This is why Branson is investing hugely in Saudi Arabia
In the recent past, Saudi Arabia has embarked on a whole slew of moves whose primary objective is to succeed in implementing Vision 2030 by opening up its economy and reducing the Kingdom’s dependence on oil revenues.
In this regard, one of the most important sectors that will help the country diversify its revenue streams is the tourism sector. Therefore, KSA is currently launching a series of projects to cater to its nationals and attract foreign tourists.
Among the latest projects announced by the kingdom is a Red Sea project that aims to turn 50 Saudi Arabian islands into luxury tourism destinations.
Media statements said the project will be developed with seed capital from the Public Investment Fund, while partnerships with top-tier international companies will be formed.
Surprisingly, Virgin Owner Richard Branson is the first non Saudi to invest in the red sea project.
So, what’s so appealing about the kingdom?
With the launching of Vision 2030, Saudi Arabia is making every effort to open its doors to the world. The Kingdom, for instance, opened its stock market to attract more regional and international investors and also introduced new regulatory reforms to help encourage the interest of overseas investors.
Also, Saudi Arabia lifted its ban on voice calls on Skype, WhatsApp and other applications to make the country more attractive for business.
Moreover, the years of protests from feminists in Saudi Arabia who have fought for an end to the guardianship system reaped good results this year when King Salman issued an order allowing women to benefit from government services such as education and healthcare without needing their male guardian’s consent.
Further, the king also issued a decree to end the ban on women being allowed to drive in Saudi Arabia, which was considered a major step in the country’s modernization process not to forget that Saudi women have started occupying high rank government positions.
These positive changes were all hailed by Branson.
“This is an incredibly exciting time in the country’s history and I’ve always felt that there’s nothing like getting a first-hand impression,” Sir Richard was quoted as saying in a statement issued by the Saudi Ministry of Culture on the occasion.
“It is so exciting that this side of Saudi Arabia is starting to come to light. It will be wonderful to attract visitors to marvel at the beauty of Saudi Arabia, and get to know its people too,” he added.
But is this enough to make Saudi Arabia an investment haven?
Not really. Saudi Arabia has a lot more to offer.
According to the Saudi Arabia General Investment Authority (SAGIA), among the benefits offered to foreign investors for instance is that foreign-owned companies enjoy all the benefits, incentives, guarantees and support offered to Saudi-owned companies.
These include a 20 per cent tax on corporate profits, with any losses carried forward indefinitely to offset future taxes, while there are no personal income tax, value added tax, sales tax, land tax or property tax.
Are there more incentives?
Definitely. Among the incentives offered by Saudi Arabia is tax exemption for foreign investors on earnings from exports, in addition to tax credits on R&D investments.
“The government also grants significant training and employment-related tax concessions, up to 50 per cent of either training cost or payroll, to companies operating in any of the six less developed regions: Hail, Jizan, Najran, Al Baha, Al Jouf, and the Northern Region,” SAGIA said.
SAGIA added that one of the positive factors is the stability of the Saudi Riyal, which saw no critical changes in its exchange rates during the last three decades.
“Saudi Arabia permits transferring of capital and profit abroad. Moreover, Saudi Arabia has low inflation rates and pursues to conclude mutual agreements with a number of countries in regards of promoting and protecting investment as well as preventing double taxation,” it noted.
But how Saudi fare in terms of ease of doing business?
It looks like KSA has to make more efforts in the years to come until it implements its Vision 2030, enabling it to compete with its regional peers when it comes to attracting business.
Saudi Arabia still lags behind its regional peers on the World Bank’s Ease of Doing Business Index, scoring 77.09 on a scale from 0 to 100, compared to 92.85 for Oman and 91.21 for the UAE.
This is of course reflected in the set of reforms that are necessary to achieve Vision 2030 and which are still in the pipeline.