Between 2019 and 2023, Saudi Arabia experienced a significant rise of 12% in business registrations to reach over 1.12 million commercial records. This surge tops off a 14% surge in commercial records over the last five years, surpassing 192,000 registrations in that time. This highlights the dynamic and rapid evolution of the business landscape in the Kingdom. These improvements have been driven by strategic reforms, regulations, and a business-friendly investment environment under the Vision 2030 framework, as recently reported and confirmed by the Minister of Commerce.
The cities of Riyadh and Jeddah emerged as the top two cities for company registrations in the Kingdom, respectively, reflecting their strategic importance and development as vibrant economic hubs. The most popular company types seeing an increase are limited-liability companies (LLCs), with an increase of 40% (229,000 registrations), and joint-stock firms (JSCs), which saw a rise of 15% (reaching 2,756).
The legislative reforms in Saudi Arabia have proven to be a pivotal aspect of creating an attractive business environment. Since the inception of the Vision 2030 initiative, over 70 laws have been introduced or amended, including the Companies Law, which regulates family enterprises, encourages entrepreneurship, and supports startups. Other updates include the Consumer Protection Law, Commercial Transactions Law, Trademark Law, and the Commercial Register Law, all of which have been instrumental in improving trust and compliance in the Kingdom’s business sectors.
Over 60 economic activities have been introduced to enhance investment opportunities in a multitude of business sectors in the Kingdom due to collaborations between government entities and the private sector with The National Competitiveness Center. In addition, reforms across procedural aspects of the business environment have been improved to simplify the setup process.
The right location is crucial for business success. Cities like Riyadh and Jeddah in Saudi are prime examples of thriving business environments. Other countries in the GCC can similarly offer appropriate locations with emerging business landscapes, such as Kuwait and Egypt, with their mirroring economic reforms and strategic locations.
Focusing on economic diversification and reforms, Kuwait has similarly been making strides to improve its attractiveness for foreign business investments. The Kuwait Vision 2035 aims to transform the country into a regional financial and commercial hub, offering significant opportunities for investors in these fields.
Other regional countries, such as Egypt, while not a GCC country, play a significant role in the Middle Eastern business landscape. Having implemented several economic reforms to attract foreign investment in real estate, tourism, and manufacturing, the country is making significant contributions to attracting business to itself and surrounding countries.
Understanding the regulatory and compliance requirements when looking to establish a business in any country is essential. This is a key reason why LLCs and JSCs are the most popular formation types in Saudi Arabia, as they offer flexibility and certain benefits. Each country across the region has its own specific regulations that govern company formations, and therefore, it is imperative to adhere to these laws to ensure seamless operation and setup processes.
It is vital to identify the appropriate economic activity for business growth. The Kingdom of Saudi Arabia (KSA) offers numerous opportunities across various sectors, including technology, healthcare and tourism. KSA has been making great efforts to diversify its economy into non-oil sectors, creating new opportunities, a key element of the Vision 2030 programme.
The ascent of Saudi Arabia in the global competitiveness rankings is a testament to its economic performance and transformation, securing 17th in 2023 and achieving third place ranking amongst G20 countries, underscoring the Kingdom’s commitment to economic standing. In conjunction with working to improve global competitiveness, the Kingdom has seen a rise in compliance rates from commercial entities, where violations in Jeddah have decreased by 28% compared to the previous year, which further reinforced the Kingdom’s dedication to a reliable business environment.
The recent rise in business registrations in Saudi Arabia reflects the thriving and evolving business landscape across the GCC and Middle Eastern regions. Strategic reforms, a robust legislative framework, and a commitment to enhancing the business landscape have created a growing and opportunistic environment for investment and entrepreneurship.
