Turkey-to-Saudi: A Step-by-Step Guide to Saudi Market Entry for Turkish Companies (Part 2)
This article is part of a series that explores the entry of companies from various countries around the world to the Kingdom. In this article within our series, we are shedding light on the growing presence of Turkish companies in Saudi Arabia.
At the heart of Saudi Vision 2030's diversification strategy is the focus on localizing key industries as well as turning Saudi Arabia into a growing business center to attract innovative global firms, including high-growth companies expanding from their base in Turkey to Saudi Arabia.
Strong bilateral economic relationships create a wealth of opportunities for Turkish companies to tap into a digitally oriented customer base, a booming economy, and a wider pool of exceptional talents.
Saudi Vision 2030 Opens Up Business Opportunities for Turkish Business
Central to the current upswing in construction and tourism is Saudi Vision 2030 and giga projects, which act as the main draw of Turkish companies to the Kingdom. The growth push typically comes off the back of an expansive pipeline of unawarded projects worth $1.5 billion, offering a white space of opportunities for investors and contractors.
Enka İnşaat is a prime example of how Turkish companies are increasingly making their presence felt in the construction sector in Saudi Arabia, contributing to its growth by leveraging their expertise pragmatically across the value chain.
The company, which recently expanded to Saudi Arbaia, spearheads the development of the Medinah Housing project, designing and constructing 2,084 villas with an infrastructure that blends modern lifestyles with traditional housing elements.
A cornerstone of Vision 2030 is a robust, localized industrial sector, which is witnessing sustained growth backed by $132 billion in manufacturing investments since 2016.
According to the National Industrial Development and Logistics Program's (NIDLP) objectives, the industrial sector’s GDP contribution will reach SR900 billion ($230 billion) by 2030, cementing the country's place as a global industrial hub, attracting prominent Turkish players such as Vestel and EAE Group.
Vestel has already established itself as a key player in the Saudi manufacturing space, delivering top-notch consumer electronics and home appliances, while EAE Group is playing a vital role in reshaping the industrial sector in Saudi Arabia by providing advanced industrial solutions and machinery.
On a wider scale, the presence of Turkish companies in Saudi Arabia is rapidly gaining momentum, with around 390 companies with a total capital of more than $266,613 (SR1 billion) active in the local market.
This signifies the growing status of the Kingdom as a haven for foreign investments and the rising interest of Turkish firms to participate in the ongoing development of key sectors of the economy and take advantage of the full breadth of growth opportunities offered by Vision 2030.
A Step-by-Step Guide to Saudi Market Entry for Turkish Companies
A Summary of Key Market Entry Steps:
- Stage 1: Foundations of the Legal Entity this stage includes obtaining a MISA Investor license, name reservation, drafting local Articles of Association (AoA), and gaining Commercial Registration (CR), and Chamber of Commerce (CoC) Registration.
- Stage 2: Authorization to Hire Staff includes obtaining a company seal, registering with the Ministry of Labor, General Organization for Social Issuance (GOSI), obtaining a National Address, issuing a GM Visa and registration with the General Authority of Zakat and Tax (GAZT) and VAT Registration
- Stage 3: Acquiring Residency and Opening a Bank Account: This stage includes activating your CoC account, obtaining health insurance for the GM, scheduling the GM's medical check-up (the GM must visit KSA for this step), securing the GM's Iqama, registering on the key portals such as Muqeem, Absher, Qiwa, and Mudad portal, and opening a corporate bank account
With the Kingdom rising as a prime business hub for foreign companies, including Turkish ones, there’s an increased governmental emphasis on easing the tax burdens on incoming companies.
When setting up shop in the Kingdom, the initial phases primarily involve getting documents attested, such as a certificate of incorporation, the memorandum of association (MoA), and articles of association (AoA), as well as an audited financial statement.
Afterward, businesses have to register with key ministries, a crucial part of the 20-step roadmap. At this point, finding a workspace is mandatory in order to acquire a national address and later be able to renew the commercial license.
During the soft landing stage, companies are required to issue a residence permit for the general manager of the Saudi entity and register on important government portals. That includes Muqeem, Absher, Qiwa, and Mudad. At the same time, establishing a bank account is a prerequisite to ensuring faster takeoff and scalability.
In the post-setup stage, companies must comply with Saudization quotas by hiring local staff. Obtaining visas for non-Saudi employees is crucial to ensuring the completion of legal due diligence. Businesses may find it beneficial to utilize third-party services to assist with the accounting and payroll management processes.
A business expansion platform like AstroLabs provides foreign companies with expert advice, equipping them with hands-on services ranging from licensing and registrations to opening a bank account to securing offices and hiring local talent.
The on-ground team enables companies to comply with Saudi regulations regarding Saudization, taxes, and more, effectively aiding them through the Saudi market expansion journey, making valuable connections with various stakeholders, and ultimately optimizing operations to realize sustainable business success.
The Kingdom’s proactive measures to attract foreign investment further underpin a growth trajectory, attracting rising inflows of Turkish businesses hoping to get in on the ground floor of an industrial sector poised for expansion and benefit from a booming private sector economy.
Check out the first part of the two-part article focusing on the growing presence of Turkish companies in the Kingdom here.
