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Khalil Khazindar Law Firm
in Association with
JASON HUF INTERNATIONAL pc
Ammar Commercial Center

Al Murjan Street (off of King Abdul Aziz Street), Office # 202
P.O. Box 157,  Jeddah  21411
Kingdom of Saudi Arabia
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www.khazindarlaw.com
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  • Investing in Saudi Arabia

    Jason Huf has, for almost 20 years, centered the focus of his professional work on the Middle East.  Furthering economic development, including and especially increased Foreign Direct Investment (FDI), have been helpful in generating conditions giving rise to a broader, more self-sustaining, increasingly cosmopolitan - but still an authentically Arab and Islamic - middle class in the Gulf region.  The associated societal changes have been fundamental to addressing dynamics that need to be addressed if the exciting Vision 2030 reforms initiated by the Saudi Crown Prince, HRH Mohammed bin Salman bin Abdul Aziz al Saud are to fully succeed.

    Some of the Kingdom of Saudi Arabia's (KSA) domestic problems have, in the past, become problems that impact the United States and other parts of the world.  Mr. Huf is proud that his work and the work of other Business Law practitioners in the region have constituted a small piece of a small piece of a tremendous puzzle, the resolution of which can be of significant benefit to our ever-shrinking global village.

    But there are other, more immediately practical, reasons to invest in Saudi Arabia.  Mr. Firoz Mohammed, our Senior Legal Consultant in Jeddah - a city in the Western Province (an economic designation, not a political governate) and the center of non-Oil related economic activity and development in the KSA - has written about some of the reasons why now might be a good time to invest there:



    Firoz has also written about the basics of FDI and how a foreign company would go about investing in the KSA:



    With well-trained, experienced professionals in both the USA & KSA, JHI's attorneys are well placed to assist American companies with transactional business law matters in the KSA, including franchising, construction and banking, as well as disputes arising from business dealings in the Kingdom (litigation in Saudi courts, hearings before local administrative boards or international arbitration).  

    Contact JHI for more information on how we can help your company to explore - and expand - the boundaries of your business.


    Firoz Mohammed, Senior Legal Consultant, Jeddah, Saudi Arabia  Mr. Firoz Mohammed is Senior Legal Counsel in our Jeddah, Saudi Arabia office.
  • K.A.E.C. (Pronounced "Cake")

    For reasons both personal and professional, 2019 has been an extraordinary year so far.  Thus, the lack of recent blog postings.  I have not disappeared, though.  I have just been out and about.

    One interesting item I am happy to share is my participation in a roundtable featuring officials from Saudi Arabia (KSA), representing King Abdullah's Economic City (KAEC, pronounced "cake") and discussing KAEC's efforts to attract greater investment by the pharmaceutical industry.

    Sultan Masoom, KSA ECA & Jason Huf, JHI, KAEC Pharma & BioTech Roundtable, New Brunswick, NJ, USA (Sultan Masoom, Director General of Investments, Saudi Arabian           
                                                           Economic Cities Authority & Jason Huf - not an endorsement of JHI)

    "Localize Your Business in the Middle East" (a theme very near and dear to my professional heart for years) was staged for the benefit of the Pharma and BioTech industries in New Brunswick, New Jersey on a very humid July 18.  As a US-based attorney with an office in Jeddah, Saudi Arabia, I was honored to be the only lawyer admitted to this rather exclusive gathering.

    To summarize the discussion with the Saudi delegation and American industry leaders:  by establishing research, development and manufacturing in the expansive facilties housed in KAEC's Industrial Valley district, Pharmaceutical and Bio Tech companies may significantly reduce costs.  They would also be able to avail themselves of distribution via King Abdullah Port.  Set to become the second-largest port in the world (as measured by container capacity), KAEC's King Abdullah Port is well-situated to distribute products to East Africa, India and South East Asia.

    Consensus among the participants was that new drugs approved by the US FDA and/ or European authorities would be likely be approved by the regulatory authorities in the Kingdom for sale there (and, possibly, to the smaller Gulf states via the Gulf Cooperation Council regime), and that further research and development would be encouraged.  And, Intellectual Property protections in Saudi Arabia have been strengthened in recent years.

    On the subject of entity establishment, much can be done online, and a government office has been established to assist with bureacratic snags that may sometimes be encountered with the Saudi Arabian General Investment Authority during the licensing process (and other matters, such as obtaining the necessary permits and visas for resident laborers and business travellers).

    And, of course, JHI stands ready to assist with entity establishment matters in the KSA as well.

    The net effect of reduced costs and greater access to large markets with high demand, such as India, could be to bring down the price of cutting-edge, life-saving drugs (particularly those not always covered by insurance), making them more generally available (economically) right here in the United States.

    There are days when I could not be more enthusiastic about what I do for a living.  July 18, 2019 was one of them.


     - Jason Huf
    Saturday, November 2, 2019

    New Jersey, USA
  • Ramadan, Eid al-Fitr & Saudi Arabian Labor Law

    We trust that the business community in the Gulf region is refreshed following Eid al-Fitr and is busily back at work.

    Historically, business slows down during the Holy Month of Ramadan.  At JHI, however, Ramadan in recent years has been as busy as any other month. Naturally, this is because our clients doing business in the Middle East have been busy.

    With the current flurry of reforms and tremendous economic growth, there is no longer room for a "slow" month for those doing business in Arabia.

    With so much work being done by so many, now would seem an opportune time to share with you a recent article on Saudi Arabian Labor Law authored by attorney Firoz Mohammed, Senior Legal Consultant at JHI's Jeddah office (KKLF).

    For both economic and moral reasons, local Labor Law is important to those who do business internationally.  If you are already doing business in the Kingdom, or are weighing an expansion into the Saudi market, you may be interested in reading about the latest Labor Law reforms concerning greater transparancy (rights, obligations, expectations, compensation, process, review and outcomes) and faster, more reliable dispute resolution.

    Mr. Mohammed is licensed to practice in his home country of India, and has been working and living in Jeddah for over 25 years.  While witnessing the fascinating, historically rapid development of a very traditional nation, Firoz has - since the days of King Fahad - made it his business to analyze the laws of one of the Arab world's most important economies.  You can read his article HERE   

    Ramadan, Eid al-Fitr & Saudi Arabian Labor Law   "Let's get back to work!"
                                                                                                     "Um, did we ever actually stop working this year... ?"


    You will see more articles from Firoz in subsequent blog entries, and we will showcase the profiles of Firoz and other seasoned professionals resident in Jeddah very soon - watch this space !
  • Saudi Arabia's Vision 2030 & "Riyadh Day" at the UN

    You are about to see a rapid-fire (for this space, anyway) succession of as yet unpublished updates covering a period from Spring 2016 to present.  We will start with an initial discussion of Saudi Arabia’s “Vision 2030”, touted as the most sweeping series of reforms in the Kingdom’s history.
     
    In a nutshell, Saudi Arabia’s Vision 2030 is a collection of planned economic and social reforms designed to construct a “Post-Oil” Saudi Arabia, in line with globally-held concepts of Sustainable Development. King Salman has invested his son, Deputy Crown Prince Mohammed bin Salman, with broad, sweeping powers to enable him, his advisors and other subordinates to design and execute these reforms between now and the target date of 2030.
     
    Within the stated goals of weaning the Kingdom (KSA) off of being an Oil-based economy and becoming an industrialized state, with greater Foreign Direct Investment (FDI), full employment for working-aged males, improved access to high-quality education, greater rights for women and a more liberal social structure generally, two items are immediately obvious:  we are seeing Riyadh’s intent to finalize the end the era wherein OPEC, the powerful cartel of oil-producing states, has been the world’s definitive maker of oil policy; and, a rapid and intense military build-up intended to strengthen a block of states that includes the KSA, Egypt and the smaller Gulf States determined to withstand growing Iranian and Russian influence in the Gulf region following continued declining US influence and interest there and in the greater Middle East.
     
    While JHI is not a policy think tank, we feel it is important to know the backdrop and overall purpose of any upcoming reforms.
     
    Our principle concern is FDI, and the impact any reforms may have on the attractiveness of FDI in the KSA. This program is still young, so specific laws and regulations impacting FDI are not yet in effect. For the time being, there is nothing set in concrete that a law firm can dissect for the benefit of its clients.
     
    Therefore, in our typical less-than-modest fashion, JHI offers some suggestions on how to make FDI in the KSA more attractive to potential investors:
     
    1.  The Corporate Income Tax should continue to be (gradually) lowered, and personal income tax should remain zero.  Although declining oil revenues and their impact on the national government’s budget needs to be addressed, increasing the number of companies investing in the KSA, rather than increasing the tax existing companies pay, seems the best way to address the current budget shortfalls giving rise to the KSA’s national debt.
     
    2.  Saudization is seen, by and large, as a form of tax by potential foreign investors. The best way to address the employment crisis in the KSA is not by compelling investors to hire Saudi nationals, but by making the hiring of them more attractive.  Foreign investors ordinarily love to avail themselves of a local workforce – after all, importing staff and finding housing for them is pretty darned expensive!  Many such imported workers do not know the language or withstand the culture shock very well.  Unfortunately, fairly or unfairly, the idea of hiring Saudis is generally considered unattractive, thus the current Saudization requirements.  Rather than increase these requirements, education should be improved and made more accessible, and a sense of work ethic (rather than entitlement) needs to be instilled in the Kingdom’s youth.  And, the world needs to actually KNOW of the existence of such an educated, hard-working labor pool – numbering in the millions, and proud of real accomplishment at the workplace.  Do this, and Saudization will no longer be necessary at all.
     
    3.  Make the process of obtaining a business license less burdensome and more efficient.  Telling clients that it could take a minimum of six (6) months to obtain the necessary documentation before proceeding with business activity tends to be something of a turn-off for them.  Additional agencies designed to steer and otherwise regulate foreign investment eases nothing and are simply additional "layers” of bureaucracy.  Streamlining, rather than adding to, the process of licensing incoming businesses would be a productive step.
     
    4.  Women’s rights, and human rights generally, should be broadened – and, can be without offending the Kingdom’s religious sensibilities or its historical traditions.  It is much easier, on multiple levels, for a company to invest in a country whose culture is not the focus of controversial discussions centered around notions of equality and individual human dignity.  Additionally, it is essential that people throughout the Kingdom feel some sense of “ownership” in their country and their respective futures (see, 2. above).  They need to feel that their rights are being protected by their government, not denied.  This isn’t a call for the overnight imposition of Jeffersonian democracy.  Quite the contrary:  JHI asserts that the keys to unlocking a more liberal social structure (without rocking the stability of the KSA) lay within the old tribal and other cultural traditions of the modern Kingdom.
     
    5.  The labor market, and the regulation of such, should be loosened, and greater rights should be provided to foreign “unskilled” laborers and household staff.  As above (see, 4.), this is a matter of conscious for many potential investors, as well as foreign professional staff who visit the KSA.
     
    6.  Banking reform is a must.  The KSA is one of the most – if not the most – “underbanked” markets on the face of the earth.  While new banks and fresh capital and competition need to be allowed in, stronger regulation and monitoring needs to be in place, giving rise to stronger internal compliance programs.  While banking needs to be more readily available in the KSA, companies and governments around the world also need to have more confidence in the country’s banks.
     
    7.  For local and foreign companies alike, receivables can be something of a headache in the KSA.  Its no secret that debt, and the collection of debt, can be problematic there.  As the Kingdom undertakes judicial reform, it should continue to consider the importance of the confidence a company can have in the investment it makes in Saudi Arabia.
     
    8.  One of the most crucial assets in play when investing in any country is a company’s intellectual property. Intellectual property protections and anti-piracy measures need to be greatly strengthened, and quickly.  It is important for any company (say, you sell shampoo and find yourself competing with a counterfeit knock-off of your product – that’s not good), but when looking to attract high-tech industries, especially, it is absolutely fundamental that such companies have confidence that intellectual property worth hundreds of millions, perhaps billions, of US dollars will not be stolen from them and effectively rendered next to worthless overnight.
     
    These are eight basic principle points upon which JHI would like to see the building of any reform package affecting FDI in the KSA.
     
    JHI will track any concrete steps within this subject, and Mr. Huf hopes to learn more when “Riyadh Day” (its actually a week of symposiums, workshops and other such meetings), sponsored by the KSA’s High Commission for the Development of Riyadh, is held at the United Nations in New York at the end of September.