What conditions do you need to meet to set up a factory in Saudi Arabia

The conditions for setting up a factory in Saudi Arabia involve many levels. Enterprises need to make a comprehensive plan at the beginning of registration, strictly abide by local laws and regulations, and comply with regulations in site construction, license application, personnel management, environmental protection measures, etc., in order to ensure the smooth landing of the factory and long-term stable operation, and seize the development opportunities brought by Saudi economic transformation.

Saudi factory conditions

1. Foreign investment access and shareholding ratio

most industries allow 100 per cent foreign ownership: manufacturing, wholesale and retail, information technology and consulting services have been liberalized, but joint ventures are still required in oil, gas, mining, insurance and telecommunications, and Saudi ownership is usually no less than 25 per cent.

Parent company operating life requirements: If applying for an industrial license or a specific industry license, the parent company must operate abroad for 1 year to prove its market stability.

2. Requirements for registered capital:

industrial sector: minimum of SAR 500000 (no paid-up required);

trade: minimum of 30 million Saudi riyal (paid-in required);

mining, agriculture, etc.: minimum 25000 Saudi riyal.

3. Labor policy

saudization requires that companies hire a certain percentage of local Saudi employees by industry and size (usually no less than 15% in manufacturing) and pay social security (GOSI) for them.

Management of foreign employees: they need to apply for work visa and residence permit (iqama) for foreign employees, and bear the benefits such as housing allowance and annual air tickets for visiting relatives.

4, Industry Licensing and Certification

industrial license: To engage in manufacturing, you need to apply for an industrial license, allowing foreign investors to hold 100 per cent of the shares.

Product Certification:

electronic products need to provide IECEE certification, and obtain energy efficiency labels (such as air conditioners, refrigerators);

photovoltaic modules and energy storage batteries shall comply with IEC standards and be certified by SASO accreditation bodies;

tires and other products need to pass GSO certification and G-Mark identification;

electric vehicles and charging pile equipment must comply with SASO technical specifications, and some projects need to be approved by the power company.

5. Environmental protection and safe production

environmental License: To engage in manufacturing, an environmental license is required and an environmental impact assessment (EIA) report is submitted to ensure that wastewater, waste gas and solid waste treatment comply with the Saudi Ministry of Environment, Water Resources and Industrial Pollution Control Regulations 2020.

Safety production management: enterprises need to establish a safety production system, improve employees' safety awareness, and ensure that the production process meets Saudi safety standards.

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