Entering the Saudi market: the questions to answer before you commit

Why a Saudi entry case needs its own study

International companies often approach Saudi Arabia with a regional plan built in Dubai, then adjusted. The Kingdom's licensing, labour rules, procurement rules and customers are different enough that this rarely holds up. A Saudi entry case should be built from Saudi data and answer a short list of questions before money is committed.

1. Is the market there, for you?

• How large is demand for your product or service in the Kingdom, and who buys it: government, giga-projects, private companies or consumers?
• Who supplies it today, local producers or importers, and at what price?
• Which regions matter? Riyadh, Jeddah and the Eastern Province behave as different markets.
• What share is realistic in three and five years, and what does it depend on?

2. What licence do you need?

A foreign investor needs an investment licence from the Ministry of Investment (MISA). It is a separate approval from the commercial registration issued by the Ministry of Commerce, and the two have to be sequenced: the MISA licence authorises the activity and the foreign ownership, and the commercial registration then gives the company legal personality to trade, contract and employ staff.

The activity described in the licence application, the company's articles and the business plan need to match. Mismatches between them are a common cause of delay, so the study should settle exactly what the Saudi entity will do.

3. Will you sell to government?

Since 1 January 2024, Saudi government entities have been restricted from contracting with foreign companies that do not have a regional headquarters (RHQ) in the Kingdom. The rule includes exceptions, such as contracts under SAR 1 million, and a more structured exemption framework has since been introduced. Even so, if government or government-linked buyers are a large part of your expected revenue, the RHQ question belongs in the entry case from the start.

An RHQ licence comes with its own requirements, including staffing. Published guidance sets a minimum of 15 full-time employees, including three senior executives, within a year of the licence being issued.

4. What will it cost to staff?

Saudisation targets under the Nitaqat programme apply from the day the entity starts hiring. New establishments have a capped number of instant work visas, and their capacity to recruit from abroad grows as their Saudisation rate improves. Salaries, the Saudi share of the workforce and recruitment timelines should all be built into the cost model, not added later. See our guide to Saudisation in a feasibility study.

5. Which route in?

Compare the options side by side on cost, control, speed and risk:

• Your own entity: full control and the clearest route to government work, with the highest set-up cost and Saudisation obligations
• Joint venture with a Saudi partner: faster market access and relationships, with shared control
• Distributor or agent: lowest commitment and fastest start, with the least control over price and customers
• Licensing or franchise: brand presence without operating risk, where the business model allows it

6. Is there a case for local production?

Local manufacturing can open SIDF financing, industrial city land and local content advantages in procurement. It also brings capital cost, an industrial licence and a longer timeline. If the market case is strong, test a local production scenario in the model even if you start with imports. See the feasibility file for a MODON industrial licence.

7. When does it pay back?

A board will want set-up cost, operating cost, revenue ramp-up, break-even and return, with the two or three assumptions that decide the outcome tested in a downside case. Build the model so the route options can be switched and compared, not as separate spreadsheets.