Feasibility Assessment for Entry Into Saudi Arabia's Service Sector
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FEASIBILITY ASSESSMENT FOR ENTRY INTO SAUDI ARABIA’S SERVICE SECTOR PRESENTED BY JETRO Table of Contents Research Background and Objectives ..................................................................................................... 9 Executive Summary ............................................................................................................................... 10 Economy with Positive Outlook ........................................................................................................ 10 Foreign Investment in the KSA - Procedures .................................................................................... 11 Franchising in the KSA ....................................................................................................................... 12 Services Sectors Outlook ................................................................................................................... 13 Retail Sector .................................................................................................................................. 13 Food and Restaurant Service Sector ............................................................................................. 15 Hair Dressing and Beauty Service Sector ...................................................................................... 16 Education Service Sector ............................................................................................................... 18 Medical and Social Service Sector ................................................................................................. 20 Housing and Construction Services Sector ................................................................................... 21 Information Technology Services Sector ...................................................................................... 22 Facilities Management Services Sector ......................................................................................... 23 General Observations and Conclusions across all Sectors ................................................................ 24 Chapter 1: The Kingdom of Saudi Arabia .............................................................................................. 27 General Overview ............................................................................................................................. 27 Political Snapshot .............................................................................................................................. 27 Economic Overview .......................................................................................................................... 29 GDP growth rate ........................................................................................................................... 30 Nominal GDP per capita ................................................................................................................ 31 Consumer Prices ........................................................................................................................... 31 Private Consumption Expenditure ................................................................................................ 32 Inward Foreign Direct Investment ................................................................................................ 32 Household Expenditure and Income ............................................................................................. 33 Penetration rates of consumer durables and services ................................................................. 34 Population Structure ..................................................................................................................... 34 Chapter 2: Company Registration Policies and Procedures .................................................................. 36 Foreign Investment Regulation ......................................................................................................... 36 Procedures involved in obtaining company licenses ........................................................................ 38 Rules governing Licences for Individuals and their Investor Visas ................................................... 40 28 January 2015 2 Investment Licence Cancellation Procedures ................................................................................... 40 Activities excluded from Foreign Investment under the Services Sector ......................................... 41 Franchising Market in the KSA .......................................................................................................... 42 Market overview ........................................................................................................................... 43 Market Entry ................................................................................................................................. 43 Paid-up Capital .............................................................................................................................. 43 Registration time ........................................................................................................................... 43 Ownership structure ..................................................................................................................... 43 Cultural concern ............................................................................................................................ 43 Developing Franchise in the KSA ................................................................................................... 44 Foreign Exchange and Tax Law ......................................................................................................... 44 Chapter 3: Halal .................................................................................................................................... 48 Current Status of Halal ...................................................................................................................... 48 Regulations of Halal and Procedures of Acquiring Certification ....................................................... 49 Saudi Halal Food Standards and Import ........................................................................................... 49 Business Model to Sell Halal in the KSA ............................................................................................ 49 Comparison of Regulations with other Countries............................................................................. 50 Islamic Bodies Worldwide for Halal Certification of Red Meat .................................................... 53 The KSA Halal Market........................................................................................................................ 53 Drivers and Restraints ................................................................................................................... 56 Chapter 4: Actual Condition of Consumption ....................................................................................... 58 Characteristics and Purchase Need of Consumers ........................................................................... 58 Major Business Locations .................................................................................................................. 65 List of Shopping Malls (not exhaustive) ............................................................................................ 66 Findings of Consumer Research to Understand Consumer Preferences .......................................... 68 Survey Results of the Retail Service Sector ................................................................................... 68 Survey Results of the Food/Restaurant Service Sector ................................................................ 69 Survey Results of the Beauty/Hair Dressing Service Sector .......................................................... 69 Survey Results of the Medical Service Sector ............................................................................... 70 Survey Results of the Housing Service Sector ............................................................................... 70 Brief Profiles of Japanese Service Companies in the KSA ................................................................. 71 Daiso.............................................................................................................................................. 71 Beard Papa .................................................................................................................................... 71 Chapter 5: Service Sector in the KSA .................................................................................................... 72 28 January 2015 3 Service sector Market Overview ....................................................................................................... 72 Chapter 6: Retail Services Sector .......................................................................................................... 76 The GCC Retail Service ...................................................................................................................... 76 The KSA Retail Sector ........................................................................................................................ 76 Retail Industry Segments 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