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Jeddah - Yasmine El Tohamy - Foreign investors in special economic zones to get extra incentives for hiring Saudis
RIYADH: Saudi Arabia will offer foreign investors operating in the Kingdom’s special economic zones extra incentives to hire local workforce, said Minister of Human Resources and Social Development Ahmed Al-Rajhi.
He was speaking at the Saudi Special Economic Zones Investment Forum in Riyadh on Monday. The minister noted that the special economic zones will be exempt from Saudization requirements and Human Resources Development Fund will provide extra benefits should companies opt to hire locals.
“The incentives were decided after a very careful study of regional and global benchmarks. And today, I would announce that one of these incentives, which is very important, probably to investors is the exemption from Saudization requirements. Yet, they will receive the requirements from HRDF if they chose to hire Saudis,” said Al-Rajhi.
Saudi Arabia’s Finance Minister Mohammed Al-Jadaan said that policies related to the special zones were designed in such a way that they will give as much freedom to investors as possible.
Al-Jadaan added that guard rails have been put on economic zones’ policies to ensure that they don’t compete with the base economy.
“They need to be designed as a policy to give as much freedom to investors as possible, simply because largely they are actually export-related. We wanted to make sure that investors feel free to select the talents as per their needs, and not constrained by base economy regulations,” said Al-Jadaan.
Special economic zone is a designated area that is subject to different regulations than other regions within the same country.
Earlier in April, Saudi Arabia’s Crown Prince Mohammed bin Salman announced that four special economic zones will be established in the Kingdom.
“Saudi Arabia is open for business and welcomes investors from all around the world to see first-hand the historic opportunities we have to offer,” said the crown prince.
According to Al-Jadaan, special economic zones are being established in Saudi Arabia to complement the Kingdom’s growth.
“In 2023, Saudi Arabia is the only country in the world which has received three positive actions from three rating agencies, which basically confirms that the journey which we started six or seven years ago is going on track. We are seeing growth, we are seeing momentum, and we are seeing private sector confidence. And special economic zones come to complement that,” added Al-Jadaan.
The primary purpose of the new zones, located in Riyadh, Jazan, Ras Al-Khair and the King Abdullah Economic City, is to open up new opportunities for international investors.
The finance minister said that Saudi Arabia’s unique geographical advantage will also act as a catalyst in boosting the operations of these zones in the Kingdom.
Nabil Khoja, secretary-general of the Economic Cities and Special Zones Authority, said that Saudi Arabia has formulated regulatory frameworks related to special economic zones after a lot of in-depth study.
“Our journey included doing a lot of analyses, benchmarking and studying to really understand what the global landscape looks like in terms of global regulatory frameworks. Thus, we identified specific components investors were looking for. As a result of that, we have established a regulatory framework that comprises a set of regulations so that the world can connect (with) the special economic zones we have,” said Khoja.
He added: “In addition to that, we also have sector-specific regulations. These regulations are not necessarily for all zones, but for specific sectors and clusters that are being targeted within these zones. We ensured that we had regulatory tools that looked at how these zones will integrate with one another.”
According to Khoja, agility is one of the most crucial factors that Saudi Arabia is following to meet the needs of foreign investors.
“We do not want to set regulations now and forget them forever. We believe that we have to be agile in our approach. And this agility requires us to continuously monitor the impact of these regulations as well as suggest and add new regulations, and stay in tune and in touch with investors,” added Khoja.
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