be ideally positioned to become a leading exporter of renewable energy technologies with a particular emphasis on solar power. This would provide a major boost to the country’s economy and create new opportunities for businesses looking to invest in clean technologies.

As a result of these efforts, businesses in KSA are increasingly turning to renewable energy as a key part of their overall strategy. This is supported by the growing demand for clean technologies across various industries, including manufacturing, construction, and transportation. The adoption of such technologies can help businesses become more efficient and profitable, while also reducing their environmental impact.

New Regulations Impacting The Renewable Sector

This commitment to renewable energy is also reflected in new regulations and incentives that have been launched in recent years to encourage the expansion of the renewable energy sector. The Saudi government plans to introduce a new form of industrial licences within the renewable energy sector, that will provide companies with a competitive advantage in the marketplace. The Ministry of Energy also announced that they will offer incentives to energy project developers that will allow them to avail of certain benefits and custom exemptions.

Additionally, the Saudi Green Building Forum was launched in 2017 to promote sustainable building practices and support the development of green infrastructure. These initiatives are helping to create a more supportive environment for businesses that are looking to adopt clean technologies and sustainability practices.

Overall, KSA’s push towards a greener future is creating significant opportunities for businesses in the renewable energy sector. By embracing renewable technologies and sustainability practices, companies can not only reduce their carbon footprint but also gain a competitive advantage in a rapidly changing global marketplace. As such, it is essential for businesses to stay up to date on the latest developments in the renewable energy sector in order to make informed decisions about their future growth.

 

Corporate Governance & The Family Business

Posted on May 19, 2022 - 1:37 pm by

Family businesses are the backbone of the Saudi Arabian economy, accounting for 25% of all economic activity in the Kingdom. However, as the economic landscape becomes increasingly complex and globalized, many family businesses are struggling to keep up with changing times. One of the biggest challenges they face is ensuring good corporate governance.

Corporate governance is the system of rules, practices, and processes by which a company is controlled and directed. It includes the mechanisms through which a company’s affairs are conducted and managed, and the relationships between different stakeholders such as shareholders, directors, management, and employees. Keeping this system running smoothly is not always an easy task, but it is crucial for the long-term success of any family business.

Why Corporate Governance Is Essential To The Family Business

Good corporate governance is essential for any company, but it is especially important for family businesses. This is because family businesses are often more complex than other types of businesses. There are many different interests and opinions within a family, which can make decision-making difficult.

Without good corporate governance, family businesses can quickly become dysfunctional. This can lead to conflict between family members, which can damage the business and its reputation. It can also lead to financial problems caused by the business failing to make sound decisions about investment and expenditure. For all these reasons, good corporate governance is essential for family businesses to thrive in today’s ever-changing business world.

Aligning Governance With The Times

As Saudi Arabia continues to evolve, so too must the governance of its family businesses.  Governance must align with the current business environment, which is fast-paced and constantly evolving. The old ways of doing things no longer work in today’s climate, and family businesses must adapt to survive.

Saudi family-owned businesses often tend to be set in their ways when it comes to their internal governance structures and processes. This can be a hindrance to their growth and development. In many cases, succession planning, and transparency are not given the attention they deserve, which leads to problems passing on the business to the next generation.

Many internal processes such as human resource planning, tend to be informal and ad-hoc. This can lead to inefficiency and poor record keeping. And as we move into an era that is quickly being defined by the ever-growing presence of risk and crisis, family-owned businesses must have the internal governance structures in place to allow them to tackle these challenges effectively.

With the Saudi Arabian government’s aim to attract more foreign investment, it will also become increasingly important for the Kingdom to uphold a more regulated and compliant business environment. As a result, new laws and regulations are being introduced, and family businesses will be required to comply. And as more businesses choose to go public, there is a heightened need for transparency and accountability. If good corporate governance practices are implemented effectively, family businesses can open the doors to new sources of capital.

The Kingdom of Saudi Arabia continues to evolve, and so too must the governance of its family businesses. By aligning governance with the current business environment, family businesses can make the right decisions and avoid unnecessary conflict. This will help them to protect their reputation and help establish long-term success.

The Push For Alternative Energy In The GCC

Posted on September 29, 2022 - 3:07 pm by

The worldwide energy industry is headed towards an extraordinary excursion and the Gulf Cooperation Council (“GCC”)  is pushing to be a pioneer in this rising market. The United Arab Emirates (“UAE”) and the Kingdom of Saudi Arabia (the “Kingdom” or “KSA”) are two of the central figures in the movement toward utilising more sustainable and environmentally friendly energy sources, and both have made large investments in research and development for these fields.

From NEOM to ADNOC, the UAE and Saudi Arabia are working to establish themselves as leaders in the global energy market, and it is clear that alternative energy will play a major role in their plans. These two nations have access to the necessary technical expertise and financial resources to drive a more clean-energy strategic focus in the future.

 

GCC Clean Energy Drive Requires $50b for Grid-related Speculations

The GCC would require approximately $50 billion by 2026 to boost the proposed increments from renewables, as highlighted in a recent white paper, ‘Clean Energy — Going Beyond the Grid’.

Improvements in sustainable power innovation are one of the critical mainstays of the UAE’s Operation 300bn and Saudi Arabia’s Made in Saudi Initiative, which are both national plans that envision improving the contribution of renewables in the energy blend of their nations.

The UAE National Energy Plan 2050 calls for clean energy to achieve 50% of the country’s complete energy blend by 2050. This would lower the carbon footprint by 70%, requiring an investment of $190 billion along the way.

Two of the biggest single-site solar plants in the world are currently being created in Abu Dhabi and Dubai. Both will add to the developing UAE green economy while advancing the nation’s status as a global renewable energy player.

Furthermore, Saudi Arabia is focused on deriving 50% of its energy from renewables by 2030 and the Kingdom also intends to spend up to $50 billion on this sector by 2023. Under the normal expansion in grid-related ventures, the transmission and circulation gear industry are supposed to top $312.8 billion universally by 2026.

 

Minerals Projects

Inside the unique energy sector, organisations with a history of upgrading power age and energy stockpiling arrangements are assuming a significant part in empowering the practical creation of minerals universally. This is subsequently assisting the world to decarbonize more quickly.

Perhaps the best illustration of that, is in Saudi Arabia, where at the height of the COVID-19 pandemic in 2020, consent was given to supply a 45 MW power plant to the biggest gold venture for the Saudi Arabian Mining Company.

The Mansourah-Massarah plant uses a crossover of motor innovation and solar power, and Finnish energy company Wärtsilä has the mandate to introduce six power motors — working in close coordination with project worker for hire, Larsen, and Toubro and EPC project worker, Outotec.

The task is important for Saudi Arabia’s Vision 2030, which plans to expand revenue sources for the Saudi economy by moving away from oil dependency and increasing the mining of under-exploited assets such as gold.

 

Changes to the Legal and Regulatory Framework Governing Clean Energy

The GCC’s ambitious plans for alternative energy will have major legal implications, both in terms of the regulatory frameworks that need to be put in place and the contracts that need to be negotiated.

Accordingly, a coordinated approach to alternative energy may need to be taken by the GCC and the applicable GCC national laws and regulations may need to be further developed and enhanced in order to become a suitable regional market for alternative energy.

 

Saudi Arabia

The Ministry of Energy (“MoE”) has introduced the National Renewable Energy Program (“NREP”), which aims to diversify the Kingdom’s energy resources. Several incentives were issued to promote investments into the renewable energy projects under the NREP, which include direct foreign ownership and land incentives that include subsidized leases for projects. This will further entice foreign entities to invest in the Kingdom’s renewable energy schemes, while also resulting in the formation of innovative technologies within the renewable energy sector that include solar photovoltaic technologies, waste to energy technologies, wind energy technologies and concentrated solar power technologies. All such renewable technologies have been identified and developed under the NREP to further diversify the Kingdom’s local energy supply and to further encourage foreign investment along with public-private participation within the energy industry.

To that end, MoE, in collaboration with the Ministry of Industry and Mineral Resources and Non-oil Revenue Development Center, introduced further initiatives that allow companies whose activities involve renewable energy and solar power plants to apply for and obtain industrial licenses. These initiatives aim to support the renewable energy industry and economic growth while enhancing the Kingdom’s capabilities regarding renewable energy, and to achieve an optimum energy usage in electrical productions. Furthermore, the Gulf Cooperation Council (“GCC”) grants industrial projects with benefits and facilities to promote the industrial sector and to attract investments to countries in the GCC under the scope of the Common Industrial Regulatory Law of the GCC Countries (the “Law”). This Law grants companies’ certain exemptions from customs duties in relation to manufacturing and industrial projects. Such exemptions are aimed to enhance investments and increase production and adoption of renewable energy in the KSA.

In addition to having solar power plants, KSA’s 2030 target includes the usage of the aforementioned Solar Photovoltaic (“PV”) Systems. The Water & Electricity Regulatory Authority (“WERA”) issued a regulatory framework for the use of Small-Scale Solar PV Systems. The framework aims to promote the use of Small-Scale Solar PV Systems and ensure efficient and safe production, installation, operation, and maintenance of these systems within the Kingdom. Under the regulatory framework, customers may build/possess and operate on a premises in which a Small-Scale Solar PV System may be installed. This Solar PV System helps convert solar energy into electricity and gives a more efficient way of obtaining electricity using renewable energy, thus, reducing the usage of oil and instead using a renewable energy source that does not emit carbon.

Moreover, the Kingdom has also introduced the Saudi Green Initiative (“SGI”) which works to combat climate change as its main goal while also aiming to offer significant investment opportunities for local and foreign investors in the energy sector in KSA. The SGI’s programs which include environmental protection, energy transformation and sustainability, aims to reduce carbon emissions and increase domestic usage of renewable energy. To that end, the kingdom developed cost-effective technologies for efficient carbon management, with the aim of eliminating gas combustion by 2030.

 

The UAE

The UAE has taken a leading role in the development of renewable energy in the GCC, and currently has the largest installed capacity of solar PV in the region.

The objective of the Dubai Clean Energy Strategy 2050 is for clean energy to contribute 25% of Dubai’s overall energy output by 2030 and 75 per cent by 2060. To achieve this, the Dubai Electricity and Water Authority (“DEWA”) has launched a number of initiatives, including the Shams 1 solar-thermal plant (100MW) and the Mohammed bin Rashid Al Maktoum Solar Park, which represents a total investment of AED 1.2 billion and is the largest single-site solar park in the world.

In addition to this, the Dubai Green Fund has been established to provide financing for renewable energy projects. The Fund is open to both local and international investors and offers a number of benefits, including tax exemptions and visa facilitation.

In the realm of transportation, the Dubai Supreme Council of Energy has initiated free charging, parking, and registration fees. The Dubai Autonomous Transportation Strategy also aims to have 25% of all trips made using driverless vehicles by 2030.

 

The Future

Ultimately, the GCC is at the forefront of the global energy transition, and its ambitious plans for alternative energy will have major legal implications.

In order to meet its renewable energy targets, the GCC will need to make significant changes to its current regulatory frameworks and invest in developing the infrastructure needed to support large-scale renewable energy projects.

The GCC is also likely to face challenges in relation to water availability and land use, as well as the need to develop a skilled workforce for the renewable energy sector.

Despite these challenges, the GCC is well placed to become a global leader in renewable energy, and its commitment to this transition will have far-reaching legal implications.

 

Ebaa Tounesi

Associate – Corporate & Commercial Practice

Emerging Trends of Saudi Arabia’s Sporting Industry

Posted on October 12, 2022 - 12:20 pm by

Entertainment and sporting events have not always been the first things that come to mind in relation to Saudi Arabia. However, in recent years the country has made great strides in developing its entertainment industry, with a particular focus on sports. This has been driven by several factors, including the country’s large and young population, and the government’s desire to build a more diverse and modern economy.

 

While the sporting industry in Saudi Arabia is still in its early stages of development, it is currently growing at a rapid pace. This is evident in the increasing number of sports facilities and events being held in the country and the growing number of Saudis participating in sports. In addition, the Saudi government has been investing heavily in the sporting industry, both in terms of infrastructure and supporting local athletes.

 

Key Developments in Saudi Arabia’s Sporting Sector

The Saudi government has taken a keen interest in the role of sports and sporting events in the country’s development. In line with its Vision 2030 reform agenda, the government has set out to increase participation in sports and improve the quality of sporting facilities and events within the Kingdom. This has led to many developments within Saudi Arabia’s sporting sector, including the ones outlined below.

 

Increase in Major Sporting Events

One of the most notable developments in Saudi Arabia’s sporting industry has been the increase in major sporting events being held in the country. Over the past five years, the country has hosted several high-profile sporting events, including the Saudi Arabian Grand Prix in 2021, the Joshua v Ruiz II – “Clash on the Dunes” in 2018 and the Saudi Cup international horse racing event in 2020. Saudi Arabia has now put forward its bid to host the FIFA World Cup in 2030.

 

The Introduction of ESports

Esports — competitive electronic gaming — is not recognised by many countries as a sport. This means it can be difficult for professional gamers to find an appropriate venue to compete at an international level. However, in recent years, Saudi Arabia has begun to nurture its own esports scene, which has included the establishment of the Saudi Esports Federation in 2017. In the summer of this year, the federation launched the Gamer8 Festival, which was a highly successful 8-week esports event held across Riyadh.

 

The Growth of Women’s Sport

The Saudi government has taken a keen interest in increasing women’s participation in sports over the last decade. In 2012, the nation sent its first female athletes to the Olympic games and from 2017 onwards, women have been allowed to compete in sports tournaments held in the country. 2020 saw the launch of the Saudi Women’s Premier League, ushering in a new era for women’s football in the Kingdom.

 

The Rise of Sports Tourism

The Saudi government is also looking to develop the country’s sports tourism industry. In 2018, the Kingdom hosted the first season of the World Boxing Super Series at King Abdullah Sports City in Jeddah, which attracted boxing fans from all over the world. The country is also set to host the Spanish Super Cup semi-final in 2023 and the Formula E Diriyah E-Prix early next year. These types of events are not only a boost for the sporting industry, but also for the country’s economy as a whole.

 

Savvy Games Group Strategy

In September 2022, Saudi Crown Prince Mohammed bin Salman announced the government’s goal of becoming a global hub of games and esports, with the launch of the Savvy Games Group Strategy. This ambitious plan includes a focus on developing the local games industry, as well as supporting Saudi Arabian gamers to compete at an international level. As part of the plan, the government will establish 250 games companies in the country by 2030, creating over 39,000 jobs. In total, government investment in this strategy is expected to reach SAR 142 billion by 2030.

 

Next World Event

The Saudi Esports Federation just hosted the inaugural Next World Forum in September 2022. It was a two-day event that saw a number of prominent Esports industry speakers gather to discuss the future of the sector. Among them were Grant Johnson, the chairman and CEO of Canada’s Esports Entertainment Group and Chester King, the vice president of the Global Esports Federation. The forum was a huge success, with over 1,000 people in attendance from across the globe.

 

What Does the Future Hold?

The sporting industry in Saudi Arabia is still in its early stages of development. However, the sector is growing at a rapid pace and the government is fully supportive of its growth. This is evident in the many developments that have taken place in recent years, including the increase in major sporting events, the arrival of esports and the active promotion of women as both sports spectators and competitors.

 

In addition to this, the Saudi government is keen to develop the country’s sports tourism industry as part of its move to diversify the nation’s economic activity. With the government’s continued support, it is likely that the sector will continue to grow in popularity and size, welcoming a new era of sports in Saudi Arabia.

Market View: Egypt

Posted on October 19, 2022 - 9:01 am by

Egypt’s economy is one of the most diversified in the Middle East and North Africa. The country’s strategic location, rich natural resources, and large population have made it a regional hub for trade and investment.

Egypt’s economy has been growing at around 3-5% per year since 2017 and is expected to grow by around 5.5% by the end of 2022. This growth has been driven by several factors, including strong foreign direct investment inflows, positive economic reforms, and robust domestic consumption.

Exploring Egypt’s Economic Opportunities

Egypt offers numerous advantages for businesses looking to invest in the country. For starters, Egypt’s population of over 100 million provides a large potential market for businesses. Additionally, the country’s geographic location also provides an excellent potential to develop the region as a hub for trade and investment.

Young Population

Egypt has a young and rapidly growing population. Over 60% of the population is under the age of 30, making it an attractive market for consumer-oriented businesses.

Strategic Location

Egypt is located at the crossroads of Africa, the Middle East, and Europe. This makes it an excellent location for businesses looking to tap into regional markets across all three continents.

Rich Natural Resources

Egypt is home to several valuable natural resources, including oil, gas, and minerals. These resources provide a great source of revenue for the government and offer opportunities for businesses in the mining and energy sectors.

Egypt’s Most Well-Developed Sectors

Egypt has many thriving industries, which offer opportunities for businesses looking to invest in the country and local businesses looking to expand their operations.

Agriculture

Egypt is a major producer of agricultural commodities, such as wheat, rice, and cotton. The country’s large agricultural sector provides the largest portion of employment in the nation, representing 21% of the entire workforce.

Manufacturing

Egypt has a large manufacturing sector, which accounts for around 15% of its total GDP. The manufacturing sector is dominated by the textile and food processing industries.

Tourism

Egypt is a major tourist destination, with around 13 million tourists visiting the country in the year prior to the pandemic. Tourism accounts for around 12% of the nation’s total GDP and employs around 2.2 million people.

Oil and Gas

Egypt is a major producer of oil and gas. The country’s oil reserves are estimated at around 4.4 billion barrels, while its gas reserves are estimated at around 77 million cubic feet.

Egypt’s Trade Relationship with Saudi Arabia

Egypt is a major trading partner of Saudi Arabia and has been so for a few decades. In 1989, the two countries signed a trade agreement, which was followed by several other agreements in the 1990s. The two countries continue to have strong economic ties to this day and are both members of the Arab League and the Organization of Islamic Cooperation.

Inbound Trade

Egypt imports a significant amount of Saudi Arabian products, with the number one being crude petroleum. This exchange was worth USD$1.63 billion in 2020. Saudi exports to Egypt continue to grow each year and have increased by 10.1% in total over the past two and a half decades.

Outbound Trade

Egypt also exports a significant number of products to Saudi Arabia. Refined petroleum is the number one export, representing USD$3.88 million in 2020. In total, Egypt exported USD$2.8 billion worth of products to Saudi Arabia in the same year.

Investment

Saudi Arabia is a major investor in Egypt. This year, Saudi Arabia and Egypt signed 14 agreements representing USD$7.7 billion worth of investment. The majority of these deals were signed in relation to renewable energy, fintech, and petroleum-related industries. Saudi Arabia remains Egypt’s largest source of foreign investment and continues to contribute a hefty US$10 billion to the Egyptian economy each year.

Egypt – An Economy on the Rise

The Egyptian economy is growing rapidly, driven by reforms and strong domestic demand. The country has a diversified economy with a strong focus on sectors such as agriculture, manufacturing, tourism, and oil and gas.

There are also some rapidly emerging industries, which have enjoyed recent foreign investment, such as the renewable energy sector and the fintech industry. The Egyptian government has made it easier to start and operate businesses and has worked to attract foreign investment. These reforms have helped to improve the business environment and spur economic growth.

Changes to Saudi’s legal Framework Since COVID-19

Posted on October 19, 2022 - 9:06 am by

Saudi’s legal system is based on the principles of Sharia law and has remained largely unchanged for decades. However, in recent years the government has modernised the system by introducing online court services and other technological advances. There have also been a series of legal reforms seeking to bring the commercial courts closer to international best practice.

The COVID-19 pandemic has resulted in a further acceleration of these changes, with the Saudi government taking steps to digitise the court system and make it more accessible to the public. In this article, we will explore the changes that have taken place, why they were introduced and how they are helping to modernise the Saudi legal system.

Recent Reforms to the Legal System

COVID-19 has acted as a catalyst for change in many areas of life, and one of those is the legal system. However, even prior to the pandemic, the Saudi government was already taking steps to modernise the system and facilitate a more attractive commercial environment for international investors. Here are some of the key reforms that have been introduced in recent years.

Licencing for Foreign Law Firms

In 2022, the Saudi government issued a formal licensing regime for foreign law firms to operate in the Kingdom. This is a significant development, as it officially opens up the Saudi legal market to international firms for the first time. It is also a reflection of the government’s commitment to attracting foreign investment and talent and providing a level playing field for all businesses operating in the Kingdom.

In order to apply for a licence, foreign law firms must have two partners that reside within the Kingdom, no more than 30% of their fee revenue must originate from out KSA, and no work related to Saudi law may be passed on to an external office.

Increase in Female Legal Professors

There has been a significant increase in the number of female legal professors in Saudi Arabia in recent years. This is part of a broader government initiative to encourage women to participate more fully in the workforce and give them equal opportunities to succeed.

Over a decade ago, there were no licensed Saudi female lawyers, and in 2022, there are now over 1,000. Although female lawyers may still be a minority, this figure is expected to grow steadily as more women choose law as a career.

Electronic Legal Services

One of the most significant changes has been the introduction of an online court system, which has modernised the way in which cases are heard and processed. This has resulted in a more efficient and effective system, with faster turnaround times for cases.

It is now possible to file legal documents electronically, submit evidence online, and even attend court hearings via video link. This has made the system more accessible for litigants, as they no longer need to physically attend court in all cases.

Laws for the 21st Century

With the nation’s digital transformation in full swing, it’s become necessary to introduce laws that govern new technologies and business models. In recent years, the Saudi government has enacted a number of laws relating to e-commerce, data protection, and cybercrime.

These laws are designed to encourage innovation and investment, while also ensuring that consumers and businesses are protected from harm. Influencers have also been regulated, with a new law introduced this year that requires anyone generating an income through social media to apply for a licence.

Looking to the Future

The Saudi legal system is continuing to evolve, and the pace of change is likely to accelerate in the coming years. This is positive news for businesses operating in the Kingdom, as it creates a more predictable and transparent regulatory environment.

It is also encouraging to see the government taking steps to increase female participation in the legal profession, as this can only lead to a more balanced and effective system in the long-term. With the right reforms in place, the Saudi legal landscape is well-positioned to meet the challenges of the 21st century.

Older posts
Newer posts