Trade in Saudi Arabia

Trade in the Kingdom of Saudi Arabia refers to the buying, selling, and exchange of goods and services within the Kingdom or between the Kingdom and other countries around the world. The organization of trade in the Kingdom dates back to the era of the Founding King, Abdulaziz Bin Abdulrahman Al Saud, when in 1926, he issued what is known as the "Sunni Will" (Royal Decree). This decree stated that the rulings previously in effect and in accordance with Islamic law were still applicable. Following this decree, several laws began to emerge, as there had not been any governmental entity focused on regulating trade in the country. The decree also stipulated that trade was considered a domestic matter within the Kingdom.

Three months after the issuance of the decree, King Abdulaziz ordered the formation of a commercial body to resolve disputes between merchants. This body was established under the name Traders Council.

Over time, a commercial system began to develop in line with the growth of business in the Kingdom. In 1928, the Companies Registration Law was issued, which introduced a role associated with the Attorney General called the "Registrar of Companies." The law mandated that all commercial companies and associations be registered with the Registrar of Companies, making the Companies Registration Law the foundation for regulating commercial affairs in the country.

The development of the commercial system continued with the issuance of the Customs Law in 1930, followed by the Royal Decree in 1931 approving the Kingdom's Commercial Law, known as the Commercial Court Law. In 1939, a royal order was issued approving the Trademark Registration Law, and in 1941, another royal order approved the Goldsmiths Law.

A significant shift in the organization of commercial activities across the Kingdom occurred with the issuance of a Royal Order in 1946, approving the establishment of the Jeddah Chamber of Commerce and Industry. This institution was created to enhance trade and industry in the country and protect it from foreign competition. Two years later, the Shura Council approved the establishment of the Chamber of Commerce and Industry in Makkah al-Mukarramah. In 1949, the first Chamber of Commerce and Industry Law was issued, leading to a directive from the Governor of the Eastern Province in 1953 to establish the Chamber of Commerce and Industry in the Eastern Province.

Since the issuance of the Royal Decree approving the establishment of the Jeddah Chamber of Commerce and Industry, the number of chambers has grown to twenty-six across the Kingdom. Numerous amendments have been made to the Chambers of Commerce and Industry Law and regulations to keep pace with the economic development the Kingdom has experienced. A unified body for the chambers, the Federation of Saudi Chambers, was established in Riyadh in 1980 to manage the shared interests of the chambers within the Kingdom. The Federation represents the chambers both locally and internationally, focusing on enhancing the role of the private sector in the national economy.

With the expansion and growth of business and commercial activities, a Royal Decree was issued in 1954 establishing the Ministry of Commerce. The ministry was tasked with organizing domestic and international trade and promoting commerce. After its establishment, several entities concerned with commercial matters were incorporated into the ministry, and it took on the responsibility of overseeing the Chambers of Commerce and Industry in the Kingdom.

The ministry's responsibilities include issuing commercial registrations, with the first one issued in Jeddah City in 1957. This service evolved starting in 2012 with the launch of the first-of-its-kind electronic service for obtaining commercial registration and membership in the Chambers of Commerce and Industry through a single online platform. The process for issuing commercial registrations continued to be developed, becoming fully electronic, and can now be completed in a record time of 180 seconds, without the need for any paper transactions, across provinces of the Kingdom.

Several commercial laws have been issued to contribute to the development of trade activities in the Kingdom. The Law of Commercial Agencies was issued by Royal Decree in 1962, and the number of commercial agencies has since grown to exceed 16,000 agencies.

The Trademark Law was also implemented, with the first trademark registered being "al-Sha'alah Match" in 1945. In 2002, the Trademark Law was issued, and the process of trademark registration continued to evolve until the launch of the electronic system in 2013, which facilitated the registration process. By 2016, the number of registered trademarks had exceeded 183,000.

The Ministry of Commerce performs several mandates that enhance the Kingdom's commercial activities, including:

- Participating in formulating and implementing trade policies to achieve efficiency and effectiveness in the sector, diversify the production base, support competition among institutions, and enhance the private sector's role in the national economy.

- Proposing draft commercial laws and regulations projects, reviewing existing laws and regulations, and overseeing the application of commercial laws.

- Organizing methods to promote domestic trade, overseeing internal markets to protect them from exploitation and monopolization, controlling prices, and reviewing commercial practices to develop methods and procedures according to public interest.

- Issuing the necessary licenses to establish chambers of commerce and their branches, monitoring their various activities and budgets, supervising their board elections, and approving their organization of exhibitions, markets, and participation in relevant conferences.

- Ensuring the availability of essential goods in local markets and stabilizing supplies in coordination with government entities and the private sector, while monitoring markets to combat improper practices that affect supply and price stability.

- Reviewing requests to establish companies, open branches, or liquidate them, completing procedures related to company formation, modification, and liquidation in accordance with the regulations of the Companies Law, and addressing violations related to the Companies Law's provisions.

- Registering commercial establishments by issuing and supervising commercial registrations.

- Reviewing requests and contracts for commercial agencies, completing registration procedures for various types of agencies and their amendments, issuing the necessary registration certificates, monitoring the activities of commercial agencies, and enforcing the law's provisions.

- Monitoring the compliance of commercial establishments and e-stores with ministry regulations related to consumer protection, identifying violations in coordination with relevant authorities, and enforcing penalties.

- Recording, categorizing, and classifying information related to commercial activities and services, issuing related reports, making them available to relevant entities, and raising awareness among traders and consumers.

- Reviewing localization requirements for ministry-related activities, and overseeing the issuance of relevant regulatory decisions and amendments.

- Issuing licenses for freelance professions.

- Registering and supervising trade names.

To enhance the commercial system in the Kingdom, the General Authority for Foreign Trade was established in 2019, with legal personality and financial and administrative independence. The authority's regulations were issued in 2020, aiming to boost the Kingdom's international trade gains and defend its interests in foreign trade, contributing to the growth of its national economy.

The authority performs a number of mandates and duties related to formulating policies and strategies for foreign trade in coordination and alignment with both the public and private sectors. It represents the Kingdom in regional and international organizations and forums related to foreign trade, handles matters concerning international trade relations, resolves related disputes, and conducts negotiations for free trade agreements as well as bilateral, regional, and international agreements.

The authority also works to protect the Kingdom's industry from harm caused by unfair practices in international trade by implementing trade remedy mechanisms in World Trade Organization (WTO) agreements, including anti-dumping, countervailing duties, and safeguard measures. Additionally, it oversees the mandates of the Saudi negotiating team and the technical teams derived from it, as well as supervising the commercial attachés abroad and the joint Saudi-foreign business councils.

The Kingdom has kept pace with the development of global commercial activities and, in 2018, established the E-Commerce Council as a platform for the integrated efforts of all relevant national entities. The council is responsible for proposing e-commerce policies and legislation, overseeing the "E-Commerce Stimulus Program," coordinating with relevant entities to prevent duplication, eliminating obstacles facing e-commerce, and ensuring the effective implementation of the program's projects and recommendations.

The establishment of the council was a strategic step towards achieving the objectives of Saudi Vision 2030, aimed at creating a diversified economy, establishing an attractive investment environment, and fostering an ecosystem that supports entrepreneurship and generates job opportunities.

E-commerce activity in the Kingdom is classified as one of the largest e-commerce markets in the Middle East. Additionally, the Kingdom is ranked among the top ten fastest-growing countries in the field of e-commerce.

By the end of the second quarter of 2024, the number of active commercial registrations for e-commerce reached approximately 40,697, reflecting a growth of 17.47 percent compared to 34,645 registrations during the same period in 2023. Riyadh Province led all regions in the Kingdom in terms of issued e-commerce registrations, with around 16,535 registrations, followed by Makkah al-Mukarramah with a total of 10,325, and the Eastern Province with about 6,525 registrations.

The Kingdom has signed several trade agreements with countries, organizations, and regional economic groups. One of the most significant milestones was joining the World Trade Organization (WTO) in 2005. The General Council of the WTO approved the Kingdom's accession documents in the presence of 148 member countries, making the Kingdom the 149th member.

The Kingdom also signed two regional trade agreements. The first was the Economic Agreement among the Gulf Cooperation Council (GCC) countries in 1981, followed by the Agreement to Facilitate and Develop Trade among Arab Countries in the same year. In 1998, the establishment of the Greater Arab Free Trade Area (GAFTA) was announced, which officially launched in 2008. This agreement allowed the Kingdom to export nine agricultural products without customs duties.

The National Transformation Program, through the efforts of the Ministry of Commerce, has contributed to the Kingdom's advancement in competitiveness reports. This progress has been driven by several initiatives, including the establishment of the Competitiveness Center, which aims to create an independent and specialized entity dedicated to supporting and enhancing the competitiveness of the Kingdom's investment environment. Another key initiative is the creation of unified service centers, "Meras," which aims to simplify business operations at all stages by providing government services alongside value-added services in an integrated and efficient manner for both local and foreign investors.

The initiatives also include the establishment of the Saudi Business Center, which introduces a new concept as a service and regulatory entity for commercial and investment activities for all legal entities in the Kingdom. Another key initiative is the implementation of the Bankruptcy Law. Additionally, the National Competitiveness Center, "Tayseer," has played a role in improving business performance in the private sector and encouraging its participation in economic development by enhancing and developing the competitive environment. The center also works to improve the Kingdom's ranking in global reports, while studying and analyzing challenges faced by the private sector and proposing solutions and initiatives to address them.

By 2020, ten new entities were established to enhance the commercial and investment environment. These include: the Small and Medium Enterprises General Authority, the Saudi Authority for Intellectual Property, the General Authority of Foreign Trade, the Saudi Conventions and Exhibitions General Authority, the E-Commerce Council, the National Program for Combating Commercial Concealment, the National Competitiveness Center, the Saudi Business Center, the Saudi Accreditation Center, and the Bankruptcy Commission.

To facilitate the business environment and support the institutional and corporate sectors, the Ministry of Commerce, in 2022, allowed institutions to become partners in all types of commercial entities. Allowing institutions to participate as partners in various types of companies has had a significant impact on the growth of institutional investments and the expansion of their revenue streams.

The Kingdom has achieved several milestones in both domestic and international trade. In 2019, it ranked first globally in business environment reforms among 190 countries, making it easier for businesses to operate according to the DOING BUSINESS 2020 report, part of the Ease of Doing Business Index issued by the World Bank. The Kingdom ranked sixty-second, advancing by thirty positions compared to the previous year

In 2021, the Kingdom achieved unprecedented global success in four international sub-indicators related to entrepreneurship, in addition to securing advanced rankings in six other indicators, according to the Global Entrepreneurship Monitor. This performance is tracked and monitored by the National Center for Performance Measurement "Adaa", which measures the variation in levels of entrepreneurship stimulation and activity worldwide.

The Kingdom's excellence was demonstrated by leading globally in the indicators of "Availability of Good Opportunities to Start a Business" and "Ease of Starting a Business." It also ranked first in the indicators of "Entrepreneurs' Response to the Pandemic" and "Government Response to the Pandemic," out of forty-five countries.

The Kingdom ranked sixteenth globally out of sixty-seven of the most competitive countries in the world, according to the 2024 World Competitiveness Yearbook report, issued by the World Competitiveness Center of the International Institute for Management Development (IMD).

The Kingdom's advancement in 2024 marks its third consecutive improvement in the World Competitiveness Yearbook report. In 2023, the Kingdom ranked seventeenth globally, and in 2022, it held the twenty-fourth position worldwide.