SEU Study of Partial Privatization and Its Impacts on Corporate Governance Summary

I am looking for support with the following:

The topic this week is the foundations of finance. From this week’s readings, identify one of the principles that resonates with your perspective on financial decisions in Saudi Arabia. How is this concept important to financial managers in today’s global economic environment? Why are these concepts important to business leaders in Saudi Arabia?

For your discussion post, your first step is to summarize the article in two paragraphs, describing what you think are the most important points made by the authors ( Refer to the attachements )

Doing Business 2020
Saudi Arabia
Economy Profile
Saudi Arabia
Page 1
Doing Business 2020
Saudi Arabia
Economy Profile of Saudi Arabia
Doing Business 2020 Indicators
(in order of appearance in the document)
Starting a business
Procedures, time, cost and paid-in minimum capital to start a limited liability company
Dealing with construction permits
Procedures, time and cost to complete all formalities to build a warehouse and the quality control and safety
mechanisms in the construction permitting system
Getting electricity
Procedures, time and cost to get connected to the electrical grid, and the reliability of the electricity supply and
the transparency of tariffs
Registering property
Procedures, time and cost to transfer a property and the quality of the land administration system
Getting credit
Movable collateral laws and credit information systems
Protecting minority investors
Minority shareholders’ rights in related-party transactions and in corporate governance
Paying taxes
Payments, time, total tax and contribution rate for a firm to comply with all tax regulations as well as postfiling
processes
Trading across borders
Time and cost to export the product of comparative advantage and import auto parts
Enforcing contracts
Time and cost to resolve a commercial dispute and the quality of judicial processes
Resolving insolvency
Time, cost, outcome and recovery rate for a commercial insolvency and the strength of the legal framework for
insolvency
Employing workers
Flexibility in employment regulation and redundancy cost
Page 2
Doing Business 2020
Saudi Arabia
About Doing Business
The Doing Business project provides objective measures of business regulations and their enforcement across 190 economies and selected cities at the subnational and
regional level.
The Doing Business project, launched in 2002, looks at domestic small and medium-size companies and measures the regulations applying to them through their life
cycle.
Doing Business captures several important dimensions of the regulatory environment as it applies to local firms. It provides quantitative indicators on regulation for
starting a business, dealing with construction permits, getting electricity, registering property, getting credit, protecting minority investors, paying taxes, trading across
borders, enforcing contracts and resolving insolvency. Doing Business also measures features of employing workers. Although Doing Business does not present rankings
of economies on the employing workers indicators or include the topic in the aggregate ease of doing business score or ranking on the ease of doing business, it does
present the data for these indicators.
By gathering and analyzing comprehensive quantitative data to compare business regulation environments across economies and over time, Doing Business encourages
economies to compete towards more efficient regulation; offers measurable benchmarks for reform; and serves as a resource for academics, journalists, private sector
researchers and others interested in the business climate of each economy.
In addition, Doing Business offers detailed subnational studies, which exhaustively cover business regulation and reform in different cities and regions within a nation.
These studies provide data on the ease of doing business, rank each location, and recommend reforms to improve performance in each of the indicator areas. Selected
cities can compare their business regulations with other cities in the economy or region and with the 190 economies that Doing Business has ranked.
The first Doing Business study, published in 2003, covered 5 indicator sets and 133 economies. This year’s study covers 11 indicator sets and 190 economies. Most
indicator sets refer to a case scenario in the largest business city of each economy, except for 11 economies that have a population of more than 100 million as of 2013
(Bangladesh, Brazil, China, India, Indonesia, Japan, Mexico, Nigeria, Pakistan, the Russian Federation and the United States) where Doing Business also collected data
for the second largest business city. The data for these 11 economies are a population-weighted average for the 2 largest business cities. The project has benefited from
feedback from governments, academics, practitioners and reviewers. The initial goal remains: to provide an objective basis for understanding and improving the
regulatory environment for business around the world.
To learn more about Doing Business please visit doingbusiness.org
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Doing Business 2020
Saudi Arabia
Ease of Doing Business in
Saudi Arabia
Region
Middle East & North Africa
Income Category
High income
Population
33,699,947
City Covered
Riyadh
DB RANK
DB SCORE
62
71.6
Rankings on Doing Business topics – Saudi Arabia
3
18
19
28
38
51
57
80
86
168
Starting
a
Business
Dealing
with
Construction
Permits
Getting
Electricity
Registering
Property
Getting
Credit
Protecting
Minority
Investors
Paying
Taxes
Trading
across
Borders
Enforcing
Contracts
Resolving
Insolvency
80.5
76.0
65.3
0.0
Topic Scores
93.1
78.3
91.8
Starting a Business (rank)
Score of starting a business (0-100)
84.5
60.0
38
86.0
Getting Credit (rank)
80
Procedures (number)
3.5
Strength of legal rights index (0-12)
4
Time to export
Time (days)
10.5
Depth of credit information index (0-8)
8
Documentary compliance (hours)
11
Cost (number)
5.4
Credit registry coverage (% of adults)
0.0
Border compliance (hours)
37
Paid-in min. capital (% of income per capita)
0.0
Credit bureau coverage (% of adults)
56.7
Cost to export
Dealing with Construction Permits (rank)
28
Protecting Minority Investors (rank)
3
76.0
Documentary compliance (USD)
73
Border compliance (USD)
319
Score of protecting minority investors (0-100)
86.0
Time to export
Procedures (number)
14
Extent of disclosure index (0-10)
9.0
Documentary compliance (hours)
32
Time (days)
100
Extent of director liability index (0-10)
9.0
Border compliance (hours)
72
Cost (% of warehouse value)
1.9
Ease of shareholder suits index (0-10)
7.0
Cost to export
Building quality control index (0-15)
12.0
Extent of shareholder rights index (0-6)
5.0
Documentary compliance (USD)
267
Extent of ownership and control index (0-7)
6.0
Border compliance (USD)
464
Extent of corporate transparency index (0-7)
7.0
2
Paying Taxes (rank)
57
35
Score of paying taxes (0-100)
80.5
27.9
Payments (number per year)
4
Getting Electricity (rank)
Score of getting electricity (0-100)
Procedures (number)
Time (days)
Cost (% of income per capita)
Reliability of supply and transparency of tariff index (0-8)
Registering Property (rank)
Score of registering property (0-100)
Procedures (number)
Time (days)
78.3
Score of trading across borders (0-100)
86
Score of getting credit (0-100)
Score of dealing with construction permits (0-100)
60.0
Trading across Borders (rank)
93.1
18
91.8
6
19
84.5
2
Enforcing Contracts (rank)
Time (hours per year)
104
Total tax and contribution rate (% of profit)
15.7
Postfiling index (0-100)
32.2
Score of enforcing contracts (0-100)
Time (days)
575
Cost (% of claim value)
27.5
Quality of judicial processes index (0-18)
11.5
Resolving Insolvency (rank)
168
Score of resolving insolvency (0-100)
0.0
Recovery rate (cents on the dollar)
No
Practice
Time (years)
No
Practice
Cost (% of estate)
No
Practice
1.5
Cost (% of property value)
0.0
Quality of the land administration index (0-30)
14.0
51
65.3
Outcome (0 as piecemeal sale and 1 as
going concern)
Strength of insolvency framework index (016)
0
No
Practice
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Doing Business 2020
Saudi Arabia
Starting a Business
This topic measures the number of procedures, time, cost and paid-in minimum capital requirement for a small- to medium-sized limited liability company to start up and
formally operate in each economy’s largest business city.
To make the data comparable across 190 economies, Doing Business uses a standardized business that is 100% domestically owned, has start-up capital equivalent to
10 times the income per capita, engages in general industrial or commercial activities and employs between 10 and 50 people one month after the commencement of
operations, all of whom are domestic nationals. Starting a Business considers two types of local limited liability companies that are identical in all aspects, except that one
company is owned by 5 married women and the other by 5 married men. The ranking of economies on the ease of starting a business is determined by sorting their
scores for starting a business. These scores are the simple average of the scores for each of the component indicators.
The most recent round of data collection for the project was completed in May 2019. See the methodology for more information.
What the indicators measure
Case study assumptions
Procedures to legally start and formally operate a company
(number)
To make the data comparable across economies, several assumptions about the business and the
procedures are used. It is assumed that any required information is readily available and that the
entrepreneur will pay no bribes.
• Preregistration (for example, name verification or reservation,
notarization)
• Registration in the economy’s largest business city
• Postregistration (for example, social security registration,
company seal)
• Obtaining approval from spouse to start a business or to leave
the home to register the company
• Obtaining any gender specific document for company
registration and operation or national identification card
Time required to complete each procedure (calendar days)
• Does not include time spent gathering information
• Each procedure starts on a separate day (2 procedures cannot
start on the same day)
• Procedures fully completed online are recorded as ½ day
• Procedure is considered completed once final document is
received
• No prior contact with officials
Cost required to complete each procedure (% of income per
capita)
• Official costs only, no bribes
• No professional fees unless services required by law or
commonly used in practice
Paid-in minimum capital (% of income per capita)
• Funds deposited in a bank or with third party before registration
or up to 3 months after incorporation
The business:
-Is a limited liability company (or its legal equivalent). If there is more than one type of limited
liability company in the economy, the limited liability form most common among domestic firms is
chosen. Information on the most common form is obtained from incorporation lawyers or the
statistical office.
-Operates in the economy’s largest business city. For 11 economies the data are also collected for
the second largest business city.
-Performs general industrial or commercial activities such as the production or sale to the public of
goods or services. The business does not perform foreign trade activities and does not handle
products subject to a special tax regime, for example, liquor or tobacco. It is not using heavily
polluting production processes.
-Does not qualify for investment incentives or any special benefits.
-Is 100% domestically owned.
-Has five business owners, none of whom is a legal entity. One business owner holds 30% of the
company shares, two owners have 20% of shares each, and two owners have 15% of shares
each.
-Is managed by one local director.
-Has between 10 and 50 employees one month after the commencement of operations, all of them
domestic nationals.
-Has start-up capital of 10 times income per capita.
-Has an estimated turnover of at least 100 times income per capita.
-Leases the commercial plant or offices and is not a proprietor of real estate.
-Has an annual lease for the office space equivalent to one income per capita.
-Is in an office space of approximately 929 square meters (10,000 square feet).
-Has a company deed that is 10 pages long.
The owners:
-Have reached the legal age of majority and are capable of making decisions as an adult. If there
is no legal age of majority, they are assumed to be 30 years old.
-Are in good health and have no criminal record.
-Are married, the marriage is monogamous and registered with the authorities.
-Where the answer differs according to the legal system applicable to the woman or man in
question (as may be the case in economies where there is legal plurality), the answer used will be
the one that applies to the majority of the population.
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Doing Business 2020
Saudi Arabia
Starting a Business – Saudi Arabia
Standardized Company
Legal form
Limited Liability Company
Paid-in minimum capital requirement
No minimum
City Covered
Riyadh
Indicator
Saudi Arabia
Middle East &
North Africa
OECD high
income
Best Regulatory
Performance
Procedure – Men (number)
3
6.5
4.9
1 (2 Economies)
Time – Men (days)
10
19.7
9.2
0.5 (New Zealand)
Cost – Men (% of income per capita)
5.4
16.7
3.0
0.0 (2 Economies)
Procedure – Women (number)
4
7.1
4.9
1 (2 Economies)
Time – Women (days)
11
20.3
9.2
0.5 (New Zealand)
Cost – Women (% of income per capita)
5.4
16.7
3.0
0.0 (2 Economies)
Paid-in min. capital (% of income per capita)
0.0
8.9
7.6
0.0 (120 Economies)
Figure – Starting a Business in Saudi Arabia – Score
85.3
90.0
97.3
100.0
Procedures
Time
Cost
Paid-in min. capital
Figure – Starting a Business in Saudi Arabia and comparator economies – Ranking and Score
DB 2020 Starting a Business Score
0
100
94.8: United Arab Emirates (Rank: 17)
93.5: Oman (Rank: 32)
93.1: Saudi Arabia (Rank: 38)
87.8: Egypt, Arab Rep. (Rank: 90)
84.5: Jordan (Rank: 120)
84.0: Regional Average (Middle East & North Africa)
Note: The ranking of economies on the ease of starting a business is determined by sorting their scores for starting a business. These scores are the simple average of
the scores for each of the component indicators.
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Doing Business 2020
Saudi Arabia
Figure – Starting a Business in Saudi Arabia – Procedure, Time and Cost
Time (days)
Cost (% of income per capita)
6
5
Time (days)
8
4
6
3
4
2
2
Cost (% of income per capita)
10
1
0
0
1
2
3
4
Procedures (number)
* This symbol is shown beside procedure numbers that take place simultaneously with the previous procedure.
Note: Online procedures account for 0.5 days in the total time calculation. For economies that have a different procedure list for men and women, the graph shows the
time for women. For more information on methodology, see the Doing Business website (http://doingbusiness.org/en/methodology). For details on the procedures
reflected here, see the summary below.
Page 7
Doing Business 2020
Saudi Arabia
Details – Starting a Business in Saudi Arabia – Procedure, Time and Cost
No.
Procedures
Time to Complete
Associated Costs
1
APPLIES TO WOMEN ONLY: Obtain husband’s permission to leave the house
Agency : Home
If a woman fails to obtain the permission/support of her husband in leaving the home (for example,
for entrepreneurial ventures) it is possible that she may suffer consequences under the law; for
example she may not be entitled to financial alimony.
1 day
no charge
2
Register the company with MERAS
Agency : MERAS
The Meras platform is a one stop-shop that allows entrepreneurs to register their new company
online with the Ministry of Commerce. It also allows entrepreneurs to obtain the Municipality
license, notarize the articles of association electronically, register with the Ministry of Labor and
Social Development (MLSD), the General Organization for Social Insurance (GOSI), and the
General Authority of Zakat & Tax (GAZT). New compamies are also registered with Wasel
automatically.
8 days
SAR 1,200 for commercial
3
Open a bank account
Agency : Bank
The entrepreneur open a company bank account at a bank of choice. After the certificate of
registration is issued, the company founders go back to the bank to unblock their capital deposit
and activate their bank account. It is required to open a bank account within 90 days starting from
the issuance date of the commercial certificate of an LLC.
1 day
no charge
4
Make a company seal
Agency : Seal maker
The seal must include the Certificate of Registration number and the name of the company. It
costs around SAR 40-50 to make. It is needed to attest signatories at the Chamber of Commerce,
register with the General Organization for Social Insurance and for the companies’ invoices. It is
commonly used in practice. The seal is always used on the following documents:
1) Any contracts
2) Shareholder resolutions
3) Management resolutions
4) Official letters and notices
5) All Gvt agencies require documents to be put on official company letterheads and stamped.
1 day
SAR 50
registration + SAR 2,000 a
fee to become member of
Chamber of Commerce +
SAR 500 e-magazine
publication fee + SAR
1000 (municipality license)
Applies to women only.
Takes place simultaneously with previous procedure.
Page 8
Doing Business 2020
Saudi Arabia
Dealing with Construction Permits
This topic tracks the procedures, time and cost to build a warehouse—including obtaining necessary the licenses and permits, submitting all required notifications,
requesting and receiving all necessary inspections and obtaining utility connections. In addition, the Dealing with Construction Permits indicator measures the building
quality control index, evaluating the quality of building regulations, the strength of quality control and safety mechanisms, liability and insurance regimes, and professional
certification requirements. The most recent round of data collection was completed in May 2019. See the methodology for more information
What the indicators measure
Case study assumptions
Procedures to legally build a warehouse (number)
To make the data comparable across economies, several assumptions about the construction
company, the warehouse project and the utility connections are used.
• Submitting all relevant documents and obtaining all necessary
clearances, licenses, permits and certificates
• Submitting all required notifications and receiving all necessary
inspections
• Obtaining utility connections for water and sewerage
• Registering and selling the warehouse after its completion
Time required to complete each procedure (calendar days)
• Does not include time spent gathering information
• Each procedure starts on a separate day—though procedures
that can be fully completed online are an exception to this rule
• Procedure is considered completed once final document is
received
• No prior contact with officials
Cost required to complete each procedure (% of income per
capita)
• Official costs only, no bribes
Building quality control index (0-15)
• Quality of building regulations (0-2)
• Quality control before construction (0-1)
• Quality control during construction (0-3)
• Quality control after construction (0-3)
• Liability and insurance regimes (0-2)
• Professional certifications (0-4)
The construction company (BuildCo):
– Is a limited liability company (or its legal equivalent) and operates in the economy’s largest
business city. For 11 economies the data are also collected for the second largest business city.
– Is 100% domestically and privately owned; has five owners, none of whom is a legal entity. Has a
licensed architect and a licensed engineer, both registered with the local association of architects
or engineers. BuildCo is not assumed to have any other employees who are technical or licensed
experts, such as geological or topographical experts.
– Owns the land on which the warehouse will be built and will sell the warehouse upon its
completion.
The warehouse:
– Will be used for general storage activities, such as storage of books or stationery.
– Will have two stories, both above ground, with a total constructed area of approximately 1,300.6
square meters (14,000 square feet). Each floor will be 3 meters (9 feet, 10 inches) high and will be
located on a land plot of approximately 929 square meters (10,000 square feet) that is 100%
owned by BuildCo, and the warehouse is valued at 50 times income per capita.
– Will have complete architectural and technical plans prepared by a licensed architect. If
preparation of the plans requires such steps as obtaining further documentation or getting prior
approvals from external agencies, these are counted as procedures.
– Will take 30 weeks to construct (excluding all delays due to administrative and regulatory
requirements).
The water and sewerage connections:
– Will be 150 meters (492 feet) from the existing water source and sewer tap. If there is no water
delivery infrastructure in the economy, a borehole will be dug. If there is no sewerage
infrastructure, a septic tank in the smallest size available will be installed or built.
– Will have an average water use of 662 liters (175 gallons) a day and an average wastewater flow
of 568 liters (150 gallons) a day. Will have a peak water use of 1,325 liters (350 gallons) a day and
a peak wastewater flow of 1,136 liters (300 gallons) a day.
– Will have a constant level of water demand and wastewater flow throughout the year; will be 1
inch in diameter for the water connection and 4 inches in diameter for the sewerage connection.
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Doing Business 2020
Saudi Arabia
Dealing with Construction Permits – Saudi Arabia
Standardized Warehouse
Estimated value of warehouse
SAR 4,394,910
City Covered
Riyadh
Indicator
Saudi Arabia
Middle East &
North Africa
OECD high
income
Best Regulatory
Performance
Procedures (number)
14
15.7
12.7
None in 2018/19
Time (days)
100
123.6
152.3
None in 2018/19
Cost (% of warehouse value)
1.9
4.4
1.5
None in 2018/19
Building quality control index (0-15)
12.0
12.5
11.6
15.0 (6 Economies)
Figure – Dealing with Construction Permits in Saudi Arabia – Score
64.0
78.7
90.7
80.0
Procedures
Time
Cost
Building quality control index
Figure – Dealing with Construction Permits in Saudi Arabia and comparator economies – Ranking and Score
DB 2020 Dealing with Construction Permits Score
0
100
89.8: United Arab Emirates (Rank: 3)
78.3: Saudi Arabia (Rank: 28)
75.2: Oman (Rank: 47)
71.2: Egypt, Arab Rep. (Rank: 74)
61.7: Regional Average (Middle East & North Africa)
60.3: Jordan (Rank: 138)
Note: The ranking of economies on the ease of dealing with construction permits is determined by sorting their scores for dealing with construction permits. These scores
are the simple average of the scores for each of the component indicators.
Page 10
Doing Business 2020
Saudi Arabia
Figure – Dealing with Construction Permits in Saudi Arabia – Procedure, Time and Cost
Time (days)
Cost (% of warehouse value)
1.4
1.2
80
Time (days)
1
60
0.8
0.6
40
0.4
Cost (% of warehouse value)
100
20
0.2
0
0
1
*2
*3
*4
5
6
7
8
9
10
11
* 12
13
14
Procedures (number)
* This symbol is shown beside procedure numbers that take place simultaneously with the previous procedure.
Note: Online procedures account for 0.5 days in the total time calculation. For economies that have a different procedure list for men and women, the graph shows the
time for women. For more information on methodology, see the Doing Business website (http://doingbusiness.org/en/methodology). For details on the procedures
reflected here, see the summary below.
Page 11
Doing Business 2020
Saudi Arabia
Index score
Figure – Dealing with Construction Permits in Saudi Arabia and comparator economies – Measure of Quality
16
14
12
10
8
6
4
2
0
15.0
14.0
12.0
Saudi
Arabia
Egypt,
Arab
Rep.
11.0
11.0
Jordan
Oman
12.5
United
Arab
Emirates
Middle
East
&
North
Africa
Details – Dealing with Construction Permits in Saudi Arabia – Procedure, Time and Cost
No.
Procedures
Time to Complete
Associated Costs
1
Obtain a geotechnical study / soil test
Agency : Private firms
BuildCo will request a soil test for the structural calculations for the foundation.
7 days
SAR 4,000
2
Obtain a topographical study of the land
Agency : Private firms
2 days
SAR 1,500
3
Obtain surveyor’s report from Riyadh Municipality outlining the building standards
Agency : Riyadh Municipality
After the inspection, the Municipality issues a set of building standards (in a “surveyor’s report”)
that need to be adhered to.
3 days
no charge
Hire independent authorized engineer
Agency : Private Company
To apply for the building permit, BuildCo must hire an independent authorized engineering firm for
the drawings and supervise the building permit application.
The new online platform allows the client to select the authorized engineering firm from a drop
down menu, however this is only to formally notify the Municipality. BuildCo would still have to
draft and sign a separate contract with the independent engineering firm.
1 day
SAR 52,024
Request and obtain construction permit
Agency : Riyadh Municipality
BuildCo submits the application file with all the supporting documentation through the online portal
located on the Riyadh Municipality website (http://eservices.alriyadh.gov.sa).
19 days
SAR 7,804
30 days
no charge
BuildCo must obtain a surveyor’s report from the Municipality prior to requesting the building
permit. The report outlines whether the intended project can be built on the particular location. It
also indicates the boundaries, leveling and area of the land. This report is needed for the
consultant to prepare the drawings.
4
5
Documents include:
• A cover page
• Legal documentation from the owner of the land (in this case BuildCo), and the design engineer
(in this case, an employee of BuildCo)
• A copy of the applicant’s identity card
• Surveyor’s report from the branch municipality
• Draft of the building permit, which has been prepared in advance by BuildCo and contains full
information including the instrument number, street name, the name of the neighborhood,
rebounds and components of construction and the amount of construction drawings and number
and the date of receipt of payment, and the general location of all data set forth in the license
• Building plans drawn to a 50/1 scale with all the annexes
• Copy of the final plans
Incomplete files will not be accepted for further processing. Once all documents are submitted, the
system will generate the permit fees, which can also be paid online through the Sadad Payment
System.
6
Request and obtain Civil Defense approval prior to installation
Agency : Civil Defense
The building firm needs to submit fire and safety drawings as well as hydraulic calculations to the
Civil Defense in order to obtain their approval. The Civil Defense confirms that the design is done
in compliance with all the safety standards. If everything is in compliance with the existing
standards, the department of Civil Defense issues the approval. The application is submitted inperson to present all the original documents.
This procedure can be done in less time (7 days) if BuildCo hires an approved Civil Defense
consultant.
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Doing Business 2020
Saudi Arabia
7
Request and receive inspection at the beginning of construction
Agency : Riyadh Municipality
Once the building permit is obtained the engineering firm notifies the Municipality of
commencement of construction work, through the online portal Balady, and receives the first site
inspection. For small projects like the warehouse, the supervision is done by the in-house
engineer and the Municipality may conduct a random inspection during construction.
However, for larger projects, the supervising engineer has to notify the Municipality at each phase
and receive the inspection before proceeding with the construction work.
1 day
no charge
8
Request and receive certificate of completion from the Riyadh Municipality
Agency : Riyadh Municipality
The customer notifies the Branch Municipality electronically that construction reached 80% of
completion. Based on the supervising engineer’s report, the certificate of completion is issued and
delivered online. Once the certificate of completion is issued, this information is automatically sent
to Sewage, Water, Power and Civil Defense.
2 days
no charge
9
Request letter of approval from Civil Defense
Agency : Civil Defense
BuildCo must visit the Civil Defense agency in person to request the letter of approval. The Civil
Defense must then visit the site to approve that the warehouse is safe for commercial use.
1 day
no charge
10
Receive final inspection by Civil Defense
Agency : Civil Defense
1 day
no charge
11
Obtain water and sewage connection
Agency : National Water Company
Once the completion certificate is issued, the Municipality will automatically inform the National
Water Company (NWC) to start the connection process. However, it is still common for
engineering firms to visit the NWC in person and follow up on the process.
30 days
SAR 16,250
Obtain letter of approval from Civil Defense
Agency : Civil Defense
If the completed building complies with all the fire safety regulations, the Civil Defense issues a
letter of approval.
12 days
no charge
13
Request and receive final inspection to issue certificate of occupancy
Agency : Riyadh Municipality
Municipality appoints an inspector who will check that all the set backs are in order. Inspectors
also check the height of all floors and all the other standard building parameters. Everything has to
be built in accordance with previously submitted plans. Inspectors also take multiple pictures of
the constructed object for reporting and filing purposes.
The final inspection report can be obtained electronically through the Municipality’s website.
1 day
no charge
14
Obtain occupancy certificate
Agency : Riyadh Municipality
After the inspection is done and the report submitted, the occupancy certificate is issued online.
8 days
no charge
12
Takes place simultaneously with previous procedure.
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Doing Business 2020
Saudi Arabia
Details – Dealing with Construction Permits in Saudi Arabia – Measure of Quality
Answer
Score
Building quality control index (0-15)
12.0
Quality of building regulations index (0-2)
2.0
How accessible are building laws and regulations in your economy? (0-1)
Available online; Free
of charge.
1.0
Which requirements for obtaining a building permit are clearly specified in the building regulations or on any
accessible website, brochure or pamphlet? (0-1)
List of required
documents; Fees to
be paid; Required
preapprovals.
1.0
Quality control before construction index (0-1)
Which third-party entities are required by law to verify that the building plans are in compliance with existing
building regulations? (0-1)
1.0
Licensed architect;
Licensed engineer.
Quality control during construction index (0-3)
1.0
2.0
What types of inspections (if any) are required by law to be carried out during construction? (0-2)
Inspections by inhouse engineer;
Unscheduled
inspections;
Inspections at various
phases.
1.0
Do legally mandated inspections occur in practice during construction? (0-1)
Mandatory
inspections are
always done in
practice.
1.0
Quality control after construction index (0-3)
3.0
Is there a final inspection required by law to verify that the building was built in accordance with the approved
plans and regulations? (0-2)
Yes, final inspection
is done by
government agency.
2.0
Do legally mandated final inspections occur in practice? (0-1)
Final inspection
always occurs in
practice.
1.0
Liability and insurance regimes index (0-2)
0.0
Which parties (if any) are held liable by law for structural flaws or problems in the building once it is in use
(Latent Defect Liability or Decennial Liability)? (0-1)
No party is held liable
under the law.
0.0
Which parties (if any) are required by law to obtain an insurance policy to cover possible structural flaws or
problems in the building once it is in use (Latent Defect Liability Insurance or Decennial Insurance)? (0-1)
No party is required
by law to obtain
insurance .
0.0
Professional certifications index (0-4)
4.0
What are the qualification requirements for the professional responsible for verifying that the architectural plans
or drawings are in compliance with existing building regulations? (0-2)
Minimum number of
years of experience;
University degree in
architecture or
engineering; Being a
registered architect or
engineer; Passing a
certification exam.
2.0
What are the qualification requirements for the professional who supervises the construction on the ground? (02)
Minimum number of
years of experience;
University degree in
engineering,
construction or
construction
management; Being
a registered architect
or engineer.
2.0
Page 14
Doing Business 2020
Saudi Arabia
Getting Electricity
This topic measures the procedures, time and cost required for a business to obtain a permanent electricity connection for a newly constructed warehouse. Additionally,
the reliability of supply and transparency of tariffs index measures reliability of supply, transparency of tariffs and the price of electricity. The most recent round of data
collection for the project was completed in May 2019. See the methodology for more information.
What the indicators measure
Case study assumptions
Procedures to obtain an electricity connection (number)
To make the data comparable across economies, several assumptions about the warehouse, the
electricity connection and the monthly consumption are used.
• Submitting all relevant documents and obtaining all necessary
clearances and permits
• Completing all required notifications and receiving all necessary
inspections
• Obtaining external installation works and possibly purchasing
material for these works
• Concluding any necessary supply contract and obtaining final
supply
Time required to complete each procedure (calendar days)
• Is at least 1 calendar day
• Each procedure starts on a separate day
• Does not include time spent gathering information
• Reflects the time spent in practice, with little follow-up and no
prior contact with officials
Cost required to complete each procedure (% of income per
capita)
• Official costs only, no bribes
• Value added tax excluded
The reliability of supply and transparency of tariffs index (0-8)
• Duration and frequency of power outages (0–3)
• Tools to monitor power outages (0–1)
• Tools to restore power supply (0–1)
• Regulatory monitoring of utilities’ performance (0–1)
• Financial deterrents limiting outages (0–1)
• Transparency and accessibility of tariffs (0–1)
The warehouse:
– Is owned by a local entrepreneur and is used for storage of goods.
– Is located in the economy’s largest business city. For 11 economies the data are also collected for
the second largest business city.
– Is located in an area where similar warehouses are typically located and is in an area with no
physical constraints. For example, the property is not near a railway.
– Is a new construction and is being connected to electricity for the first time.
– Has two stories with a total surface area of approximately 1,300.6 square meters (14,000 square
feet). The plot of land on which it is built is 929 square meters (10,000 square feet).
The electricity connection:
– Is a permanent one with a three-phase, four-wire Y connection with a subscribed capacity of 140kilo-volt-ampere (kVA) with a power factor of 1, when 1 kVA = 1 kilowatt (kW).
– Has a length of 150 meters. The connection is to either the low- or medium-voltage distribution
network and is either overhead or underground, whichever is more common in the area where the
warehouse is located and requires works that involve the crossing of a 10-meter road (such as by
excavation or overhead lines) but are all carried out on public land. There is no crossing of other
owners’ private property because the warehouse has access to a road.
– Does not require work to install the internal wiring of the warehouse. This has already been
completed up to and including the customer’s service panel or switchboard and the meter base.
The monthly consumption:
– It is assumed that the warehouse operates 30 days a month from 9:00 a.m. to 5:00 p.m. (8 hours
a day), with equipment utilized at 80% of capacity on average and that there are no electricity cuts
(assumed for simplicity reasons) and the monthly energy consumption is 26,880 kilowatt-hours
(kWh); hourly consumption is 112 kWh.
– If multiple electricity suppliers exist, the warehouse is served by the cheapest supplier.
– Tariffs effective in January of the current year are used for calculation of the price of electricity for
the warehouse. Although January has 31 days, for calculation purposes only 30 days are used.
Price of electricity (cents per kilowatt-hour)*
• Price based on monthly bill for commercial warehouse in case
study
*Note: Doing Business measures the price of electricity, but it is
not included in the ease of doing business score nor in the ranking
on the ease of getting electricity.
Page 15
Doing Business 2020
Saudi Arabia
Getting Electricity – Saudi Arabia
Standardized Connection
Name of utility
Saudi Electricity Company (SEC)
Price of electricity (US cents per kWh)
7.4
City Covered
Riyadh
Indicator
Saudi Arabia
Middle East &
North Africa
OECD high
income
Best Regulatory
Performance
Procedures (number)
2
4.4
4.4
3 (28 Economies)
Time (days)
35
63.5
74.8
18 (3 Economies)
Cost (% of income per capita)
27.9
419.6
61.0
0.0 (3 Economies)
Reliability of supply and transparency of tariff index (0-8)
6
4.4
7.4
8 (26 Economies)
Figure – Getting Electricity in Saudi Arabia – Score
100.0
92.6
99.7
75.0
Procedures
Time
Cost
Reliability of supply and transparency of
tariff index
Figure – Getting Electricity in Saudi Arabia and comparator economies – Ranking and Score
DB 2020 Getting Electricity Score
0
100
91.8: Saudi Arabia (Rank: 18)
87.1: Oman (Rank: 35)
80.5: Jordan (Rank: 69)
77.9: Egypt, Arab Rep. (Rank: 77)
72.4: Regional Average (Middle East & North Africa)
100: United Arab Emirates (Rank: 1)
Note: The ranking of economies on the ease of getting electricity is determined by sorting their scores for getting electricity. These scores are the simple average of the
scores for all the component indicators except the price of electricity.
Figure – Getting Electricity in Saudi Arabia – Procedure, Time and Cost
Time (days)
Cost (% of income per capita)
30
30
25
Time (days)
25
20
20
15
15
10
10
Cost (% of income per capita)
35
5
5
0
0
1
2
Procedures (number)
* This symbol is shown beside procedure numbers that take place simultaneously with the previous procedure.
Note: Online procedures account for 0.5 days in the total time calculation. For economies that have a different procedure list for men and women, the graph shows the
time for women. For more information on methodology, see the Doing Business website (http://doingbusiness.org/en/methodology). For details on the procedures
Page 16
Doing Business 2020
Saudi Arabia
reflected here, see the summary below.
Index score
Figure – Getting Electricity in Saudi Arabia and comparator economies – Measure of Quality
9
8
7
6
5
4
3
2
1
0
8
7
6
6
5
Saudi
Arabia
Egypt,
Arab
Rep.
4.4
Jordan
Oman
United
Arab
Emirates
Middle
East
&
North
Africa
Page 17
Doing Business 2020
Saudi Arabia
Details – Getting Electricity in Saudi Arabia – Procedure, Time and Cost
No.
Procedures
Time to Complete
Associated Costs
1
Submit application to utility and await estimate
Agency : Saudi Electricity Company (SEC)
Customers can apply to a connection with the online application system in Riyadh. The connection
fees can also be paid online.
14 calendar days
SAR 0
21 calendar days
SAR 24,500
The documents required are commercial license, industrial license, and building permit.
2
Obtain external works from utility
Agency : Saudi Electricity Company (SEC)
Upon payment of estimate online, a notification request is sent to the Execution department of
SEC to start the external works and meter installation. No further interaction is required between
the customer and the utility or its contractor.
The external works consist of laying out cables from the warehouse to the closest supply on the
low voltage network. The material is provided by the utility.
If the building is located within grid coverage or at a distance less than 1,000 meters outside of
coverage the client pays only the connection fees and does not pay for the actual works.
Takes place simultaneously with previous procedure.
Page 18
Doing Business 2020
Saudi Arabia
Details – Getting Electricity in Saudi Arabia – Measure of Quality
Answer
Reliability of supply and transparency of tariff index (0-8)
6
Total duration and frequency of outages per customer a year (0-3)
2
System average interruption duration index (SAIDI)
2.0
System average interruption frequency index (SAIFI)
1.6
What is the minimum outage time (in minutes) that the utility considers for the calculation of SAIDI/SAIFI
5.0
Mechanisms for monitoring outages (0-1)
Does the distribution utility use automated tools to monitor outages?
Mechanisms for restoring service (0-1)
Does the distribution utility use automated tools to restore service?
Regulatory monitoring (0-1)
Does a regulator—that is, an entity separate from the utility—monitor the utility’s performance on reliability of supply?
Financial deterrents aimed at limiting outages (0-1)
Does the utility either pay compensation to customers or face fines by the regulator (or both) if outages exceed a certain cap?
Communication of tariffs and tariff changes (0-1)
1
Yes
1
Yes
1
Yes
1
Yes
0
Are effective tariffs available online?
Yes
Link to the website, if available online
https://www.se.com.sa/arsa/Customers/Pages/Tariff
Rates.aspx
Are customers notified of a change in tariff ahead of the billing cycle?
No
Note:
If the duration and frequency of outages is 100 or less, the economy is eligible to score on the Reliability of supply and transparency of tariff index.
If the duration and frequency of outages is not available, or is over 100, the economy is not eligible to score on the index.
If the minimum outage time considered for SAIDI/SAIFI is over 5 minutes, the economy is not eligible to score on the index.
Page 19
Doing Business 2020
Saudi Arabia
Registering Property
This topic examines the steps, time and cost involved in registering property, assuming a standardized case of an entrepreneur who wants to purchase land and a
building that is already registered and free of title dispute. In addition, the topic also measures the quality of the land administration system in each economy. The quality
of land administration index has five dimensions: reliability of infrastructure, transparency of information, geographic coverage, land dispute resolution, and equal access
to property rights. The most recent round of data collection for the project was completed in May 2019. See the methodology for more information.
What the indicators measure
Case study assumptions
Procedures to legally transfer title on immovable property
(number)
To make the data comparable across economies, several assumptions about the parties to the
transaction, the property and the procedures are used.
• Preregistration procedures (for example, checking for liens,
The parties (buyer and seller):
notarizing sales agreement, paying property transfer taxes)
• Registration procedures in the economy’s largest business city.
• Postregistration procedures (for example, filling title with
municipality)
Time required to complete each procedure (calendar days)
• Does not include time spent gathering information
• Each procedure starts on a separate day – though procedures
that can be fully completed online are an exception to this rule
• Procedure is considered completed once final document is
received
• No prior contact with officials
Cost required to complete each procedure (% of property
value)
• Official costs only (such as administrative fees, duties and
taxes).
• Value Added Tax, Capital Gains Tax and illicit payments are
excluded
Quality of land administration index (0-30)
• Reliability of infrastructure index (0-8)
• Transparency of information index (0–6)
• Geographic coverage index (0–8)
• Land dispute resolution index (0–8)
• Equal access to property rights index (-2–0)
– Are limited liability companies (or the legal equivalent).
– Are located in the periurban (that is, on the outskirts of the city but still within its official limits)
area of the economy’s largest business city. For 11 economies the data are also collected for the
second largest business city.
– Are 100% domestically and privately owned.
– Perform general commercial activities.
The property (fully owned by the seller):
– Has a value of 50 times income per capita, which equals the sale price.
– Is fully owned by the seller.
– Has no mortgages attached and has been under the same ownership for the past 10 years.
– Is registered in the land registry or cadastre, or both, and is free of title disputes.
– Is located in a periurban commercial zone (that is, on the outskirts of the city but still within its
official limits), and no rezoning is required.
– Consists of land and a building. The land area is 557.4 square meters (6,000 square feet). A twostory warehouse of 929 square meters (10,000 square feet) is located on the land. The warehouse
is 10 years old, is in good condition, has no heating system and complies with all safety standards,
building codes and legal requirements. The property, consisting of land and building, will be
transferred in its entirety.
– Will not be subject to renovations or additional construction following the purchase.
– Has no trees, natural water sources, natural reserves or historical monuments of any kind.
– Will not be used for special purposes, and no special permits, such as for residential use,
industrial plants, waste storage or certain types of agricultural activities, are required.
– Has no occupants, and no other party holds a legal interest in it.
Page 20
Doing Business 2020
Saudi Arabia
Registering Property – Saudi Arabia
Indicator
Saudi Arabia
Middle East &
North Africa
OECD high
income
Best Regulatory
Performance
Procedures (number)
2
5.4
4.7
1 (5 Economies)
Time (days)
1.5
26.6
23.6
1 (2 Economies)
Cost (% of property value)
0.0
5.6
4.2
0.0 (Saudi Arabia)
Quality of the land administration index (0-30)
14.0
14.6
23.2
None in 2018/19
Figure – Registering Property in Saudi Arabia – Score
91.7
99.8
100.0
Procedures
Time
Cost
46.7
Quality of the land administration index
Figure – Registering Property in Saudi Arabia and comparator economies – Ranking and Score
DB 2020 Registering Property Score
0
100
90.1: United Arab Emirates (Rank: 10)
84.5: Saudi Arabia (Rank: 19)
73.0: Oman (Rank: 52)
66.4: Jordan (Rank: 78)
63.4: Regional Average (Middle East & North Africa)
55.0: Egypt, Arab Rep. (Rank: 130)
Note: The ranking of economies on the ease of registering property is determined by sorting their scores for registering property. These scores are the simple average of
the scores for each of the component indicators.
Page 21
Doing Business 2020
Saudi Arabia
Figure – Registering Property in Saudi Arabia – Procedure, Time and Cost
Time (days)
Cost (% of property value)
1.2
1
Time (days)
1.2
1
0.8
0.8
0.6
0.6
0.4
0.4
Cost (% of property value)
1.4
0.2
0.2
0
0
1
2
Procedures (number)
* This symbol is shown beside procedure numbers that take place simultaneously with the previous procedure.
Note: Online procedures account for 0.5 days in the total time calculation. For economies that have a different procedure list for men and women, the graph shows the
time for women. For more information on methodology, see the Doing Business website (http://doingbusiness.org/en/methodology). For details on the procedures
reflected here, see the summary below.
Page 22
Doing Business 2020
Saudi Arabia
Figure – Registering Property in Saudi Arabia and comparator economies – Measure of Quality
Index score
25
22.5
20
15
21.0
17.0
14.6
14.0
9.0
10
5
0
Saudi
Arabia
Egypt,
Arab
Rep.
Jordan
Oman
United
Arab
Emirates
Middle
East
&
North
Africa
Details – Registering Property in Saudi Arabia – Procedure, Time and Cost
No.
Procedures
Time to Complete
Associated Costs
1
The buyer conducts a title search on the property
Agency : First Notary Public Department
The procedure is conducted by the buyer to verify that (i) the details in the deed provided by the
seller match those in the records of the agency; (ii) to get an official detailed description of the
property and (iii) check if any encumbrances are registered on the property. In order to have
access to the information, the buyer needs to be authorized by the seller.
Since April 2017, it is possible to access all this information online through the website of the
Ministry of Justice. The buyer would obtain a printout with the assigned deed number, which is
validated electronically through an official digital stamp.
Less than one day,
no charge
Notary drafts the deed and parties sign before the notary
Agency : First Notary Public Department
Customers first check in the front desk and are given a room number where the transfer will
happen. The customer proceeds to the Notary’s office (after having waited a bit in the assistant’s
room). Notary clerks will retrieve all the necessary documents and checks them. Then the clerk
will input manually all the relevant information in the electronic Notary system which is linked with
the Ministry of Justice’s online portal. and approves the transaction and the change of name. Then
the parties meet with the Notary to sign the deed. Both parties or their representatives need to be
present for the transfer to take place. The check is handed to the Seller by the Buyer and a new
deed is issued: One copy is given to the buyer, with the Notary’s signature; the other one is
archived with the parties’ signatures.
1 day
2
online
no charge
Takes place simultaneously with previous procedure.
Page 23
Doing Business 2020
Saudi Arabia
Details – Registering Property in Saudi Arabia – Measure of Quality
Answer
Score
Quality of the land administration index (0-30)
14.0
Reliability of infrastructure index (0-8)
5.0
Type of land registration system in the economy:
Deed Registration
System
What is the institution in charge of immovable property registration?
First Notary Public
Department
In what format are past and newly issued land records kept at the immovable property registry of the largest
business city of the economy —in a paper format or in a computerized format (scanned or fully digital)?
Computer/Fully digital
2.0
Is there a comprehensive and functional electronic database for checking for encumbrances (liens, mortgages,
restrictions and the like)?
Yes
1.0
Institution in charge of the plans showing legal boundaries in the largest business city:
Municipality of Ryadh
In what format are past and newly issued cadastral plans kept at the mapping agency of the largest business
city of the economy—in a paper format or in a computerized format (scanned or fully digital)?
Computer/Scanned
1.0
Is there an electronic database for recording boundaries, checking plans and providing cadastral information
(geographic information system)?
Yes
1.0
Is the information recorded by the immovable property registration agency and the cadastral or mapping agency
kept in a single database, in different but linked databases or in separate databases?
Separate databases
0.0
Do the immovable property registration agency and cadastral or mapping agency use the same identification
number for properties?
No
0.0
Transparency of information index (0–6)
2.5
Who is able to obtain information on land ownership at the agency in charge of immovable property registration
in the largest business city?
Only intermediaries
and interested parties
0.0
Is the list of documents that are required to complete any type of property transaction made publicly available–
and if so, how?
Yes, online
0.5
Link for online access:
https://www.moj.gov.s
a/Documents/Regulat
ions/pdf/70.pdf
Is the applicable fee schedule for any type of property transaction at the agency in charge of immovable
property registration in the largest business city made publicly available–and if so, how?
Yes, online
Link for online access:
https://www.moj.gov.s
a/ar/SystemsAndReg
ulations/Pages/Regul
ations_RealEstate.as
px
www.moj.gov.sa/Doc
uments/Regulations/p
df/70.pdf
Does the agency in charge of immovable property registration agency formally commit to deliver a legally
binding document that proves property ownership within a specific timeframe –and if so, how does it
communicate the service standard?
Yes, online
Link for online access:
https://www.moj.gov.s
a/ar/SystemsAndReg
ulations/Pages/Regul
ations_RealEstate.as
px
https://realestatereq.
moj.gov.sa/
Is there a specific and independent mechanism for filing complaints about a problem that occurred at the agency
in charge of immovable property registration?
No
0.0
Are there publicly available official statistics tracking the number of transactions at the immovable property
registration agency?
Yes
0.5
Number of property transfers in the largest business city in 2018:
258224.0
0.5
0.5
Contact information:
Page 24
Doing Business 2020
Saudi Arabia
Who is able to consult maps of land plots in the largest business city?
Only intermediaries
and interested parties
0.0
Is the applicable fee schedule for accessing maps of land plots made publicly available—and if so, how?
No cost
0.5
Yes, in person
0.0
No
0.0
Link for online access:
Does the cadastral/mapping agency formally specifies the timeframe to deliver an updated cadastral plan—and
if so, how does it communicate the service standard?
Link for online access:
Is there a specific and independent mechanism for filing complaints about a problem that occurred at the
cadastral or mapping agency?
Contact information:
Geographic coverage index (0–8)
0.0
Are all privately held land plots in the largest business city formally registered at the immovable property
registry?
No
0.0
Are all privately held land plots in the economy formally registered at the immovable property registry?
No
0.0
Are all privately held land plots in the largest business city mapped?
No
0.0
Are all privately held land plots in the economy mapped?
No
0.0
Land dispute resolution index (0–8)
6.5
Does the law require that all property sale transactions be registered at the immovable property registry to make
them opposable to third parties?
Yes
1.5
Legal basis:
Art (3) of the Law for
Property Registration
(1423H) states that
registration of a
property shall be
absolute evidence
that cannot be
objected by any party
Is the system of immovable property registration subject to a state or private guarantee?
Yes
Type of guarantee:
State guarantee
Legal basis:
Royal Decree No. (M
/ 6) and the date of
11/02/1423
http://www.moj.gov.sa
/arsa/ministry/DocAgenc
y/Pages/AeneRegAg
ency.aspx First notary
public is under the
ministry of justice
Is there a is a specific, out-of-court compensation mechanism to cover for losses incurred by parties who
engaged in good faith in a property transaction based on erroneous information certified by the immovable
property registry?
No
0.0
Does the legal system require a control of legality of the documents necessary for a property transaction (e.g.,
checking the compliance of contracts with requirements of the law)?
Yes
0.5
If yes, who is responsible for checking the legality of the documents?
Registrar;
Does the legal system require verification of the identity of the parties to a property transaction?
Yes
If yes, who is responsible for verifying the identity of the parties?
Registrar;
Is there a national database to verify the accuracy of government issued identity documents?
Yes
What is the Court of first instance in charge of a case involving a standard land dispute between two local
businesses over tenure rights for a property worth 50 times gross national income (GNI) per capita and located
in the largest business city?
General court
0.5
Legal basis:
0.5
1.0
Page 25
Doing Business 2020
Saudi Arabia
How long does it take on average to obtain a decision from the first-instance court for such a case (without
appeal)?
Between 1 and 2
years
2.0
Are there publicly available statistics on the number of land disputes at the economy level in the first instance
court?
Yes
0.5
Number of land disputes in the economy in 2018:
24655.0
Equal access to property rights index (-2–0)
0.0
Do unmarried men and unmarried women have equal ownership rights to property?
Yes
Do married men and married women have equal ownership rights to property?
Yes
0.0
Page 26
Doing Business 2020
Saudi Arabia
Getting Credit
This topic explores two sets of issues—the strength of credit reporting systems and the effectiveness of collateral and bankruptcy laws in facilitating lending. The most
recent round of data collection for the project was completed in May 2019. See the methodology for more information.
What the indicators measure
Case study assumptions
Strength of legal rights index (0–12)
Doing Business assesses the sharing of credit information and the legal rights of borrowers and
lenders with respect to secured transactions through 2 sets of indicators. The depth of credit
information index measures rules and practices affecting the coverage, scope and accessibility of
credit information available through a credit registry or a credit bureau. The strength of legal rights
index measures the degree to which collateral and bankruptcy laws protect the rights of borrowers
and lenders and thus facilitate lending. For each economy it is first determined whether a unitary
secured transactions system exists. Then two case scenarios, case A and case B, are used to
determine how a nonpossessory security interest is created, publicized and enforced according to
the law. Special emphasis is given to how the collateral registry operates (if registration of security
interests is possible). The case scenarios involve a secured borrower, company ABC, and a
secured lender, BizBank.
• Rights of borrowers and lenders through collateral laws (0-10)
• Protection of secured creditors’ rights through bankruptcy laws
(0-2)
Depth of credit information index (0–8)
• Scope and accessibility of credit information distributed by
credit bureaus and credit registries (0-8)
Credit bureau coverage (% of adults)
• Number of individuals and firms listed in largest credit bureau
as a percentage of adult population
Credit registry coverage (% of adults)
• Number of individuals and firms listed in credit registry as a
percentage of adult population
In some economies the legal framework for secured transactions will allow only case A or case B
(not both) to apply. Both cases examine the same set of legal provisions relating to the use of
movable collateral.
Several assumptions about the secured borrower (ABC) and lender (BizBank) are used:
– ABC is a domestic limited liability company (or its legal equivalent).
– ABC has up to 50 employees.
– ABC has its headquarters and only base of operations in the economy’s largest business city. For
11 economies the data are also collected for the second largest business city.
– Both ABC and BizBank are 100% domestically owned.
The case scenarios also involve assumptions. In case A, as collateral for the loan, ABC grants
BizBank a nonpossessory security interest in one category of movable assets, for example, its
machinery or its inventory. ABC wants to keep both possession and ownership of the collateral. In
economies where the law does not allow nonpossessory security interests in movable property,
ABC and BizBank use a fiduciary transfer-of-title arrangement (or a similar substitute for
nonpossessory security interests).
In case B, ABC grants BizBank a business charge, enterprise charge, floating charge or any
charge that gives BizBank a security interest over ABC’s combined movable assets (or as much of
ABC’s movable assets as possible). ABC keeps ownership and possession of the assets.
Page 27
Doing Business 2020
Saudi Arabia
Getting Credit – Saudi Arabia
Indicator
Saudi Arabia
Middle East &
North Africa
OECD high
income
Best Regulatory
Performance
Strength of legal rights index (0-12)
4
3.1
6.1
12 (5 Economies)
Depth of credit information index (0-8)
8
5.3
6.8
8 (53 Economies)
Credit registry coverage (% of adults)
0.0
15.8
24.4
100.0 (2 Economies)
Credit bureau coverage (% of adults)
56.7
16.3
66.7
100.0 (14 Economies)
Figure – Getting Credit in Saudi Arabia – Score
60.0
Score – Getting Credit
Figure – Getting Credit in Saudi Arabia and comparator economies – Ranking and Score
DB 2020 Getting Credit Score
0
100
95.0: Jordan (Rank: 4)
70.0: United Arab Emirates (Rank: 48)
65.0: Egypt, Arab Rep. (Rank: 67)
60.0: Saudi Arabia (Rank: 80)
41.8: Regional Average (Middle East & North Africa)
35.0: Oman (Rank: 144)
Note: The ranking of economies on the ease of getting credit is determined by sorting their scores for getting credit. These scores are the sum of the scores for the
strength of legal rights index and the depth of credit information index.
Page 28
Doing Business 2020
Saudi Arabia
Figure – Legal Rights in Saudi Arabia and comparator economies
11
Index Score
12
10
8
6
4
4
6
5
3.1
1
2
0
Saudi
Arabia
Egypt,
Arab
Rep.
Jordan
Oman
United
Arab
Emirates
Middle
East
&
North
Africa
Page 29
Doing Business 2020
Saudi Arabia
Details – Legal Rights in Saudi Arabia
Strength of legal rights index (0-12)
4
Does an integrated or unified legal framework for secured transactions that extends to the creation, publicity and enforcement of functional equivalents
to security interests in movable assets exist in the economy?
No
Does the law allow businesses to grant a non possessory security right in a single category of movable assets, without requiring a specific description
of collateral?
No
Does the law allow businesses to grant a non possessory security right in substantially all of its assets, without requiring a specific description of
collateral?
No
May a security right extend to future or after-acquired assets, and does it extend automatically to the products, proceeds and replacements of the
original assets?
No
Is a general description of debts and obligations permitted in collateral agreements; can all types of debts and obligations be secured between parties;
and can the collateral agreement include a maximum amount for which the assets are encumbered?
Yes
Is a collateral registry in operation for both incorporated and non-incorporated entities, that is unified geographically and by asset type, with an
electronic database indexed by debtor’s name?
No
Does a notice-based collateral registry exist in which all functional equivalents can be registered?
No
Does a modern collateral registry exist in which registrations, amendments, cancellations and searches can be performed online by any interested third
party?
No
Are secured creditors paid first (i.e. before tax claims and employee claims) when a debtor defaults outside an insolvency procedure?
Yes
Are secured creditors paid first (i.e. before tax claims and employee claims) when a business is liquidated?
Yes
Are secured creditors subject to an automatic stay on enforcement when a debtor enters a court-supervised reorganization procedure? Does the law
protect secured creditors’ rights by providing clear grounds for relief from the stay and sets a time limit for it?
No
Does the law allow parties to agree on out of court enforcement at the time a security interest is created? Does the law allow the secured creditor to sell
the collateral through public auction or private tender, as well as, for the secured creditor to keep the asset in satisfaction of the debt?
Yes
Index Score
Figure – Credit Information in Saudi Arabia and comparator economies
9
8
7
6
5
4
3
2
1
0
8
8
8
8
6
Saudi
Arabia
Egypt,
Arab
Rep.
Jordan
Oman
5.3
United
Arab
Emirates
Middle
East
&
North
Africa
Page 30
Doing Business 2020
Saudi Arabia
Details – Credit Information in Saudi Arabia
Depth of credit information index (0-8)
Credit bureau
Credit registry
Score
Are data on both firms and individuals distributed?
Yes
No
1
Are both positive and negative credit data distributed?
Yes
No
1
Are data from retailers or utility companies – in addition to data from banks and
financial institutions – distributed?
Yes
No
1
Are at least 2 years of historical data distributed? (Credit bureaus and registries
that distribute more than 10 years of negative data or erase data on defaults as
soon as they are repaid obtain a score of 0 for this component.)
Yes
No
1
Are data on loan amounts below 1% of income per capita distributed?
Yes
No
1
By law, do borrowers have the right to access their data in the credit bureau or
credit registry?
Yes
No
1
Can banks and financial institutions access borrowers’ credit information online
(for example, through an online platform, a system-to-system connection or
both)?
Yes
No
1
Are bureau or registry credit scores offered as a value-added service to help
banks and financial institutions assess the creditworthiness of borrowers?
Yes
No
1
Note: An economy receives a score of 1 if there is a “yes” to either bureau or registry. If the credit bureau or registry is not operational or covers less than 5% of the adult
population, the total score on the depth of credit information index is 0.
Coverage
Credit bureau
Credit registry
Number of individuals
13,537,086
0
Number of firms
171,639
0
Total
13,708,725
0
Percentage of adult population
56.7
0.0
Page 31
Doing Business 2020
Saudi Arabia
Protecting Minority Investors
This topic measures the strength of minority shareholder protections against misuse of corporate assets by directors for their personal gain as well as shareholder rights,
governance safeguards and corporate transparency requirements that reduce the risk of abuse. The most recent round of data collection for the project was completed
in May 2019. See the methodology for more information.
What the indicators measure
• Extent of disclosure index (0–10): Disclosure, review, and
approval requirements for related-party transactions
Case study assumptions
To make the data comparable across economies, a case study uses several assumptions about
the business and the transaction.
• Extent of director liability index (0–10): Ability of minority
shareholders to sue and hold interested directors liable for
prejudicial related-party transactions; Available legal
remedies (damages, disgorgement of profits, disqualification
from managerial position(s) for one year or more, rescission of
the transaction)
• Ease of shareholder suits index (0–10): Access to internal
corporate documents; Evidence obtainable during trial and
allocation of legal expenses
• Extent of conflict of interest regulation index (0-30): Sum of
the extent of disclosure, extent of director liability and ease of
shareholder suits indices
• Extent of shareholder rights index (0-6): Shareholders’ rights
and role in major corporate decisions
• Extent of ownership and control index (0-7): Governance
safeguards protecting shareholders from undue board control
and entrenchment
• Extent of corporate transparency index (0-7): Corporate
transparency on ownership stakes, compensation, audits and
financial prospects
• Extent of shareholder governance index (0–20): Sum of the
extent of shareholders rights, extent of ownership and control
and extent of corporate transparency indices
The business (Buyer):
– Is a publicly traded corporation listed on the economy’s most important stock exchange.
– Has a board of directors and a chief executive officer (CEO) who may legally act on behalf of
Buyer where permitted, even if this is not specifically required by law.
– Has a supervisory board in economies with a two-tier board system on which Mr. James
appointed 60% of the shareholder-elected members.
– Has not adopted bylaws or articles of association that go beyond the minimum requirements.
Does not follow codes, principles, recommendations or guidelines that are not mandatory.
– Is a manufacturing company with its own distribution network.
The transaction involves the following details:
– Mr. James owns 60% of Buyer, sits on Buyer’s board of directors and elected two directors to
Buyer’s five-member board.
– Mr. James also owns 90% of Seller, a company that operates a chain of retail hardware stores.
Seller recently closed a large number of its stores.
– Mr. James proposes that Buyer purchase Seller’s unused fleet of trucks to expand Buyer’s
distribution of its food products, a proposal to which Buyer agrees. The price is equal to 10% of
Buyer’s assets and is higher than the market value.
– The proposed transaction is part of the company’s principal activity and is not outside the
authority of the company.
– Buyer enters into the transaction. All required approvals are obtained, and all required disclosures
made—that is, the transaction was not entered into fraudulently.
– The transaction causes damages to Buyer. Shareholders sue Mr. James and the executives and
directors that approved the transaction.
• Strength of minority investor protection index (0–50): Sum
of the extent of conflict of interest regulation and extent of
shareholder governance indices
Page 32
Doing Business 2020
Saudi Arabia
Protecting Minority Investors – Saudi Arabia
Stock exchange information
Stock exchange
Tadawul
Stock exchange URL
http://www.tadawul.com.sa
Listed firms with equity securities
144
City Covered
Riyadh
Indicator
Saudi Arabia
Middle East &
North Africa
OECD high
income
Best Regulatory
Performance
Extent of disclosure index (0-10)
9.0
6.4
6.5
10 (13 Economies)
Extent of director liability index (0-10)
9.0
4.8
5.3
10 (3 Economies)
Ease of shareholder suits index (0-10)
7.0
4.7
7.3
10 (Djibouti)
Extent of shareholder rights index (0-6)
5.0
3.2
4.7
6 (19 Economies)
Extent of ownership and control index (0-7)
6.0
3.6
4.5
7 (9 Economies)
Extent of corporate transparency index (0-7)
7.0
3.5
5.7
7 (13 Economies)
Figure – Protecting Minority in Saudi Arabia – Score
86.0
Score – Protecting Minority Investors
Figure – Protecting Minority Investors in Saudi Arabia and comparator economies – Ranking and Score
DB 2020 Protecting Minority Investors Score
0
100
86.0: Saudi Arabia (Rank: 3)
80.0: United Arab Emirates (Rank: 13)
64.0: Egypt, Arab Rep. (Rank: 57)
56.0: Oman (Rank: 88)
51.9: Regional Average (Middle East & North Africa)
50.0: Jordan (Rank: 105)
Note: The ranking of economies on the strength of minority investor protections is determined by sorting their scores for protecting minority investors. These scores are
the simple average of the scores for the extent of conflict of interest regulation index and the extent of shareholder governance index.
Page 33
Doing Business 2020
Saudi Arabia
Figure – Protecting Minority Investors in Saudi Arabia and comparator economies – Measure of Quality
Saudi Arabia
7
Egypt, Arab Rep.
9
6
Jordan
3
6
Oman
OECD high income
5.6
0
6
8
5
6.6
4.8
5
6.4
10
4
4.3
3.6
15
3.2
20
7
3
3
3
10
5.6
5
6
2
10
3.5
6
6
4
5
5
Middle East & North Africa
8
4
3
United Arab Emirates
9
7
4.5
4
4
7.4
4.7
25
30
35
40
45
Sub-Indicator Score
Extent of corporate transparency index (0-7)
Extent of director liability index (0-10)
Extent of shareholder rights index (0-6)
Ease of shareholder suits index (0-10)
Extent of disclosure index (0-10)
Extent of ownership and control index (0-7)
Page 34
Doing Business 2020
Saudi Arabia
Details – Protecting Minority Investors in Saudi Arabia – Measure of Quality
Answer
Score
Extent of conflict of interest regulation index (0-30)
Extent of disclosure index (0-10)
9.0
Whose decision is sufficient to approve the Buyer-Seller transaction? (0-3)
Shareholders
excluding interested
parties
3.0
Must an external body review the terms of the transaction before it takes place? (0-1)
Yes
1.0
Must Mr. James disclose his conflict of interest to the board of directors? (0-2)
Full disclosure of all
material facts
2.0
Must Buyer disclose the transaction in periodic filings (e.g. annual reports)? (0-2)
Disclosure on the
transaction and on
the conflict of interest
2.0
Must Buyer immediately disclose the transaction to the public? (0-2)
Disclosure on the
transaction only
1.0
Extent of director liability index (0-10)
9.0
Can shareholders representing 10% of Buyer’s share capital sue for the damage the transaction caused to
Buyer? (0-1)
Yes
1.0
Can shareholders hold Mr. James liable for the damage the transaction caused to Buyer? (0-2)
Liable if unfair or
prejudicial
2.0
Can shareholders hold the other directors liable for the damage the transaction caused to Buyer? (0-2)
Liable if negligent
1.0
Must Mr. James pay damages for the harm caused to Buyer upon a successful claim by shareholders? (0-1)
Yes
1.0
Must Mr. James repay profits made from the transaction upon a successful claim by shareholders? (0-1)
Yes
1.0
Is Mr. James disqualified upon a successful claim by shareholders? (0-1)
Yes
1.0
Can a court void the transaction upon a successful claim by shareholders? (0-2)
Voidable if unfair or
prejudicial
2.0
Ease of shareholder suits index (0-10)
7.0
Before suing, can shareholders representing 10% of Buyer’s share capital inspect the transaction documents?
(0-1)
Yes
1.0
Can the plaintiff obtain any documents from the defendant and witnesses at trial? (0-3)
Documents that
directly prove specific
facts in the plaintiff’s
claim
2.0
Can the plaintiff request categories of documents from the defendant without identifying specific ones? (0-1)
Yes
1.0
Can the plaintiff directly question the defendant and witnesses at trial? (0-2)
Preapproved
questions only
1.0
Is the level of proof required for civil suits lower than that of criminal cases? (0-1)
Yes
1.0
Can shareholder plaintiffs recover their legal expenses from the company? (0-2)
Yes if successful
1.0
Extent of shareholder governance index (0-20)
Extent of shareholder rights index (0-6)
5.0
Does the sale of 51% of Buyer’s assets require shareholder approval?
Yes
1.0
Can shareholders representing 10% of Buyer’s share capital call for a meeting of shareholders?
Yes
1.0
Must Buyer obtain its shareholders’ approval every time it issues new shares?
Yes
1.0
Do shareholders automatically receive preemption rights every time Buyer issues new shares?
No
0.0
Do shareholders elect and dismiss the external auditor?
Yes
1.0
Are changes to the rights of a class of shares only possible if the holders of the affected shares approve?
Yes
1.0
Page 35
Doing Business 2020
Saudi Arabia
Extent of ownership and control index (0-7)
6.0
Is it forbidden to appoint the same individual as CEO and chairperson of the board of directors?
Yes
1.0
Must the board of directors include independent and nonexecutive board members?
Yes
1.0
Can shareholders remove members of the board of directors without cause before the end of their term?
Yes
1.0
Must the board of directors include a separate audit committee exclusively comprising board members?
No
0.0
Must a potential acquirer make a tender offer to all shareholders upon acquiring 50% of Buyer?
Yes
1.0
Must Buyer pay declared dividends within a maximum period set by law?
Yes
1.0
Is a subsidiary prohibited from acquiring shares issued by its parent company?
Yes
1.0
Extent of corporate transparency index (0-7)
7.0
Must Buyer disclose direct and indirect beneficial ownership stakes representing 5%?
Yes
1.0
Must Buyer disclose information about board members’ primary employment and directorships in other
companies?
Yes
1.0
Must Buyer disclose the compensation of individual managers?
Yes
1.0
Must a detailed notice of general meeting be sent 21 days before the meeting?
Yes
1.0
Can shareholders representing 5% of Buyer’s share capital put items on the general meeting agenda?
Yes
1.0
Must Buyer’s annual financial statements be audited by an external auditor?
Yes
1.0
Must Buyer disclose its audit reports to the public?
Yes
1.0
Page 36
Doing Business 2020
Saudi Arabia
Paying Taxes
This topic records the taxes and mandatory contributions that a medium-size company must pay or withhold in a given year, as well as the administrative burden of
paying taxes and contributions and complying with postfiling procedures (VAT refund and tax audit). The most recent round of data collection for the project was
completed in May 2019 covering for the Paying Taxes indicator calendar year 2018 (January 1, 2018 – December 31, 2018). See the methodology for more information.
What the indicators measure
Case study assumptions
Tax payments for a manufacturing company in 2018 (number
per year adjusted for electronic and joint filing and payment)
Using a case scenario, Doing Business records taxes and mandatory contributions a medium size
company must pay in a year, and measures the administrative burden of paying taxes,
contributions and dealing with postfiling processes. Information is also compiled on frequency of
filing and payments, time taken to comply with tax laws, time taken to comply with the
requirements of postfiling processes and time waiting.
• Total number of taxes and contributions paid or withheld,
including consumption taxes (value added tax, sales tax or
goods and service tax)
• Method and frequency of filing and payment
Time required to comply with 3 major taxes (hours per year)
• Collecting information, computing tax payable
• Preparing separate tax accounting books, if required
• Completing tax return, filing with agencies
• Arranging payment or withholding
Total tax and contribution rate (% of commercial profits)
• Profit or corporate income tax
• Social contributions, labor taxes paid by employer
• Property and property transfer taxes
• Dividend, capital gains, financial transactions taxes
• Waste collection, vehicle, road and other taxes
Postfiling Index
• Time to comply with VAT refund (hours)
• Time to obtain VAT refund (weeks)
• Time to comply with a corporate income tax correction (hours)
• Time to complete a corporate income tax correction (weeks)
To make data comparable across economies, several assumptions are used:
– TaxpayerCo is a medium-size business that started operations on January 1, 2017. It produces
ceramic flowerpots and sells them at retail. All taxes and contributions recorded are paid in the
second year of operation (calendar year 2018). Taxes and mandatory contributions are measured
at all levels of government.
The VAT refund process:
– In June 2018, TaxpayerCo. makes a large capital purchase: the value of the machine is 65 times
income per capita of the economy. Sales are equally spread per month (1,050 times income per
capita divided by 12) and cost of goods sold are equally expensed per month (875 times income
per capita divided by 12). The machinery seller is registered for VAT and excess input VAT incurred
in June will be fully recovered after four consecutive months if the VAT rate is the same for inputs,
sales and the machine and the tax reporting period is every month. Input VAT will exceed Output
VAT in June 2018.
The corporate income tax audit process:
– An error in calculation of income tax liability (for example, use of incorrect tax depreciation rates,
or incorrectly treating an expense as tax deductible) leads to an incorrect income tax return and a
corporate income tax underpayment. TaxpayerCo. discovered the error and voluntarily notified the
tax authority. The value of the underpaid income tax liability is 5% of the corporate income tax
liability due. TaxpayerCo. submits corrected information after the deadline for submitting the annual
tax return, but within the tax assessment period.
Page 37
Doing Business 2020
Saudi Arabia
Paying Taxes – Saudi Arabia
Indicator
Saudi Arabia
Middle East &
North Africa
OECD high
income
Best Regulatory
Performance
Payments (number per year)
4
16.5
10.3
3 (2 Economies)
Time (hours per year)
104
202.6
158.8
49 (3 Economies)
Total tax and contribution rate (% of profit)
15.7
32.5
39.9
26.1 (33 Economies)
Postfiling index (0-100)
32.2
53.3
86.7
None in 2018/19
Figure – Paying Taxes in Saudi Arabia – Score
98.3
91.5
100.0
32.2
Payments
Time
Total tax and contribution rate
Postfiling index
Figure – Paying Taxes in Saudi Arabia and comparator economies – Ranking and Score
DB 2020 Paying Taxes Score
0
100
90.2: Oman (Rank: 11)
85.3: United Arab Emirates (Rank: 30)
80.5: Saudi Arabia (Rank: 57)
78.7: Jordan (Rank: 62)
75.1: Regional Average (Middle East & North Africa)
55.1: Egypt, Arab Rep. (Rank: 156)
Note: The ranking of economies on the ease of paying taxes is determined by sorting their scores for paying taxes. These scores are the simple average of the scores for
each of the component indicators, with a threshold and a nonlinear transformation applied to one of the component indicators, the total tax and contribution rate. The
threshold is defined as the total tax and contribution rate at the 15th percentile of the overall distribution for all years included in the analysis up to and including Doing
Business 2015, which is 26.1%. All economies with a total tax and contribution rate below this threshold receive the same score as the economy at the threshold.
Page 38
Doing Business 2020
Saudi Arabia
Index score
Figure – Paying Taxes in Saudi Arabia and comparator economies – Measure of Quality
90
80
70
60
50
40
30
20
10
0
85.3
32.2
36.3
35.7
Saudi
Arabia
Egypt,
Arab
Rep.
Jordan
Oman
55.0
53.3
United
Arab
Emirates
Middle
East
&
North
Africa
Page 39
Doing Business 2020
Saudi Arabia
Details – Paying Taxes in Saudi Arabia
Tax or
mandatory
contribution
Payments
(number)
Notes on
Payments
Time (hours)
Statutory tax
rate
Tax base
Total tax and
contribution
rate (% of
profit)
Employer paid –
1.0
online
9.0
12%
gross salaries
13.54
1.0
online
23.0
2.5%
Higher of zakat
2.18
Notes on TTCR
Labor
contributions
Zakat
base or taxable
income
Vehicle fee
1.0
Employee paid –
0.0
online and jointly
VAT
1.0
online
Totals
4
10%
gross salaries
5%
value added
0.00
small amount
0.00
withheld
Social security
contributions
72.0
104
not included
15.7
Page 40
Doing Business 2020
Saudi Arabia
Details – Paying Taxes in Saudi Arabia – Tax by Type
Taxes by type
Answer
Profit tax (% of profit)
2.2
Labor tax and contributions (% of profit)
13.5
Other taxes (% of profit)
0.0
Page 41
Doing Business 2020
Saudi Arabia
Details – Paying Taxes in Saudi Arabia – Measure of Quality
Answer
Postfiling index (0-100)
Score
32.2
VAT refunds
Does VAT exist?
Yes
Does a VAT refund process exist per the case study?
Yes
Restrictions on VAT refund process
none
Percentage of cases exposed to a VAT audit (%)
75% – 100%
Is there a mandatory carry forward period?
No
Time to comply with VAT refund (hours)
17.0
67.0
Time to obtain VAT refund (weeks)
23.0
61.9
Corporate income tax audits
Does corporate income tax exist?
Yes
Percentage of cases exposed to a corporate income tax audit (%)
25% – 49%
Time to comply with a corporate income tax correction (hours)
69.0
0.0
Time to complete a corporate income tax correction (weeks)
33.6
0.0
Notes: Names of taxes have been standardized. For instance income tax, profit tax, tax on company’s income are all named corporate income tax in this table.
The hours for VAT include all the VAT and sales taxes applicable.
The hours for Social Security include all the hours for labor taxes and mandatory contributions in general.
The postfiling index is the average of the scores on time to comply with VAT refund, time to obtain a VAT refund, time to comply with a corporate income tax correction
and time to complete a corporate income tax correction.
N/A = Not applicable.
Page 42
Doing Business 2020
Saudi Arabia
Trading across Borders
Doing Business records the time and cost associated with the logistical process of exporting and importing goods. Doing Business measures the time and cost (excluding
tariffs) associated with three sets of procedures—documentary compliance, border compliance and domestic transport—within the overall process of exporting or
importing a shipment of goods. The most recent round of data collection for the project was completed in May 2019. See the methodology for more information.
What the indicators measure
Case study assumptions
Documentary compliance
To make the data comparable across economies, a few assumptions are made about the traded
goods and the transactions:
• Obtaining, preparing and submitting documents during
transport, clearance, inspections and port or border handling in
origin economy
• Obtaining, preparing and submitting documents required by
destination economy and any transit economies
• Covers all documents required by law and in practice, including
electronic submissions of information
Border compliance
• Customs clearance and inspections
• Inspections by other agencies (if applied to more than 20% of
shipments)
• Handling and inspections that take place at the economy’s port
or border
Domestic transport
• Loading or unloading of the shipment at the warehouse or
port/border
• Transport between warehouse and port/border
• Traffic delays and road police checks while shipment is en
route
Time: Time is measured in hours, and 1 day is 24 hours (for example, 22 days are recorded as
22×24=528 hours). If customs clearance takes 7.5 hours, the data are recorded as is. Alternatively,
suppose documents are submitted to a customs agency at 8:00a.m., are processed overnight and
can be picked up at 8:00a.m. the next day. The time for customs clearance would be recorded as
24 hours because the actual procedure took 24 hours.
Cost: Insurance cost and informal payments for which no receipt is issued are excluded from the
costs recorded. Costs are reported in U.S. dollars. Contributors are asked to convert local currency
into U.S. dollars based on the exchange rate prevailing on the day they answer the questionnaire.
Contributors are private sector experts in international trade logistics and are informed about
exchange rates.
Assumptions of the case study:
– For all 190 economies covered by Doing Business, it is assumed a shipment is in a warehouse in
the largest business city of the exporting economy and travels to a warehouse in the largest
business city of the importing economy.
– It is assumed each economy imports 15 metric tons of containerized auto parts (HS 8708) from
its natural import partner—the economy from which it imports the largest value (price times
quantity) of auto parts. It is assumed each economy exports the product of its comparative
advantage (defined by the largest export value) to its natural export partner—the economy that is
the largest purchaser of this product. Shipment value is assumed to be $50,000.
– The mode of transport is the one most widely used for the chosen export or import product and
the trading partner, as is the seaport or land border crossing.
– All electronic information submissions requested by any government agency in connection with
the shipment are considered to be documents obtained, prepared and submitted during the export
or import process.
– A port or border is a place (seaport or land border crossing) where merchandise can enter or
leave an economy.
– Relevant government agencies include customs, port authorities, road police, border guards,
standardization agencies, ministries or departments of agriculture or industry, national security
agencies and any other government authorities.
Page 43
Doing Business 2020
Saudi Arabia
Trading across Borders – Saudi Arabia
Indicator
Saudi Arabia
Middle East &
North Africa
OECD high
income
Best Regulatory
Performance
Time to export: Border compliance (hours)
37
52.5
12.7
1 (19 Economies)
Cost to export: Border compliance (USD)
319
441.8
136.8
0 (19 Economies)
Time to export: Documentary compliance (hours)
11
66.4
2.3
1 (26 Economies)
Cost to export: Documentary compliance (USD)
73
240.7
33.4
0 (20 Economies)
Time to import: Border compliance (hours)
72
94.2
8.5
1 (25 Economies)
Cost to import: Border compliance (USD)
464
512.5
98.1
0 (28 Economies)
Time to import: Documentary compliance (hours)
32
72.5
3.4
1 (30 Economies)
Cost to import: Documentary compliance (USD)
267
262.6
23.5
0 (30 Economies)
Figure – Trading across Borders in Saudi Arabia – Score
77.4
69.9
94.1
81.8
74.6
61.3
87.0
61.9
Time
to
export:
Border
compliance
Cost
to
export:
Border
compliance
Time
to
export:
Documentary
compliance
Cost
to
export:
Documentary
compliance
Time
to
import:
Border
compliance
Cost
to
import:
Border
compliance
Time
to
import:
Documentary
compliance
Cost
to
import:
Documentary
compliance
Figure – Trading across Borders in Saudi Arabia and comparator economies – Ranking and Score
DB 2020 Trading Across Borders Score
0
100
84.1: Oman (Rank: 64)
79.0: Jordan (Rank: 75)
76.0: Saudi Arabia (Rank: 86)
74.1: United Arab Emirates (Rank: 92)
61.8: Regional Average (Middle East & North Africa)
42.2: Egypt, Arab Rep. (Rank: 171)
Note: The ranking of economies on the ease of trading across borders is determined by sorting their scores for trading across borders. These scores are the simple
average of the scores for the time and cost for documentary compliance and border compliance to export and import.
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Doing Business 2020
Saudi Arabia
Figure – Trading across Borders in Saudi Arabia – Time and Cost
Time (hours)
80
Cost (USD)
72
500
464
400
60
319
50
40
267
37
32
30
20
11
73
300
200
Cost (USD)
Time (hours)
70
100
10
0
0
Export
Border
Compliance
Export
Documentary
Compliance
Import
Border
Compliance
Import
Documentary
Compliance
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Doing Business 2020
Saudi Arabia
Details – Trading across Borders in Saudi Arabia
Characteristics
Export
Import
Product
HS 39 : Plastics and articles thereof
HS 8708: Parts and accessories of motor vehicles
Trade partner
China
Japan
Border
Jeddah port
Jeddah port
Distance (km)
995
995
Domestic transport time (hours)
17
14
Domestic transport cost (USD)
1408
1692
Details – Trading across Borders in Saudi Arabia – Components of Border Compliance
Time to Complete (hours)
Associated Costs (USD)
10.0
106.0
0.0
0.0
Export: Port or border handling
29.0
213.0
Import: Clearance and inspections required by
24.0
126.0
0.0
0.0
60.0
338.5
Export: Clearance and inspections required by
customs authorities
Export: Clearance and inspections required by
agencies other than customs
customs authorities
Import: Clearance and inspections required by
agencies other than customs
Import: Port or border handling
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Doing Business 2020
Saudi Arabia
Details – Trading across Borders in Saudi Arabia – Trade Documents
Export
Import
Bill of lading
Bill of lading
Commercial invoice
Commercial invoice
Customs declaration
Customs declaration
Packing list
Packing list
SOLAS certificate
Delivery Order
Certificate of conformity
SOLAS certificate
Page 47
Doing Business 2020
Saudi Arabia
Enforcing Contracts
The enforcing contracts indicator measures the time and cost for resolving a commercial dispute through a local first-instance court, and the quality of judicial processes
index, evaluating whether each economy has adopted a series of good practices that promote quality and efficiency in the court system. The most recent round of data
collection was completed in May 2019. See the methodology for more information.
What the indicators measure
Case study assumptions
Time required to enforce a contract through the courts
(calendar days)
The dispute in the case study involves the breach of a sales contract between two domestic
businesses. The case study assumes that the court hears an expert on the quality of the goods in
dispute. This distinguishes the case from simple debt enforcement.
• Time to file and serve the case
• Time for trial and to obtain the judgment
• Time to enforce the judgment
Cost required to enforce a contract through the courts (% of
claim value)
• Average attorney fees
• Court costs
• Enforcement costs
Quality of judicial processes index (0-18)
• Court structure and proceedings (-1-5)
• Case management (0-6)
• Court automation (0-4)
• Alternative dispute resolution (0-3)
To make the data on the time and comparable across economies, several assumptions about the
case are used:
– The dispute concerns a lawful transaction between two businesses (Seller and Buyer), both
located in the economy’s largest business city. For 11 economies the data are also collected for the
second largest business city.
– The Buyer orders custom-made furniture, then fails to pay alleging that the goods are not of
adequate quality.
– The value of the dispute is 200% of the income per capita or the equivalent in local currency of
USD 5,000, whichever is greater.
– The Seller sues the Buyer before the court with jurisdiction over commercial cases worth 200% of
income per capita or $5,000 whichever is greater.
– The Seller requests the pretrial attachment of the defendant’s movable assets to secure the
claim.
– The claim is disputed on the merits because of Buyer’s allegation that the quality of the goods
was not adequate.
– The judge decides in favor of the seller; there is no appeal.
– The Seller enforces the judgment through a public sale of the Buyer’s movable assets.
Page 48
Doing Business 2020
Saudi Arabia
Enforcing Contracts – Saudi Arabia
Standardized Case
Claim value
SAR 158,374
Court name
Riyadh Commercial Court
City Covered
Riyadh
Indicator
Saudi Arabia
Middle East &
North Africa
OECD high
income
Best Regulatory
Performance
Time (days)
575
622.0
589.6
120 (Singapore)
Cost (% of claim value)
27.5
24.7
21.5
0.1 (Bhutan)
Quality of judicial processes index (0-18)
11.5
6.6
11.7
None in 2018/19
Figure – Enforcing Contracts in Saudi Arabia – Score
62.7
69.2
63.9
Time
Cost
Quality of judicial processes index
Figure – Enforcing Contracts in Saudi Arabia and comparator economies – Ranking and Score
DB 2020 Enforcing Contracts Score
0
100
75.9: United Arab Emirates (Rank: 9)
65.3: Saudi Arabia (Rank: 51)
61.9: Oman (Rank: 69)
56.0: Regional Average (Middle East & North Africa)
55.6: Jordan (Rank: 110)
40.0: Egypt, Arab Rep. (Rank: 166)
Note: The ranking of economies on the ease of enforcing contracts is determined by sorting their scores for enforcing contracts. These scores are the simple average of
the scores for each of the component indicators.
Page 49
Doing Business 2020
Saudi Arabia
Figure – Enforcing Contracts in Saudi Arabia – Time and Cost
1200
Time (days)
35
31.2
1010
1000
Cost (% of claim value)
26.2
800
27.5
24.7
642
30
21.5
622.0
600
589.6
21.0
598
15.1
25
20
575
445
400
15
10
200
5
0
0
Egypt,
Arab
Rep.
Jordan
Middle
East
&
North
Africa
OECD
high
income
Oman
Saudi
Arabia
Cost (% of claim value)
Time (days)
United
Arab
Emirates
Page 50
Doing Business 2020
Saudi Arabia
Figure – Enforcing Contracts in Saudi Arabia and comparator economies – Measure of Quality
Saudi Arabia
2
Egypt, Arab Rep.
2
3.5
0
Jordan
2
2.5
United Arab Emirates
1
2
4
4
2.5
Middle East & North Africa
1
0
2
OECD high income
4
2
3
Oman
2
3.2
2.2
0
3
1.1
0.5
2
5
2.4
3.6
2.9
4
6
8
10
12
14
16
Sub-Indicator Score
Alternative dispute resolution (0-3)
Case management (0-6)
Court automation (0-4)
Court structure and proceedings (-1-5)
Details – Enforcing Contracts in Saudi Arabia
Indicator
Time (days)
575
Filing and service
30
Trial and judgment
365
Enforcement of judgment
180
Cost (% of claim value)
27.5
Attorney fees
20
Court fees
7.5
Enforcement fees
0
Quality of judicial processes index (0-18)
11.5
Court structure and proceedings (-1-5)
4.0
Case management (0-6)
3.5
Court automation (0-4)
2.0
Alternative dispute resolution (0-3)
2.0
Page 51
Doing Business 2020
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Details – Enforcing Contracts in Saudi Arabia – Measure of Quality
Answer
Score
Quality of judicial processes index (0-18)
11.5
Court structure and proceedings (-1-5)
4.0
1. Is there a court or division of a court dedicated solely to hearing commercial cases?
Yes
2. Small claims court
1.5
1.5
2.a. Is there a small claims court or a fast-track procedure for small claims?
Yes
2.b. If yes, is self-representation allowed?
Yes
3. Is pretrial attachment available?
Yes
1.0
4. Are new cases assigned randomly to judges?
Yes, automatic
1.0
5. Does a woman’s testimony carry the same evidentiary weight in court as a man’s?
No
-1.0
Case management (0-6)
3.5
1. Time standards
0.5
1.a. Are there laws setting overall time standards for key court events in a civil case?
Yes
1.b. If yes, are the time standards set for at least three court events?
Yes
1.c. Are these time standards respected in more than 50% of cases?
No
2. Adjournments
0.0
2.a. Does the law regulate the maximum number of adjournments that can be granted?
No
2.b. Are adjournments limited to unforeseen and exceptional circumstances?
No
2.c. If rules on adjournments exist, are they respected in more than 50% of cases?
n.a.
3. Can two of the following four reports be generated about the competent court: (i) time to disposition report; (ii)
clearance rate report; (iii) age of pending cases report; and (iv) single case progress report?
Yes
1.0
4. Is a pretrial conference among the case management techniques used before the competent court?
No
0.0
5. Are there any electronic case management tools in place within the competent court for use by judges?
Yes
1.0
6. Are there any electronic case management tools in place within the competent court for use by lawyers?
Yes
1.0
Court automation (0-4)
2.0
1. Can the initial complaint be filed electronically through a dedicated platform within the competent court?
Yes
1.0
2. Is it possible to carry out service of process electronically for claims filed before the competent court?
No
0.0
3. Can court fees be paid electronically within the competent court?
Yes
1.0
4. Publication of judgments
0.0
4.a Are judgments rendered in commercial cases at all levels made available to the general public
through publication in official gazettes, in newspapers or on the internet or court website?
No
4.b. Are judgments rendered in commercial cases at the appellate and supreme court level made
available to the general public through publication in official gazettes, in newspapers or on the internet
…