Undoubtedly a foreign investor intending to set up a contracting company in Saudi Arabia will face challenges. These challenges can be minimized or eliminated by obtaining the proper professional advice along with the foreign investor conducting their thorough due diligence. Business Link has helped several organizations with business setup in Saudi Arabia.
Business Link consistently setup 100% remote possessed substances under the Saudi Arabian General Investment Authority “SAGIA” guidelines and makes venturing into the KSA advertise quick, simple, and incredibly financially savvy.
Saudi Arabia’s construction industry is expanding. With the impending implementation of Vision 2030, every project in the Kingdom will require some type of building. However, accessing the Saudi market can be perplexing because of different rules. Applying to different organizations, with elements varying based on whether you are a foreign-only company. We’re here to make your life easier.
Do you have any doubts about expanding in Saudi Arabia?
According to InvestSaudi, the Kingdom’s GDP per capita is $23,570, with a stock of 230.8 billion dollars in FDI and a nominal GDP of 782 billion dollars. These are the highest figures in the region. Furthermore, the Kingdom recently permitted foreign loans, which is a significant and welcome development.
The Kingdom aspires to be thought leaders in all fields, including construction. In the first quarter of 2021, the construction industry in the Kingdom grew by 2.7 percent in real GDP, with 78 new construction investment permits issued.
As Saudi Arabia strives to meet the needs of urgently needs growth. An infusion of foreign construction corporations is obvious and will continue. Construction cranes and other construction machinery have been hasty transports to Saudi Arabia as the building sector in neighboring Middle Eastern countries slows, allowing construction companies to take advantage of available employment.
In the last five years, the construction business has spent $300 billion, and by 2025, roughly 400 thousand units will have been erected utilizing modern construction methods and innovative technologies. Despite the pandemic, these figures are low. Despite COVID-19, however, the sector has been steadily expanding.
Permits for foreign Contracting Company in Saudi Arabia
The most important consideration for a foreign contracting company in Saudi Arabia is to conduct due diligence on their proposed investment in Saudi Arabia. Consultation with Saudi legal counsel is essential to ensure that the correct structure and overall setup achieve to maximize results. You should also seek advice from tax and other financial advisors. When deciding to establish an investment vehicle in Saudi Arabia, the SAGIA will require a foreign investment license.
After the foreign investment license is issued, it will need to be registered with other government departments, such as the Ministry of Industry and Commerce, the Ministry of Zakat and Taxation, the Ministry of Labor, the Chamber of Commerce, the General Organization of Social Insurance and local government departments. City Hall.
Saudi Arabian General Investment Authority issues the Investor License which enables you to open a 100% foreign investment in Saudi Arabia. You don’t need a local partner and can operate anywhere in the Kingdom. Please note, certain conditioning confines similarly to reclamation, medical, and consulting.
The Ministry of Investment of Saudi Arabia provides accelerated investment operations, For foreign companies within 5 days of submission to SAGIA.
SAGIA role is to interface foreign investors and other Saudi Ministry of Investment to promote foreign investment. SAGIA “filter” to ensure that only reputable investors can enter the Kingdom of Saudi Arabia. Proof of industry experience and certificates is required.
A construction company incorporated can be a 100% foreign-owned entity, usually in the form of a limited liability company formation in Saudi Arabia. Such a company usually requires at least two shareholders, and these shareholders may be in the same company group.
As part of SAGIA due diligence process, foreign investors will need to provide various information. It is worth noting that as far as construction companies are concerned,
The following will form part of the foreign investment permit application:
Corporate documentation (board/shareholder resolutions, constitutional documents, registrations)
- A power of attorney authorizing a local representative to facilitate matters
- Shareholder information
- Audited financial statements – going back at least a year
- References
- Projects completed
- Construction classification – rating/grade
- Bank statements
While the above information does provide a broad overview there are exemptions available and the Saudi Arabian General Investment Authority has a great deal of discretion.
Grading of Construction Firms
As mentioned above, the classified copy of the foreign investor needs to come from its home jurisdiction. According to the Contractor Classification Law (and implementing regulations), the Ministry of Municipal and Rural Affairs of Saudi Arabia (“MOMRA”) can obtain the classification. This local classification is usually a mandatory requirement for construction contracts. Especially when the client is the Saudi government or government authority. The classification level will determine the contract type and value allowed by the contractor. For example, a level 1 contractor can sign a construction contract of more than $74.66 million, while a level 5 company can only sign a contract of up to $1.86 million.
The classification level of the jurisdiction where the foreigner locates does not automatically correspond to the level in Saudi Arabia. MOMRA will make classification decisions based on the merits of a particular applicant (including experience and previously completed projects).
Foreign investors need to pay attention to whether they meet all the standards of the construction contract, because in general, government authorities will require the contractor to set up a local agency, and the payment can only deposit into the local bank account. When signing government contracts, contracting companies in Saudi Arabia can also get concessions. Foreign investors should also conduct legal reviews of any construction contracts before signing.
Our team will always be there to resolve all of your major and minor doubts related to business formation. We believe that it is clear to you what is Saudi Arabian General Investment Authority is and how the services from Business Link can be beneficial for you when you are going to start a business in Saudi Arabia.
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