Saudi Arabia launches four new Special Economic Zones
Saudi Arabia’s Special Economic Cities & Zones Authority (ECZA) announced, on 13 April, the launch of four new Special Economic Zones. Each zone is designed to unlock key segments of Saudi’s economic development goals under the Vision 2030 strategy, with ECZA providing a safe and modern business environment for international investors.
Saudi Arabia’s new special economic zones, strategically situated across the Kingdom, are King Abdullah Economic City (KAEC) SEZ in Makkah Province, Jazan SEZ in Jazan Province, Ras Al Khair SEZ in Eastern Province, and Cloud Computing SEZ located in King Abdulaziz City for Science and Technology (KACST) in Riyadh Province.
The focus industry sectors for each of the four special economic zones are as follows:
- King Abdullah Economic City (KAEC) ¬– opportunities for advanced manufacturing and logistics, from automobile supply chain and assembly to consumer goods, ICT to MedTech.
- Jazan SEZ – opportunities for the manufacturing, processing and distribution of food products to cater for growing regional demand and meet food security challenges.
- Ras Al-Khair SEZ – opportunities across shipbuilding and repair, offshore drilling and maritime value chains.
- Cloud Computing SEZ in King Abdulaziz City for Science & Technology (KACT) – opportunities for emerging and disruptive technology enabling investors to establish physical data centres and cloud computing services and infrastructure in multiple locations within the Kingdom.
The special economic zones are geographically defined areas that facilitate specific economic activities, such as investment, trade and employment, by providing competitive advantages, supportive regulations and legislative frameworks that differ from the base economy. The programme is intended to enable Saudi Arabia to fast-track certain reforms, encourage foreign direct investment in key growth sectors and facilitate the ease of doing business across the country.
The ECZA is the umbrella regulator for all Saudi Special Economic Zones (SEZs) and Economic Cities (ECs). ECZA Secretary-General Nabil Khoja said: “With hugely attractive financial incentives, world-class infrastructure, business-friendly regulations and streamlined procedures for investors … the zones will become engines of growth, increasing the Kingdom’s export competitiveness, attracting talent, boosting technology and improving our global links.”
The incentives offered to companies cover both fiscal and non-fiscal incentives, including a 5% Corporate Income Tax rate for up to 20 years, 0% withholding tax on repatriation of profits to foreign countries, customs duties deferral for goods and duty-free imports of machinery and raw materials, 0% VAT for all intra-SEZ goods exchanged within and between the SEZs, 100% foreign ownership, enhanced set-up procedures and flexible and supportive regulations around foreign talent during first five years.
“This development in Saudi Arabia is the next logical step for Saudi Arabia to remain competitive and widen its offerings to attract further foreign companies and significant inward investment,” said Nazar Musa, General Manager at Sovereign PPG.
“Apart from the economic benefits that will arise for foreign investors, such as the competitive corporate tax rates, exemptions on customs duties and potentially attractive legal framework, the Special Economic Zones will create an attractive sector campus atmosphere and should offer a significant draw for companies much like we saw during the commercial development of the Freezone areas in the UAE,” he added.