Corporate and Commercial Services – Page 4 – Hammad & Al-Mehdar Law Firm

Legal Compliance In Saudi Arabia’s Construction & Contracting Industry

Posted on March 27, 2022 - 8:32 am by perpetual-admin

The construction and contracting industry in Saudi Arabia is booming, with many high-profile projects underway or in the planning stages. The sector presents a significant growth opportunity for businesses, but it’s important to be aware of the legal compliance issues that need to be considered in order to operate successfully and avoid any potential penalties.

This article provides an overview of some of the key legal compliance issues that are relevant to the construction and contracting industry in Saudi Arabia.

Saudi Arabia’s Leading Construction Projects

Saudi Arabia’s construction industry has seen significant growth in recent years, with many large-scale projects nearing completion. Here are some of the most notable construction projects in Saudi Arabia:

The Riyadh Metro is a new metro system being built in the Saudi capital city of Riyadh, costing approximately $22 billion. The metro will have six lines, 85 metro stations and a total length of 176 km, making it one of the largest urban transport projects in the world. It is expected to open to its first passengers sometime in 2022.
The Qiddiya Project is a new entertainment city being built near Riyadh with a total area of 334km². The mega project will include theme parks, a water park, a racing track, and the capacity to host large sporting events. The cost of the project is estimated at $8 billion. When completed, it will be the largest tourism destination in the world.
Neom is a new mega-city being built in the northwest of Saudi Arabia with a total area of 26,600km². The goal of this development is to create a city that will not just be a destination, “but a home for people who dream big and who want to be part of building a new model for sustainable living”. The cost of the project is estimated at $500 billion. The city will be powered by renewable energy and will include high-tech industries, a resort area, and a university.
The Red Sea Project is one of the world’s most ambitious tourism development programmes, located along Saudi Arabia’s Red Sea coast. The project will include luxury hotels, a marina, and a nature reserve. Although the cost of the project is estimated at $10 billion, it is expected that upon completion it will increase Saudi Arabia’s GDP by $5.86 billion per year.

Legal & Regulatory Frameworks Affecting The Industry

Saudi Arabian law is uncodified and relies on a set of Shari’ah principles interpreted from Islamic religious texts. Currently, there is no complete set of construction laws regulating the industry, and parties are free to enter a contract as long as their agreements do not offend the fundamentals of Shari’ah.

Procurement & Tenders

With regards to procurement, an amended Government Tenders and Procurement Law (GTPL) was introduced in 2019 and sets out the rules and procedures for government contracting. Since the majority of major construction projects in Saudi Arabia are government-sponsored, this law is highly relevant to the industry.

The GTPL requires all government contracts to be tendered openly and transparently, with contracting authorities required to publish notices of contracting opportunities and award contracts to the winning bidder after a fair and open tender process.

Real Estate Ownership & Development

The Saudi Arabian government has placed a number of restrictions on non-GCC foreigners owning property in the Kingdom. They may only own the property for the purpose of residency and are restricted from acting as a landlord or owning more than one property.

Businesses owned by foreigners can purchase real estate for the purpose of business activities, including accommodation for employees. Within the holy cities of Makkah and Medina, only Saudis are permitted to purchase properties.

Construction Permits & Licenses

In 2017, the government announced that contractors must register with the Saudi Contractors Authority. The authority is responsible for the regulation and control of the construction industry in Saudi Arabia. In 2020, it was discovered that out of 140,000 contracting companies, only 4000 were registered. It was subsequently announced that contractors won’t be awarded building permits or be able to bid on government projects if they are not registered with the authority.

The Future of the Construction Industry in Saudi Arabia

As the Saudi Arabian construction industry continues to grow and attract foreign investment, additional regulation is likely to be introduced in order to ensure the sector remains compliant. In particular, the government is likely to focus on increasing transparency and preventing corruption in the industry. Foreign investors and contractors should ensure they are aware of the relevant regulations before entering into any construction contracts in Saudi Arabia.

The Legal Implications of Saudi Arabia’s Tech Transformation

Posted on March 27, 2022 - 8:35 am by perpetual-admin

As part of Saudi Arabia’s Vision 2030, the government seeks to transform the nation into a hub for technology and innovation. This transformation will have several legal implications, particularly with regards to data protection and cyber security.

In recent years, lenient cyber security implementation has made the Kingdom a global target for cyberattacks. To protect businesses and consumers, the government is implementing new laws and regulations to improve the security of the nation’s digital infrastructure.

The government is also working to create a more favourable environment for businesses and consumers by introducing new data protection laws and establishing regulatory frameworks related to cloud services and e-commerce. These efforts will help to attract foreign investment and encourage innovation within the Kingdom.

Cyber Security

In 2020, Saudi Arabia experienced over 22 million cyberattacks, which cost the economy over $6 million. In a survey by VMware, 85% of Saudi Arabian security professionals reported an increase in cyberattacks during the pandemic, due to the increased number of employees working from their homes. Over the past few years, the government has begun to take steps to tackle the country’s long-standing cyber security vulnerabilities with the introduction of several new regulatory frameworks and governing bodies.

The National Cybersecurity Authority (NCA) was established in 2017 as the central authority for cyber security in Saudi Arabia. The NCA is responsible for developing and coordinating the Kingdom’s cyber security strategy, as well as overseeing the implementation of new laws and regulations.

In 2018, the NCA released a whitepaper outlining the minimum standards for cyber security that all organisations in Saudi Arabia must adhere to. This document includes requirements for risk management, incident response, data protection, and more. It was circulated amongst both private organisations and government bodies, to raise awareness and improve cyber security posture across the country.

In 2019, NCA established the Computer Emergency Response Team (CERT), which is responsible for responding to cyber incidents and providing technical and forensic support. Two years later, Saudi Arabia’s Communications and Information Technology Commission (CITC) announced the implementation of a cyber security regulatory framework that aims to raise the security levels of service providers in the IT, communications, and postal services sector.

Data Protection

In 2020, the Saudi government enacted a new e-commerce Law, which includes provisions on data protection. The law requires e-commerce businesses to take measures to protect the personal data of consumers and establishes penalties for companies that fail to do so. It ensures the reliability and trustworthiness of online business transactions while safeguarding consumer rights and protecting online users from fraud and deception.

In March 2022, a new standalone personal data protection law (PDPL) came into force to provide additional protection for Saudi citizens’ personal data. The law requires organisations to take steps to protect the personal data of Saudi residents, including obtaining written permission before collecting, using or sharing personal data. Data controllers will be required to register with Saudi Data & Artificial Intelligence Authority (SDAIA) and pay an annual fee. Failure to adhere to this new law may incur criminal penalties including up to two years’ imprisonment or a fine of up to SAR 3 million. At the time of writing, the PDPL Implementing Regulations will be postponed until 17 March 2023, in order to consider the public consultation responses. That said, businesses are aware of the regulations which will be enforced soon, and are therefore urged to implement operational realignment to ensure legal compliance with the law from 2023.

Cloud Computing Regulatory Framework

In 2020, the Saudi government also released a Cloud Computing Regulatory Framework (CCRF), which sets out the requirements for organisations that wish to provide cloud services in the country. Cloud Service Providers (CSPs) are required to register with the Communication & Information Technology Commission (CITC) before they can provide cloud services within Saudi Arabia. In the event of any type of security breach, CSP must inform the CITC and any affected subscribers of their services, without delay. Additionally, the CSP is not permitted to share, or use their subscribers’ data for any purpose, unless express permission is obtained from the subscriber.

As Saudi Arabia’s tech transformation continues, the legal landscape is also evolving to keep pace with these changes. By ensuring that its legal system meets the demands of the modern IT industry, the Saudi government is sending a clear message that it is committed to protecting the privacy and security of its citizens in the digital age. In the coming years, we can expect to see these laws evolve further as the Kingdom looks to stay at the forefront of the global tech landscape.

Incorporation Requirements For Educational Institutes In Saudi Arabia

Posted on March 29, 2022 - 7:19 am by perpetual-admin

Education in Saudi Arabia has come a long way over the past few decades. In the 1970s, only 7,000 students were enrolled in Saudi universities and today that figure stands at over 1 million. There has been a concerted effort by the government to provide education for all its citizens, and the results are evident. The primary education enrolment rate has increased dramatically, and the country now boasts several world-class institutions of higher learning.

There are still some challenges to be addressed, however. The quality of education remains uneven, with attainment levels still lagging some of the leading developing nations. COVID-19 also put a strain on the sector as schools were forced to close, meaning students had to learn remotely. Nevertheless, the future looks bright for Saudi Arabia’s education sector.

Saudi Private Sector Education – A Growing Industry

The Saudi private sector has been playing an increasingly important role in education over the past few years. As part of Vision 2030, the government is aiming to increase the proportion of students in private schools to take the strain off public funding and boost attainment levels.

Saudi Arabia’s exceptionally young population has increased the demand for good-quality schooling, and many parents are now willing to pay for private education. This has created opportunities for a number of international school chains to enter the market. By the year 2025, it’s anticipated that there will be a need for an additional 980 private schools to support the 2.1 million new school seats that will be required. In 2018, private school enrolment sat at 13%, but by the year 2025, this will likely increase to 15% to match the 3.5% annual increase in the total number of Saudi students. As a result of these factors, the private education sector is expected to grow at a CAGR of 11% until 2026.

As part of the government’s plan to increase private participation to 25% of the education sector, they have created an “independent schools” program. This program aims to make 2,000 public schools independent, meaning they have full autonomy over their administration, financial support, and curriculum. It opens up even more opportunities for private investment and management of public schools.

Current Challenges Facing The Saudi Education Sector

Saudi Arabia has typically fallen behind its Gulf neighbours when it comes to quality of education. However, government efforts are starting to have a positive effect, and the country is now ranked 35th place globally for quality of education (up from 45th in 2020). However, attainment levels remain relatively low when compared to other nations.

To tackle this issue, the Saudi government has funnelled one-fifth of their budget into the education sector and made steps to increase private sector participation in the market. Their efforts were somewhat hampered by the COVID-19 pandemic, which forced students to switch to online home-based learning. This meant private schools had to drop their fees, resulting in reduced funding and staffing issues.

Key Considerations For Private Educational Institutes

In 2017, the Saudi government opened the private education sector to 100% foreign ownership and investment. This means there are now plenty of opportunities for foreign businesses to get involved in the education sector without the requirement of a local partner.

In the same year, the government announced new regulations under the Tadarruj system to regulate the building requirements for private schools operating in the Kingdom. By 2018, over 113 private schools were shut down for not abiding by these new regulations and operating out of buildings not designed for educational activities. Private schools are now required to wholly own their school buildings in order to be granted the appropriate licensing. Their premises must also fulfil a number of criteria to ensure they are fit for purpose.

The government recently announced that by the end of 2022, the Human Resource Development Fund (HRDF) would withdraw their funding support for Saudi citizen teachers. Until now, the government had been paying up to 50% of Saudi teachers’ salaries. This funding program was previously initiated after a Saudi citizen minimum wage was introduced, but schools must now start paying these salaries in full. This may result in a fee increase to combat the shortfall in funding.

The government has made it a priority to address the issues affecting educational attainment within the Kingdom and is working hard to ensure that Saudi Arabia’s education sector continues to develop and improve. In the coming years, we can expect to see even more progress in this vital area.

Thriving in Saudi Arabia – key considerations

Private institutes who are considering entering the education sector will need to consider a multitude of elements, which include:

Incorporation – navigating the registration structure, considering your location, core age demographic which you are targeting, incorporation legal requirements, regulatory legal approvals,

Funding & Finance – the financial resources required to incorporate and operate across Saudi Arabia, whether you should consider a joint venture or merger, feasibility and due diligence assessments, banking structure across the country

Real estate – land law considerations, development, and leasing requirements, musataha agreements with government entities and developers.

Construction and infrastructure – construction laws, operating and maintaining of new campuses and student accommodation.

Employment – contracts, review of HR policies, employment laws.

Technology – technology procurement, outsourcing arrangements, licensing agreements.

Our education specialists at Hammad & Al-Mehdar have been supporting the education sector and its related entities for decades and have delivered the full lifecycle of legal and corporate services for its clients.

To discuss your education entity contact us.

Vision 2030 & Opportunities For UK Investors

Posted on April 4, 2022 - 8:57 am by perpetual-admin

Saudi Arabia is going through a period of unprecedented transformation and rapid economic diversification. Thanks largely to the regulatory, legal, and social reforms under Vision 2030, the nation is opening up new opportunities for businesses and investors.

The Vision 2030 plan — championed by Crown Prince Mohammed bin Salman — set a clear goal to reduce the country’s dependence on oil. The government is investing in several growing sectors, such as renewable energy, tourism, technology, and education, in a bid to position Saudi as a regional hub of technological innovation, entrepreneurship, and economic opportunity.

Saudi’s Economic Success Story

The government’s strategic investments and reforms have already begun to bear fruit. The Saudi economy has flourished despite the pandemic, with foreign investment at an all-time high and the private sector playing an increasingly important role.

Legal reforms have played a significant role in this success. The government has taken steps to remove investment restrictions and develop a more regulated legal framework for businesses operating within the Kingdom. These reforms have brought Saudi in line with global standards of best practice and improved their positioning in the World Bank’s “ease of doing business” index from 59.16 out of 100 in 2016 to 71.56 in 2020. This figure is expected to grow at a rate of 4.6% each year.

In 2016, the government opened up multiple sectors to 100% foreign investment and ownership, allowing foreigners to fully own their businesses for the first time. In the same year, the process of obtaining a foreign investment licenses was eased dramatically, with the number of required documents reduced to three, and the maximum processing time capped at five days. In 2021, the number of foreign investment licenses issued jumped by 250% compared to the previous year, with 4,431 licenses issued in total.

The Vision 2030 strategy was designed with Saudi’s large youth population in mind and aims to reduce the local population’s reliance on public sector employment. More than half of the population is under 35, making the country one of the most youthful in the world. Saudi’s private sector economy was largely supported by foreign labour until recently, reducing employment opportunities for Saudi citizens. Under Vision 2030, the government has funneled nearly 20% of their total budget into their education system, with the aim of developing a more skilled and employable Saudi workforce.

Emerging Markets Present New Opportunities For British Investors

According to the MSCI, Saudi Arabia topped the Emerging Markets Index in 2021, representing a 27% rise in total market value compared to the previous year. The country presents a unique opportunity for British investors, who are now welcome to visit the country freely since the adoption of a new visitor visa model. Additionally, the Saudi government has approved the issuance of a new foreign investor visa that allows potential investors to reside in the Kingdom, sponsor their family members, and engage in property and business ownership.

Many sectors across the country are growing at an accelerated rate since the start of the pandemic, providing ample opportunity for foreign skill sets and investment. Most notably, the telecommunications and IT sectors have seen a surge in recent years, with the latter expected to grow at a CAGR of 7.78% through 2025. The move towards economic diversification has also meant a shift away from the petrochemical industry, towards renewable energy and other sustainable sectors. In 2021, the government announced its intention to invest $100 billion in the development of the renewable energy sector by 2030.

The government has also paved the way toward developing the nation as a prime tourist destination for travelers seeking to explore Arabia’s rich heritage. The Vision 2030 strategy prioritizes tourism as a key economic enabler, with the aim of increasing the number of tourists to 100 million annual visitors by 2030. The rapid development of this previously unexplored sector presents the need for hospitality industry experts, who can help to develop the necessary infrastructure and establish best practices.

The Bottom Line

Vision 2030 presents a wealth of opportunities for UK investors looking to expand into new and rapidly growing markets. The Saudi government has made a concerted effort towards improving the ease of doing business in the country by focusing on developing a more highly skilled and employable local workforce. Sectors such as telecommunications, IT, renewable energy, and tourism are growing rapidly and offer ample opportunity for foreign investment and skill sets. The government has also made it easier for investors to obtain visas, making Saudi Arabia a more attractive destination for those looking to expand their business operations.

The Regulation Of Digital Assets In Saudi Arabia

Posted on April 4, 2022 - 9:02 am by perpetual-admin

Digital assets are becoming increasingly popular all over the world, as investors see the potential for great returns. By the end of 2022, global owners of crypto assets are expected to exceed 1 billion. Although initially slow to gain mainstream adoption in the region, their popularity is quickly growing among GCC residents. In Saudi Arabia specifically, cryptocurrency ownership has rapidly increased over the past 5 years, with 77% of the population having some awareness of digital assets and 18% actively trading in crypto. This increased level of digital asset trading activity is creating a need for a clearer regulatory framework within the region.

GCC Countries Move To Regulate Crypto Assets

Digital asset regulation differs from country to country across the GCC. Some take a more hands-on approach while others have been unhurried. Bahrain, an early adopter of crypto regulations, launched a directive in 2019. The directive states that no person may market or undertake business activities comprising regulated crypto-asset services from within the Kingdom of Bahrain, without obtaining a licenses from the Central Bank of Bahrain (CBB).

In 2020, the UAE’s Securities & Commodities Authority (SCA) published “The Authority’s Chairman of the Board of Directors Decision No. (21/R.M) of 2020 Concerning the Regulation of Crypto Assets”. This directive outlines SCA’s licensing regime for any ICOs, exchanges, marketplaces, crowdfunding platforms, custodian services, or related financial services based upon, or leveraging crypto assets that wish to operate within the country. It states that crypto trade service providers must be incorporated onshore within the UAE and obtain the correct licensing. They must also comply with the country’s anti-money laundering and counter-terrorism financing laws, cyber security compliance standards, and data protection regulations.

In contrast to its Gulf neighbours, Qatar took the decision to announce an outright ban on cryptocurrency trade, with the exception of security tokens in 2020. Citing sources of Islamic scholarship, the leadership determined that cryptocurrency trading was in breach of the Shari’ah principle of the forbiddance of riba (usury).

Crypto & Digital Asset Adoption In KSA

While interest in digital assets remains high within the Kingdom (34% of residents express an interest in investing), adoption remains lower than the global standard. However, within the Arab world, Saudi residents come in third place in crypto ownership. Younger higher-income Saudis (earning at least 30,000 riyals per month) are the demographic most likely to pursue crypto investment, while those over 45 years of age show the most hesitancy.

Saudi Arabia’s first non-fungible token (NFT) marketplace Nuqtah was launched in 2021, showcasing digitally tradeable art from leading Middle Eastern and North African artists. Founder, Salwa Radwa believes, “We are currently witnessing the revolution of what is known as the Internet, not only with blockchain technology, but ownership of virtual assets through NFTs”.

Princess Reem Al Faisal — one of the first women to document the hajj with her photography — recently entered the NFT world with the launch of her NFT collection “Makkah and Medina”. Her digitized historic images of the holy pilgrimage were sold on the OpenSea NFT marketplace, drawing greater attention to this form of digital asset trading within the Kingdom.

Saudi Arabian Regulations Affecting Digital Assets

Cryptocurrencies have a quasi-legal status within Saudi Arabia. In 2018, the government placed an outright ban on banks processing any transactions involving cryptocurrencies. The government has repeatedly maintained that those who trade in cryptocurrencies are doing so illegally and have no financial protection and risk the loss of their assets. However, there are currently no legal penalties in place for people who choose to trade in digital assets, whether crypto, NFT, or otherwise.

Currently, this legal grey area presents a challenge to potential crypto investors within Saudi Arabia, who may be hesitant to engage in crypto-trading activity out of fear of possible legal repercussions. NFTs remain a safe option for many in the Kingdom as they are not currently considered to be cryptocurrencies, with their trade not falling under the blanket crypto ban.

With Saudi Arabia’s neighbors seeking to bring the world of digital asset trade under the control of a regulatory framework, it’s possible that the Kingdom may follow suit in the coming years. The country’s youth population maintain a keen interest in all things digital and will likely welcome the introduction of regulations that legitimise the crypto and digital asset space.

How Technology Is Transforming Saudi Arabia’s Healthcare Industry

Posted on April 13, 2022 - 7:25 am by perpetual-admin

The Saudi healthcare market is expected to generate US$464m in 2022, growing at a CAGR of 12.79% until 2025. Due to its young and growing population, it is estimated that Saudi Arabia will require more than 20,000 additional hospital beds by 2035. Innovations in technology and the global pandemic are amongst the key forces driving changes in Saudi Arabia’s healthcare industry at such an unprecedented rate. From patient care to medical research and training, every aspect of healthcare is being affected by technological advances and operational reforms.

Hospital stays are becoming shorter as more procedures can be carried out on an outpatient basis. This is thanks to advances in diagnostic techniques and treatments, as well as the availability of better-quality medical equipment. Over the coming years, it’s expected that healthcare will become increasingly digitised, improving the level of access and convenience for patients.

The Digitisation Of Healthcare

With the pressure of the global pandemic, Saudi’s healthcare industry has been forced to adapt to new ways of working at a pace that would have been unthinkable just a few years ago. The sudden and rapid increase in patient numbers has necessitated a more consolidated and connected approach to care. In response to this need, the Saudi government has begun working on the development of a unified vision of e-health provision across the Kingdom. It’ll enable patients to access streamlined, efficient, and high-quality care regardless of location.

At the heart of this transformation is the digitisation of healthcare. By making use of new and innovative technologies such as AI, big data, and cloud computing, Saudi Arabia’s healthcare system will be able to become more responsive to the needs of patients. What’s more, these tools will help to improve communication between different care providers, leading to better coordination and delivery of care.

New technologies are already being implemented across the Kingdom’s hospitals. AI is being introduced to interpret patient X-rays, taking some pressure off hospital staff. In the near future, Saudi doctors may be able to mine patient healthcare records using big data technology, to assist with diagnosis and the development of treatment plans. Health tech startups are also playing a crucial role in the digitisation of healthcare in Saudi Arabia.

There are currently 150 health tech startups operating within the Kingdom. One of these is Cura — a locally developed application that allows users to receive remote video consultations with doctors across 34 different specialities. Similarly, a new app named Labayh, gives users the ability to connect with a qualified counsellor or psychotherapist quickly and discreetly. These companies are developing innovative solutions that are making a positive impact on the lives of many patients.

Beyond Saudi Arabia’s borders, Neurosurgeons at John Hopkins performed their first augmented reality surgery in June 2021. VR headsets are also being deployed during medical training, to allow students to practice in a virtual environment before moving on to the real thing. This technology could be used to train the next generation of Saudi doctors, possibly in virtual spaces like the metaverse, to meet the Kingdom’s growing demand for qualified physicians.

How The Legal Industry Is Keeping Up With Development

As the healthcare industry evolves, the legal landscape must keep pace. With the wider proliferation of cloud data storage, the Saudi government introduced a new law that prohibits healthcare providers from storing the personal data of any Saudi national outside the Kingdom. The ongoing push towards Saudization also impacts the Healthcare industry. As it currently stands, each hospital must appoint a locally qualified doctor of Saudi nationality as a medical manager for the hospital, with some exceptions granted for hospitals in very rural or remote locations.

Negligence liability is still an area of Saudi law that does not yet have a well-defined framework. Saudi’s lack of legal precedence means that the results of civil cases are often unpredictable. This presents a challenge for both patients and practitioners when it comes to seeking damages for medical negligence. Most cases are resolved on the principle that a contract between two parties constitutes the law between two parties — unless it is in breach of some element of Shari’ah.

The way technology is impacting the healthcare industry is set to continue at an ever-increasing pace. As more countries around the world begin to adopt similar approaches, the potential for further improvement and efficiency is huge. For Saudi Arabia, the next few years will be crucial in shaping the country’s healthcare landscape for the future.

Opportunities For Chinese Investors In KSA

Posted on May 8, 2022 - 6:50 am by perpetual-admin

The Kingdom of Saudi Arabia is well-positioned to take advantage of the opportunities offered by China’s continued pursuit of an international investment strategy. With China’s CIC, the country’s sovereign wealth fund, seeking to diversify its portfolio and invest in foreign assets, Saudi Arabia is an attractive option.

As the world’s largest crude oil supplier to China, Saudi Arabia is in a unique position to offer energy security and assist the Chinese government to meet their growing energy requirements. Additionally, Saudi Arabia’s economic reforms have been designed to foster growth and attract foreign investment, making it an attractive option for Chinese businesses and investors.

The Saudi government is committed to developing the country’s infrastructure and has made significant investments in transportation and logistics. This will make it easier for Chinese businesses to access the Saudi market and set up operations in the Kingdom. KSA also has a large and rapidly growing economy, with a population of over 32 million people.

China & Saudi Trade Relations

The 2019 Aramco IPO was seen as a key part of the Kingdom’s economic diversification program in its efforts to attract foreign investment. Earlier this year, Saudi Aramco initiated a joint venture with China to develop a new refinery and petrochemical complex in the northeast of the country. Saudi Arabia will supply the new Huajin Aramco Petrochemical Company (HAPCO) with 210,000 barrels a day of crude oil feedstock.

This move represents a tightening of economic ties between the two nations and provides a significant boost to Saudi Arabia’s downstream sector. It also reflects China’s continued interest in Saudi Arabia as an investment partner and will strengthen Chinese-Saudi relationships.

In 2020, Chinese imports into Saudi Arabia increased by 17.8 per cent to $28.1 billion. Bilateral trade between the two nations continues to grow at a steady pace and is expected to continue to do so in the years ahead. Political commentator Zaid M. Belbagi told Arab News last year that China increasingly saw relations with the Arab world as “central” to its geostrategic ambitions. In 2017, King Salman visited the country during a six-country Asia tour, which set in motion a “comprehensive strategic partnership” between the two nations. With its strategic location, vast natural resources, and favourable economic climate, Saudi Arabia is ideally suited to assist China in achieving its economic goals in the Arab world.

The Future of Chinese Investment in Saudi Arabia

Looking to the future, it’s clear that there are significant investment opportunities in Saudi Arabia for Chinese businesses and investors. In 2020, the annual flow of foreign direct investments (FDI) from China to Saudi reached approximately $390 million. Rumours that Saudi would start accepting the Yuan during oil sales were quashed earlier this year by Aramco CEO Amin Nasser, but it’s undeniable that China sees Saudi Arabia as a key strategic and economic partner in the region.

For Chinese businesses and investors looking for opportunities in the turbulent global economy, Saudi Arabia remains an attractive and promising option. Chinese business leaders should keep a close eye on the Kingdom in the coming years as it looks to attract more foreign investment and continue its economic reforms.

Renewable Energy In KSA

Posted on May 8, 2022 - 6:55 am by perpetual-admin

The shift to renewable energy is essential for businesses in Saudi Arabia, as it provides a reliable, sustainable energy source that will help to support economic growth. In recent years, KSA has made major commitments to increase its use of renewable energy sources, including solar and wind power. These efforts are supported by new regulations and incentives that promote the adoption of clean technologies and sustainability practices across various sectors.

For businesses to succeed in KSA and compete in the global marketplace, they must consider renewables and cleantech as key factors in their overall business strategy.

Saudi Arabia’s Push Towards A Greener Future

Renewable energy has become increasingly important in KSA over the past few years as the country works to transition away from its reliance on fossil fuels. This transition has been supported by the Saudi Vision 2030 initiative, which aims to diversify the country’s economy and boost private sector growth. One of the primary focus areas of this plan is environmental protection, particularly through increased investment in clean energy sources.

This year, the government awarded two solar photovoltaic (PV) projects with an estimated value of $453m as part of a power-purchase agreement (PPA) that will increase the nation’s production capacity to over 1GW. This will help to align the country with its aim to derive 50% of its domestic electricity from renewable sources by 2030. The government hopes that its investment in renewable energy innovation will attract $20 billion in industry investments over the course of the next ten years.

The global energy trade is also expected to play an important role in the growth of renewable energy in KSA. As the world’s largest oil exporter, Saudi Arabia has historically been a global leader in energy production. However, as part of the worldwide shift towards greener energy sources, Saudi Arabia will be ideally positioned to become a leading exporter of renewable energy technologies with a particular emphasis on solar power. This would provide a major boost to the country’s economy and create new opportunities for businesses looking to invest in clean technologies.

As a result of these efforts, businesses in KSA are increasingly turning to renewable energy as a key part of their overall strategy. This is supported by the growing demand for clean technologies across various industries, including manufacturing, construction, and transportation. The adoption of such technologies can help businesses become more efficient and profitable, while also reducing their environmental impact.

New Regulations Impacting The Renewable Sector

This commitment to renewable energy is also reflected in new regulations and incentives that have been launched in recent years to encourage the expansion of the renewable energy sector. The Saudi government plans to introduce a new form of industrial licences within the renewable energy sector, that will provide companies with a competitive advantage in the marketplace. The Ministry of Energy also announced that they will offer incentives to energy project developers that will allow them to avail of certain benefits and custom exemptions.

Additionally, the Saudi Green Building Forum was launched in 2017 to promote sustainable building practices and support the development of green infrastructure. These initiatives are helping to create a more supportive environment for businesses that are looking to adopt clean technologies and sustainability practices.

Overall, KSA’s push towards a greener future is creating significant opportunities for businesses in the renewable energy sector. By embracing renewable technologies and sustainability practices, companies can not only reduce their carbon footprint but also gain a competitive advantage in a rapidly changing global marketplace. As such, it is essential for businesses to stay up to date on the latest developments in the renewable energy sector in order to make informed decisions about their future growth.

Corporate Governance & The Family Business

Posted on May 19, 2022 - 1:37 pm by perpetual-admin

Family businesses are the backbone of the Saudi Arabian economy, accounting for 25% of all economic activity in the Kingdom. However, as the economic landscape becomes increasingly complex and globalized, many family businesses are struggling to keep up with changing times. One of the biggest challenges they face is ensuring good corporate governance.

Corporate governance is the system of rules, practices, and processes by which a company is controlled and directed. It includes the mechanisms through which a company’s affairs are conducted and managed, and the relationships between different stakeholders such as shareholders, directors, management, and employees. Keeping this system running smoothly is not always an easy task, but it is crucial for the long-term success of any family business.

Why Corporate Governance Is Essential To The Family Business

Good corporate governance is essential for any company, but it is especially important for family businesses. This is because family businesses are often more complex than other types of businesses. There are many different interests and opinions within a family, which can make decision-making difficult.

Without good corporate governance, family businesses can quickly become dysfunctional. This can lead to conflict between family members, which can damage the business and its reputation. It can also lead to financial problems caused by the business failing to make sound decisions about investment and expenditure. For all these reasons, good corporate governance is essential for family businesses to thrive in today’s ever-changing business world.

Aligning Governance With The Times

As Saudi Arabia continues to evolve, so too must the governance of its family businesses. Governance must align with the current business environment, which is fast-paced and constantly evolving. The old ways of doing things no longer work in today’s climate, and family businesses must adapt to survive.

Saudi family-owned businesses often tend to be set in their ways when it comes to their internal governance structures and processes. This can be a hindrance to their growth and development. In many cases, succession planning, and transparency are not given the attention they deserve, which leads to problems passing on the business to the next generation.

Many internal processes such as human resource planning, tend to be informal and ad-hoc. This can lead to inefficiency and poor record keeping. And as we move into an era that is quickly being defined by the ever-growing presence of risk and crisis, family-owned businesses must have the internal governance structures in place to allow them to tackle these challenges effectively.

With the Saudi Arabian government’s aim to attract more foreign investment, it will also become increasingly important for the Kingdom to uphold a more regulated and compliant business environment. As a result, new laws and regulations are being introduced, and family businesses will be required to comply. And as more businesses choose to go public, there is a heightened need for transparency and accountability. If good corporate governance practices are implemented effectively, family businesses can open the doors to new sources of capital.

The Kingdom of Saudi Arabia continues to evolve, and so too must the governance of its family businesses. By aligning governance with the current business environment, family businesses can make the right decisions and avoid unnecessary conflict. This will help them to protect their reputation and help establish long-term success.

What is the Legal Impact of Web 3?

Posted on May 29, 2022 - 7:29 am by perpetual-admin

Apart from Dubai being a tourist destination, it’s a haven for web 3 and the cryptocurrency community. On March 9, 2022, the city approved the first law for the regulation of operations of digital assets, such as non-fungible tokens (NFTs) and cryptocurrencies. The news was confirmed through a tweet by Sheikh Mohammed bin Rashid Al Maktoum, the prime minister of the UAE.

Under the new law, Dubai wants to establish itself as a key player in designing the global future of virtual assets. In addition, the UAE seeks to form a Virtual Assets Regulatory Authority (VARA), which will be an independent body under the Dubai World Trade Center. VARA will oversee the governance, licensing, and setting of regulations for NFTs, cryptocurrencies, and other virtual assets. As a result, the city has become an epicenter for web 3 entrepreneurs from all over the world.

Web 1.0 and Web 2.0

The World Wide Web, referred to as web 1.0, dates back to the 90s. Web 1.0 was made up of web pages connected by hyperlinks. This first generation of the web was read-only, where businesses only shared information for you to search and read it.

Then in the 20s, web 2.0 came to life, the current version of the internet. The platform created a rise in eCommerce and social media platforms like Facebook, Instagram, and Twitter. This improved version of the first worldwide web has a more friendly user-generated interface. During web 2.0, users have been able to work and earn money through various platforms.

However, in web 2.0, users are needed to give out personal information to access and use the ‘free’ services provided by tech giants like Amazon, Google, and Microsoft. The information gathered is then sold to third parties like shopping sites to offer you targeted advertisements.

Web Version 3.0 Explained

Gavin Wood, a co-founder of the Ethereum cryptocurrency, popularized the term web 3 in 2014 to describe anything involved with the changes on the internet for the next generation by making the platform a decentralized digital infrastructure. A cryptocurrency is a digital currency that does not rely on a central authority like a central bank or the government. As a result, transactions done through web 3 technologies, such as peer-to-peer payments, are free from the control of any central governing body.

Web 3 is a new version of the web built on blockchains that are peer-to-peer and decentralized. This format will allow people to control what is published, archived, and stored in secrecy.

A blockchain is a database hosted by a network of several computers instead of a single computer. This distributed ledger offers its users a transparent and unchanging way of storing information.

A blockchain-centric internet will be harder to manipulate and control since the technology used will be the same as in the cryptocurrency technology, which is built to prevent “double-spending.” This means computers will store data on a network instead of servers as it is now, making it easy to track the stored data as there will be an established record of the movement pattern.

An example of a web 3 application is the peer-to-peer payment app that works on blockchains where instead of opening a bank account, you can use the decentralized app (Dapp) to make payments. Examples of peer-to-peer apps include;

Ziina
Zand
mePay
Rise
YAP
NOW-money

How Web 3 Will Impact Businesses

The third phase of worldwide web evolution will bring revolutionary changes to the UAE’s mode of operating its businesses. There are four main types of legal business structure in the UAE, which include:

Individual establishment – Owned by a single person and responsible for its financial obligations
Civil company – Established by investors from local and foreign countries to provide specialized services in the UAE. They include but are not limited to lawyers, doctors, consultants, and engineers
Commercial company – Business arrangements between two UAE nationals where each partner is responsible for the company
Limited Liability Company – Involves more than two but less than fifty, and each partner is responsible to the company according to the shares bought

The introduction of web 3.0 will allow companies to work efficiently by cutting out the middleman through the connection of artificially intelligent computers. As a result, businesses will experience optimum growth. Below are the benefits and challenges that web 3 will present.

1. Streamlined Business Process

With web 3 integrated into the business format, companies and sole proprietorships will find it easy to maintain their transactional ledger. As a result, continuous customers will enjoy personalized services as their previous purchase information is readily available.

2. Provides an Efficient Collaboration With all Involved Parties

Most businesses fail because there is a lack of transparency. However, web 3 will make the business more transparent to all the parties involved. This is achieved through an unchangeable chain of records visible to everyone on the blockchain.

As a result, slow-performing companies will suffer stiff competition due to the end-to-end transparency system that provides real-time transactional proof and supply chain activities to its customers.

3. No-third Parties

Blockchain technology will allow a business owner to control all their in-house operations, including directly contacting the customer. Although it will reduce cost, save time, and make the business more competitive, third-party service providers will experience a decline in their business due to the lack of demand for their services.

Web 3 might be revolutionary, but it also presents various sets of challenges. For example, if your cryptocurrencies like Bitcoin or Ethereum are stolen, you lack a way of pursuing the case due to a lack of centralized control. In addition, due to the nature of public distributed ledgers which makes transactions visible to all, making it directly opposite to privacy

Why You Should Stay Alert on Web3

Businesses will undoubtedly adapt to web 3 technology as it offers a higher competitive advantage. However, before getting involved in the space, all businesses–small or large, existing or start-ups- should know that endless legal issues can arise. This is because the space is relatively new, and laws are continuously being created to regulate the industry.

Web 3 is still at its infancy stage, and the already existing technologies prove that the future of the internet will usher new tides in businesses. As Dubai fully embraces the idea by creating regulatory bodies to control the space and attract investors, understanding this new technology and its impact on your business will benefit you and your business.

Hammad & Al-Mehdar law firm dutifully serves the legal needs of regional businesses and individuals from the five offices across the Kingdom of Saudi Arabia and the United Arab Emirates. Our firm is well-positioned and structured to handle legal issues while providing you with support to navigate through the implications of web 3 in your business or industry. Contact us for more information or legal representation.