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Saudi Arabia: Trading vs. Industrial Business Setup

One of the most remarkable privileges offered by the Saudi government is 100% ownership for foreign investors, particularly in the manufacturing and industrial sectors. This significant step is part of their drive to attract global businesses and reinforce industrial growth. Below, I’ve shared my knowledge and insights on company formation in Saudi Arabia, focusing on Trading and Industrial Licenses.

Trading License: Requirements and Process

A Trading License is tailored for businesses involved in import/export, wholesale, and retail activities.

1. Pre-Requisites:

    • International Presence: You need three companies in three different countries, with the same partners in all entities.
    • Capital Requirements: A capital amount of 30 million SAR is recommended to demonstrate financial strength, though it is not mandatory for the setup.

2. Key Features of a Trading License:

    • Enables trading, importing, and exporting goods.
    • Facilitates wholesale and retail operations across Saudi Arabia.
    • Allows the establishment of multiple outlets or branches under a single license.

3. Challenges:

    • High financial thresholds compared to industrial licenses.
    • Extensive documentation requirements.
    • More complex regulatory approvals.

Video Insight on Business Opportunities in Saudi Arabia



Industrial License: Requirements and Process


An Industrial License is designed for businesses focused on manufacturing, production, and factory operations. It offers a simpler and more cost-effective route compared to a trading license.

1. Pre-Requisites:

    • Existing Company Abroad: You must already have a company established outside Saudi Arabia, which will act as the parent entity.
    • Minimum Capital: The capital required is just 100,000 SAR, making it more accessible.

2. Key Features of an Industrial License:

    • Full 100% foreign ownership under the MISA (Ministry of Investment Saudi Arabia) framework.
    • A streamlined setup process compared to a trading license.
    • Access to industrial zones and incentives, such as tax benefits and government grants.

3. Benefits of the Industrial License:

    • Freedom to manufacture, process, and export products.
    • Lower initial investment requirements.
    • Alignment with Saudi Arabia’s Vision 2030 initiative for industrial growth.

Comparison: Trading vs. Industrial License

Feature Trading License Industrial License
Purpose Import/export, wholesale, retail Manufacturing and production
Ownership Possible with MISA, local partners common 100% foreign ownership under MISA
Capital Requirement 30 million SAR (recommended, not mandatory) 100,000 SAR (mandatory)
Parent Company Abroad Not required Required
Setup Complexity High Low
Main Activities Trading, importing/exporting Manufacturing, processing, factory setups