Saudi Arabia has the biggest free market economic system in the MENA part keeping a 25 % portion of entire Arab GDP. The Kingdom ‘s is located in such a mode that it provides easiness of entree to the European, Asian and African markets. It has a increasingly turning place market ( one-year population growing of 3.5 per centum ) , which is adding to a immature and devouring population with strong purchasing power. Its new Foreign Investment Law allows 100 per centum foreign ownership of undertakings and existent estate. The Kingdom has a stable political environment every bit good as a stable economic environment. Saudi Arabia besides provides universe category substructure.
Saudi Arabia histories for 25 per centum of the universe ‘s oil militias. The Saudi authorities places no kerb on foreign exchange and repatriation of net incomes every bit good as capital. The currency is really stable and there are no foreign exchange limitations, and 100 per centum repatriation of net incomes is allowed. Saudi Arabia allows losingss to be carried frontward indefinitely, therefore relieving the revenue enhancement load for concerns till they turn profitable. Personal income revenue enhancement is zero. Labor cost in about all sectors is non really high. Extra inducements offered to investors include:
The new Foreign Investment Law [ 2 ] allows aliens to put in most sectors of the economic system. The jurisprudence has abolished the patron system and enabled foreign investors to ain existent estate for company activities and patronize their foreign employees. The new Real Estate Law allows aliens to ain existent estate except in the two Holy metropoliss of Makah and Medina. The Kingdom is drastically revising its business-related Torahs to increase transparence and beef up the state ‘s planetary fight. The Torahs presently under alteration include the Capital Markets Law, the Companies Law, the Agency Law, the Insurance Law, the Mining Law and the Labor Law. Many other Torahs are presently under alteration with the purpose of fostering the procedure of economic liberalisation. In May 2001 the authorities besides issued guidelines for transparence of economic and financial informations.
Wage Ratess and Labor Regulation [ 2 ]
Saudi Arabia is already basking important success in its new instruction scheme with a farther SAR 12 billion being distributed over the following five old ages. School support has increased coupled with school edifice and instructor enlisting plans. This has led to a phenomenal addition in literacy rates from 33 % in 1970 to 83 % today. The Kingdom allows companies to engage endowment from abroad if need be. There are approximately 6 million skilled and semi-skilled exile workers in Saudi, from senior managerial degree to labourers. Unskilled labour in Saudi Arabia costs US $ 2.77/hr compared to US $ 2.63/hr in Mexico and US $ 22.60/hr in France.
World Investment study 2009, UNCTAD web site: hypertext transfer protocol: //www.unctad.org
Saudi Industrial Property Authority web site: hypertext transfer protocol: //www.modon.gov.sa/English/AboutKingdom/Pages/SaudiEconomy.aspx
Banking Infrastructure and Financial Markets
Saudi Arabia has established a sound regulative model and fiscal substructure based on coverage criterions comparable to those in major industrial states. The Kingdom ‘s fiscal system consists of the cardinal bank ( SAMA, the Saudi Arabian Monetary Agency ) , the commercial Bankss, the specialized recognition establishments and the stock market. Banking is regulated under the Banking Control Law issued by Royal Decree in 1966. The authorities interest in commercial Bankss is less than 10 % . Adequate liquidness enables financing at competitory rates. Foreigners can put in the stock market through investing financess. The Saudi stock market is the largest in the part. The Saudi Riyal has a strong record of stableness and rising prices rates in Saudi Arabia are really low.
A comparative survey based on the Ease of Business Report [ 7 ] clearly shows the greater challenges that an investor faces while establishing a Business in UAE as compared to Saudi Arabia. The clip required to Get down a Business is a competitory advantage that an investor has in Saudi Arabia as compared to UAE. In add-on to that, Saudi Arabia provides better investor protection as compared to UAE.
Another of import thing to observe is that while it takes merely a twelvemonth and half to go out a concern in Saudi Arabia, it takes, around 5 old ages to make the same in UAE. The higher cost and lower Recovery rate in UAE is besides something that can be a hindrance to investors who are more risk averse and wish to go out in instance things do n’t work out.