Saudi Arabia's Main Business Sectors
The Kingdom of Saudi Arabia only allows GCC or Saudi nationals to register as a commercial agent or engage in trading, but to encourage more foreign investors to do business there, the Kingdom recently relaxed its restrictions to allow foreign companies and individuals to trade through a JV partnership with a Saudi company or individual. In this arrangement, the foreigner can hold up to 75% of the company's equity. In order to decrease its reliance on its oil sector, the Kingdom wants to attract investors in order to diversify its industrial offerings and to decrease the government's influence on its economy. Here are the main business sectors in Saudi Arabia:
Gas and oil. The Kingdom has long concentrated on developing the oil and natural gas market. The largest oil company in the world, Saudi Aramco, is predicting spending of $129 billion over the next five years. However, the state of the global economy and the resulting decline in project costs have forced the company to reprioritize its spending. Projects are still progressing, but time frames and budgets are being adjusted.
The Saudi Arabian financial sector is very well-developed, and it is becoming gradually liberalized to include opportunities for foreign investors. The newly-approved Capital Markets Law concerns the legal rules for investment banking, and developing the stock market. It calls for the founding of a stock exchange and a Saudi Capital Market Authority.
The Kingdom is the largest contracting and engineering market in the Gulf. It is a member of the World Trade Organization, and it is committed to allow consultancy firms (with the exception of engineering firms) to establish there without the need for a local partnership. In engineering firms, the foreign party cannot hold more than 75% equity in the business.
The healthcare and pharmaceutical sectors in Saudi Arabia are expected to increase up to $3.48 billion in spending per year by 2013, amid greater demand by the country's large and comparatively wealthy people. The Saudi pharmaceutical market dominates the CCASG, with 65% of total sales. More than 98% of its pharmaceutical products are imported, and despite the great need in the sector, regulations in place prohibit new medicines and treatments from being introduced without a license from the Ministry of Health.
For foreigners living in Saudi Arabia, medical insurance has become mandatory, which provides great opportunity for companies providing insurance coverage. A new cooperative program set forth by the Health Insurance Council stipulates that employers must provide coverage for their workers and families. The Saudi auto insurance market is also changing due to new regulations that affect more than six million drivers.
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