Entrepreneurship enjoys high level of support in Saudi Arabia, according to Jonathan Ortmans.[1] The Kingdom has been leading in the Arab region in terms of regulatory reforms related to entrepreneurship. According to the latest report of Doing Business (DB), the country ranked 13th globally and maintained its position in the first place in the region on the ease of doing business.[2] Saudi Arabia's consistent improvement in DB's six indicators propelled it to its latest ranking from 35th since 2004, using French law as a model in revising its policies. In the latest World Economic Forum (WEF) Global Competitive Index (GCI 2010–2011), it moved up by seven places from 28th to 21st place which resulted in a strong and solid institutional framework, efficient markets, and sophisticated businesses places.[3] Real activity (real GDP) in Saudi Arabia was expected to grow at 3.4 percent in 2010 and 4.5 percent in 2011. Enactment of a new foreign investment law, establishment of the Saudi Arabian General Investment Authority (SAGIA) as well as privatizations of public companies in recent years have encouraged investments in the country.
However, businesses still face difficulties in the enforcement of contracts and labor issues within the regulatory system in the country. Based on a Global Entrepreneurship Monitor (GEM) survey conducted from May to October 2009, among the factor-driven economies in the region, Saudi Arabia had the lowest total entrepreneurial activity (TEA) rate. Only 4.7% of the adult population (18–64 years old) were actively involved in the start-up of a new business or owned a young business of less than three and half years old.[4] A study by Michael Porter in 2008 noted that Saudi Arabia could build a competitive economy and diversify beyond natural resources if it was willing to take a strategic approach, make multiple improvements in its business environment, truly open up competition and entrepreneurship in the private sector, and embark on a sustained effort to equip Saudi citizens with new skills, attitudes and mindsets.[5]
Startup, ease of entry
For-profit companies
Best practices
In 2006, Saudi Arabia made it easier to start a business by simplifying processes at its Ministry of Commerce and cut registration time from 64 days to 39. The Saudi Arabian General Investment Agency (SAGIA) finalized agreements with 17 government agencies to remove impediments and introduce incentives for businesses. SAGIA also launched its “10/10” project targeting the top ten by 2010.[6] The reform continued in 2007, the time for start-up dropped from 39 days to 15 days by eliminating layers of bureaucracy. Procedures at its Ministry of Commerce were sped up, publication requirements were merged and social security registration with the Chamber of commerce was automated. The reforms cut 6 procedures for forming a new company from 13 to 7 and the cost from 59% of income per capita to 32%.[7] The commercial registration fees with its Ministry of Commerce were reduced by 80%, reducing the time to start a business by two days.[8] It eliminated the requirement to publish the summary Articles of Association in the local newspaper. Instead, they need to be published only in the official gazette, at a cost of just 1,500–3,000 riyals.[9] Saudi Arabia continued to simplify regulation formalities, in 2009 one-stop system was created at the Ministry of Commerce for business registration and permits. It combined all registration procedures for local limited liability companies.[10]
In June 2007, Saudi Arabia made the most dramatic reform in the ease of doing business by scrapping the high minimum paid in capital that used to be $124,464 and the fifth largest minimum capital requirement in the world, equivalent to 1057% income per capita. Since its reform, the total number of annual business registered increased by 81%.[7]
Saudi Arabia expedited the process of dealing with construction permits by adopting the one-day permit procedure by allowing builders to obtain temporary building permit to begin the construction after one day and a final building permit after just one week.[11] Now entrepreneurs can complete registration in 1 procedure and 1 day at the new one-stop shop in Riyadh. The one-stop shop includes representatives from several government departments, the chamber of commerce, a private bank and the notary public.[2] Again in 2010, Saudi Arabia made dealing with construction permits easier by introducing a new, streamlined process, reducing the procedures by five and time by five days, ranked the country to 14th place from 30th.[12]
Until 2005, a Saudi entrepreneur pays nothing for registering a property, it only required to be notarized and not linked to a cadastre, which could lead to less security. It was not until late 2005 when the Real Property Registration Law came into effect, this was the country's first property registry. Saudi Arabia computerized procedures in 2007, making it possible to register property in 2 procedures and 2 days. Under this new law, upon verification of the documents by the notary public, in the presence of the legal representative from the seller and the buyer, will submit the documents electronically to the Records Department to get the new title deed showing the new owner of the property. This will be added electronically in the centralized records in Riyadh. The sale agreement shall be scanned and save while the original is kept in the notary public's record.[8]
The country improved procedures at ports by abolishing the requirement for a consular certificate and allowing submission of information required for customs clearance electronically. This reduced trading time by 2 days. In Jeddah's port, more containers are cleared in one day.[7] In 2009, Saudi Arabia cut fees by 50%. In 2010, Saudi Arabia launched a new container terminal at the Jeddah Islamic Port reducing the time to import to 17 days.[12]
In 2008, Ministry of Trade and Industry amended provisions of its company law that addresses approval and disclosure requirements for related party transactions. In the new law, the interested directors may no longer vote at a shareholders meeting to approve related-party transactions. It increased the legal remedies available in cases dealing with the liability of directors for misconduct. Directors found liable for damage to a company due to a related party transaction will have to repay all profits made from it.[9]
Needed reforms
Electronic registration of records: online name verification and other online services are common in Organisation for Economic Co-operation and Development (OECD) countries, Eastern Europe, Latin America and others, around 40 economies offer electronic registration services. This improves data safety, transparency and sharing of information.[9]
Foreign Ownership
Best practices
Restrictions on foreign ownership are present in Saudi Arabia where local citizens are required to hold majority ownership in banking and insurance[13]
Needed reforms
Finances
Best practices;
Saudi Arabia ranked well worldwide in the ease of getting credit in Doing Business report 2011, its rank moved up from 69th to 46th place.[12] In 2004 Saudi Arabia's public registry cut the minimum loan size for collecting data substantially from 5 million riyals to 500,000, almost doubling the number of borrowers recorded. The bureau was set up with the support from the Central Bank. In 2007, Saudi Arabia launched its private credit bureau. The bureau issues reports on companies’ credit exposure and includes their financial statements and ownership details both positive and negative information. By 2008, utility company like mobile telephone companies and retailers started providing information to the bureau. The credit bureau allowed borrowers to inspect and dispute their information[8] The latest reform in 2010 was a big improvement, an amendment to Saudi Arabia's commercial lien law enhanced access to credit by making secured lending more flexible and allowing out-of-court enforcement in case of default. Saudi is planning to implement an electronic collateral registry in the future[12]
Needed reforms
Contracts/Commercial Law
Best Practices
Saudi Arabia ranked 140th out of 183 economies in enforcing contracts. The enforcement of contracts is not always swiftly implemented; the procedural phases of filing, trial, judgment, and enforcement typically take an average of 635 days with 43 procedures.[2] Due to the underdeveloped contract enforcement because of bureaucratic delays caused by conflicts between commercial laws and Islamic rules, this put the country as one of the unattractive place for dispute resolution among emerging markets.
Needed reforms
Bankruptcy
Best Practices
The Ministry of Commerce introduced strict deadlines for bankruptcy procedures in 2008. Auctions of debtors’ assets are expected to take place quicker than before. As a result, the process to determine the fate of a company in financial jeopardy (i.e., sale as going concern, piecemeal sale of assets, or approval of a reorganization plan) can range from 12 to 18 months. Once a judgment has been made and the fate of the company is determined, recovery of payment is fairly expeditious—creditors can expect to recover some monies owed within 1 month of judgment.[8]
In 2009, Saudi Arabia established additional committees for amicable settlement of insolvencies put time limits on the settlements to encourage creditors to participate. Saudi Arabia are also developing automated case management systems. It will allow electronic filing and automatic assignment of court dates as well as keep a log of all proceedings.[12]
Needed reforms
Taxes
Best Practices
Saudi Arabia ranked 7th worldwide in the latest report in the ease of paying taxes. As the government relies mostly on oil revenue to fund spending, businesses in the region pay some of the lowest tax rates in the world.
Education
As much as the recent improvements are commendable, the country faces important challenges going forward. Education in Saudi Arabia does not meet the standards of countries at similar income levels. While some progress is visible in the assessment of the quality of education, improvements are taking place from a low level. As a result, the country continues to occupy low ranks in the health and primary education (74th) and higher education and training (51st).[3] The youth consists of more than 70% of the country's population and many of young Saudis are looking to entrepreneurship as a career path.[14] According to the latest survey conducted by Gallup between July and October 2009, among the high-income group in the region, 78% of the Saudi youth believed that their local communities are good places for such entrepreneurs and 30% of young Saudis who are not already business owners say they are planning to start their own business in the next 12 months. Youth in Saudi Arabia are three times as likely to say they are planning to launch a business if they perceive the government makes paperwork and permits easy enough for aspiring entrepreneurs. If out of work for more than six months, 51% of youth indicate they would be willing to take a job beneath their skills or train in a new field or start their own business. Among youth who express entrepreneurship aspirations, 61% are employed. Saudi youth reported dissatisfaction with efforts to increase the number of quality jobs within the Kingdom. However, 93% of young Saudis say taking part in regular job training increases their chances of getting a job.[15]
Best Practices
Saudi Arabia has implemented reform in higher education by establishing the King Abdullah University of Science and Technology (KAUST) in 2009, the world's newest state-of-the-art graduate level research and entrepreneurial university. KAUST's Industry Collaboration Program (KICP), Technology Transfer Office, and Research Park underscore the university's mission to convert research discoveries into practical applications, to incubate new businesses, and to maximize industrial collaboration within Saudi Arabia as well as regionally, and globally[16]
In 2009, the Prince Mohammed bin Fahd Leaders Preparation Center was established to prepare young Saudi girls to lead the future. Operating under the umbrella of the Prince Sultan bin Abdul Aziz Fund, it opened to Saudi girls between the ages of six and 25. Two programs at the center target different age groups: the Promising Leaders Program is designed for girls ages six to 15, and the Young Leaders Program caters to girls ages 16 to 25.[16]
Labor market
Based on the case study conducted by World Bank on 2007, the oil sector in Saudi Arabia made up more than half the gross domestic product (GDP) but employed only 2% of the workforce and even if the oil maintained its high price, it would not generate the new jobs to satisfy the growing number of young Saudis who will enter the labor market over the next years. The latest report from WEF ranked the country 60th in the efficiency of labor market out of 183 economies.[3] The need to transform the Saudi economy was clear—from one based on inherited wealth to one based on innovation creating an ecosystem for entrepreneurship.
Ease of Doing Business - ranked among 189 Economies
GCI Index - ranked among 139 Economies
Economic Freedom Score - 0 to 100, where 100 represents the maximum freedom
Prosperity Index -The Prosperity Index assessed 110 countries, accounting for over 90 percent of the world's population, and is based on 89 different variables, each of which has a demonstrated effect on economic growth or on personal wellbeing. The Index consists of eight sub-indexes, i.e. Economy, Entrepreneurship & Opportunity (E&O), Governance, Education, Health, Safety & Security, Personal Freedom and Social Capital.
The ICT value falls on a scale of 0-10 and is calculated from three key indicators: number of telephone lines per thousand of the population, number of computers per thousand of the population, and number of internet users per thousand of the population. The top 10 per cent of states score in the range 9–10, the next highest 10 per cent of states score in the range 8-9 and so on.
Innovation System Index - The index value falls on a scale of 0-10 and is calculated from three key indicators: Total royalty payments and receipts in US$ per person, number of patent applications granted by the US Patent and Trademark Office per million people, and the number of scientific and technical journal articles published per million people. The top 10 percent of states score in the range 9–10, the next highest 10 per cent of states score in the range 8-9 and so on.
HDI - Calculated based on data from UNDESA (2009d), Barro and Lee (2010), UNESCO Institute for Statistics (2010a), World Bank (2010g) and IMF (2010a).
Education and Human Resources Score - The index value falls on a scale of 0-10 and is calculated from three key indicators: adult literacy rate, secondary enrolment, and tertiary enrolment. The top 10 per cent of states score in the range 9–10, the next highest 10 per cent of states score in the range 8-9 and so on.
Press Freedom Index- The lower the value of a state's press freedom index, the better the situation for press freedom, ranked among 178 countries.
The economy of Azerbaijan has completed its post-Soviet transition into a major oil-based economy, from one where the state played the major role. The transition to oil production led to remarkable growth figures as projects came online; reaching 26.4% in 2005 and 34.6% in 2006 before subsiding to 10.8% and 9.3% in 2008 and 2009 respectively. The real GDP growth rate for 2011 was expected at 3.7% but had dropped to 0.1%. Large oil reserves are a major contributor to Azerbaijan's economy. The national currency, the Azerbaijani manat, was stable in 2000, depreciating 3.8% against the dollar. The budget deficit equaled 1.3% of GDP in 2000.
The economy of Georgia is an emerging free market economy. Its gross domestic product fell sharply following the dissolution of the Soviet Union but recovered in the mid-2000s, growing in double digits thanks to the economic and democratic reforms brought by the peaceful Rose Revolution. Georgia continued its economic progress since, "moving from a near-failed state in 2003 to a relatively well-functioning market economy in 2014". In 2007, the World Bank named Georgia the World's number one economic reformer, and has consistently ranked the country at the top of its ease of doing business index.
The economy of Saudi Arabia is the largest in the Middle East and the eighteenth largest in the world. A permanent and founding member of OPEC, Saudi Arabia is also a member of the G20 forum as one of the world's largest economies.
The economy of Bahrain is heavily dependent upon oil and gas. The Bahraini Dinar is the second-highest-valued currency unit in the world. Since the late 20th century, Bahrain has heavily invested in the banking and tourism sectors. The country's capital, Manama is home to many large financial structures. Bahrain's finance industry is very successful. In 2008, Bahrain was named the world's fastest growing financial center by the City of London's Global Financial Centres Index. Bahrain's banking and financial services sector, particularly Islamic banking, have benefited from the regional boom driven by demand for oil. Petroleum is Bahrain's most exported product, accounting for 60% of export receipts, 70% of government revenues, and 11% of GDP. Aluminium is the second most exported product, followed by finance and construction materials.
Saudi Arabia, formally the Kingdom of Saudi Arabia (KSA), is a country in West Asia. It covers the bulk of the Arabian Peninsula, and has a land area of about 2150000 km2, making it the fifth-largest country in Asia, the second-largest in the Arab world, and the largest in West Asia and the Middle East. It is bordered by the Red Sea to the west; Jordan, Iraq, and Kuwait to the north; the Persian Gulf, Qatar and the United Arab Emirates to the east; Oman to the southeast; and Yemen to the south. Bahrain is an island country off its east coast. The Gulf of Aqaba in the northwest separates Saudi Arabia from Egypt and Israel. Saudi Arabia is the only country with a coastline along both the Red Sea and the Persian Gulf, and most of its terrain consists of arid desert, lowland, steppe, and mountains. Saudi Arabia's capital and largest city is Riyadh; the kingdom also is the location of Islam's two holiest cities of Mecca and Medina.
An emerging market is a market that has some characteristics of a developed market, but does not fully meet its standards. This includes markets that may become developed markets in the future or were in the past. The term "frontier market" is used for developing countries with smaller, riskier, or more illiquid capital markets than "emerging". As of 2006, the economies of China and India are considered to be the largest emerging markets. According to The Economist, many people find the term outdated, but no new term has gained traction. Emerging market hedge fund capital reached a record new level in the first quarter of 2011 of $121 billion. Emerging market economies’ share of global PPP-adjusted GDP has risen from 27 percent in 1960 to around 53 percent by 2013. The 10 largest emerging and developing economies by either nominal or PPP-adjusted GDP are 4 of the 5 BRICS countries along with Egypt, Indonesia, Mexico, South Korea, Saudi Arabia, Taiwan and Turkey.
The Arab states of the Persian Gulf refers to a group of Arab states which border the Persian Gulf. There are seven member states of the Arab League in the region: Bahrain, Kuwait, Iraq, Oman, Qatar, Saudi Arabia, and the United Arab Emirates. Yemen is bound to the six countries of the Gulf Cooperation Council, based on history and culture.
The economy of the Middle East is very diverse, with national economies ranging from hydrocarbon-exporting rentiers to centralized socialist economies and free-market economies. The region is best known for oil production and export, which significantly impacts the entire region through the wealth it generates and through labor utilization. In recent years, many of the countries in the region have undertaken efforts to diversify their economies.
Amr Al-Dabbagh is a Saudi businessman and politician.
The ease of doing business index was an index created jointly by Simeon Djankov, Michael Klein, and Caralee McLiesh, three leading economists at the World Bank Group, following the release of World Development Report 2002. The academic research for the report was done jointly with professors Edward Glaeser, Oliver Hart, and Andrei Shleifer. Though the first report was authored by Djankov, Klein, and McLiesh, and they continue to be listed as "founders" of the report, some sources attribute the genesis of the idea to Djankov and Gerhard Pohl. Higher rankings indicated better, usually simpler, regulations for businesses and stronger protections of property rights. Empirical research funded by the World Bank to justify their work show that the economic growth effect of improving these regulations is strong. Other researchers find that the distance-to-frontier measure introduced in 2016 after a decision of the World Bank board is not correlated with subsequent economic growth or investment.
Simeon Dyankov is a Bulgarian economist. From 2009 to 2013, he was the deputy prime minister and minister of finance of Bulgaria in the government of Boyko Borisov. He has been a vocal supporter of Bulgaria's entry into the Eurozone. Before his cabinet appointment, he was the chief economist of the finance and private sector vice-presidency of the World Bank.
The following are international rankings of Saudi Arabia.
The phrase women in business refers to women who hold positions, particularly leadership in the fields of commerce, business, and entrepreneurship. It advocates for their increased participation in business.
This article covers the best practices and movement for reform in entrepreneurship policies in the United Arab Emirates.
This article covers the best practices and needs for reform in entrepreneurship policies in Egypt.
The Ministry of Economy of Azerbaijan Republic is the central executive body responsible for implementing state policy and regulation in the following areas: formulating economic policy of Azerbaijan, producing macroeconomic projections, creating a favorable environment for economic development and growth, encouraging investment activity, developing entrepreneurship and industry, regulating the licensing and permit system, protecting, developing and encouraging competition, protecting the rights of consumers, implementing state procurement policy, ensuring full and timely introduction of taxes and other mandatory payments relating to the authority of the Ministry, in the state budget, management of government assets, privatization, establishing state land management system, conducting state registration and single state cadastre of immovable property.
This article covers the best practices and needs for reform in entrepreneurship policies in Syria.
The Mumbai Consensus is a term used to refer to India's particular model of economic development, with a "people-centric" approach to managing its economy which may be taken up by other developing nations in time. Indian model of economic growth, which relied on its domestic market more than exports, boosted domestic consumption rather than investment, pursued service-oriented industries rather than low-skilled manufacturing industries, has greatly differed from the typical Asian strategy of exporting labor-intensive, low-priced manufactured goods to the West. This model of economic development remains distinct from the Beijing Consensus with an export-led growth economy, and the Washington Consensus focused instead on encouraging the spread of democracy and free trade.
Authoritarian capitalism, or illiberal capitalism, is an economic system in which a capitalist market economy exists alongside an authoritarian government. Related to and overlapping with state capitalism, a system in which the state undertakes commercial activity, authoritarian capitalism combines private property and the functioning of market forces with repression of dissent, restrictions on freedom of speech and either a lack of elections or an electoral system with a single dominant political party.
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