Saudi Business Continuity Updates

Ramadan Kareem!

In the popular imagination little happens during Ramadan, though this stereotype has once again been contradicted by experience; as has typically been the case we find ourselves challenged by the flow of new projects, as Saudi families reunite in the Kingdom and join arms nightly in celebrating iftar, while in parallel concluding new business deals.

The flood of new regulations continues; preparations for an apparently much more restrictive data privacy regime have been suspended first by delays in issuing  implementing regulations, and most encouragingly by a 1-year delay in its implementation in the face of issues raised by international business challenged to localize data as radically as contemplated in an increasingly interconnected world.

Amendments to the Code of Legal Practice reopen doors for foreign law firms to either register their own branches or partner with local attorneys and firms, a timely opportunity for global firms to restructure their regional presence and serve international clients locally rather than from Dubai or elsewhere.

There has been no abatement in activity to launch new projects at NEOM, Red Sea, Al-Ula, Qiddiya, DiriyaGate and elsewhere, as the PIF expands its role as a domestic development agency, fueled not only by creativity and energy from above but also by crisis-driven surge in energy prices and revenues, which may hopefully also alleviate continuing contract payment delays.

Tonight I moderate the third in our Diplomatic Dialogue series, featuring UK Ambassador Neil Crompton, U.S. Chargé d’Affaires Martina Strong and Singapore Ambassador Chowming Wong, showcasing initiatives and success stories from these countries to help inform Vision 2030 economic reforms, most immediately Project HQ which seeks to locate regional headquarters of global business at King Abdullah Financial District.

Finally and most importantly, we wish our Muslim colleagues and friends a deeply blessed and inwardly rewarding holy month of fasting and spiritual growth!

Upcoming Saudi Holidays, Events, Webinars, and Conferences

  • USSBC Program: For a schedule of upcoming U.S.-Saudi Business Council (USSBC) events and webinars see here.
  • Ramadan: April 1-May 1
  • Eid al-Fitr: April 25-May 5

COVID-19 Status, Restrictions, and Information

  • Vaccines: Saudi Arabia has approved the Pfizer, Oxford-AstraZeneca, Johnson and Johnson, Covishield, Comirnaty, Spikevax, SK Bioscience, Vaxzevria, Sputnik, and Moderna vaccines for import and use. Covaxin has been approved for travel. The Ministry of Health has affirmed the safety of the mixing of vaccines approved in the kingdom. 
  • Removal of Precautionary Measures: Saudi Arabia has lifted significant precautionary and preventative COVID measures, including social distancing and outdoor mask-wearing.

Public Sector and Significant Updates 

  • Opening Bank Accounts Halted: the Saudi Central Bank (SAMA) has issued instructions for all banks in the Kingdom to halt opening new accounts for clients through online platforms “until further notice” as part of measures to tackle fraud.
  • Government Disbursements: Saudi Arabia’s Citizen Account Program deposited $480 million into the accounts of 10.3 million beneficiaries for April to subsidize living costs.

Corporate / Employment

  • Philippines Employment Ban: The Philippines Department of Labor and Employment (DOLE) has clarified that the deployment of Filipino workers to Saudi Arabia is still suspended.

Legal

  • Al Tamimi Legal Magazine: For Al Tamimi Law’s latest magazine issue (focus is on the legal transformation of Saudi Arabia), see here.
  • Payment Services Law Consultation: The Saudi Central Bank (SAMA) has announced the opening of a public consultation on the draft implementing regulation of payments and payment services law.
  • Anti-Corruption Academy Membership: Saudi Arabia has been elected as a member of the International Anti-Corruption Academy (IACA).

Visas and Travel

  • Travel Guidelines: For up-to-date travel information, visit the US Embassy in Saudi Arabia’s COVID-19 page. For Saudia’s travel guidelines, see here. 
    • COVID Protocols Lifted: Saudi Arabia has lifted all COVID travel restrictions. Unvaccinated travelers can enter the Kingdom.

Business / Economy 

  • General:
    • Non-Profit Growth: The Minister of Human Resources and Social Development stated that there are now over 3,400 non-profits in the Kingdom, an increase of 164%.
  • Public Investment Fund (PIF):
  • Finance, Insurance, and Investment:
    • Citigroup Reentry: For an analysis of Citigroup’s reentry into the Saudi market, see here.
    • Foreign Investments in Stock Market: Foreigners now own $1.7 billion in the Saudi stock market. 
    • GEN Expansion: The Global Entrepreneurship Network (GEN) plans to establish its first overseas office in Saudi Arabia.
    • Flat6Labs Seed Program: Flat6Labs, a seed and early-stage VC company, has partnered with The Saudi Venture Capital Company (SVC) to establish a new seed program and fund to support early-stage entrepreneurs in Saudi Arabia.
  • Real Estate, Construction, Infrastructure, and Megaprojects:
    • Keller Williams Expansion: Real estate firm Keller Williams announced its expansion to the Kingdom.
    • Quba Mosque Expansion: Saudi Arabia has announced a plan to massively expand the Quba mosque in Medina.
  • Industry, Utilities, Logistics, and Non-Oil Energy:
    • No significant recent developments.
  • Tourism, Hospitality, Culture, Sports, and Entertainment:
    • F1 Commitment: According to its CEO, Formula One will continue to race in Saudi Arabia despite concerns about safety and human rights in the country.
  • Retail, Luxury, and E-Commerce: 
    • No significant recent developments.
  • Religion: 
    • Haj Expansion: Saudi Arabia will allow up to 1 million pilgrims to join the Haj this year and will ease COVID restrictions. Umrah pilgrims must obtain a permit issued via the Eatmarna and Tawkkalna apps.
    • Schengen Visa Exemption: Saudi authorities announced that holders of Schengen visas will be allowed to perform umrah without being required to obtain a Saudi visa beforehand.
  • Education:
    • No significant recent developments.
  • Healthcare:
    • Cialis Acquisition: The Saudi Chemical Co. Holding (SCCH) has announced that it completed the acquisition of Eli Lilly’s Cialis in Saudi Arabia.
  • Technology and Telecom:
    • Uber Difficulties: A slew of new government rules and restrictions, including large retroactive taxes, is frustrating Uber’s activities in the Kingdom.
    • AI Excellence Center: Aramco has signed an MoU with King Abdullah University of Science and Technology (KAUST) to establish a new AI excellence center at the university.
    • IoT Company: The PIF is partnering with STC to launch a new IoT company.
    • 3D Printing Company: 3D printing company 3D Systems has signed an agreement with the Saudi Arabian Industrial Investments Company (Dussur) to expand manufacturing in the Kingdom.
    • ICT Sector Growth: The Saudi IT and communications sector (ICT) grew 8% between 2019 and 2021, reaching a total value of $32.1 billion.
  • Defense: 
    • SAMI-Boeing JV: SAMI, the Kingdom’s government-owned defense company, has announced a preliminary agreement on a JV with Boeing aimed at developing the country’s aviation sector.
    • Lockheed THAAD Contract: Lockheed Martin has won a contract to provide Saudi Arabia with THAAD missiles.
  • Food and Agriculture:
    • Agricultural Loans: The Agricultural Development Fund (ADF) has approved loans totaling $116 million to boost agricultural performance and production.
    • Food Waste: The value of food waste in Saudi Arabia reportedly exceeds $10.6 billion per year.
  • Natural Resources, Mining, and Environment:
    • Limestone Mining Licenses: The Ministry of Industry and Mineral Resources has invited investors to qualify for mining licenses to exploit limestone blocks in the Riyadh region.
    • Green Aluminum Smelting: Saudi Arabian Mining Co. (Ma’aden) and Emirates Global Aluminium (EGA) have agreed to extend their collaboration on greener aluminum smelting technology.
  • Oil: Oil prices most recently stood on April 14 at $110.06 pbb for Saudi oil (Arab Light) and $104.01 pbb for West Texas Intermediate (WTI).
    • Aramco 2021 Financial Report: For Aramco’s financial report for 2021, see here.
    • Oil Price Hike: Saudi Arabia has raised oil prices for customers in all regions as the Ukrainian crisis reverberates through markets, with Arab Light crude to Asia jumping from $4.40 a barely above the benchmark it uses to $9.35 a barrel above.
    • Pakistan Oil Credit: Pakistan has requested to take 200,000 barrels of oil per day from Saudi Arabia on credit for five years.
    • Refinery IPO: Aramco refinery Saudi Aramco Base Oil Co., also known as Luberef, is planning an initial public offering that may raise over $1 billion.

Geopolitical

  • Ukraine Aid: Saudi Arabia’s humanitarian charity will provide $10 million in urgent medical and shelter aid to Ukrainian refugees.
  • U.S.:
    • Anti-Saudi Pressure from Democrats: A coalition of Democrat lawmakers plan to press the Biden administration to take a tougher stance on Saudi Arabia over its position on Ukraine and human rights.
    • Jared Kushner Investments: Jared Kushner reportedly secured a $2 billion investment for his private equity firm from Saudi Arabia in 2021.
  • Yemen:

Gulf

  • UN Russia Vote Abstention: All six Gulf Arab countries abstained in a vote to suspend Russia from the UN Human Rights Council.
  • Payment Systems Linkage: The UAE Cabinet has adopted an agreement to link the payment systems of GCC countries.
  • Iron Dome Interest: The UAE and Bahrain have reportedly sought to buy Israel’s Iron Dome missile defense system.
  • Investments in the Horn of Africa: Gulf investments in the countries of the Horn of Africa, particularly Ethiopia, Sudan, Somalia, and Djibouti, have been rising.
  • UAE:
    • COVID Information: For current COVID information from the U.S. Embassy in the UAE, see here. For statistics and information from the UAE government, see here.
    • Israel Free Trade Deal: Israel and the UAE have concluded negotiations for a free trade agreement.
    • GDP Growth: The UAE achieved 3.8% growth in 2021, the highest in the region. The Central Bank predicts the economy will grow at 4.2% in 2022 despite inflationary pressure.
    • FDI Growth: FDI inflows into the UAE recorded a 3.9% growth in 2021 compared to 2020 to reach $20.7 billion.
    • Dubai Real Estate Boom: Dubai’s residential real estate sector saw its highest-ever transaction volumes for Q1 2022, with a total of 7,865 transactions in March, up 83.4% from the same month in 2021.
    • AD Ports Red Sea Expansion: Abu Dhabi port operator AD Ports Group plans to expand operations into the Red Sea.
    • Continued Russia Flights: Emirates has stated it will continue to fly to Russia as long as the Dubai government allows it.
  • Qatar: 
    • COVID Information: For current COVID information from the U.S. Embassy in Qatar, see here. For statistics and information from the Ministry of Public Health, see here.
    • Airbus Dispute: Airbus and Qatar Airways are set to face each other in UK court over a dispute worth billions of dollars.
    • London Property Investments: The number of properties owned by Qatari citizens in London has climbed 50% between 2018 and 2021.
  • Kuwait: 
    • COVID Information: For current COVID information from the U.S. Embassy in Kuwait, see here. For statistics and information from the Ministry of Health, see here.
    • Government Resignations: Kuwait’s government has resigned, just months after its formation. Meanwhile, the country’s Prime Minister Sheikh Sabah Al-Khaled Al-Sabah has resigned to avert a new push by opposition lawmakers to remove him from office.
    • S&P Rating: S&P has affirmed its long- and short-term foreign and local currency sovereign credit ratings on Kuwait at ‘A+/A-1’ with a negative outlook.
  • Bahrain:
    • COVID Information: For current COVID information from the U.S. Embassy in Bahrain, see here. For statistics and information from the Ministry of Health, see here.
    • Growth: Bahrain’s GDP grew 4.29% at real prices and 18.44% at current prices in Q4 2021.
    • Land Development: Bahrain is inviting private investors to develop government-owned land and provide required services across 17 projects.
  • Oman:
    • COVID Information: For current COVID information from the U.S. Embassy in Oman, see here. For statistics and information from the Ministry of Health, see here.
    • Outlook: S&P has upgraded Oman’s long-term foreign and local currency sovereign credit rating to ‘BB-’ from ‘B+’, citing higher oil prices, rising hydrocarbon production, and the government’s fiscal reform program. S&P predicts Oman’s GDP will grow 4% in 2022.
    • Surplus Growth: Oman has recorded a budget surplus of $545 million on the back of growing oil revenues.
    • Maritime Labour Convention: Oman has become the first Gulf country to ratify the Maritime Labour Convention.
    • Sustainable Tourism City: Oman’s Tourism Development Company (Omran Group) has launched the Yiti sustainable city.

Other

  • Miscellaneous: For earlier developments, see here.
  • Natural Gas Ambitions: For an analysis of Saudi Arabia’s natural gas ambitions, see here.

Resources

Commercial Law in Saudi Arabia

Chris Johnson

Managing Attorney
Johnson & Pump