RESTRICTED
WORLD TRADE WT/ACC/SAU/23
23September 1997
ORGANIZATION(97-3867)
Working Party ontheAccession Original: English
oftheKingdom ofSaudi Arabia
ACCESSION OFTHE KINGDOM OFSAUDI ARABIA
Communication from Saudi Arabia
TheMinistry ofCommerce oftheKingdom ofSaudi Arabia hassubmitted thefollowing
background paper onthetrade-related services regime.
_______________
I. INTRODUCTION
1. Adetailed description of,thetrade-related services regime oftheKingdom ofSaudi Arabia
wasprovided indocument WT/ACC/SAU/5, paragraphs 36to63.Theinformation wasorganized
inaccordance withtheoutline inWTO document WT/ACC/l.
2. Thefollowing paragraphs supplement theinformation indocument WT/ACC/SAU/5.
II. MARKET ACCESS FOR SERVICES
(a) Cross-border Supply
3. There aregenerally norestrictions orlimitations oncross-border supply ofservices, except,
inthecaseoftelecommunication area, forcall-back services.
4.Intheareaofaudio-visual services andfinancial services, cross-border supply isnotpermitted.
(b) Consumption Abroad
5. Saudi Arabia doesnotplace anylimitations orrestrictions onconsumption abroad bySaudi
nationals ofdifferent services.
(c) Commercial Presence
6. Commercial presence offoreign service suppliers inSaudi Arabia isregulated either under
theInvestment ofForeign Capital Regulation orunder theCompanies Law.
7.TheInvestment ofForeign Capital Regulation isapplicable where foreign capital isinvested in
services activities which areconsidered asdevelopment enterprises. Inother cases, theCompanies
Lawisapplicable.
8. Foreign capital, whether inajointventure orwholly owned enterprise, mustbeapproved by
Foreign Capital Investment Committee. Theconditions forapproval arethatthecapital beinvestedWT/ACC/SAU/23
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indevelopment enterprises, other thanextraction ofpetroleum andmining, andthattheforeign capital
beaccompanied bytechnical expertise. Theterm"technical expertise" isunderstood tomean technical
know-how andmanagement know-how. Most services activities, including, inparticular, financial
services, areconsidered asdevelopment enterprises. However, professional services arenotconsidered
asdevelopment enterprises andcommercial presence inthese isregulated under theCompanies Law.
9. Commercial presence inSaudi Arabia canbeintheform ofbranches offoreign companies
subject toapproval under theInvestment ofForeign Capital Regulation orunder theCompanies Law
orinoneoftheeightforms oflegalentities speltoutintheCompanies Law, i.e.,general partnership,
limited partnership, partnership limited byshares, limited-liability partnership, company withvariable
capital, joint-stock company, cooperative company andjoint-venture company, again subject toapproval
under theInvestment ofForeign Capital Regulation.
10. However, inthecaseoffinancial services, commercial presence inSaudi Arabia caneither
taketheform ofabranch ofaforeign financial company orintheform ofajoint-stock company
incorporated inSaudi Arabia withtheshare offoreign partners limited to40percentoftheequity.
Inbothcases, itissubject toalicense granted bytheMinister ofFinance andNational Economy, upon
therecommendation oftheSaudi Arabian Monetary Agency, andwiththeapproval oftheCouncil
ofMinisters.
11. Commercial presence offoreign service suppliers intheareaoftelecommunications isnot
permissible asthisservice isreserved totheState.
12. Commercial presence forforeign maritime shipping companies issubject toalicense from
theMinistryofCommunications.Licensesareissuedtojoint-venturecompaniesbetweenSaudinationals
andforeigners,withtheshareproportiontobedeterminedbytheForeignCapitalInvestmentCommittee.
However, theshare offoreigners islimited toamaximum of49percent.
13. Foreign tourism ortravel agencies canestablish commercial presence inSaudi Arabia subject
totheInvestment ofForeign Capital Regulation andsubject tothecondition thattheforeign service
supplier (fortourism andtravel agency) belongs toastatewhich givesSaudi nationals arighttoestablish
tourism offices andtravel agencies intheircountries.
14. Asforprofessional services, foreign accounting firms canestablish commercial presence in
Saudi Arabia byentering intopartnerships withcertified Saudi accountants inaccordance withthe
conditions specified inArticle, 2oftheImplementing Rules forProfessional Companies. (Fordetails,
please refer toReply 131 indocument WT/ACC/SAU/8 andReply 200 indocument
WT/ACC/SAU/13/Add.1).
15. Commercial presence forforeign legalservices isnotpermitted inSaudi Arabia as,according
tolaw,license topractice lawandlegalconsultation isrestricted onlytoSaudi nationals. However,
Saudi legalconsultants canprocure theservices offoreign legalconsultants toobtain advice onmatters
pertaining toforeign countries 'lawsorinternational law.
(d) Movement ofNatural Persons
16. There isnorestriction ontheentry intoSaudi Arabia ofbusiness visitors whocome forshort
duration provided theyhaveobtained entry visafrom aSaudi embassy orconsulate abroad.
17. Asamatter ofprinciple, since work isconsidered aSaudi citizen ’sright, aforeigner would
notbeemployed when todosowould displace aSaudi worker. Inapplying thisprinciple, theLabor
andWorkers Regulations establish, asageneral rule,thatanyenterprise, Saudi orforeign owned,WT/ACC/SAU/23
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shallensure thatthe"percentage oftheSaudi workers engaged bytheemployer shallnotbelessthan
75percent ofhistotalworkforce". However, theRegulations alsoprovide theMinister ofLabor with
theauthority totemporarily reduce therequired percentage incircumstances "where Saudi workers
withrequisite qualifications arenotavailable".
18.Permission oftheMinistry ofLabour isrequired forobtaining work permits forforeign persons.
Work permit shallnotbegiven unless thefollowing conditions havebeensatisfied:
(i) foreign natural person shallhaveentered thecountry legally andsatisfies theconditions
prescribed intheResidence Regulations;
(ii) theforeign person mustpossess occupational proficiencies oracademic qualifications
needed inSaudi Arabia, provided thatnoSaudi national withthesame qualifications
isavailable orthatthenumber ofavailable Saudi nationals doesnotsatisfy demand;
(iii) theforeign person shall have entered intoacontract withaSaudi employer ora
non-Saudi employer whoisauthorized under theInvestment ofForeign Capital
Regulation.
19. Asstated inparagraph 56oftheMemorandum, document WT/ACC/SAU/5, thepositions of
personnel managers, cashiers, civilian security guards, andtransaction follow-up clerks togovernment
departments arereserved forSaudi nationals inallcompanies whether Saudi orforeign.
III. LIMITATIONS ONNATIONAL TREATMENT
20. Foreign services suppliers aregiven thesame treatment asdomestic service suppliers, except
forthelimitations mentioned inparagraph 61indocument WT/ACC/SAU/5.