Saudi Arabia Investment Climate
Author - U.S. Department of Commerce
Openness to Foreign Investment The Saudi Government generally encourages foreign direct investment, particularly in the case of foreign investment in joint ventures with Saudi partners. Though Saudi Arabia technically allows wholly foreign-owned firms to operate, such ventures are rare. With an eye to stimulating greater foreign investment to strengthen the non-oil private sector, Saudi Arabia is revising its 30-year-old investment code and tax code. These revisions may enhance the attractiveness of Saudi Arabia to foreign investors.
The Government and the private sector actively promote investment opportunities in Saudi Arabia, particularly partnerships with Saudi businessmen that bring industry or transfer technology to the Kingdom. Currently the Government is focusing on attracting investment in infrastructure, such as electric power generation, but has yet to make such investments financially attractive. Disincentives include a high tax rate on a foreign partner's corporate profits, a Government policy of forced hiring of Saudis, the practical requirement for a foreign investor to have a Saudi partner, an ultraconservative cultural environment, and an extreme desert climate.
The Ministry of Industry and Electricity periodically identifies investment opportunities, as do the Saudi Chambers of Commerce and Industry and private consulting houses. Other Government bodies, such as the Royal Commission for Jubail and Yanbu and the Arriyadh Development Authority, have also been active in promoting opportunities in Saudi Arabia's industrial cities and other regions. In addition to the majority Government-owned Saudi Arabian Basic Industries Corporation (SABIC), private investment companies, such as the National Industrialization Corporation, the Saudi Venture Capital Group, the Saudi Industrial Development Company, and the Arabian Industrial Development Company, have also become increasingly active in project development and in seeking out foreign joint venture partners.
One sector closed to foreign investment is upstream oil exploration and development, as the Saudi Government considers this sector to be of strategic national interest. All oil exploration and development is conducted by the national oil company, Saudi Aramco. Conversely, the greatest foreign investment in the Kingdom is found in a related sector--petrochemicals, where several major foreign firms have partnered with Saudis to build world-scale petrochemical plants.
The Government uses its purchasing power to encourage foreign investment. In 1985, the Saudi Government reached an agreement with American contractors under the Peace Shield defense procurement program for "offset" joint venture investments equivalent to 35 percent of the program's value. One Peace Shield offset program, the Al-Salam Aircraft Company in Riyadh, which performs maintenance on civilian and military aircraft, received FAA certification in September 1994. AT&T (now Lucent Technologies) undertook the first nondefense offset project in connection with the $4 billion Sixth Telephone Expansion Project (TEP-6). British and French defense firms also have offset requirements. Offset requirements are likely to remain components of major defense purchases. Rules and Regulations Governing Investment The current foreign capital investment code specifies three conditions for foreign investments:
1. The undertaking must be a "development project." 2. The investment must generate technology transfer. 3. A Saudi partner should own a minimum of 25 percent equity (although this last stipulation can be waived).
"Development projects" were defined in Ministry of Industry and Electricity Resolution 11/k/w of February 12, 1990, to include industrial, agriculture, health, contracting and specialized service projects. In an important development, the Minister of Industry and Electricity issued a decree in September 1997 that declared electric power generation to be an "industrial development activity," and thus open to foreign investment in accordance with existing foreign investment guidelines.
High technology projects are generally given priority, while projects in construction, general operations, and maintenance are discouraged.
The Saudi Government is considering revisions to the foreign investment code with a stated aim of attracting more foreign direct investment. Although considerable attention is currently being paid to these issues, the timing, scope, and content of the revisions remain uncertain.
Corporate Organization and Liability While Saudi law permits a variety of corporate structures, joint ventures almost always take the form of limited liability partnerships. This form or organization does confer limited liability (see below). However, there are disadvantages. Foreign partners in service and contracting ventures organized as limited liability partnerships must pay in cash or kind 100 percent of their contribution to authorized capital.
Industrial projects normally require 25 percent capitalization, although it may be higher for some industries. Additionally, 10 percent of profits must be set aside each year in a statutory reserve until it equals 50 percent of the venture's authorized capital.
The Ministry of Industry and Electricity licenses direct foreign investment, except for mineral concessions, which are governed by separate agreements. Otherwise, all proposals for new investments, reinvestment, mergers, or acquisitions must go through that Ministry's licensing process. For ventures with Government participation, the process is usually only a formality. On the other hand, for a purely private venture, the process can involve a considerable amount of time and effort, although this may vary depending on the Saudi partner's involvement in the process.
Operating under the Foreign Capital Investment Regulations, the Ministry of Industry and Electricity's "Foreign Capital Investment Committee" screens all license applications and counsels prospective investors. License applications must be accompanied by a formidable array of documents including a feasibility study, an outline of the venture's proposed capital structure and legal form, the partnership agreement, plans to train Saudi nationals for technical and managerial positions, and procurement plans for machinery and other equipment. Applicants must also submit permits to use specific patents, the foreign partner's foreign certificate of registration, and authorization from the foreign partner's board of directors.
Following the initial screening, the Foreign Capital Investment Committee evaluates applications. The Committee is chaired by the Deputy Minister of Industry and Electricity and includes representatives from other relevant ministries, including the Ministries of Commerce, Finance, Agriculture, Planning and Petroleum. License applications approved by the Committee then require the approval of the Minister of Industry and Electricity.
The new joint venture must apply for a commercial registration number from the Ministry of Commerce. Depending on the type of business, additional approvals may be needed, such as from the Ministry of Health in the case of a health care business.
The Foreign Capital Investment Committee evaluates projects using a variety of factors. Foremost is the project's compatibility with Saudi Arabia's basic economic goals:
1. Economic diversification. 2. Access to modern technology. 3. Development of a trained Saudi labor force to reduce dependence on foreign labor.
The Committee looks with a special favor on projects involving the transfer of high technology, preferring firms with experience in the proposed field of investment. The Committee evaluates royalty arrangements and the price of equipment to be supplied by the foreign partner. Additionally, while there is no minimum foreign equity requirement for joint ventures, more than nominal investment is encouraged. Intangible property is not counted toward this investment, and a Saudi accountant must evaluate the monetary worth of any contributions in kind.
The Embassy has heard reports that the Foreign Capital Investment Committee will not license a second joint venture in a specific industry sector until the Committee agrees the first venture is "established." While this would be beneficial to initial licensees, it would also allow individual companies to tie up industrial and commercial opportunities for extended periods while they mobilized support for their own ventures.
Professionals, including architects, consultants and consulting engineers, are required to register with and be certified by the Ministry of Commerce in accordance with the requirements defined in the Ministry of Commerce's resolution 264, published in 1982.
These regulations, in theory, permit the registration of Saudi/foreign joint ventures. However, according to business sources, the regulations have never been fully implemented. As a result, most foreign consulting firms work as adjuncts to established Saudi firms.
Foreign investors are denied national treatment in the following sectors: catering, cleaning, maintenance and operations of facilities, power generation, trading, transportation, and businesses that affect national security.
Saudi privatization efforts are embryonic, and the treatment of foreign investors has not yet been decided. In May 1998, the Council of Ministers announced the establishment of the Saudi Telecommunications Corporation (STC), the first phase of privatization of telecommunications services. STC will operate as a wholly state-owned corporation for two years before starting to offer shares to the public in stages. It remains unclear whether foreigners will be permitted to own shares and whether STC will seek a foreign strategic partner in the privatization. In a related development, the Saudi Government in May 1998 also authorized private operation of postal services. As of July 1998 there were already over 100 private postal offices across the Kingdom, including some with foreign participation. Saudi ports have since 1997 begun "privatizing" port services by signing long-term contracts with private providers. Although foreign companies have entered this market through joint ventures, so far, no U.S. firms have taken part. The Government has also raised the prospect of privatizing the national airline, Saudi Arabian Airlines (previously Saudia), although no clear decisions have been made.
There is a clear hierarchy of privileges and preferences in Saudi Arabia that favors Saudi companies and joint ventures with Saudi participation. For instance, only firms with at least 25 percent Saudi ownership are eligible for tax holidays and interest-free loans from Government credit institutions such as the Saudi Industrial Development Fund. Similarly, only foreign-owned corporations and the foreign-owned portion of joint ventures are subject to the corporate income tax, which can range up to 45 percent of net profits.
Only Saudi companies or citizens, or those from the other Gulf Cooperation Council (GCC) countries (Kuwait, Bahrain, Qatar, UAE and Oman) may own land or engage in internal trading and distribution activities. Similarly, only joint ventures with at least 51 percent GCC ownership interest are permitted to export duty-free to other GCC countries.
Taken together, the above represent a formidable array of privileges and preferences which can severely disadvantage a foreign investor attempting to operate his wholly-owned company in Saudi Arabia. The formerly common practice of Saudis illegally lending their names to a foreign-owned and operated business, so-called "cover-ups," was curtailed by Royal Decree m/49 of May 21, 1989. Saudis and foreigners who engage in such "cover-ups" to evade Saudi commercial regulations are now subject to severe penalties, including imprisonment, stiff fines, and deportation for the foreigner.
While, theoretically, American and other foreign firms are able to participate in Saudi Government financed and/or subsidized research and development programs on a national treatment basis, the Embassy is not aware of any examples.
One of the leading obstacles for foreign investors is restrictive Saudi visa requirements, although the Saudi Government announced new, more streamlined measures in May 1998 for business travelers. Investors or potential investors wishing to visit Saudi Arabia must have a Saudi sponsor to obtain the necessary business visa. On rare occasions the Saudi Embassy or Consulates may grant, at their discretion, sponsorless business visas to employees of prominent American firms, but this practice is unpredictable. Business visas are currently valid for only one entry for up to three months, although the U.S. Government is hopeful that Saudi authorities will very soon agree to issuance of two-year, multiple-entry visas to U.S. citizens on a reciprocal basis. Under existing rules, if a businessperson went to Saudi Arabia, then departed to reenter Saudi Arabia, he or she would need to reapply for a new visa including a new sponsorship letter. Businesswomen and naturalized Americans of Arab descent often face difficulties when requesting visas.
To work in Saudi Arabia, a Saudi company must formally petition the Ministry of Foreign Affairs on behalf of the American. The Saudi firm then sends the approved petition to the Saudi Embassy in Washington or to the Saudi consulates in New York, Los Angeles, or Houston. The American would then would obtain the visa either from the Embassy or one of the consulates.
Within three days of arrival in Saudi Arabia, the American must go to the Ministry of Interior Passports Office and apply for a residence permit called an "igama." The Saudi employer holds the American's passport while the American uses the igama for identification purposes. Whenever the American wants to leave Saudi Arabia, the sponsor must get an exit/re-entry or exit visa; then the American exchanges his or her igama for the passport.
Since the Saudi firm holds the passport, it has the potential to exert great influence on the foreign employee's movements. Americans who come to Saudi Arabia cannot directly bring their families with them. The employee can apply for his or her family's visas only in Saudi Arabia and then must return to the United States to accompany the family.
Conversion and Transfer Policies There are no restrictions on converting or transferring funds associated with an investment (including remittances of investment capital, earnings, loan repayments, and lease payments) into a freely usable currency and at a legal market clearing rate. There have been no recent changes, nor are there plans to change remittance policies. There are no delays in effect for remitting investment returns such as dividends, return of capital, interest and principal on private foreign debt, lease payments, royalties and management fees through normal legal channels. There is no need for a legal parallel market for investor remittances.
There is no limitation on the inflow or outflow of funds for remittances of profits, debt service, capital, capital gains, returns on intellectual property, imported inputs, etc. There is, however, a heavy tax (up to 45 percent) on corporate profits and capital gains of the foreign partner in a joint venture. Since 1987, the official exchange rate has been 3.7450 Saudi riyals per U.S. dollar. Transactions occur using rates very close to the official rate. The last devaluation of the Saudi riyal occurred in 1986. Conditions do not appear to warrant another devaluation anytime soon.
Right to Private Ownership and Establishment Foreign and domestic private entities have the right to establish and own business enterprises and engage in all forms of remunerative activity. Private entities have the right to freely establish, acquire, and dispose of interests in business enterprises. The Embassy is not aware of any private enterprises competing with public enterprises; therefore, the concept of "competitive equality" has not been tested with respect to access to markets, credit, and other business operations such as licenses and supplies.
Expropriation and Compensation The Embassy is not aware of the Saudi Government ever expropriating property. There have been no expropriatory actions in the recent past or policy shifts which would lead the Embassy to believe there may be such actions in the near future.
Dispute Settlement Saudi commercial law is still developing, but the Saudis have recently taken positive steps such as joining the New York Convention of 1958 on the Recognition and Enforcement of Foreign Arbitral Awards. Dispute settlement in Saudi Arabia continues to be time-consuming and uncertain. Even after a decision is reached in a dispute, effective enforcement of the judgment can still take years.
The Embassy suggests that American firms investing in Saudi Arabia include in contracts a foreign arbitration clause; but such clauses are not allowed in Government contracts without a decision by the Saudi Council of Ministers.
Saudi litigants have an advantage over foreign parties in almost any investment dispute, because of their first-hand knowledge of Saudi law and culture and the relatively amorphous dispute settlement processes. Foreign partners involved in a dispute find it advisable to hire local attorneys with knowledge of Saudi legal practices. Many Saudi attorneys, in turn, retain non-Saudi (and particularly American) lawyers to facilitate the handling of disputes involving foreign investors.
In several cases, disputes have caused serious problems for foreign investors. For instance, Saudi partners have blocked foreigners' access to exit visas, forcing them to remain in Saudi Arabia against their will. In cases of alleged fraud, foreign partners may also be jailed to prevent their departure from the country while awaiting police investigation or adjudication of the case.
Courts can impose precautionary restraint of personal property pending the adjudication of a commercial dispute, according to Royal Decree No. M/4 of October 2, 1989. This decree has diminished the incentive for individuals to physically detain foreign partners pending the resolution of commercial disputes. Thus, it is very important that foreign investors take steps to protect themselves, by thoroughly researching the business record of the proposed Saudi partner, retaining legal counsel, complying scrupulously with all legal steps in the investment process, and securing a well-drafted agreement.
There have been few investment disputes in recent years involving American or other foreign investors or contractors in Saudi Arabia. A common phenomenon of the early 1990s was that the Government, due to fiscal constraints, fell in arrears on payments to private contractors, both Saudi and foreign. Some companies carried Saudi Government receivables without being paid for years.
The problem was eased considerably in 1996, and the Government appears committed to clearing remaining arrears, although in some cases this will likely take several years. In the current straitened fiscal environment, some contractors are being paid in bonds instead of cash. Some contractors then sell these bonds at a discount to local banks.
The Saudi Arabian legal system is derived from the legal rules of Islam, known as the Shari'a. The Ministry of Justice oversees the Shari'a-based judicial system, but most ministries have committees to rule on matters under their jurisdiction. The Board of Grievances generally speaking has jurisdiction over disputes with the Government and commercial disputes. Of principal interest to investors who have disputes with private individuals are the Committees for Labor Disputes (under the Ministry of Labor, see below), and the Committee for Tax Matters (under the Negotiable Instruments Committee, also called the Commercial Paper Committee). The Ministry of Finance has jurisdiction over disputes involving letters of credit and checks, while the Banking Disputes Committee of the Saudi Arabian Monetary Agency (SAMA) adjudicates disputes between bankers and their clients. Judgments of a foreign court are not yet accepted and enforced by the local courts, but the Saudis' signature of the New York Convention may change this. Monetary judgments are based on the terms of the contract; i.e., if the contract is in dollars, the judgment would be in dollars; if unspecified, the judgment is denominated in Saudi riyals.
Saudi Arabia has a written commercial law that is generally applied consistently. The country has a written bankruptcy law which was enacted by Royal Decree No. N/16 dated 4/9/1416 H (1/24/96). Articles contained in the law allow debtors to conclude financial settlements with their creditors through committees under the Saudi Chambers of Commerce and Industry or through the Board of Grievances. Designated as the Regulation on Bankruptcy Protective Settlement, the law is open to ordinary creditors except in the case of debts of expenditures, privileged debts and debts which arise pursuant to the settlement procedures. In mid-June 1994, Saudi Arabia deposited Articles of Acceptance to the New York Convention of 1958 on the recognition and enforcement of foreign arbitral awards. Saudi Arabia is a member of the International Center for the Settlement of Investment Disputes (ICSID--also known as the Washington Convention).
Since 1996, Saudi Arabia has actively pursued its application for accession to the WTO.
Performance Requirements/Incentives Under the 1969 labor and workman regulations, 75 percent of a firm's work force and 51 percent of its payroll must be Saudi, unless an exemption has been obtained from the Ministry of Labor and Social Affairs. The Saudi Government recently implemented a regulation requiring each company employing over 20 workers to include a minimum of five percent Saudi nationals. Companies not complying with the five percent rule (which will increase in annual increments of five percent) will not be given visas for expatriate workers.
However, Saudis represent only about a quarter of the estimated 8 million workers in Saudi Arabia, so few firms have been able to meet these requirements. Foreign firms are under constant pressure to employ more Saudis.
Investors are not currently required to purchase from local sources or export a certain percentage of output, and their access to foreign exchange is unlimited. There is no requirement that the share of foreign equity be reduced over time. The Government does not impose conditions on investment such as locating in a specific geographical area, a specific percentage of local content or local equity, substitution for imports, export requirements or targets, or financing only by local sources. Investors are not required to disclose proprietary information to the Saudi Government as part of the regulatory approval process.
The Saudi Government is currently considering changes to the Foreign Capital Investment Code. There are reports that the revised regulations will include new performance requirements--possibly including export incentives, import substitution incentives, and local content requirements-- but no details have been made public.
Protection of Property Rights The Saudi legal system protects and facilitates acquisition and disposition of private property, consistent with strong Islamic dogma respecting private property. Non-Saudis are not allowed, however, to purchase real estate in Saudi Arabia, except in extremely rare situations. Other foreign-owned corporate and personal property is protected, and the Embassy knows of no cases of Government expropriation or nationalization of foreign-owned assets in the Kingdom. Regarding intellectual property rights, the Saudi Arabian Government has acceded to the Universal Copyright Convention; implementation began July 13, 1994.
Saudi Arabia has had a Patent Law since 1989, and the Patent Office accepts applications, but it has only issued a few patents. Protection is available for product and product-by-process. Product-by-process protection is accorded in the pharmaceutical sector. There are provisions in the Patent Law for compulsory licenses for non-working and dependent patents. The term of protection is 15 years. The patent holder may apply for a five-year extension.
Saudi Arabia has a Copyright Law. However, this law does not extend protection to works that were first displayed outside of Saudi Arabia unless the author is a Saudi citizen. The Saudi Government has taken actions to enforce copyrights of U.S. firms, and pirated material has been seized or forced off the shelves of a number of stores. Enforcement has been strongest for printed material, recorded music, and videos. Pirated software is still easily obtained in Saudi Arabia, although it has been removed from open display on store shelves. A recent Islamic ruling, or "fatwa" ruled software piracy to be "forbidden." In 1996, Saudi Arabia was moved from a "priority watch list" country to a "watch list" country under the Special 301 provision in recognition of its work to improve intellectual property protection.
Trademarks are protected under the Trademark Law. Trade secrets are not specifically protected under any area of Saudi law, however they are often protected by contract.
There is no specific protection for semiconductor chip layout design. However, such protection would be provided under the Patent Law and the Copyright Law. This, and certain other intellectual property concerns, are being addressed under the TRIPS agenda issue, in connection with Saudi Arabia's application to accede to the WTO.
Transparency of Regulatory System There are few aspects of the Saudi Government which are transparent, although Saudi investment policy tends to be less opaque than many other areas.
Saudi tax and labor laws and policies tend to favor high-tech transfers and the employment of Saudis, rather than fostering competition. Saudi health and safety laws and policies are not used to distort or impede the efficient mobilization and allocation of investments. Bureaucratic procedures are cumbersome, but Saudi red tape can generally be overcome with persistence.
Efficient Capital Markets and Portfolio Investment Financial policies generally facilitate the free flow of private capital. Currency can be transferred in and out of Saudi Arabia with no restriction. Credit is widely available to both Saudi and foreign entities from the commercial banks and is allocated on market terms. Credit is also available from several Government credit institutions, such as the Saudi Industrial Development Fund, which allocates credit based on Government-set criteria rather than market conditions.
The banking system, consisting of eleven commercial banks, nine of which are joint ventures with Western banks, is sound. The legal, regulatory, and accounting systems practiced in the banking sector are transparent and consistent with Western norms.
The Saudi Arabian Monetary Agency (SAMA), which oversees and regulates the banking system, generally gets high marks for its prudential oversight of the twelve commercial banks in Saudi Arabia. SAMA, for example, is the only Middle Eastern central bank that has been invited to be a member and shareholder of the Bank for International Settlements in Basel, Switzerland.
There is an effective, if nascent, regulatory system governing portfolio investment in Saudi Arabia. Saudi Arabia has a small and thinly traded stock market established in 1985. At the start of 1998, total market capitalization stood at about $60 billion. Only long buying of shares is allowed. There is no short selling, buying or selling of options or any other derivative products, primary or secondary market for corporate bonds, or secondary market for Government bonds.
Until recently, only Saudis could buy and sell shares on the stock market. SAMA, which also regulates the stock market, in early 1997 gave permission to the Saudi-American Bank to establish a closed end mutual fund of Saudi stocks to foreigners. The fund, named the Saudi Arabia Investment Fund (SAIF), is dollar-based and sold through the London exchange.
Political Violence On November 13, 1995, a truck bomb was detonated outside a U.S. military training headquarters in Riyadh, killing seven people, including five Americans. The bombing was the first act of political violence in Saudi Arabia in over a decade and the first terrorist incident to have specifically targeted foreigners. The four Saudi nationals who were apprehended and executed for the terrorist attack claimed to be avenging the Government's incomplete application of Islamic law and principles. The attack was roundly condemned by the Government, the religious establishment, and the populace.
In June 1996, a U.S. military housing facility was bombed in the Eastern Province killing 19 Americans and wounding more than 100. Since these two bombings, security has been heightened at official U.S. installations, residential compounds, and schools; and the U.S. Embassy, working closely with Saudi security organizations, periodically advises American citizens of potential security concerns.
Other than the above events, Saudi Arabia has not been subject to civil disturbances or political insurrections.
Corruption Saudi Arabia has some, albeit limited, laws aimed at limiting corruption. For example, the agency law limits a Saudi agent's commission to five percent of the value of a contract. Ministers and other senior Government officials appointed by royal decree are forbidden from engaging in business activities with their Ministry or Government organization while employed there. Nonetheless, enforcement of even these laws is rare and there are extremely few cases of prominent citizens or Government officials tried on corruption charges.
U.S. firms have identified corruption as an obstacle to investment in Saudi Arabia. Government procurement is an area often cited, as is de facto protection of businesses in which senior officials or elite individuals have a stake. Bribes, often disguised as "commissions" are commonplace. Giving or accepting a bribe is not a criminal act under Saudi law.
Bilateral Investment Agreements The Saudi Government appears to be moving forward in its pursuit of bilateral investment agreements. Saudi Arabia presently has a bilateral agreement with France and is in the process of negotiating one with Italy. Negotiations on bilateral agreements are likely to take place with some other European countries. There is no bilateral investment treaty in force between the United States and Saudi Arabia. Gulf Cooperation Council (GCC) countries and their nationals receive favorable investment treatment derived from GCC agreements.
OPIC and Other Investment Insurance Programs The Overseas Private Investment Corporation (OPIC) no longer provides coverage in Saudi Arabia. In 1995, OPIC removed Saudi Arabia from its list of countries approved for OPIC coverage because of the failure of Saudi Arabia to take steps to comply with internationally recognized labor standards. Details on OPIC programs and coverage can be obtained by calling (202) 336-8575 in Washington. The U.S. Export-Import Bank provides a limited amount of financing and political risk insurance in Saudi Arabia.
Labor Recruitment of expatriate labor is regulated jointly by the Ministry of Interior and the Ministry of Labor and Social Affairs. In general, the Government encourages the recruitment of Muslim workers, either from Muslim countries or from countries such as India and Sri Lanka with sizable Muslim populations. The largest groups of foreign workers now come from Pakistan, the Philippines, India, and Egypt.
Westerners compose less than 2 percent of the labor force, and the percentage is slowly dropping as they are replaced by Saudis and less expensive expatriates from Third World countries.
Since September 1994, the Ministry of Labor and Social Affairs has been required to certify that there are no qualified Saudis for a particular job before it can be filled by an expatriate worker. In addition, the Ministry of Interior must approve all transfers of expatriate workers from one firm to another. On the other hand, bloc visas are normally available for unskilled and some skilled workers recruited abroad.
Saudi labor law forbids union activity, strikes, and collective bargaining. However, there is no forced or compulsory labor; any required overtime, over and above the usual five and one-half to six-day week, is compensated normally at time-and-a-half rates. The minimum age for employment is 14. The Saudi Government does not adhere to the International Labor Organization Convention protecting workers' rights. Saudis generally prefer to invest in labor-saving technology rather than utilize foreign labor when given the choice.
Foreign Trade Zones/Free Ports Saudi Arabia does not have duty-free import zones or freeports. It has begun to permit transshipment of goods through its ports in Jeddah and Dammam.
Major Foreign Investors
Investment (US$ billions, except where noted):
1995(E) 1996(E) 1997(E)
- Total Foreign Direct Investment 13.3 14.5 15.0
- U.S. Direct Investment 5.5 6.7 7.0
- Percent Share of Total Foreign Investment (percent) 41.3 46.2 46.7
Major Foreign Investors
U.S.A., Japan, United Kingdom, Switzerland, France, Germany
Source : Ministry of Finance and National Economy; Saudi Arabian Monetary Agency (SAMA); International Monetary Fund; U.S. Department of Commerce; U.S. Embassy estimates; Ministry of Industry and Electricity
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