So, you want to open a factory!

"SaudiOBNC", a leading consultancy company specializing in facilitating investment opportunities and establishing business ventures in Saudi Arabia. With a proven track record of guiding international companies through the intricacies of the Saudi market, we are committed to supporting the Kingdom’s Vision 2030 by attracting foreign investments and fostering strategic partnerships.

Establishing a factory in Saudi Arabia for a foreign investor

requires a series of steps and procedures to ensure compliance with local laws and regulations. The main steps include:

1. Obtaining Necessary Licenses and Permits

- Obtaining a Foreign Investment License: A license must be obtained from the Saudi Arabian General Investment Authority (SAGIA). The following documents must be submitted:

- A copy of the passport.

- A detailed business plan.

- Proof of financial capability.

- Recommendation from the Saudi embassy in the investor's home country.

- Commercial Registration: After obtaining the investment license, the company must be

registered with the Ministry of Commerce and Investment (MCI).

2. Choosing the Location and Obtaining Environmental Approvals

- Choosing the Location: A suitable location for the factory should be chosen, preferably in an industrial city where the necessary infrastructure is available.

- Environmental Approvals: An application for environmental approval must be submitted to the General Authority for Meteorology and Environmental Protection (GAMEP) to ensure the factory complies with environmental standards.

3. Construction and Equipment

- Design and Construction: Contract with a local engineering firm to design and build the

factory according to local standards.

- Equipment: Purchase and install the necessary equipment and machinery for manufacturing.

4. Employment and Training

- Employment: Hire the necessary staff for the factory, including engineers, technicians, and administrative personnel.

- Training: Provide training programs for employees to ensure production quality and workplace safety.

5. Final Permits and Quality Testing

- Operating Permits: Obtain operating permits from relevant authorities, such as the Civil Defense, to ensure compliance with safety standards.

- Quality Testing: Conduct quality tests on the products to ensure they meet Saudi and

international standards and specifications.

6. Marketing and Sales

- Registration with Government Entities: Register the factory and products with the relevant government authorities.

- Developing a Marketing Plan: Develop a marketing plan to promote products in the Saudi market and abroad.

Additional Notes

- Financing: Consider obtaining financing from local banks or through government support programs such as the Saudi Industrial Development Fund (SIDF).

- Partnerships: Consider forming partnerships with local companies to leverage their

experience in the Saudi market.

Steps for Foreign Investment with a Saudi Partner in Saudi Arabia

1. Choosing a Local Partner:

- Research and Communication: Search for a local Saudi partner with experience in the

industrial sector who can provide local support, the SaudiOBNC can help you with that

- Agreement on Terms: Negotiate and define the partnership terms, including profit

distribution and responsibilities.

2. Applying for an Investment License:

- Submission through the Ministry of Investment: Submit an application for a foreign

investment license through the Saudi Ministry of Investment (MISA).

- Required Documents:

- An authenticated copy of the commercial registration of the foreign entity from its country of origin.

- Financial statements for the last year prepared by an internationally recognized legal office and authenticated by the Saudi Embassy.

3. Establishing the Legal Entity:

- Registering the Articles of Association: Document and register the Articles of Association with the Ministry of Justice and the Ministry of Commerce.

- Choosing the Company Type: Select the type of company (such as a Limited Liability

Company or a Joint Stock Company) and register it officially.

4. Obtaining Industrial Licenses:

- Application for Licenses: Apply for industrial licenses from the Ministry of Industry and

Mineral Resources.

- Compliance with Local Standards: Adhere to local environmental and health standards.

5. Opening Government Files:

- Opening Tax Files: Open files with the General Authority of Zakat and Tax.

- Opening Labor Files: Open files with the Ministry of Human Resources and Social

Development.

- Opening Insurance Files: Open files with the General Organization for Social Insurance.

6. Construction and Equipment:

- Contracting with Construction Companies: Contract with local construction companies to build the factory.

- Purchasing and Installing Equipment: Purchase and install the necessary machinery and equipment for production.

7. Hiring and Training:

- Hiring Local Labor: Hire local labor and provide training programs to ensure efficiency and productivity.

- Training Foreign Labor: If there is foreign labor, provide necessary training to comply with local standards.

8. Starting Production and Marketing:

- Starting Trial Production: Begin trial production to ensure product quality and production efficiency.

- Developing a Marketing Plan: Create a comprehensive marketing plan to distribute products in the local and international markets.

Incentives table from the Ministry of Industry for both Saudi and fully foreign Investors

Incentives	Description
Soft Loans	Provision of soft loans from the Saudi Industrial Development Fund with flexible repayment terms and low interest rates
Tax Exemptions	Tax exemptions for new industrial projects for a specified period
Export Support	Government programs to support and encourage the export of locally manufactured products.
Land Provision	Allocation of industrial lands at reduced prices in industrial cities managed by the Saudi Authority for Industrial Cities and Technology Zones
Innovation and Development Support	Financial and technical support for projects focusing on industrial innovation and development
Training Programs	Provision of training programs for local labor in collaboration with the Technical and Vocational Training Corporation
International Partners	Facilitation of partnerships with international companies and providing legal and technical support for these partnerships

In both scenarios, "SaudiOBNC" stands ready to provide comprehensive support throughout the entire process, from initial planning and licensing to construction, operation, and market entry. We look forward to the opportunity to discuss these scenarios in greater detail and to assist you in achieving your business objectives in the Kingdom.

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