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Advantages of Operating a Free Zone Company in Saudi Arabia

Advantages of Operating a Free Zone Company in Saudi Arabia

Examining Saudi Arabia’s Free Zones: Saudi Arabia’s deliberate efforts to diversify its economy and draw in international investment have contributed to its rise as a major player in the world economy. The creation of international free zone across the nation is one such project. Due to the many benefits these designated regions provide enterprises, they are a popular choice for domestic and foreign investors. This article will examine the many Saudi Arabian Free Zone sites and the kinds of industries that flourish there.

The Free Zones in Saudi Arabia: An Opening for Economic Development

In Saudi Arabia, designated regions known as Free Economic Zones, Free Trade Zones, or Special Economic Zones offer businesses advantageous circumstances to promote trade, investments, and economic progress. As part of its Vision 2030 strategy, Saudi Arabia has adopted the free zone concept, emphasising the promotion of non-oil industry sectors and diversifying its oil-dependent economy.

Benefits of Operating in Free Zones in Saudi Arabia 

The following are just a few of the many benefits Saudi Arabia’s free zones provide to both local and foreign investors as well as companies looking to grow and expand:

100% Foreign Ownership: Most Free zone companies list allow foreign investors to own all of their projects at 100%, which attracts foreign companies and makes the atmosphere more favourable for them.

Tax Incentives: Companies that operate in Free Zones are eligible for value-added tax (VAT), import/export levies, and corporate income tax deductions. These financial advantages directly impact businesses’ increased profitability.

Simplified Regulations: For businesses, navigating intricate regulatory processes may be difficult. Free zones are intended to expedite the setup and operation stages by simplifying administrative procedures and cutting down on red tape.

Strategic locations: Saudi Arabia’s location is critical to the success of its Free zones. These zones are well situated close to ports, airports, and other important transportation hubs, giving companies simple access to foreign markets and promoting cross-border trade.

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Strategic Locations of Saudi Arabia’s Free Economic Zones

The Special Economic Zones (SEZs) in Saudi Arabia are becoming important hubs for global commerce and commercial expansion. These approved zones now serve as entry points to business prospects and are appealing to both domestic and foreign investors due to their array of advantages.

Saudi Arabia’s Free Zones are ideally situated around the Kingdom and offer superior domestic and global connections. Access to local and international markets via a variety of transport options is one of the special benefits that come with this connectivity, as listed below:

  • Approximately 13% of global commercial commerce traverses the Red Sea. When Egypt doubles the Suez Canal’s capacity, this number will rise.
  • More than forty rapidly expanding markets can be reached in four hours, covering 40% of three continents at the convergence.
  • It is possible to reach more than 40% of the global GDP in less than six hours.
  • In less than seven hours, one can contact more than half of the world’s population.
  • Ten seaports at the Bank of the Kingdom handle more than 8.3 million TEU annually. The Middle East’s largest maritime network is made up of these seaports.
  • 28 airports serve as the global link between Saudi free zones and handle over 90 million passengers annually via flights to over
  • The Saudi Arabian free zones are connected to the various regions of the Kingdom via a 5590 KM railway network.
  • The Kingdom of Saudi Arabia boasts the largest road network in the world, spanning 71500 kilometres, according to WEF.

Let’s examine each free zone or special economic zone in Saudi Arabia separately in terms of their strategic position.

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King Abdullah Economic City (KAEC) Special Economic Zone Location

Positioned for optimal effect, the KAEC free zone aims to accomplish its goals and become a major Middle Eastern city that can serve global trade. Its position was selected to maintain connections for both internal and international trade, as well as foreign direct investment, including: 

  • The entire land area of King Abdullah Economic City is 60 KM2. It boasts expansive vistas and access to the Red Sea’s immaculate waters. 
  • As the world’s most efficient port by the World Bank in 2022, King Abdullah Port offers the most convenient connectivity to international commerce routes through the KAEC.
  • The King Abdullah Economic City free zone is strategically located along the Red Sea coast, 100 kilometres north of Jeddah. 
  • International trade is facilitated by the Red Sea, which links the many global markets.
  • North and west of Makkah, the capital of the Kingdom, is 133 kilometres lies the KAEC free zone. It lies 219 km to the southwest of Medina, another sacred city. 

Jazan Special Economic Zone Location

  1. The Saudi Arabian city of Jazan, home to primary and downstream industries, is ideally situated for the Jazan Special Economic Zone (PDI). 
  2. Situated on the Red Sea, the Jazan Special Economic Zone offers excellent access to both internal and international trade.
  3. The largest port in the area and the Kingdom’s first export port are both close to this free zone in Saudi Arabia. Due to this advantageous location, materials may be delivered effectively and at no cost for land transportation.
  4. The Belt and Road Initiative and NEOM infrastructure projects in the Middle East and Africa are two examples of regional socioeconomic trends that local and foreign investors in the Janza Special Economic Zone can benefit from.
  5. Furthermore, this free zone offers a significant expansion potential for potential investors looking to expand their international trading company due to its low current industrial intensity and quantity of suitable land.

The Jazan Special Economic Zone (JSEZ) is ideally situated in relation to other vital locations for improved commerce and business, including:

  • Its total area on land is 24.6 KM³.
  • King Abdullah Domestic Airport is the closest airport, 52 kilometres away.
  • It is 60 kilometres to Jazan Port, the closest port in the Kingdom.
  • It is located 712 kilometres from the closest train station in the area, the Jeddah Haramain High-Speed Railway Station. 

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Ras Al-Khair Special Economic Zone Location

Ras Al-Khair Special Economic Zone is 20 KM2 in size. With its advantageous location in Saudi Arabia’s Eastern Province’s Ras Al-Khair Industrial City, this free zone provides access to international markets.

Situated in the heart of the Arabian Gulf, the Ras Al-Khair Special Economic Zone offers access to a variety of multimodal transportation options, including:

  1. The Ras Al-Khair Special Economic Zone is well situated close to Ras Al-Khair Port, Saudi Arabia’s newest industrial port with the ability to handle massive cargo and over a hundred manufacturing projects.
  2. It is located 100 km away from Jubail, the bustling capital of the Kingdom.
  3. King Fahd International Airport, the third-largest airport in Saudi Arabia, is around two hours’ drive away by car and offers connections to forty-three local and international locations.
  4. The North-South Rail line network provides direct rail connections from the Ras Al-Khair SEZ to the mines of Saudi Arabia. Moreover, it offers unparalleled access to essential input materials. 
  5. Additionally, King Salman Port provides access to the busiest oil and gas operations and traffic in the area through its North-South Rail Line.

Cloud Computing Special Economic Zone Location

The Silicon Valley of Saudi Arabia is known as the Cloud Computing Special Economic Zone. King Abdulaziz City for Science and Technology is where it is situated (KACST).  This free zone’s headquarters are located in Riyadh. 

Located in the technologically advanced Cloud Computing SEZ, the Saudi Vision Cable is a ground-breaking accomplishment. This massive 1,160,000-meter high-capacity underwater cable in the Red Sea represents a significant advancement in seamless connectivity. Its deliberate landings in Jeddah, Yanbu, Duba, and Haql provide this connectivity. By deploying this cable, data centres will be able to meet the demands of the worldwide market with greatly increased capacities. As a result, the data centres are not inside the SEZ for cloud computing.

The opportunity for investment and creation within the Cloud Computing Special Economic Zone is not limited to particular areas of the Kingdom; rather, it encompasses the entire region.

Industry Types in Saudi Arabia’s Special Economic Zones 

Learn about the various industries that are flourishing in Saudi Arabia’s Free Zones and emphasise the benefits and opportunities they offer to both local and foreign investors. The following lists the preferred industry categories for each of Saudi Arabia’s special economic zones.

Types of Industry in King Abdullah Economic City (KAEC) SEZ 

The top investment destination in Saudi Arabia is King Abdullah Economic City (KAEC) SEZ, which is tailored for a variety of businesses and sectors, including:

  • items for consumers.
  • automobile assembly and supply chain.
  • Information and communication technology (ICT) in relation to electronic light manufacture.
  • Pharmacy
  • Logistics
  • Medical Technology

Types of Industry in the Jazan Special Economic Zone

The Kingdom of Saudi Arabia’s fertile southwest is home to the Jazan Special Economic Zone, which presents potential for investors in a variety of sectors, including the production, distribution, and processing of food goods. This project intends to solve the problems of guaranteeing food security throughout the region and fulfil the growing local need for nourishment. Apart from agricultural production, the Jazan Free Zone concentrates on other industrial sectors such as:

  • Logistics 
  • Metal Conversion

Types of Industry in Ras Al-Khair Special Economic Zone

In the Arabian Gulf, the Ras Al-Khair Special Economic Zone is a well-known gathering place for influential figures in the nautical sector. On the coasts of the Gulf, it makes up a complete marine environment. Many business opportunities exist in this dynamic environment in industries such as shipbuilding and repair, offshore drilling, support vessels, jack-up rigs, very large crude carriers (VLCCs), and different parts of the marine value chain.

The focus sectors are:

  • Building ships and MRO 
  • MRO and rig platforms 

Industry Types in the Special Economic Zone for Cloud Computing

Businesses from anywhere throughout the Kingdom of Saudi Arabia can develop and run physical data centres in the Cloud Computing SEZ in King Abdulaziz City for Science and Technology. 

Investors in cutting-edge and innovative technologies have the chance to set up cloud computing service infrastructure anywhere in the Kingdom thanks to the Saudi Cloud Computing Special Economic Zone.

The Free Zones in Saudi Arabia provide access to various businesses and offer distinct prospects to investors who aim to leverage the kingdom’s advantageous locations. These zones offer incentives that can drive enterprises towards growth and success in a variety of industries, including manufacturing, energy, technology, and tourism.

Saudi Arabia’s Free Zones are opportunities for global and local investors who want to be a part of the kingdom’s revolutionary progress as it continues its journey of economic diversification.

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