Supporting Saudi businesses to go global

Abdulrahman Saleh Alotaibi

Going global is a strategic goal for businesses to achieve growth and sustainability. It helps in diversifying markets which lowers business risks and provides advantages to economies. Thus, governments worldwide are encouraging businesses to trade internationally. In the case of Saudi Arabia, Vision 2030 clearly puts forth the goal of increasing the share of the Kingdom’s non-oil exports. Saudi Arabian non-oil exports increased in value by 8 percent in 2017 in comparison with 2016. Non-oil exports reached 193 billion riyals in 2017 which represents 23 percent of total exports.

Today, national and international regulators as well as business support organizations provide a number initiatives and reforms to enable businesses to fulfill global demand and to create economic surplus. From building capability to trade finance, businesses are aided with a range of services at every stage of the process once they decide to access the international market. Going global can be perceived as a challenge that requires an additional allocation of resources, yet, with proper planning and optimum utilization of resources, the benefits are tremendous.

Beginning with market research to determine the targeted market, Saudi businesses can tap into detailed reports provided by national sources, such as the Saudi Exports Development Authority which provides reports on numerous sectors and countries’ imports. The authority also provides free export training to improve the staff competency of exporting companies in this critical area. The information departments at the Saudi Chambers of Commerce also provide business affiliates with access to market intelligence.

As for market research, the International Trade Center (ITC) (a joint agency of the World Trade Organization and the United Nations) has developed a number of online tools to make global trade more transparent and to facilitate access to markets. These tools provide access to trade databases with indicators on export performance, international demand and alternative markets, as well as customs tariffs and non-tariff measures. Furthermore, the Center provides its users with access to biding on international public procurement contracts. ITC data is available to Saudi Arabian users for free and designed to enable them to conduct up-to-date market analysis.

Finding international buyers is the most important step in the export process. With this in mind, Saudi businesses can benefit from important business matching services, such as trade shows. The Saudi Exports Development Authority enables businesses to participate in major trade shows around the world for various industries as part of the Saudi national pavilion. Trade shows facilitate networking and deal making between specific industry buyers and sellers. Businesses can also participate in trade missions that are organized by the Saudi Exports Development Authority which coordinates with commercial and trade sections in various countries and organizes trips for Saudi businessmen to meet buyers in host countries.

Similar services are offered by the Saudi Chambers of Commerce. One recent and notable example was facilitating Direct and Indirect Business Opportunities at Expo Dubai 2020 which was conducted by the “Tahfeez” Coordinating Council in the Riyadh Chamber of Commerce. The Tahfeez Council was recently established by the Riyadh Chamber with the membership of the Saudi Exports Development Authority, the Saudi Small and Medium Enterprises General Authority and the Ministry of Commerce and Investment, as well as the Council of Saudi Chambers with the aim of motivating Saudi businesses to participate in international events and to access international markets.

National measures to encourage businesses to sell internationally include the zero percent VAT on exported goods. Since January 2018, the General Authority of Zakat and Tax (GAZT) has imposed 5 percent VAT on goods and services sold in the Kingdom. Now businesses in-Kingdom exporting goods and services can deduct the VAT-eligible input taxes they paid, as long as they file their tax returns as required. Also, in the area of trade finance, the Saudi Export Program (SEP) assists Saudi exporters by providing them with funding and insurance facilities needed to increase competitiveness and mitigate risks associated with international trade transactions. SEP offers direct and indirect financing options to exporters and importers of Saudi products and based on the risks involved and the nature of each export transaction, SEP can support up to 100 percent of the value of an eligible export transaction. The program also provides export credit insurance services which reduces the risk of exporters not getting paid due to importers defaulting because of commercial or political risks. SEP’s export credit insurance service also benefits commercial banks in confirming letters of credit which help to expand their limits with foreign banks.

Saudi Customs has introduced a number of initiatives to facilitate trade, such as the reduction of documents required by exporters from nine to two (the invoice and the manifest). The FASAH system has recently integrated over 25 entities, such as the Saudi Ports Authority, the Saudi Food and Drug Authority, and the Saudi Standards, Metrology and Quality Organization, and offers over 100 electronic services to importers/exporters, port operators, brokers and shipping agents. Saudi Customs has also introduced the Authorized Economic Operator (AEO) which is a trade facilitation program that promotes partnerships between Customs and the private sector in order to enable smoother border and customs processes, encourage investment and support the growth of the national economy.

If businesses face an exports barrier, a number of channels can be used to resolve the obstacle via business support organizations including the Saudi Exports Development Authority which works with local and international partners to improve the export environment. Exporters should be aware of legal implications and seek advice in this regard.

Exports should be part of the business strategy with proper planning reflected in the business plan, business leaders must be committed in order to compete with businessmen across the globe.

Abdulrahman Saleh Alotaibi

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