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Also See
Foreign Investment Policy
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Author - U.S. Department of Commerce
Source:
STAT-USA on the Internet
US Department of Commerce
(202) 482-1986
Saudi Arabia actively encourages foreign investment, especially if the projects have a lasting developmental effect on the country's economy and promote industrialization and technology transfer. Saudi law requires that any project involving foreign capital result in "economic development" and transfer needed technology. Moreover, foreign investors must find Saudi partners in order to benefit from Saudi investment incentives and practically speaking, to obtain authorization from the relevant Saudi authorities. The petroleum and mineral extraction industries are owned and controlled by the government, and are generally closed to foreign investment.
The following should be kept in mind when planning an investment in Saudi Arabia:
* All foreign investment must be licensed by the Ministry of Industry and Electricity (MIE) and registered with the Ministry of Commerce. * Obtaining the requisite governmental approvals entails the involvement of many Saudi agencies at different stages of the investment planning and implementation process. An investment proposal may be implemented only after the MIE issues an investment license to the applicants. Once granted, the investment license will stipulate the permitted corporate objectives of the entity subject to the license. * Most foreign investment is carried out through limited liability companies organized for this purpose by the foreign investors and their Saudi partners. These "investment companies" must be formed in accordance with Saudi company law and registered with the MOC. * At the present time, only foreign capital invested in a foreign-owned branch office or in the share capital of either a joint stock or limited liability company will qualify for an investment license.
Incentives: As part of its program to develop non-oil industries, the government provides various tax and other incentives for foreign investors. For government-approved projects with at least 25 percent Saudi participation, foreign investors in agricultural and industrial ventures are eligible for a 10-year exemption from income tax. Investors in non-individual projects which meet the `local participation' requirement may be eligible for a five-year income tax exemption.
The government also provides loans of up to 80 percent of fixed assets for agricultural products under SR 3 million and 40 percent for projects over SR 3 million. The Saudi Industrial Development Fund grants loans to Saudi companies amounting to 50 percent of the total cost of the project. Customs duty exemptions (on importation of products used for the project) and protection (i.e., imposition of protective duties on importation of goods produced by the project) are also available.
Saudi Arabia is presently on the Intellectual Property Rights (IPR) "watch list" under the Special 301 provisions of the 1988 Trade Act. It has experienced problems with illegally copied video tapes, audio cassettes, and computer software. Saudi Arabia has not joined the Berne Convention.
Patents: The Patent Law of 1989 regulates the issuance of patents in Saudi Arabia. The criteria used to determine whether an invention is patentable are similar to those applied under U.S. law. However, Saudi patent law authorizes the administering agency to declare unilaterally that specific areas of technology are unpatentable, effectively denying foreign patent holders the right to enforce their subject patents in the Kingdom. In addition, the law permits compulsory licensing of patented products and processes (with or without compensation) where (i) the patent holder does not make use of the invention in Saudi Arabia within a specified period of time, or (ii) the government decides to issue such licenses for reasons of public policy.
Applications for Saudi patents may only be submitted by Saudi nationals, although non-residents may hold the actual patent. The holder of the patent must make use of the patent within two years of its issuance, or the patent can be voided.
Trademarks: Trademarks are registered through the Ministry of Commerce. If the owner of the trademark lives in Saudi Arabia, the owner may register the trademark directly. If the owner does not reside in the country, the application must be filed by a Saudi resident. The trademark must be used within the first two years after it is registered in order to receive the full 10-year protection. Trademarks are renewable for additional 10-year terms.
Copyrights: Saudi copyright law protects all literary, scientific, and artistic works published, acted, or shown for the first time in Saudi Arabia. This means that Saudi copyright law does not protect foreign works first published outside of the Kingdom. Copyrights will be granted for the lifetime of the author plus 50 years, except for sound recordings and audio-visual works which will be protected for 25 years from the date of first publication.
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