Background: Saudi Arabai is a monarchy governed according to the Shari’a or Islamic Law (no constitution). The population of 20 million (90 percent Arab, 10 percent Afro-Asian, 100 percent Muslim) is concentrated among the largest urban centers - Riyadh (capital), Jiddah (commercial center), Mecca (religious center) Taif and Medina - thereby creating distinct marketing sectors. Petroleum and petroleum products are exported. Imports include foodstuffs, chemicals. motor vehicles, textiles, machinery and equipment. Trade secrets are not specifically protected by Saudi law except under contract, so intellectual piracy can be a problem. Bribes, often disguises as "commissions" are not considered illegal. Unions and strikes are forbidden. Commercial laws are evolving. The currency is the Saudi Riyal (SAR).

Business Structures: There are roughly 350,000 registered businesses, 15,000 owned by women. Types include Limited Liability companies, Joint Partnerships (usually take the form of Limited Liability Partnerships but do not enjoy limited liability), Joint Stock Companies (public or private), Joint Ventures (resemble general partnerships) and Sole Proprietorships. Most companies, even representative offices, require a level of Saudi ownership. The Saudi stock market, started in 1985, remains small. Few truly "national" companies are dominant in more than one region.

Banking Information: There are 10 commercial banks, 9 of which are joint ventures with Western banks. The top five banks in size are The National Commercial Bank, Riyad Bank, Saudi American Bank (SAMBA is the central bank holding 50 percent of the credit card market), Al-Rajhi Banking and Investment Corp., and Saudi British Bank. Depositor information is considered very confidential. Details are not released without client’s written authorization.

Public Records: Companies are registered (with "CR numbers") at the Ministry of Commerce’s regional Commercial Registry offices. Information includes, ownership, corporate basics, and so on. Common criminal and civil suits pertaining to family matters are tried in Shari’s courts. Summary Courts handle small crimes and General Courts deal with serious crimes. Other civil proceedings, claims against the government and enforcement of foreign judgements are held before specialized administrative tribunals. Appeals are handled by the Justice Ministry, the Court of Cassation or the Supreme Judicial Council. The King is the highest court of appeal.

Financial Information: There are no restrictions on capital flows. Saudi ownership (full or partial) has financial benefits ranging from interest and loan concessions to tax holidays. Taxes on foreign-owned portions of joint ventures range up to 45 percent. Taxes on unpaid debts are still owed because the government feels this is immaterial. Using Saudis as fronts can result in stiff penalties including imprisonment. Private companies are not legally required to make their accounts public.

Personal Information: Commercial repositories of personal information do not exist. Consumer credit reports are little more than a verification tool.

Trade Payment Histories: There are no commercial databases tracking trade payments, so credit agencies rely on references supplied by the company being investigated.

Standard Terms: International payments are usually Letters of Credit, but domestic terms range from net 30 to 90 days.

Collections: Some government agencies and Saudi Princes have been known for slow or no payment credit habits, but this is improving. Because of budgetary shortfalls related low oil prices (in the past), some Government contracts had been paid in 1 to 4 year bonds discounted at 1-2 percent by Saudi Banks. Debtors can conclude settlements with creditors through the Saudi Chambers of Commerce and Industry or through the Board of Grievances with some exceptions.

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Source:       Owens OnLine, Inc.

Contact:      (800) 745-4656, (813) 877-2008 (9-5 EST) or email@owens.com

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Written By:  Mark Owens for ©2000 Warren, Gorham and Lamont / RIA Group (NYC).