Over the years, Saudi Arabia has undergone a rapid and noteworthy transformations. In October 2022, the Kingdom inaugurated its inaugural integrated Special Economic Zone in Riyadh, which attracted high-profile tenants such as Apple.
The kingdom has recently introduced four new Special Economic Zones (SEZs) in different locations throughout the country. This initiative further strengthens the Kingdom’s standing as a global business hub and presents substantial investment prospects across vital sectors. These SEZs are a crucial component of Saudi Arabia’s Vision 2030 strategy, which focuses on economic diversification, encouraging innovation and attracting international investments.
The new SEZs are strategically located across the Kingdom, catering to various industries and sectors:
a) King Abdullah Economic City (KAEC) SEZ: A premier destination for advanced manufacturing and logistics, located on the Red Sea, offering access to global trade routes through King Abdullah Port.
b) Jazan SEZ: An industrial center and key platform for trade with fast-growing markets in Africa and Asia, providing opportunities for manufacturing, processing, and distribution of food products.
c) Ras Al-Khair SEZ: A launchpad on the Arabian Gulf for leaders in the maritime industry, focusing on shipbuilding, repair, offshore drilling, and maritime value chains.
d) Cloud Computing SEZ: A unique zone located in King Abdulaziz City for Science and Technology (KACST), aiming to attract leading cloud computing companies and accelerate the Kingdom’s digital economy.
The benefits of setting up business in these special economic zones are aggressive tax cuts, duty-free imports and other tax exemptions. The registration and other administrative processes have also been kept investor-friendly and as seamless as they could get. Each SEZ has a customized group of fiscal and private incentives in order to attract the investors. Similarly, there is flexibility for employment of foreign labour.
More or less, the procedure consists of several important steps such as:
a) Registering with the Ministry of Investment in Saudi Arabia (MISA): This is a crucial requirement to legally operate within the SEZs.
b) Attesting a Local Article of Association (AoA): It is necessary to have a verified AoA that complies with local regulations and laws.
c) Registering with relevant authorities: This includes registering with entities such as the General Authority of Zakat and Tax (ZATCA) to fulfill tax obligations and comply with financial regulations. The Saudi officials have expressed their vision of establishing world-class Special Economic Zones (SEZs) as the country’s next frontier for attracting investments and promoting local business development. Dubai’s Jebel Ali Free Zone, which was initially established in 1985 with only 19 registered companies. Over time, it has successfully attracted more than 8,700 local and foreign investors. Similarly, the DIFC has emerged as the premier financial centre in the region, accommodating over 4,000 companies and solidifying its position as a leading destination for financial activities. By far, there are 100 free or special economic zones across the GCC with UAE hosting most of them. Saudi officials are aspiring to match these figures.
