Saudi Arabia has been busy increasing its openness to foreign investors. They’ve enacted economic reforms, and have diversified the country’s economy to welcome more industries besides oil. Perhaps the biggest evidence of this is the Vision 2030 plan, which involves initiatives to attract foreign business owners.
Furthering this will be the establishment of four new special economic zones, announced by Crown Prince Mohammed bin Salman in April. Once complete they’ll act as business hubs for sectors like technology and manufacturing, supporting Saudi Arabia’s national strategies and improving connections with foreign partners.
The economic zones seek to add a myriad of avenues for the country to become a global investment destination, while giving entrepreneurs a business hub that enables their growth and success, with the full support of the Saudi Arabian government.
What are the four new free zones?
King Abdullah Economic City (KAEC) SEZ
This economic zone will be a new business destination for companies in logistics and advanced manufacturing, such as those in medical technology, automobiles, consumer tech, supply chain, or aerospace. It’ll be situated in the Red Sea, just about an hour & a half from Jeddah Airport and close to King Abdullah Port. All that gives prime access to global trade opportunities, as a gateway to the rest of the world.
Within KAEC will be an ecosystem that boasts tailor-made business solutions to attract entrepreneurs, alongside the modern infrastructures and investor-friendly laws that Saudi Arabia is already known for. The economic zone is also poised to be a place where entrepreneurs can grow their families, with five residential districts that offer everything from gated communities to contemporary condominiums, depending on one’s needs.
Ras Al-Khair SEZ
Focused mostly on the maritime industry, the Ras Al-Khair economic zone hosts opportunities in shipping & transportation, shipbuilding, marine technology, and other maritime services. Ras Al-Khair already has a network of investors at this stage, as about 40% of the economic zone is currently reserved. It would be a good time to make an early entry into Ras Al-Khair, and join the ranks of fellow maritime industry leaders.
Because Jazan SEZ allows for access to one of the region’s largest ports, it is being positioned as a key industrial and trade center between Saudi Arabia, Asia, and Africa. Some industries welcome here include heavy and secondary industries, food processing, metal conversion, and logistics. Operating from Jazan SEZ means the ability to work on large projects within Saudi Arabia and beyond, while taking advantage of its food resources like coffee, barley, wheat, and fruits.
Jazan SEZ will also be a place for entrepreneurs to grow their personal lives together with their businesses. It’ll have spaces allocated to residential neighbourhoods, commercial buildings, hospitals, and schools. Entertainment areas, hotels, and resorts are also being planned.
Cloud Computing SEZ
Located within King Abdulaziz City for Science and Technology (KACST), this economic zone is the most advanced of the four. It will be a hub for disruptive technologies. Cloud Computing SEZ is based on a hybrid model that lets investors establish physical data centers and cloud computing infrastructures around multiple locations in Saudi Arabia.
This will act as another proof point of Saudi Arabia’s commitment to digital innovation and technology, and another example of its strong and modern infrastructure. Although the Cloud Computing SEZ is open to serving many industries, some of its current priorities are smart mobility, digital healthcare, and potentially the current and future industry revolution.
What benefits do these new economic zones offer business owners?
- A competitive, 5% corporate tax rate
- 0% withholding taxes, for the repatriation of profits from the SEZ into foreign nations
- 0% customs duties on imports, production inputs, machinery and raw materials
- Full foreign ownership of companies
- The ability to attract and hire the foreign talent
- Exemptions on applicable fees for expats and families
Meanwhile, Cloud Computing SEZ offers the following additional benefits:
- Special tax treatments in line with OECD principle, avoiding double taxation and accommodating CSPs operating model
- Low costs for electricity USD 0.05/kWh
Getting started in Saudi Arabia’s new economic zones
Being newly launched economic zones, there are certainly a lot of questions surrounding how to open a company in these areas – alongside requirements, costs, and other details. Now that this information isn’t openly available yet, it would be best to work with company formation experts who have updated information and strategic advice surrounding emerging opportunities like this. Here in Creative Zone, we’ve helped an astounding 50,000+ entrepreneurs fulfill their business goals. Our expert consultants are equipped with the experience and the in-depth knowledge about the business landscape in the Middle East, so investors can rest easy that they’ll have everything they need to open a company in Saudi Arabia’s new economic zones.