Saudi Arabia continued its efforts to improve the business climate for domestic small and medium sized businesses, says the World Bank Group’s Doing Business 2019: Training for Reform report, released today.
In the past year, Saudi Arabia reduced the gap to the best performers by improving the Ease of Doing Business score to 63.5 points. Specifically, the country moved closer to the frontier in seven out of ten Doing Business indicators—Starting a Business, Dealing with Construction Permits, Getting Electricity, Registering Property, Protecting Minority Investors, Trading across Borders, and Enforcing Contracts.
Highlights of the major reforms are:
- Protections of minority investors were strengthened by providing clear rules for the liability of directors and increasing the role of shareholders in major decisions. Saudi Arabia has a global rank of 7 in the Protecting Minority Investors area, scoring a perfect 10 on the extent of corporate transparency index.
- The reliability of electricity supply was improved by imposing a new compensation scheme to incentivize the utility company to improve service reliability. Saudi Arabia scores 6 out of 8 on the reliability of supply and transparency of tariff index, higher than the GCC region’s average score of 4.2 on this index.
- Exporting and importing was made easier with the launch of a new electronic single window and extension of hours of operation of customs at the Jeddah port. As a result, the document preparation time was reduced by 21 hours for exports and 32 hours for imports, while border compliance time for exporting was reduced by 19 hours.
- Enforcing Contracts was made easier by introducing an e-system that allows plaintiffs to file the initial complaint electronically.
In addition to stellar performance in Protecting Minority Investors, Saudi Arabia also performs well in the Doing Business areas of Registering Property and Dealing with Construction Permits. For example, it takes only 1.5 days to register property transfer in Saudi Arabia. There are only two countries in the world where it can be done faster, in Georgia and New Zealand. Also, property transfer is done at no cost in Saudi Arabia, which is the case in only four other countries in the world. Saudi Arabia ranks 24th globally in the Registering Property area.
In the area of construction permitting, it takes 91.5 days for a business to obtain all required permits and authorizations to build a warehouse in Saudi Arabia, and it costs 2.1 percent of the warehouse value, compared to 137 days and 4.7 percent on average in the Middle East and North Africa (MENA) region. Saudi Arabia ranks 36 globally in the Dealing with Construction Permits area.
A new Bankruptcy Law came into force in August 2018. However, the country did not receive any score this year and is ranked 168 globally in Resolving Insolvency indicator as the law was enacted after the deadline for this year’s report and no cases involving a judicial reorganization, judicial liquidation or debt enforcement procedure in the country have yet been resolved.