Saudi hospitality sector unveiled.

Hi Saudi hospitality sector worth $18.1bn by 2016;

A rise in the number of pilgrims visiting the Kingdom for Hajj and Umrah, are boosting domestic tourism growth, with Saudi residents making 22.5 million overnight trips per annum. Tourism receipts for Hajj and Umrah currently account for around 3% of GDP and, according to tourism officials, the country gained a reported $16.5bn from tourism in 2012, representing a 10% increase on the previous year.

The largest hospitality market in the GCC, Saudi Arabia also accounts for the bulk of international tourist arrivals, at 46% according to an October 2012 GCC Hospitality Industry Report from Alpen Capital, representing a 50% year-on-year increase against 2011 figures.

"The Kingdom is investing heavily in it's infrastructure as expansion plans for the new $7bn Jeddah airport project move ahead, with the airport projecting annual passenger volume of up to 80 million passengers within the next two decades," said Mark Walsh, Portfolio Director, Reed Travel Exhibitions, organizer of Arabian Travel Market.

The Red Sea port of Jeddah is the gateway to Makkah and Medina, a favored destination for domestic tourism in the summer, as well as a commercial trading hub for the west coast of Saudi Arabia.

In addition, Riyadh the capital city and seat of the government, is also experiencing increased demand from business travelers. Saudi government investment into key infrastructure projects including airport expansion, railways and roads, is pegged at around $80bn between now and 2022, with investment into major tourism initiatives forecast to grow at a CAGR of 6.9%.

According to the Alpen report, tourist arrivals are expected to grow at a CAGR of 4.0% between 2012 and 2022, driven by strong growth across all sectors, with occupancies set to jump from 67.5% in 2011 to 74.2% by 2016 and a US$30 increases in ADR to US$258.4.

"In tandem demand for hotel rooms means that aggressive development and expansion plans for a number of major international hotel groups is also on the short-term agenda. InterContinental Hotels Group has said that Saudi Arabia is one of the markets representing the most opportunity for its Middle East business to grow in 2013, with two new properties set to open in Riyadh this year, and a total of eight hotels by 2018," said Walsh.

Hotel room supply in the Kingdom is expected to increase at a CAGR of 1.5% between 2011 and 2016, increasing from 243,117 rooms in 2011 to 262,049 in 2016, with 69 properties currently in the planning or construction phase.

"The tourism sector is now the country's second largest industry, with around 8% of total jobs, and industry growth presents a huge opportunity for job creation in the local market, with Takamul [an SCTA affiliate] organizing a number of job fairs around the country and working hand in hand with tourism companies to attract young Saudis looking to embark on a career in hospitality," added Walsh.

Held under the patronage of His Highness Sheikh Mohammed Bin Rashid Al Maktoum, Vice President and Prime Minister of the UAE, Ruler of Dubai and set to celebrate its 20th anniversary, the show has grown to become the largest showcase of its kind in the region and one of the biggest in the world.

Held under the patronage of His Highness Sheikh Mohammed Bin Rashid Al Maktoum, Vice President and Prime Minister of the UAE, Ruler of Dubai and set to celebrate its 20th anniversary, the show has grown to become the largest showcase of its kind in the region and one of the biggest in the world.

New to the 2013 event, ATM is launching the Digital and Technology Day focusing on online travel developments and showcasing headline speakers from across the industry. 

Taking place again this year is the New Frontiers Award, which was created to recognise outstanding contributions to tourism development in the face of overwhelming adversity. 

Industry Careers Day will wrap up the week providing the opportunity for visitors looking to make a career move to meet with the exhibitors' HR contacts looking for their next recruit.

Hi MEED’s Saudi Arabian Energy EPC Projects Conference!.

Hi MEED’s Saudi Arabian Energy EPC Projects Conference!.

EED’s Saudi Arabian Energy EPC Projects Conference is an event designed to provide a platform for the EPC community who service the projects market of Saudi Arabia. The event will focus on the major new project opportunities for the EPC market in the oil, gas, petrochemicals, industrial, electricity, water and desalination sectors of the Kingdom. In addition to focussing on major project announcements, updates and opportunities, the event will address the issues that underpin EPC project delivery in Saudi Arabia. 

Now in its 3rd year, Saudi Arabian Energy EPC Projects builds on the success of the previous two conferences which were attended by more than 150 attendees from across the EPC value chain – of which an impressive 95% said they would attend again.

Features & Benefits Include:

• Tasnee presents an overview of the Kingdom's latest strategies for driving petrochemicals industry growth
• ExxonMobil and Nexant discuss private sector investment opportunities for oil companies and EPC contractors into Saudi Arabia's petrochemicals sector
• SIPCHEM, Banque Saudi Fransi and Al Rajhi Bank analyse financing strategies for downstream industry initiatives
• Identifying the opportunities and challenges ahead for the Kingdom's energy EPC projects market
• Understanding the financial implications and licensing risks to your business if non-compliant with newly announced localisation initiatives. Perspectives from Mustang HDP and Zamil Group
• IRENA, ESIA, SASIA discuss Saudi Arabia's US$109bn alternative and renewable energy projects market
• Attendees will receive a signed certification of attendance

Over the past five years the Saudi EPC market has grown from strength to strength. Since 2008, more than $136bn worth of contracts have been awarded in the oil, gas, petrochemicals, pwer and water sectors in the kingdom hitting a high of $32bn in 2012. For contractors and clients alike the challenge is now on ensuring delivery of these projects on time and to budget.

By all accounts the scale of the challenge is only going to get bigger. There are more than $160bn worth of projects planned and un-awarded in the kingdom in the four sectors, ensuring that Saudi Arabia will remain the region's largest EPC projects market and single greatest opportunity for your business.

Previous attendees include: Saudi Aramco, SIPCHEM, National Water Company, TASNEE, ACWA Power, Royal Commission for Jubail & Yanbu, South Rub Al-Khali Company (SRAK), KBR, Jacobs Engineering, Essar Projects, Technip, National Power Company, Mustang – HDP, Jadwa Investment, BNP Paribas GCC, Linde Arabian Consulting, McConnell Dowell Saudi Arabia, SPIE Oil & Gas Services, Tawuniya, Eagleburgmann Middle East, Consolidated Power Projects, Middle East Specialized Cables, Maritime Industrial Services Arabia, International Building Systems Factory, Conoco, AFI, Gama Power Systems, AYTB, Saudi ACC, Hertel, Babcock Borsig Service Arabia, Samsung Saudi Arabia, Arabian Petroleum Supply Co. (APSCO), Zamil Air Conditioners - Zamil Industrial, Hanwha Saudi Consulting, PMI-AGC in Eastern Region KSA, Herbert Smith, Emirates Solar Association and many more…

CERTIFICATE OF ATTENDANCE: At the end of the Saudi Arabian Energy EPC conference, we will be presenting attendees with certificates of attendance!

The event’s conference, workshop and exhibition is permitted by the Royal Instruction of High Commission for conferences and exhibitions approved by Ministry of Commerce and Industry. Organised by MEED gC. This event has been registered with the Ministry of Commerce and Industry of Saudi Arabia.

Hi Featured Business Article of The Month!.

Hi Featured Business Article of The Month!.

Saudi Arabia: Wednesday, October 10 - 2012 at 10:44

In recent years, Saudi Arabia has been developing key economic sectors including services, industry and real estate, and in 2000 the kingdom's cabinet approved the Foreign Capital Investment Law. It stemmed from a recognition by King Abdullah that certain sectors require foreign expertise to grow and prosper, and was introduced to regulate outside investors keen to do business in Saudi Arabia.

This overview provides some general guidance on the laws and principal legal factors that must be considered when doing business in Saudi Arabia. Since the kingdom's laws can often be confusing, and even contradictory, it is recommended that foreign investors seek specific legal advice before entering into a business venture in the country.

The foreign investment licence;

Those who are keen to invest in Saudi Arabia must obtain a foreign capital investment licence from the Saudi Arabian General Investment Authority (Sagia).

All Saudi companies, or those registered within other GCC countries, are treated as GCC nationals if they are wholly owned by citizens or governments of GCC member states. GCC firms with foreign shareholders, foreign businesses, or any investor who is not a national of one of the GCC countries must obtain a foreign capital investment licence.

The Foreign Capital Investment Law allows the establishment of companies with 100 per cent foreign ownership within most economic sectors.
When an investment is licensed under the Investment Law, a business enjoys all the privileges and incentives offered to wholly Saudi-owned firms. These include: ownership of freehold property (if that property is necessary for the company to carry out its licensed activities); privileges granted by the anti-double-taxation treaties to which the kingdom is a party; legal protection against expropriation or confiscation of investments; and the right to repatriate profits.

Incorporating a local entity;

Saudi company regulations regulate the establishment and governance of corporate entities in the kingdom. The limited liability company (LLC), joint stock firm and branch of a foreign business are the most common forms of legal entities. Others include sole proprietorship, scientific offices and temporary commercial registration (TCR), which is granted to foreign entities that sign contract agreements with a government or semi-government department to execute a project. A TCR is limited to one contract and lasts until that contract's final date.

Limited liability companies (LLCs);

An LLC is the most common corporate vehicle for equity participation by foreign investors. It must have a minimum of two shareholders, and not more than 50. People and corporate entities may be shareholders. Generally, shareholders are liable for the debts of the company only to the extent of their respective interests in the firm's shares.

Transfer of shares between parties is effective on the date of notarising the articles of association amendment to reflect that transfer, and the liability of a selling shareholder ceases from that date. Sagia regulations and requirements are applied to new foreign shareholders who form a licensed LLC, and the procedures are the same for existing shareholders.

Joint stock companies;

A joint stock company must have a minimum of five shareholders, but there is no maximum.

Shareholders may be people or corporate entities. A minimum of SR2m ($533,000) of share capital must be used to establish a closed joint stock company, and the firm's foundation is subject to approval by the Ministry of Commerce & Industry.

Branches of foreign companies;

Branches of foreign firms in Saudi Arabia are subject to regulations, laws and rules applicable to their activities. As with LLCs and joint stock companies, foreign businesses that establish branches in Saudi Arabia must deposit capital in a local bank. The deposited capital will be blocked until the Ministry of Commerce & Industry issues a certificate of registration for the branch.

Contracting firms must have at least a third-class contractor's classification certificate and completion certificates for projects undertaken outside Saudi Arabia. They must be able to prove they are financially solid and require minimum capital of SR1m. If they are working on an industrial project, the capital required will depend on a feasibility study carried out by the investor. If the project's capital requirements are more than SR5m, Sagia allows the company to deposit only 25 per cent of the capital in the bank.

Laws;

Some of the legislation that companies operating under the Foreign Capital Regulation Law must adhere to include:

Anti-cover-up Law
The Anti-cover-up Law prohibits non-Saudis from conducting or investing in any business in the kingdom without a foreign capital investment licence issued by Sagia and prohibits any Saudi person from assisting in such activity.

Environmental Law
The Presidency for Meteorology and Environment (PME) is the entity responsible for regulating pollution control and related environmental matters. The PME (previously known as the Meteorology and Environmental Protection Administration, or Mepa) has issued environmental protection standards regarding ambient air quality, air pollution sources, receiving-water guidelines, direct discharge performance and discharge pre-treatment guidelines.

Saudi Arabia has also approved the General Environmental Regulation and the Environmental Assessment Regulation for the GCC. The General Environmental Regulation prohibits any act or failure to act that may result in adverse environmental effects and requires that precautionary and pre-emptive measures be implemented to ensure that such adverse effects do not occur as a result of the construction of any project. The Environmental Assessment Regulation applies to a long list of projects that may have an environmental impact and requires that an environmental assessment be conducted on projects that fall under its coverage.

Immigration;

Non-Saudi citizens (other than GCC nationals) must obtain visas to enter the kingdom and must obtain permits to reside there. Visas and permits are not granted on arrival and must be obtained in advance.

Companies are required to register their employees' contracts with the Ministry of Interior before a residency permit can be issued. Each firm is permitted to have a certain quota of residency visas. Employees with residency visas who earn above a threshold salary may sponsor family members. Residency visas are valid for up to one year. Employees cannot work for anyone other than their sponsor and sponsorship cannot be transferred until the employee has worked for his original sponsor for at least two years.

Real estate;

'Ownership of real property is evidenced by title deeds.'

There is a central registry under the Ministry of Justice and the Ministry of Municipalities and Rural Affairs where all real property rights are recorded. A long-awaited mortgage law was approved in July and should become effective in the near future.
A non-GCC investor in possession of a foreign investment licence from Sagia may own real property in the kingdom, provided the property is necessary for the investment project. This includes real estate used to house the project's employees.

Requirements for setting up a company;

Commercial activity in Saudi Arabia has been broken down into eight categories:

Industrial
Commercial
Agricultural
Contracting
Real estate
Specialised services
Non-specialised services
Consultancy

To operate in any of these activities, a firm must fulfil specific requirements before it is licensed by Sagia.

Industrial activity;

1 The company must inform the Saudi Arabian Standards Organisation and Sagia whether it will be using Saudi, American or European specifications for its products and methods of manufacturing. It must then ensure the specifications of the product it wishes to manufacture are met and make sure the techniques of production adhere to the kingdom's rules. If Saudi certification is not available, certification from the US or EU can be used.
2 The company's capital must be at least SR1m.
3 It must provide a schedule for completing each stage of its project.
4 The investor must produce paperwork from the Saudi Industrial Property Authority (Modon) to show it is leasing or buying industrial land for the purpose of its investment activity.
5 If the company's capital is more than SR5m, each partner must submit a bank certificate for 25 per cent of its share of the capital. If the capital is less than SR5m, a bank guarantee for the whole sum must be submitted to Sagia. This must be done through a bank licensed in Saudi Arabia after the firm shows its investment licence and submits the deposit certificate. Sagia's commercial registration department will not issue a licence until this has been done.

Commercial activity;

1 The company must submit to Sagia a commitment that up to 75 per cent of its management and technical employees will be Saudis.
2 A Saudi partner must own at least 25 per cent of the firm. Foreign partners may not own more than 75 per cent of the capital, but their share must exceed SR20m.
3 The business must submit a commitment to train more than 15 per cent of its Saudi employees each year to Sagia.
4 The company must submit a bank certificate showing each foreign investor has access to a percentage of SR20m proportionate to its shares in the firm. This must be ratified by the Saudi embassy in that investor's home country.

Agricultural activity;

1 The minimum investment must be SR25m.
2 A company's activities are subject to approval by the Ministry of Agriculture.
3 The firm must submit to Sagia a bank certificate indicating each foreign investor has access to at least 25 per cent of its shares in the company. This must be ratified by the Saudi embassy.
4 The business must submit to Sagia a schedule for completing each stage of the project.

5 A company must commit to deposit its capital in a bank licensed in Saudi Arabia after Sagia has issued an investment licence. It must submit the investment and deposit certificates to the commercial registration department of the Ministry of Commerce & Industry.

There is a branch of this department within Sagia.

Contracting activity;

1 The investor must submit three financial statements for its operations outside the kingdom, covering the three years before it has requested its licence. The statements must be prepared by a certified accounting firm and ratified by the tax office and Saudi embassy in the investor's home country. They will be used to demonstrate the investor's operations are financially sound.
2 The investor must submit to Sagia completion certificates for major projects it has undertaken in the same field in which it plans to invest.
3 The company must be classified in its home country in the same activity and must be classified as at least a third-class contractor or its equivalent. Its classifications must be ratified by the Saudi embassy in its home country.
4 The firm must submit to Sagia a bank guarantee proving each partner has access to at least SR250,000, and this must be ratified by the Saudi embassy. (Recently, Sagia stopped allowing individuals to invest in contracting, preferring investment to come from large companies with more experience.)
5 Consultancy work may only be carried out by an LLC.
6 The business must submit a schedule for completing each stage of the project to Sagia.
7 The company must commit to deposit its capital in a bank licensed in the kingdom after Sagia has issued an investment licence. It must submit the investment and deposit certificates to the commercial registration department of the Ministry of Commerce & Industry.

Real estate activity;

1 Foreign investors may only deal in properties worth more than SR30m.
2 The property must be developed and leased or sold within five years of the investor beginning its activity on the project.
3 The property must be outside the borders of Mecca and Medina.
4 The company must submit a bank certificate for the capital or the share of each partner. This must be ratified by the Saudi embassy in the firm's home country.
5 The company must submit a schedule for the completion of each stage of the project to Sagia.
6 Before it can invest in property, the business must submit a study from a local, approved engineering firm showing the value of the land and the aggregate cost of the scheme.
7 A company must commit to deposit its capital in a bank licensed in Saudi Arabia after Sagia has issued an investment licence. It must submit the investment and deposit certificates to the commercial registration department of the Ministry of Commerce & Industry.

Specialised services;

Under Sagia's classifications, specialised services include communications and tourism.
1 The firm must obtain permission from the government body that regulates the field in which it will operate. For example, the Communications and Information Technology Commission, or the Saudi Commission for Tourism and Antiquities.
2 The company must submit a schedule for the completion of each stage of the project to Sagia.
3 The business must submit to Sagia a commitment to invest its capital in a bank licensed in Saudi Arabia, once Sagia has issued its investment licence. If the capital is more than SR5m, the company does not have to deposit the whole amount but can deposit 25 per cent of it. It must submit the investment and deposit certificates to the commercial registration department of the Ministry of Commerce & Industry.

Non-specialised services;

1 The company must submit to Sagia a commitment that 10-50 per cent of workers in its facilities will be Saudis.
2 After Sagia has issued its investment licence, the firm must submit a schedule for the completion of each stage of its project.
3 The company must submit a bank certificate to Sagia proving each partner has access to SR250,000.

This must be ratified by the Saudi embassy in each investor's home country.
4 Non-specialised services may only be carried out by an LLC.
5 The company must submit three balance sheets ratified by the tax office and the Saudi embassy in the investor's country to Sagia.
6 The company must submit to the commercial registration department at the Ministry of Commerce & Industry an acknowledgement that it has deposited its capital in a bank licensed in Saudi Arabia and that its investment licence has been issued by Sagia. It will then be granted commercial registration.

Consultancy activity;

1 The applicant for the licence must have a bachelor's degree or a higher qualification in the field in which he is consulting. This must be ratified by the Saudi embassy in his home country.
2 He must submit to Sagia three recommendation certificates from consultancy facilities. These must be ratified by the Saudi embassy.
3 He must submit to Sagia experience certificates proving he has worked as a consultant in his specialism for at least five years.
4 A consultancy must submit to Sagia a commitment that 75 per cent of its employees will be Saudi.

The negative list;

A list of sectors in which foreign investment is not allowed can be found on the Supreme Economic Council's website, Click Here.

Sectors that are restricted or partially restricted include:

Oil exploration, drilling and production
Manufacturing of military equipment, devices and uniforms
Manufacturing of civilian explosives
Catering to military sectors
Security and detective services
Real estate investment in Mecca and Medina
Tourist orientation and guidance services related to Hajj and Umrah
Recruitment and employment services, including local recruitment offices
Real estate brokerage
Printing and publishing
Audiovisual and media services
Land transportation services, excluding intra-city passenger transport by trains
Some medical services
Fisheries
Blood banks, poison centres and quarantines

Key contact;
Ministry of Commerce & Industry
Website: www.mci.gov.sa
Tel: (+966) 1 401 2220/4708

Applicable laws; 'Regulations that a branch of a foreign company must adhere to include':

Anti-cover-up Law
Competition Law
Immigration Law
Labour and Labourer Act
Social Insurance Act
Zakat and taxes regulations
Sharia Appeals Act
Act of Criminal Procedures
Law Act
Regulation of commercial registration
Regulation of commercial fraud
Banking regulations
Regulations protecting intellectual property
Trademarks Act
Copyright Protection Act
Patents Act
Residence Act
Foreign Investment Act (and its executive regulations and supplementing resolutions)
Regulations governing foreign ownership of real estate
Act of Encouraging and Protection of National Industries

Key contact;
Presidency for Meteorology and Environment
Website: www.pme.gov.sa
Tel: (+966) 2 651 2312/9868

Key contact;
Ministry of Interior
Website: www.moi.gov.sa
Tel: (+966) 1 401 1944

Key contact;
Ministry of Justice
Website: www.moj.gov.sa
Tel: (+966) 1 405 7777/5399

Key contact;
Ministry of Municipalities & Rural Affairs
Website: www.momra.gov.sa (Arabic only)
Tel: (+966) 1 441 5434

Key contact;
Saudi Arabian Standards Organisation
Website: www.saso.org.sa
Tel: (+966) 2 675 1013

Key contact;
Ministry of Agriculture
Website: www.saso.org.sa
Tel: (+966) 1 401 6666

Key contact;
Communications and Information Technology Commission
Website: www.citc.gov.sa
Tel: (+966) 1 461 8000

Key contact;
Saudi Commission for Tourism and Antiquities
Website: www.scta.gov.sa
Tel: (+966) 1 880 8855

*About the writer;

Hazem Midani is director of Jumana House, a Riyadh-based specialist in company regulation, foreign investment and business formation: 'Click Here To Visit Jumana House Website'.

"The laws for setting up a business in Saudi Arabia can be complex."