Saudi Arabia

GDP (US$ Billion)

678.54 (2017)

World Ranking 20/191

GDP Per Capita (US$)

20,957 (2017)

World Ranking 39/190

Economic Structure

(in terms of GDP composition, 2017)

Services
(52%)
Industry
(45%)
Agriculture
(3%)

External Trade (% of GDP)

60.9 (2016)

Currency (Period Average)

Saudi Arabian Riyal

3.75 per US$ (2017)

Political System

Monarchy

Overview

Saudi Arabia is an oil-reliant economy, boasting the largest proven crude oil reserves in the world. Ongoing structural reform efforts and an improving outlook for oil exports signal that Saudi Arabia's economic growth will continue to strengthen in the short- to medium term. In order to shore up economic growth, on December 18, 2018, the government announced an expansionary budget for 2019, which focuses on boosting capital expenditure.

Source: Fitch Solutions

Major Economic/Political Events and Upcoming Elections

January 2015

King Salman ascended to the throne after King Abdullah died.

April 2016

The Vision 2030 economic diversification plan was launched.

June 2017

King Salman named his son Mohammed bin Salman first in line to the throne.

September 2017

The ban on women driving formally lifted, it allowed women to drive in 2018.

January 2019

The Saudi Arabian government signed three contracts worth around USD14 billion for implementing major railway projects. The first deal, signed with China Civil Engineering Construction Corporation, was for the USD10.6 billion Land Bridge project, which was aimed at linking the Red Sea and the Gulf Cooperation Council (GCC) ports via the railways between Dammam and Riyadh. The USD3.6 billion second deal has been signed with a Saudi-Spanish consortium to build Phase Two of the Haramain high-speed train project. The USD267 million third deal has been signed by Saudi Railway Company and United States firm Green Bakery Corporation for the manufacturing of train wagons in the country.

January 2019

Saudi Arabia started construction on NEOM Bay in the first half of 2019. NEOM Bay, which was the first urban area of the USD500 billion NEOM project, including the construction of homes, lifestyle and tourist facilities, innovation centres as well as hotels. The master plan concept for NEOM Bay was approved by Saudi Crown Prince Mohammed bin Salman bin Abdulaziz, who was also the chairman of the NEOM board. The phase was expected to be completed in 2020.

Sources: BBC Country Profile - Timeline, Fitch Solutions Political Risk Analysis, Saudi Press Agency

Major Economic Indicators

 

Graph: Saudi Arabia real GDP and inflation
 
Graph: Saudi Arabia real GDP and inflation
 
Graph: Saudi Arabia GDP by sector (2017)
 
Graph: Saudi Arabia GDP by sector (2017)
 
Graph: Saudi Arabia unemployment rate
 
Graph: Saudi Arabia unemployment rate
 
Graph: Saudi Arabia current account balance
 
Graph: Saudi Arabia current account balance
 

e = estimate, f = forecast

Sources: IMF, World Bank

Date last reviewed: May 2, 2019

External Trade

Merchandise Trade

 

Graph: Saudi Arabia merchandise trade
 
Graph: Saudi Arabia merchandise trade
 
 

Source: WTO

Date last reviewed: May 2, 2019

Graph: Saudi Arabia major export commodities (2018)
 
Graph: Saudi Arabia major export commodities (2018)
 
Graph: Saudi Arabia major export markets (2018)
 
Graph: Saudi Arabia major export markets (2018)
 
Graph: Saudi Arabia major import commodities (2018)
 
Graph: Saudi Arabia major import commodities (2018)
 
Graph: Saudi Arabia major import markets (2018)
 
Graph: Saudi Arabia major import markets (2018)
 

Sources: Trade Map, Fitch Solutions

Date last reviewed: May 2, 2019

Trade in Services

Graph: Saudi Arabia trade in services
 
Graph: Saudi Arabia trade in services
 
 

Source: WTO

Date last reviewed: May 2, 2019

Trade Policies
  • Saudi Arabia has been a member of World Trade Organisation (WTO) since December 11, 2005.

  • The country's GCC membership means that it is part of a single market and customs union with a common external tariff. A tariff of only 5% is imposed on the majority of items imported to Saudi Arabia from non-GCC countries, and there is a single point of entry where tariffs are collected once imports enter the GCC.

  • Overall, the average applied import tariff for goods entering Saudi Arabia is 3.4%. This is the second highest out of all six GCC states – tied with Qatar and just behind the United Arab Emirates (UAE), which has an average applied tariff rate of 3.2%. On average Saudi Arabia has some of the highest import tariffs in the Middle East North Africa region, and there are significant non-tariff barriers to trade in the country. Times and associated costs for border and documentary procedures in Saudi Arabia (especially imports) are some of the longest and highest in the GCC, which reduces the country's competitiveness as a trading destination when compared to its regional peers.

  • The Saudi Arabian government grants various subsidies and export incentives to a variety of industries, which reduces the competition of imports in this regard.

  • For cultural and religious reasons, an import tariff of 200% is levied on cigarettes and tobacco products (GCC tariff).

  • Value of 5% was introduced in January 2018.

  • Saudi Arabia has a domestic metal manufacturing industry which is protected by tariff measures.

  • For cultural and religious reasons, all imports of alcoholic beverages are banned.

  • Various import bans exist on sensitive goods such as high energy air-conditioners, cars older than five years, and equipment used in water desalination processes.

  • In order to import a wide variety of consumer goods (such as basic foodstuffs and packaged pharmaceutical products) to Saudi Arabia, special approval is required from the relevant government authority.

Sources: WTO - Trade Policy Review, government websites, Fitch Solutions

Trade Agreement

Trade Updates

As Saudi Arabia's ties with the West cool, the kingdom is starting to pivot towards the East as part of its 'Vision 2030' plan. In February 2019, the crown prince commenced an Asian tour with the aim of strengthening economic, political and cultural ties.

Multinational Trade Agreements

Active

  1. The GCC: Saudi Arabia is a founding member of the GCC, a political and economic organisation established on May 25, 1981. In January 2015, the GCC implemented a customs union and free trade agreement (FTA) that allows for the free movement of local goods among member states. Saudi Arabia's trade with these countries is tariff free. Other members of the GCC are Bahrain, Oman, Qatar and the UAE. This agreement helps member states to leverage one another's industrial capacity and logistics networks. The geographic proximity of these countries and their general adoption of free trade economic policies are factors that foster a competitive business environment. Only imports on certain sensitive goods from GCC countries face tariffs, and there is freedom of movement between GCC countries without customs or non-customs restrictions. In 2017, the GCC was the source market of 9% of Saudi Arabia's imports and the destination for 5.8% of Saudi Arabia's exports. Saudi Arabia negotiates FTAs through its GCC membership.

  2. Greater Arab Free Trade Area (GAFTA): GAFTA came into force on January 1, 1998. In March 2001, it was decided to speed up the liberalisation process, and on January 1, 2005 the elimination of most tariffs among the GAFTA members was enforced. GAFTA activates the Trade Facilitation and Development Agreement and eliminates most tariffs among the GAFTA members. The 17 members of GAFTA are: Algeria, Bahrain, Egypt, Iraq, Kuwait, Lebanon, Libya, Morocco, Oman, Palestine, Qatar, Saudi Arabia, Sudan, Syria, Tunisia, UAE and Yemen. GAFTA was declared within the Social and Economic Council of the Arab League as an executive programme to activate the Trade Facilitation and Development Agreement and the elimination of most tariffs among the GAFTA members. The GAFTA saw tariffs between 17 Arab states rapidly decline from an average 15% in 2002 to 6% in 2009. Trade liberalisation has been of great benefit to all member states and has aimed to reduce the cost of imports to Saudi Arabia; however, regional instability and domestic security concerns have diminished the effect of this agreement and have created trade barriers.

  3. GCC-European Free Trade Association (EFTA) (Iceland, Liechtenstein, Norway and Switzerland): The GCC and the EFTA signed an FTA on June 22, 2009 which entered into force on July 1, 2014. The agreement covers the progressive elimination of tariffs in trade in services and manufactured goods as well as investment, and other trade-related issues, such as protection of intellectual property, and is fully consistent with provisions of the WTO. In addition, bilateral arrangements on agricultural products between individual EFTA states and the GCC form part of the instruments establishing the free trade area between both sides. As a single entity, the EFTA is one of Saudi Arabia's largest import partners. Between 2014 and 2017, total trade between the GCC and EFTA grew by 22%.

  4. GCC-Singapore: The GCC-Singapore FTA (GSFTA): The GSFTA became effective on September 1, 2013. GSFTA eliminates most tariffs (99%) of Singapore's exports to the GCC. This is a comprehensive agreement covering trade in goods, rules of origin, customs procedures, trade in services and government procurement among others. Key sectors benefitting include telecommunication, electrical and electronic equipment, petrochemicals, jewellery, machinery and iron and steel-related industry. The recognition of the halal certification of Singapore's Majlis Ugama Islam Singapura (MUIS) will also pave the way for trade in halal-certified products to gain faster access to the GCC countries, such as Saudi Arabia.

Signed But Not Yet In Effect

The Trade Preferential System of the Organization of the Islamic Conference (TPS-OIC): The agreement would see to the promotion of trade between member states by including most-favoured nation principles, harmonising policy on rules of origin, exchanging trade preferences among member states, promoting equal treatment of member states and special treatment for least developed member states and providing for regional economic bodies made up of OIC nations to participate as a block. The agreement will cover all commodity groups. The OIC comprises 57 members, making a full realisation of such an agreement highly impactful, encompassing approximately 1.8 billion people. Although the Framework Agreement, the Protocol on Preferential Tariff Scheme and the Rules of Origin have all been agreed on, a minimum of 10 members are required to update and submit their concessions list for the agreements to come into effect. As of April 2019, only seven nations have done so.

Under Negotiation

  1. GCC-Australia FTA: Australia and the GCC commenced FTA negotiations in July 2007. Australia and the GCC share a significant economic relationship, encompassing trade and investment across a broad range of goods and services. Total trade between Australia and the GCC reached USD8.4 billion in 2017. The GCC is a key market for agricultural exports, such as livestock, meat, dairy products, vegetables, sugar, wheat and other grains. The agreement provides an opportunity to address a range of tariff and non-tariff barriers related to food exports that will benefit the food and drink sectors in Saudi Arabia. With a large proportion of world petroleum resources and a rapidly growing population, the GCC's prospects for continued trade growth are strong. The agreement will also help maintain a level playing field for automotive imports to the GCC market. These factors, along with a plurilateral FTA, will help sustain growth in Saudi Arabia's trade and investment relations with the country.

  2. GCC-mainland China FTA: The first-round negotiations of the GCC-mainland China FTA commenced on April 27, 2005. Greater trade liberalisation will help develop the industrial and service sectors. Saudi Arabia mainly exports commodities, such as oil, to mainland China, and imports electrical goods and machinery from mainland China. Trade liberalisation with the GCC will help the group integrate and grow with mutual cooperation and comprehensive tariff reduction. In 2017, mainland China accounted for 12% of the GCC's total global trade.

  3. United States-Middle East Free Trade Area (MEFTA): In May 2003, the United States-Middle East Free Trade Area (US-MEFTA) initiative was proposed, with the eventual goal of establishing an FTA between the United States and a range of countries in the Middle East. The countries targeted to join MEFTA are: Algeria, Bahrain, Egypt, Iran, Iraq, and Israel (and through Israel, the Palestinian Authority), Jordan, Kuwait, Lebanon, Libya, Morocco, Oman, Qatar, Saudi Arabia, Syria, Tunisia and Yemen. US-MEFTA includes a wide range of trade and investment issues, such as market access, intellectual property rights, and labour and environmental issues. US-MEFTA will help in growing commercial and investment opportunities by identifying and working to remove impediments to trade and investment flows between member states. This expands the scope of markets for businesses in Saudi Arabia to export products to and will significantly reduce trade costs. In July 2003, the United States and Saudi Arabia signed into force the Trade and Investment Framework Agreement (TIFA), with the aim of regulating all commercial matters between member states.

  4. India-GCC FTA: The agreement is expected to remove restrictive duties, push down tariffs on goods and pave the way for more intensive economic engagement between the nations. More than 50% of India's oil and gas comes from the GCC countries.

  5. Japan-GCC FTA: This agreement will seek to reduce tariffs and liberalise services trade and investment. Japan mainly imports aluminium, natural gas, liquid natural gas and petroleum products from the GCC, while Japan mainly exports electronics, vehicles, machinery and other industrial products to the GCC.

  6. Other: A number of other GCC FTAs are currently under negotiation. The countries engaged in negotiations include Pakistan, New Zealand, South Korea, the MERCOSUR bloc and Turkey.

Sources: WTO Regional Trade Agreements Database, Fitch Solutions

Investment Policy

Foreign Direct Investment

Graph: Saudi Arabia FDI stock
 
Graph: Saudi Arabia FDI stock
 
Graph: Saudi Arabia FDI flow
 
Graph: Saudi Arabia FDI flow
 

Source: UNCTAD

Date last reviewed: May 2, 2019

Foreign Direct Investment Policy

  1. The Saudi Arabian General Investment Authority (SAGIA), established in April 2000, is responsible for foreign direct investment (FDI) promotion, licensing and regulation, as well as offering support services to foreign investors. SAGIA's primary goal is to facilitate and encourage investment wherever possible. FDI is particularly encouraged in key infrastructure sectors such as utilities, transport and real estate, as well as for high value-add businesses and knowledge-based industries, including education, health and life sciences. Foreign investors are eligible for a number of incentives through SAGIA, including heavily subsidised utilities costs, reduced rent for industrial land and customs duties exemptions on imported raw materials (for five years) and machinery (for three years).

  2. Businesses face relatively higher trade and investment risks in Saudi Arabia when compared to regional peers. Despite the kingdom having some of the largest trade turnover and inward FDI stock volumes in the region, Saudi Arabia still remains fairly closed off to international trade and foreign investment by virtue of its undiversified economy and export partner portfolio. The global slump in crude prices has highlighted the necessity of diversifying the economy and opening it up more to private and foreign investment. In this regard, there have been several positive developments, specifically with the release of the 'Vision 2030' economic diversification plan, the opening up of Saudi stock exchanges to foreign portfolio investment and the allowance of 100% foreign ownership in certain sectors. Nevertheless, while these developments are noted as positive, the impact of these policies is expected to take time to filter through to diversifying Saudi Arabian export revenues away from crude oil and opening the country up even further for foreign investment.

  3. Related law and regulations on foreign investment are well established; however, some restrictions still remain for FDI, such as limits on foreign ownership and business activity in core sectors of the Saudi Arabian economy, including upstream oil and gas production.

  4. In January 2018, the Saudi government took further steps to open up its stock market to foreign investors. This has been done by allowing foreign (whether resident or non-resident) holdings of an entity's securities listed on Saudi stock exchanges to amount to 49%. The ceiling of the total percentage of shares that a single qualified foreign investor can own of a listed entity has been increased to 10% (it was previously set at 5%). Authorities have also now lowered the minimum assets under management an investor must have to meet the requirements to be recognised as a 'qualified foreign investor' from around USD1 billion to around USD500 million. These amendments formally came into effect on January 1, 2018.

  5. There are a number of subsidised or soft loans available to foreign investors, primarily through the Saudi Industrial Development Fund (SIDF) which provides medium-to-long term funding for new projects or the expansion of existing facilities. Low-cost credit is allocated on a geographic basis, with businesses located in less developed regions benefitting from more generous financing options. Accordingly, loans covering either 50%, 60% or 75% of project costs are available on a time frame of either 15 or 20 years. Facilities based in the underdeveloped regions of Hail, Jazan, Najran, Al Baha, Al Jouf and the Northern Borders enjoy additional benefits, including a tax reduction of 50% of annual expenses for employing and training Saudi workers, a further tax reduction of 50% on gross salaries of Saudi employees and tax exemption up to 15% of the value of the non-Saudi's share of capital.

  6. Non-residents are permitted to own property without a Saudi partner or sponsor. Saudi investment law allows 100% ownership of projects by foreigners (except for activities ruled out by the negative list) and relaxes rules for sponsoring foreign employees.

  7. Industries barred from foreign involvement are published in the country's negative investment list. This includes upstream oil production, manufacturing of military hardware, real estate in Mecca and Medina, recruitment and employment services, some printing and publishing activities, media services and land transportation. In addition, special licensing requirements are in place for a wider range of industries, including pharmaceuticals, air and maritime transport, hydrocarbon exploration, ports, livestock farming, and advertising and media.

  8. Local worker hiring requirements are in place. Government efforts to encourage the employment of Saudi nationals over expatriates have been enshrined in a clear plan known as Nitaqat, by which every company is divided into a sector with a different quota for the employment of Saudi workers, depending on the size of the firm. Those businesses meeting the criteria are classed as platinum or green, those failing are classed as yellow or red. Expatriate employees may move freely from the latter categories to the former (employers' permission is usually required), while companies under the former categories gain advantages in terms of employing expatriate workers.

  9. Though the law no longer requires that non-resident companies must find local partners, this method remains the most effective way of doing business in Saudi Arabia, as domestic entities will have a greater knowledge and experience of dealing with licensing, procurement and other bureaucratic procedures.

  10. Saudi Arabia implemented a tourist visa in December 2018 on a trial basis.

  11. Privatisation schemes and the public listing of state-owned entities are aims outlined in Saudi Arabia's 'Vision 2030' document.

  12. The government of Saudi Arabia is aiming to rival the UAE and Qatar by incentivising foreign investment through its special economic zones. Through the Economic Cities (ECs) initiative in Rabigh, Hail, Madinah and Jazan regions, the government aims to develop vibrant urban areas with a business-friendly environment. This would leverage the country's competitive advantages, namely low-cost energy and strategic locations. ECs projects are not only large industrial zones, they are also cities that will nurture new businesses and residential communities in areas that have had limited investment to date. They are expected to translate into employment growth in the cities; as a result, the ECs are expected to see positive growth in population, resulting in higher demand for real estate in the ECs.

Sources: WTO - Trade Policy Review, ITA, US Department of Commerce, Fitch Solutions

Free Trade Zones and Investment Incentives

Free Trade Zone/Incentive Programme Main Incentives Available
Prince Abdulaziz Bin Mousaed Economic City (PABMEC) in Hail, Knowledge Economic City (KEC) in Madinah, King Abdullah Economic City (KAEC) in Rabigh, and the Jazan Economic City (JEC) - No restrictions on sponsoring foreign employees



- Ability to carry forward losses indefinitely



- Indefinite exemption from all income taxes



- Minimum capital requirement and no restrictions on repatriation of capital



- Accelerated investment application, business registration and setup process, with a guaranteed decision for foreign investment applications within 30 days of submission to SAIGA



- No personal income tax and a minimal 20% corporate tax for foreign companies



- Moderate utilities rates



- No export duties within the 17 countries of GAFTA



- Few restrictions on currency conversion, exchanges and transfers



- Duty drawback, a customs refund for raw material imports that are processed and exported as finished goods



- Preferential treatment for national products in Saudi Government procurement



- Export credit, financing, guarantees and insurance through the Saudi Export Programme



- Financial support for the training and employment of Saudis from the Human Resources Development Fund



- Low-cost loans from the Saudi Industrial Development Fund and Public Investment Fund



- Customs duties exemption on imported machinery, equipment, raw materials and spare parts, if they are for industrial use. Low land rental and utilities rates – net leasing rate/annum: SAR700/sq m; service charge: SAR120/sq m (total service charge: SAR820/sq m, to be paid annually in advance on a quarterly basis)



- Exemption from import fees for selected raw materials imported for manufacturing products



- Contract term – minimum two years; no escalation during the first two years; year three onwards: 5% per annum



- Modern infrastructure and education facilities

Sources: US Department of Commerce, Fitch Solutions

Taxation – 2019
  • Value Added Tax: 5%
  • Corporate Income Tax: 20%

Sources: Saudi Arabia Ministry of Finance, General Authority of Zakat and Tax (GAZT), Fitch Solutions

Important Updates to Taxation Information

  • Saudi Arabia has double taxation agreements (DTA) and Investment Promotion & Protection Agreement (IPPA) with mainland China. The DTA with Hong Kong entered into force on September 1, 2018.

  • VAT is expected to  become one of the major sources of non-oil revenue in Saudi Arabia, according to the 2019 budget statement. Enterprises with taxable or expected sales of SAR1 million or more were required to register before December 20, 2017 and transfer VAT collected to the General Authority for Zakat and Tax. Enterprises with annual sales of SAR375,000 or more were required to register before December 20, 2018.

Business Taxes

Type of Tax Tax Rate and Base
Corporate Income Tax
 
- 20% on a non-Saudi’s share in a resident corporation;

- Zakat is levied on a Saudi's share (citizens of the GCC are treated as Saudis)
Corporate Income Tax in the natural gas sector 30%
Corporate Income Tax in the oil sector 50%-85%
Dividends 5% on net earnings (except for firms in the oil and gas sector)
Capital Gains Tax Treated as taxable income; gains on depreciable assets and on certain securities are exempt
Value Added Tax 30% on export earnings
Zakat (Religious levy, imposed on the shareholders in Saudi Arabian companies that are Saudi or GCC nationals) 2.5% on Zakat base
Social security contributions – payable by employer 12% of employee's salary for Saudi employees and an accident insurance of 2% of employee's salary for non-Saudi employees

Sources: Saudi Arabia Ministry of Finance, The Saudi Arabian General Authority of Zakat And Tax, Fitch Solutions

Date last reviewed: May 2, 2019

Foreign Worker Requirements

Localisation Requirements

The Saudi Arabian government has launched a local workforce hiring localisation policy called 'Saudisation', which is intended to boost the employment of Saudi nationals and reduce reliance on foreign labour. Foreign firms are, therefore, required to employ and train Saudi nationals. In line with Saudi Arabia's economic diversification strategy 'Vision 2030', the Saudi Arabian government has ramped up the enforcement of its 'Saudisation' policies in order to try and achieve its aim of 50% of all employment in the country's private sector to be occupied by Saudi Nationals. Employers must consider Saudi nationals for any positions before they hire a foreign worker. Before a company can apply for a work permit for a foreign national they want to employ, they must advertise the job opening for two weeks on a government jobs portal.

Certain positions are reserved strictly for Saudi nationals and businesses must pay certain charges for every foreign national they hire. There are also specific 'Saudisation' targets set for specific firms or sectors, and if these are not complied with there is strong potential for businesses not to get the work permits of their foreign workers renewed or to be denied work permits for new foreign employees.

Obtaining Foreign Worker Permits for Skilled Workers

Applicants must have an offer of employment by an employer willing to sponsor their application and from there the applicant must provide proof of education qualifications and various medical records. Due to the Saudi Arabian government's drive to promote local employment these are becoming increasingly difficult to obtain, especially as the Saudi Arabian government is becoming far stricter with the implementation of its policies and the negative repercussions these can have for future foreign worker permit applications or renewals.

Visa/Travel Restrictions

All citizens of non-GCC states must apply for a visa before entering the country. To be granted a visa to enter Saudi Arabia (only for business, medical or religious purposes) the applicant must be sponsored by a Saudi national. Saudi Arabia implemented a tourist visa in December 2018 on a trial basis.

Sources: Government websites, Fitch Solutions

Risks

Sovereign Credit Ratings


 
Rating (Outlook) Rating Date
Moody's
 
A1 (Stable)
 
13/04/2018
 
Standard & Poor's A- (Stable)
 
17/02/2016
 
Fitch Ratings
 
A+ (Stable)
 
30/04/2019

Sources: Moody's, Standard & Poor's, Fitch Ratings

Competitiveness and Efficiency Indicators


 
World Ranking
 
2017 2018 2019
Ease of Doing Business Index
 
94/190
 
92/190
 
92/190
Ease of Paying Taxes Index
 
69/190 76/190 78/190
Logistics Performance Index
 
N/A 55/160 N/A
Corruption Perception Index
 
57/180 58/180 N/A
IMD World Competitiveness 36/63 39/63 N/A

Sources: World Bank, IMD, Transparency International

Fitch Solutions Risk Indices


 
World Ranking
2017 2018 2019
Economic Risk Index
 
N/A 40/202 49/202
Short-Term Economic Risk Score 58.8 67.5
 
65.5
Long-Term Economic Risk Score 65.7 67.1 66.0
Political Risk Index
 
N/A 117/202 122/202
Short-Term Political Risk Score 72.5 72.5 71.7
Long-Term Political Risk Score 56.7 58.7 57.7
 Operational Risk Index N/A 52/201 49/201
Operational Risk Score 61.7 61.5 62.6

Source: Fitch Solutions

Date last reviewed: May 2, 2019

Fitch Solutions Risk Summary

ECONOMIC RISK

Saudi Arabia's economic fortunes are heavily tied to global hydrocarbon prices. The economy benefitted from increased crude oil production and higher prices for the commodity in the second half of 2018, prompting GDP to expand at the fastest pace in two-and-a-half years. Although growth in non-oil private activity accelerated slightly, it remained low compared to historical figures. In order to shore up economic growth, the government announced an expansionary budget for 2019, which focuses on boosting capital expenditure. The 'Vision 2030' plan is expected to provide long-term benefits for private sector growth and foreign direct investment levels in the decade ahead. However, failure by the government to deliver on economic reforms could lead to a deterioration in investor sentiment, as could perceived foreign policy impulsiveness.

OPERATIONAL RISK

Saudi Arabia remains one of the top regional performers in terms of its operating environment. This competitiveness is largely associated with the Kingdom's larger trade volumes and inward FDI flows compared to its peers, its well-developed taxation and financial systems and its superior logistics network to those of many other MENA states. Furthermore, government efforts are being increasingly directed towards addressing its pre-existing key areas of weakness that are largely related to its complex security and labour environments.

Source: Fitch Solutions

Date last reviewed: April 30, 2019

Fitch Solutions Political and Economic Risk Indices

Graph: Saudi Arabia short term political risk index
 
Graph: Saudi Arabia short term political risk index
 
Graph: Saudi Arabia long term political risk index
 
Graph: Saudi Arabia long term political risk index
 
Graph: Saudi Arabia short term economic risk index
 
Graph: Saudi Arabia short term economic risk index
 
Graph: Saudi Arabia long term economic risk index
 
Graph: Saudi Arabia long term economic risk index
 

100 = Lowest risk, 0 = Highest risk

Source: Fitch Solutions Political and Economic Risk Indices

Date last reviewed: May 2, 2019

Fitch Solutions Operational Risk Index


 
Operational Risk Labour Market Risk Trade and Investment Risk Logistics Risk Crime and Security Risk
Saudi Arabia Score 62.6 67.2
 
62.1 62.7
 
58.6
MENA Average 48.3 52.3 48.0 48.7 44.1
MENA Position (out of 18) 5 2 4
 
5 7
 
Global Average 49.7 50.3
 
49.8
 
49.0
 
49.8
Global Position (out of 201) 49 16 53
 
51
 
73
 

100 = Lowest risk, 0 = Highest risk

Note: MENA= Middle East and North Africa

Source: Fitch Solutions Operational Risk Index

Graph: Saudi Arabia vs global and regional averages
 
Graph: Saudi Arabia vs global and regional averages
 
Country
 
Operational Risk Index Labour Market Risk Index
 
Trade and Investment Risk Index Logistics Risk Crime and Security Risk Index
UAE 73.6 71.2 79.1 68.7 75.3
Qatar 66.2 65.0
 
61.8 71.6
 
66.5
Oman 66.2 62.2 61.9 64.5 76.0
Bahrain 66.0 63.1 69.5 71.5 60.1
Saudi Arabia 62.6 67.2 62.1 62.7 58.6
Jordan 59.1 56.9 60.7 59.0 60.0
Kuwait 55.5
 
54.2 51.2 52.5 64.1
Morocco 54.1 43.2 63.8 54.8 54.6
Egypt 49.3 49.9 45.7 56.4 45.3
Tunisia 47.1 42.2 56.2 47.3 42.8
Lebanon 44.7 43.0 51.9 41.4 32.4
Iran 43.0 49.5 36.7 50.8 35.1
Algeria 42.0 46.1 31.1 42.9 47.9
West Bank and Gaza 34.8 48.8 37.4 32.0 21.2
Libya 28.0 47.2 22.1 29.3 13.4
Syria 27.3 45.5 23.7 27.0 12.7
Iraq 27.1 43.7
 
24.8 28.6 11.3
Yemen 22.4 32.7 24.9 15.8 16.1
Regional Averages 48.3 52.3 48.0 48.7 44.1
Emerging Markets Averages 46.0 48.1 46.5 44.7 44.8
Global Markets Averages 49.7 50.3 49.8 49.0 49.8

100 = Lowest risk, 0 = Highest risk

Source: Fitch Solutions Operational Risk Index

Date last reviewed: May 2, 2019

Hong Kong Connection

Hong Kong’s Trade with Saudi Arabia

Graph: Major export commodities to Saudi Arabia (2018)
 
Graph: Major export commodities to Saudi Arabia (2018)
 
Graph: Major import commodities from Saudi Arabia (2018)
 
Graph: Major import commodities from Saudi Arabia (2018)
 

Note: Graph shows the main Hong Kong exports to/imports from Saudi Arabia (by consignment)

Date last reviewed: May 2, 2019

Graph: Merchandise exports to Saudi Arabia
 
Graph: Merchandise exports to Saudi Arabia
 
Graph: Merchandise imports from Saudi Arabia
 
Graph: Merchandise imports from Saudi Arabia
 

Note: Graph shows Hong Kong exports to/imports from Saudi Arabia (by consignment)

Exchange Rate HK$/US$, average

7.76 (2013)

7.75 (2014)

7.75 (2015)

7.76 (2016)

7.79 (2017)

7.83 (2018)

Source: Hong Kong Census and Statistics Department, Fitch Solutions

Date last reviewed: May 2, 2019
 

 

 
Graph: Merchandise imports, Poland
 

 
2017
 
Growth rate (%)
Number of Saudi residents visiting Hong Kong 13,179
 
-28.7
 

Sources: Hong Kong Tourism Board, United Nations Department of Economic and Social Affairs – Population Division, Fitch Solutions


 
2017
 
Growth rate (%)
Number of Middle Eastern residents visiting Hong Kong 129,816 -0.2

Sources: Hong Kong Tourism Board, United Nations Department of Economic and Social Affairs – Population Division, Fitch Solutions

Date last reviewed: May 2, 2019

Commercial Presence in Hong Kong


 
2016
 
Growth rate (%)
 
Number of Saudi Arabian companies in Hong Kong  N/A
 
N/A
- Regional headquarters
- Regional offices
- Local offices



Treaties and agreements between Hong Kong and Saudi Arabia

Saudi Arabia and mainland China entered into a bilateral investment treaty (BIT) in May 1997. Saudi Arabia has DTA and IPPA with mainland China and concluded the DTA with Hong Kong in August 2017.

Source: Hong Kong Department of Justice, UNCTAD Investment Policy Hub

Chamber of Commerce (or Related Organisations) in Hong Kong

The Arab Chamber of Commerce & Industry

The Arab Chamber of Commerce & Industry (ARABCCI) was established in Hong Kong in 2006 as a leading organisation at promoting commercial ties between Hong Kong/mainland China and the Arab World.

Address: 20/F, Central Tower, 28 Queens Road, Central, Hong Kong

Email: info@arabcci.org, secretariat@arabcci.org

Tel: (852) 2159 9170

Fax: (852) 2159 9688

Source: The Arab Chamber of Commerce and Industry, Hong Kong

Consulate of the Kingdom of Saudi Arabia in Hong Kong

Address: Suite 6401-3, Central Plaza, 18 Harbour Road, Wan Chai, Hong Kong

Email: info@saudiconsulate.org.hk

Tel: (852) 2520 3200

Fax: (852) 2520 3266

Source: Hong Kong Protcol Division Government Secretariat

Visa Requirements for Hong Kong Residents

Visa applications must be completed prior to travel. It is important to note that the passport must not contain any evidence of prior or intended travel to Israel. Visas are currently only issued for business travel, for foreigners with Saudi Arabian relatives, for transit purposes and for religious pilgrimage purposes. Therefore, a Saudi Arabia commercial visit invitation letter is required for Hong Kong residents. In March 2019, Saudi Arabia announced plans to allow Chinese citizens visa-free access to the kingdom for tourism reasons by the end of 2019. Further details, as well as whether this will apply to Hong Kong residents, are yet to be released.

Source: Saudi Arabia's Ministry of Foreign Affairs

Date last reviewed: May 2, 2019

 

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