Saudi Arabia’s Vision 2030 socioeconomic revolution is unleashing an economic boom across a number of potential areas, giving investors a plethora of unexplored prospects for corporate growth and success. According to an industry official, Saudi Arabia plans to offer at least 800 industrial projects worth more than one trillion Saudi riyals ($266 billion) in 2023. This opens up opportunities for any entity or type of business setup in KSA.
The Kingdom plans to shift focus away from the oil industry and diversify the economy by welcoming entrepreneurs and investors from varying professions. Let’s look into the most likely to-thrive sectors in 2023.
Vision 2030 intends to strengthen the kingdom’s manufacturing, tourism, technology, and entertainment industries while also opening up capital markets to global investors.
Top industries likely to be on the boom in KSA in 2023 and onwards:
Aerospace and Defense
Saudi Arabia, which has one of the world’s highest military expenditures, is shaking up its defense and security sector in order to localize more than 50% of its military budget by 2030.
Localization in the Kingdom represents billions of dollars in investment potential for domestic and international companies, including multinational original equipment manufacturers and small and medium-sized enterprises (SMEs). Supply or manufacturing would make a profitable business setup in KSA.
The real estate sector is important to the Kingdom’s vision of a flourishing society. Saudi Arabia has made attempts to change its real estate business, owing to its large young population and consistent demand. Due to the influx in demand, a real estate business setup in KSA is bound to be high-value.
The government contributes significantly to the sector’s development by increasing technology adoption. Through these contributions, the government creates an appealing investment environment and provides innovative financing solutions.
Human Capital Innovation
By giving lifetime learning opportunities, supporting a culture of innovation and entrepreneurship, and establishing and activating policies and enablers of human capital, the sector focuses on providing opportunities for citizens to participate and be a part of our path of upskilling citizens. Part of the sector’s goals also includes increasing SMEs’ contribution to the GDP to 35%.
The government is actively assisting financial institutions in enabling public and private sector growth, developing a sophisticated capital market, and increasing lending to micro, small, and medium-sized firms (MSMEs).
Because of its vast and well-established industrial foundation, Saudi Arabia’s oil sector is the country’s economic backbone. The expanding economy is expected to stimulate extraordinary demand across all market categories. This will come with a renewed emphasis on energy efficiency and sustainable growth.
The increasing market demand for solar, wind, tidal, and other renewables through significant government support and private-sector investment make the energy sector a potential business setup in KSA.
Undoubtedly, Saudi Arabia is revolutionizing its image on the global platform. Especially by moving away from oil and related industries and welcoming more business from foreign economies. This is a major tool to enhance and diversify the economy to align with Vision 2030 goals.
If you choose to conduct business in KSA, you must understand which types of legal entities you can establish. The following are the various types of entities you can choose from during company formation in Saudi Arabia:
- Limited Liability Company (LLC)
- Foreign Company Branch Office
- Joint Stock Firm
- General Partnership
- A Sole Propertiorship
Investing in KSA and its Benefits
Saudi Arabia has implemented considerable economic changes, increasing foreign direct investment opportunities. The country’s abundant natural resources, like oil and minerals, make it an ideal site for economic growth. Furthermore, the government’s efforts to open up the economy and attract international investment boost Saudi Arabia’s desirability as a location for economic endeavors.
The Saudi Ministry of Investment (MISA) permits 100% foreign ownership of branch offices without the necessity for a local sponsor. While branch offices are not allowed to engage in trading, they can help the parent company’s commercial development in the service industry.
On the other hand, a representative office is a branch limited to marketing operations on behalf of the parent firm. This type of entity cannot participate in business development. Companies can use branch and representative offices to establish their presence and tap into the country’s booming economy. Investing in the flourishing and opulent KSA markets is an ideal business decision for young entrepreneurs or foreign investors. Despite the flexibility in laws and openness in business, KSA still has some stringent laws around corporate. However, this could be fairly easy with professional business setup consultants in Saudi Arabia.