Doing Business 2019 Saudi Arabia Economy Profile Saudi Arabia Page 1 Doing Business 2019 Saudi Arabia Economy Profile of Saudi Arabia Doing Business 2019 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 post-filing 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 Labor market regulation Flexibility in employment regulation and aspects of job quality Page 2 Doing Business 2019 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 labor market regulation. Although Doing Business does not present rankings of economies on the labor market regulation 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 reports, which exhaustively cover business regulation and reform in different cities and regions within a nation. These reports 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 report, published in 2003, covered 5 indicator sets and 133 economies. This year’s report 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. More about Doing Business (PDF, 5MB) Page 3 Doing Business 2019 Saudi Arabia Ease of Doing Business in DB 2019 Rank Region Middle East & North Africa 190 1 Saudi Arabia Income Category High income 92 DB 2019 Ease of doing business score Population 32,938,213 0 100 City Covered Riyadh 63.50 DB 2019 Ease of Doing Business Score 0 100 81.28: United Arab Emirates (Rank: 11) 67.19: Oman (Rank: 78) 63.50: Saudi Arabia (Rank: 92) 60.98: Jordan (Rank: 104) 58.56: Egypt, Arab Rep. (Rank: 120) 58.30: Regional Average (Middle East & North Africa) Note: The ease of doing business score captures the gap of each economy from the best regulatory performance observed on each of the indicators across all economies in the Doing Business sample since 2005. An economy’s ease of doing business score is reflected on a scale from 0 to 100, where 0 represents the lowest and 100 represents the best performance. The ease of doing business ranking ranges from 1 to 190. Rankings on Doing Business topics - Saudi Arabia 1 7 24 28 36 55 59 64 78 82 Rank 112 109 136 141 158 163 168 190 Starting Dealing Getting Registering Getting Protecting Paying Trading Enforcing Resolving a with Electricity Property Credit Minority Taxes across Contracts Insolvency Business Construction Investors Borders Permits Ease of Doing Business Score on Doing Business topics - Saudi Arabia 100 80.07 79.89 81.61 80.00 80 75.71 75.00 63.41 Score 60 54.31 45.00 40 20 0.00 0 Starting Dealing Getting Registering Getting Protecting Paying Trading Enforcing Resolving a with Electricity Property Credit Minority Taxes across Contracts Insolvency Business Construction Investors Borders Permits Page 4 Doing Business 2019 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 2018. See the methodology for more information. What the indicators measure Case study assumptions Procedures to legally start and formally operate To make the data comparable across economies, several assumptions about the a company (number) 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) The business: • Registration in the economy’s largest business - Is a limited liability company (or its legal equivalent). If there is more than one type city of limited liability company in the economy, the most common among domestic firms • Postregistration (for example, social security is chosen. Information on the most common form is obtained from incorporation registration, company seal) lawyers or the statistical office. - Operates in the economy’s largest business city. For 11 economies the data are • Obtaining approval from spouse to start a business or to leave the home to register the also collected for the second largest business city. company - The entire office space is approximately 929 square meters (10,000 square feet). - Is 100% domestically owned and has five owners, none of whom is a legal entity; • Obtaining any gender specific document for has a start-up capital of 10 times income per capita and has a turnover of at least company registration and operation or national 100 times income per capita. identification card - Performs general industrial or commercial activities, such as the production or sale of goods or services to the public. The business does not perform foreign trade Time required to complete each procedure activities and does not handle products subject to a special tax regime, for example, (calendar days) liquor or tobacco. It does not use heavily polluting production processes. • Does not include time spent gathering - Leases the commercial plant or offices and is not a proprietor of real estate and the information amount of the annual lease for the office space is equivalent to the income per capita. • Each procedure starts on a separate day (2 procedures cannot start on the same day) - Does not qualify for investment incentives or any special benefits. - Has at least 10 and up to 50 employees one month after the commencement of • Procedures fully completed online are recorded operations, all of whom are domestic nationals. as ½ day - Has a company deed that is 10 pages long. • Procedure is considered completed once final document is received The owners: • No prior contact with officials - Have reached the legal age of majority. If there is no legal age of majority, they are assumed to be 30 years old. Cost required to complete each procedure (% of - Are sane, competent, in good health and have no criminal record. income per capita) - Are married and the marriage is monogamous and registered with the authorities. - Where the answer differs according to the legal system applicable to the woman or • Official costs only, no bribes man in question (as may be the case in economies where there is legal plurality), the • No professional fees unless services required by answer used will be the one that applies to the majority of the population. 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 Page 5 Doing Business 2019 Saudi Arabia Starting a Business - Saudi Arabia Standardized Company Legal form Limited Liability Company Paid-in minimum capital requirement SAR 0 City Covered Riyadh Indicator Saudi Arabia Middle East & OECD high Best Regulatory North Africa income Performance Procedure – Men (number) 10 7.2 4.9 1 (New Zealand) Time – Men (days) 17 20.5 9.3 0.5 (New Zealand) Cost – Men (% of income per capita) 6.6 22.6 3.1 0.0 (Slovenia) Procedure – Women (number) 12 7.9 4.9 1 (New Zealand) Time – Women (days) 19 21.2 9.3 0.5 (New Zealand) Cost – Women (% of income per capita) 6.6 22.6 3.1 0.0 (Slovenia) Paid-in min. capital (% of income per capita) 0.0 8.1 8.6 0.0 (117 Economies) Figure – Starting a Business in Saudi Arabia and comparator economies – Ranking and Score DB 2019 Starting a Business Score 0 100 94.06: United Arab Emirates (Rank: 25) 92.89: Oman (Rank: 37) 84.43: Jordan (Rank: 106) 84.11: Egypt, Arab Rep. (Rank: 109) 82.00: Regional Average (Middle East & North Africa) 80.07: Saudi Arabia (Rank: 141) 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. Page 6 Doing Business 2019 Saudi Arabia Figure – Starting a Business in Saudi Arabia – Procedure, Time and Cost Time (days) Cost (% of income per capita) 5 18 Cost (% of income per capita) 16 4 14 12 Time (days) 3 10 8 2 6 4 1 2 0 0 1 2 3 4 5 6 7 8 9 10 11 * 12 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 2019 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 a stand alone ID card for a woman 1 day no charge Agency : Home Procedures and forms to apply for a national identity card are different for men and women. When obtaining a stand alone ID, an adult Saudi woman has to be identified by her guardian (father or husband if married). If the guardian is not available, she can go with a muhram (a male relative that a woman cannot marry, such as an uncle), a Saudi female relative who holds an ID, two Saudi females (non-relatives) who hold IDs. Moreover, a Saudi woman applying for an ID must bring the family book of her husband. Married women do not have their own family book. This ID card is not just for opening a business but for any activity a woman might have to do. For example, going to university, staying alone at a hospital, etc. 2 APPLIES TO WOMEN ONLY: Obtain husband's permission to leave the 1 day no charge 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. 3 Reserve the company name and submit Articles of Association 5 days on average no charge Agency : Unified Center (UC)/Companies Department To initiate a company incorporation process, entrepreneurs or their third-party representatives (commonly lawyers) need to fill out the necessary forms with information about the company. Through the same platform entrepreneurs select a company name and submit Articles of Association. Within 5 days, the Ministry of Commerce and Industry will complete the due diligence of all the submitted documents. Once the due diligence process is completed an entrepreneur receives an SMS stating that the Articles of Association are ready to be notarized. Also, at the end of the registration the newly formed entry is assigned a company number. 4 Notarize the Articles of Association with the Notary Public 1 day no charge Agency : First Notary Public The notary public is located in the same building of the UC. After the articles of association are submitted online to the Ministry of Commerce and Industry, it takes a few days for MOCI to review electronically submitted AOA and for the person to come on-site and get it stamped, as well as retrieve the letter of capital deposit from MOCI. The notary public reviews all the documents to make sure that they are complete. Currently, the notary public reviews up to 15 companies per day. The notary’s office consists of about 5-6 employees. 5 Pay Company Registration Fees Less than one day SAR 1,200 for Agency : Ministry of Commerce and Industry (online procedure) commercial The fees are only paid after a notary signs the Articles of Association and a registration + SAR notary clerk processes the information in the online system. Then, an 2,000 a fee to entrepreneur or his representative receives an email and an SMS stating that the become member of payment can now be made. Most entrepreneurs make payments through SADAD Chamber of (https://www.sadad.com/). All fees are submitted at one. Commerce + SAR 500 e-magazine publication fee 6 Open a bank account 1 day no charge 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. 7 Obtain a Business Location License from the Municipality 4 days SAR 1,000 Agency : Municipality of Riyadh In order to obtain a business location license from the municipality an entrepreneur needs to go to the Municipality and present the lease, commercial registration certificate as well as a map indicating the exact location of the business. Then, the Municipality appoints an investigator who goes and inspects the property and confirms the precise location. Afterwards, the investigator submits the final report to the municipality and if everything is in order, the Municipality issues a license and assigns to it a 10-digit identification number. Page 8 Doing Business 2019 Saudi Arabia 8 Register with the Ministry of Labor 1 day no charge Agency : Ministry of Labor In order to register with the Ministry of Labor, the company must submit its certificate of registration, articles of association, Chamber of Commerce attested signatories and the business location license. Registration with the Ministry of Labor is needed to register with the General Organization for Social Insurance. Registration can be made online or in person. If the entrepreneur chooses to register online, they must then submit the original documents in person as well. 9 Register with the Post Office “Wasel” Less than one day SAR 500 Agency : Post Office (online procedure) Registering with the Post Office “Wasel” can be done in person, but a majority of entrepreneurs prefer to compete the registration online through the following webportal: https://balady.gov.sa. In order to complete the registration, an entrepreneur needs to create an account, log in with the already existing information, such as geographic location, address and zip code. Then, a payment is submitted through the same website. After which, a registration certificate is issued electronically. A company must register with the post office "Wasel" every year. 10 Make a company seal 1 day SAR 50 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. 11 Register with the General Organization for Social Insurance (GOSI) 1 day no charge Agency : General Organization for Social Insurance (GOSI) To register for social security insurance, the employer must open a file with the General Organization for Social Insurance (GOSI). This procedure can be done online as follows: The employer visits GOSI’s website, completes an application and provides the company's Ministry of Labor number. The application must be stamped with a company seal. In addition, the location of the entity (business location license) and the designation of the authorized person to represent the company before GOSI must be included. The number that GOSI gives the employer is different from his/her Ministry of Labor number. The employer enters username and password and registers the employees with their IDs, wages, occupation, nationality, date of commencement and location. Register with the Department of Zakat 3 days no charge 12 Agency : Zakat Zakat, a religious wealth tax, is assessed based on taxable income and certain assets. To register with DZIT, the employer will visit DZIT's website and complete an online application, attaching the Certificate of Registration and the details of the authorized person/signatory of the company. Then, the employer receives a unique ID number which is different from the Company ID number. The Certificate of Zakat will be issued and sent by mail and email within 2-3 days. This certificate is needed for the company to participate in tender offers and government contracts, among others. Applies to women only. Takes place simultaneously with previous procedure. Page 9 Doing Business 2019 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 2018. See the methodology for more information What the indicators measure Case study assumptions Procedures to legally build a warehouse To make the data comparable across economies, several assumptions about the (number) construction company, the warehouse project and the utility connections are used. • Submitting all relevant documents and obtaining The construction company (BuildCo): all necessary clearances, licenses, permits and certificates - 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 • Submitting all required notifications and receiving largest business city. all necessary inspections - Is 100% domestically and privately owned; has five owners, none of whom is a • Obtaining utility connections for water and legal entity. Has a licensed architect and a licensed engineer, both registered with sewerage 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 • Registering and selling the warehouse after its completion topographical experts. - Owns the land on which the warehouse will be built and will sell the warehouse Time required to complete each procedure upon its completion. (calendar days) The warehouse: • Does not include time spent gathering information - 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 • Each procedure starts on a separate day— approximately 1,300.6 square meters (14,000 square feet). Each floor will be 3 though procedures that can be fully completed meters (9 feet, 10 inches) high and will be located on a land plot of approximately online are an exception to this rule 929 square meters (10,000 square feet) that is 100% owned by BuildCo, and the • Procedure is considered completed once final warehouse is valued at 50 times income per capita. document is received - Will have complete architectural and technical plans prepared by a licensed architect. If preparation of the plans requires such steps as obtaining further • No prior contact with officials documentation or getting prior approvals from external agencies, these are counted Cost required to complete each procedure (% of as procedures. income per capita) - Will take 30 weeks to construct (excluding all delays due to administrative and regulatory requirements). • Official costs only, no bribes The water and sewerage connections: Building quality control index (0-15) - Will be 150 meters (492 feet) from the existing water source and sewer tap. If there • Quality of building regulations (0-2) is no water delivery infrastructure in the economy, a borehole will be dug. If there is • Quality control before construction (0-1) no sewerage infrastructure, a septic tank in the smallest size available will be installed or built. • Quality control during construction (0-3) - Will have an average water use of 662 liters (175 gallons) a day and an average • Quality control after construction (0-3) 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 • Liability and insurance regimes (0-2) gallons) a day. • Professional certifications (0-4) - 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. Page 10 Doing Business 2019 Saudi Arabia Dealing with Construction Permits - Saudi Arabia Standardized Warehouse Estimated value of warehouse SAR 3,959,340.30 City Covered Riyadh Indicator Saudi Arabia Middle East & OECD high Best Regulatory North Africa income Performance Procedures (number) 17 16.6 12.7 None in 2017/18 Time (days) 91.5 137.4 153.1 None in 2017/18 Cost (% of warehouse value) 2.1 4.7 1.5 None in 2017/18 Building quality control index (0-15) 12.0 12.1 11.5 15.0 (3 Economies) Figure – Dealing with Construction Permits in Saudi Arabia and comparator economies – Ranking and Score DB 2019 Dealing with Construction Permits Score 0 100 86.41: United Arab Emirates (Rank: 5) 75.71: Saudi Arabia (Rank: 36) 72.05: Oman (Rank: 66) 71.77: Egypt, Arab Rep. (Rank: 68) 60.47: Jordan (Rank: 139) 59.17: Regional Average (Middle East & North Africa) 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. Figure – Dealing with Construction Permits in Saudi Arabia – Procedure, Time and Cost Time (days) Cost (% of warehouse value) 90 1.4 80 1.2 Cost (% of warehouse value) 70 1 60 Time (days) 0.8 50 40 0.6 30 0.4 20 0.2 10 0 0 1 *2 *3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 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 2019 Saudi Arabia Figure – Dealing with Construction Permits in Saudi Arabia and comparator economies – Measure of Quality 15.0 15 14.0 12.0 12.1 11.0 11.0 Index score 10 5 0 Saudi Arabia Egypt, Arab Rep. Jordan Oman 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 7 days SAR 4,000 Agency : Private firms BuildCo will request a soil test for the structural calculations for the foundation. 2 Obtain a topographical study of the land 2 days SAR 1,500 Agency : Private firms 3 Hire independent authorized engineer 1 day SAR 52,024 Agency : Private Company To apply for the building permit, BuildCo must hire an independent engineer for the drawings and supervise the building permit application. The building standards set forth in the surveyor's report are given to the engineering firm in order for the firm to begin drawing the building plans. 4 Apply for building approval and request inspection 7 days SAR 7,804 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). 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 • Two copies of the final plans on A3 paper for Municipal record and a CD containing the complete project information 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. After this, BuildCo's engineer must be physically present to submit hard copies of all the plans and sign a sworn affidavit of responsibility before picking up the temporary permit. 5 Receive inspection from Riyadh Municipality 1 day no charge Agency : Riyadh Municipality The Municipality review the deed and physically inspects the premise to ensure that it matches the drawings. The customer must be physically present at the inspection. 6 Obtain surveyor's report from Riyadh Municipality outlining the building 3 days no charge 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. 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. Page 12 Doing Business 2019 Saudi Arabia 7 Apply for a civil defense approval from the Department of Civil Defense 7 days no charge Agency : Civil Defense Municipality will only issue a building permit after obtaining the approval document from the Civil Defense Department. The document should be presented in paper and in original. The Civil Defense needs to confirm 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 a non-objection certificate. The initial application can be submitted online but an in- person visit is necessary to present all the original documents and to pick-up the actual approval. The building firm needs to submit fire and safety drawings as well as hydraulic calculations. 8 Obtain building permit 12 days no charge Agency : Riyadh Municipality BuildCo will obtain the building permit after filling out and attaching all the required documentation through the Municipality’s website: http://eservices.alriyadh.gov.sa However, original drawings and copies of all the documents (originals as well) need to be presented in person. Examples of documents include land deed, land surveys, owners’ identity cards. During the in-person visit municipal clerks scan in all the documents for archiving purposes. Once all the documents are presented, the Municipality initiates the review process. The review process for small scale projects lasts 2-3 days. For big buildings, such as sky scrapers, the review process is at least one week. 9 Receive inspection during construction 1 day no charge Agency : Riyadh Municipality The customer notifies the Branch Municipality in person that construction has begun and the site is ready for inspection. Once the site has been inspected, the Municipality will proceed with random inspections. However, the Municipality will likely only inspect once since the supervising engineer is responsible for supervising the construction throughout the project. 10 Request certificate of completion from the Riyadh Municipality 0.5 days no charge Agency : Riyadh Municipality The customer notifies the Branch Municipality electronically that construction has been completed and the site is ready for inspection. Upon completion, the branch municipality inspects the site to ensure that all work has been performed as stated in the building permit. As of February 2017, once the certificate of completion is issued, this information is automatically sent to Sewage, Water, Power and Civil Defense. 11 Receive final inspection to issue certificate of completion 1 day no charge Agency : Riyadh Municipality Municipality appoints an inspector and this inspector comes to 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. 12 Obtain certificate of completion from the Riyadh Municipality 7 days no charge Agency : Riyadh Municipality 13 Request letter of approval from Civil Defense 1 day no charge 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. 14 Receive final inspection by Civil Defense 1 day no charge Agency : Civil Defense 15 Obtain letter of approval from Civil Defense 12 days no charge Agency : Civil Defense If the completed building complies with all the fire safety regulations, the Civil Defense issues a letter of approval. 16 Obtain water and sewage connection 30 days SAR 16,250 Agency : National Water Company 17 Obtain occupancy certificate 1 day no charge Agency : Riyadh Municipality The occupancy certificate needs to be collected in person from the Municipality. Takes place simultaneously with previous procedure. Page 13 Doing Business 2019 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; 1.0 Free of charge. Which requirements for obtaining a building permit are clearly specified in the building List of required 1.0 regulations or on any accessible website, brochure or pamphlet? (0-1) documents; Fees to be paid; Required preapprovals. Quality control before construction index (0-1) 1.0 Which third-party entities are required by law to verify that the building plans are in Licensed 1.0 compliance with existing building regulations? (0-1) architect; Licensed engineer. Quality control during construction index (0-3) 2.0 What types of inspections (if any) are required by law to be carried out during construction? Inspections by in- 1.0 (0-2) house engineer; Unscheduled inspections; Inspections at various phases. Do legally mandated inspections occur in practice during construction? (0-1) Mandatory 1.0 inspections are always done in practice. 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 Yes, final 2.0 with the approved plans and regulations? (0-2) inspection is done by government agency. Do legally mandated final inspections occur in practice? (0-1) Final inspection 1.0 always occurs in practice. 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 No party is held 0.0 once it is in use (Latent Defect Liability or Decennial Liability)? (0-1) liable under the law. Which parties (if any) are required by law to obtain an insurance policy to cover possible No party is 0.0 structural flaws or problems in the building once it is in use (Latent Defect Liability Insurance required by law or Decennial Insurance)? (0-1) to obtain insurance . Professional certifications index (0-4) 4.0 What are the qualification requirements for the professional responsible for verifying that the Minimum number 2.0 architectural plans or drawings are in compliance with existing building regulations? (0-2) of years of experience; University degree in architecture or engineering; Being a registered architect or engineer; Passing a certification exam. Page 14 Doing Business 2019 Saudi Arabia What are the qualification requirements for the professional who supervises the construction Minimum number 2.0 on the ground? (0-2) of years of experience; University degree in engineering, construction or construction management; Being a registered architect or engineer. Page 15 Doing Business 2019 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 2018. See the methodology for more information. What the indicators measure Case study assumptions Procedures to obtain an electricity connection To make the data comparable across economies, several assumptions about the (number) warehouse, the electricity connection and the monthly consumption are used. • Submitting all relevant documents and obtaining The warehouse: all necessary clearances and permits - Is owned by a local entrepreneur and is used for storage of goods. • Completing all required notifications and - Is located in the economy’s largest business city. For 11 economies the data are receiving all necessary inspections also collected for the second largest business city. • Obtaining external installation works and possibly - Is located in an area where similar warehouses are typically located and is in an purchasing material for these works 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. • Concluding any necessary supply contract and - Has two stories with a total surface area of approximately 1,300.6 square meters obtaining final supply (14,000 square feet). The plot of land on which it is built is 929 square meters Time required to complete each procedure (10,000 square feet). (calendar days) The electricity connection: • Is at least 1 calendar day - Is a permanent one with a three-phase, four-wire Y connection with a subscribed • Each procedure starts on a separate day capacity of 140-kilo-volt-ampere (kVA) with a power factor of 1, when 1 kVA = 1 • Does not include time spent gathering kilowatt (kW). information - 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 • Reflects the time spent in practice, with little common in the area where the warehouse is located and requires works that involve follow-up and no prior contact with officials the crossing of a 10-meter road (such as by excavation or overhead lines) but are all Cost required to complete each procedure (% of carried out on public land. There is no crossing of other owners’ private property income per capita) because the warehouse has access to a road. - Does not require work to install the internal wiring of the warehouse. This has • Official costs only, no bribes already been completed up to and including the customer’s service panel or • Value added tax excluded switchboard and the meter base. The reliability of supply and transparency of The monthly consumption: tariffs index (0-8) - It is assumed that the warehouse operates 30 days a month from 9:00 a.m. to 5:00 • Duration and frequency of power outages (0–3) p.m. (8 hours a day), with equipment utilized at 80% of capacity on average and that • Tools to monitor power outages (0–1) 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. • Tools to restore power supply (0–1) - If multiple electricity suppliers exist, the warehouse is served by the cheapest • Regulatory monitoring of utilities’ performance supplier. (0–1) - 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 • Financial deterrents limiting outages (0–1) purposes only 30 days are used. • Transparency and accessibility of tariffs (0–1) 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 the ranking on the ease of getting electricity. Page 16 Doing Business 2019 Saudi Arabia Getting Electricity - Saudi Arabia Standardized Connection Price of electricity (US cents per kWh) 7.6 Name of utility Saudi Electricity Company (SEC) City Covered Riyadh Indicator Saudi Arabia Middle East & OECD high Best Regulatory North Africa income Performance Procedures (number) 5 4.7 4.5 3 (25 Economies) Time (days) 68 72.4 77.2 18 (3 Economies) Cost (% of income per capita) 31.2 479.9 64.2 0.0 (3 Economies) Reliability of supply and transparency of tariff 6 4.2 7.5 8.0 (27 Economies) index (0-8) Figure – Getting Electricity in Saudi Arabia and comparator economies – Ranking and Score DB 2019 Getting Electricity Score 0 100 80.49: Jordan (Rank: 62) 79.89: Saudi Arabia (Rank: 64) 79.34: Oman (Rank: 66) 71.41: Egypt, Arab Rep. (Rank: 96) 69.45: Regional Average (Middle East & North Africa) 100.00: 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. Page 17 Doing Business 2019 Saudi Arabia Figure – Getting Electricity in Saudi Arabia – Procedure, Time and Cost Time (days) Cost (% of income per capita) 35 60 30 Cost (% of income per capita) 50 25 Time (days) 40 20 30 15 20 10 10 5 0 0 1 *2 3 4 5 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. Figure – Getting Electricity in Saudi Arabia and comparator economies – Measure of Quality 8 8 7 7 6 6 6 Index score 5 4.2 4 3 3 2 1 0 Saudi Arabia Egypt, Arab Rep. Jordan Oman United Arab Emirates Middle East & North Africa Page 18 Doing Business 2019 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 14 calendar days SAR 0 Agency : Saudi Electricity Company (SEC) The online application system is now operational in Riyadh. The connection fees can also be paid online through the SADAD system. The documents required are commercial license, industrial license, and building permit. SEC receives subscribers' applications in principle after obtaining a building license and starting construction. The subscriber can file an application by phone, fax or online (SADAD system) where the SEC informs customer on the requirement. The locations specified for the stations and electric meters will be checked and confirmed by utility and then an estimate is delivered. 2 Obtain external inspection by utility 4 calendar days SAR 0 Agency : Saudi Electricity Company (SEC) The utility conducts a site inspection to determine the details of the connection and prepare an estimate of the connection fees. The inspection is generally scheduled within 1 week. There are 5 SEC offices in Riyadh. Each office is divided into 5 zones. The surveyor visits each zone 1-2 times per week. The utility will then prepare an estimate of the connection fees. SEC sends a text to the customer saying the file is ready for payment. The customer goes to the bank and pays the fees or he can pay online via the SADAT system. No inspection of the entire internal wiring, however, is carried out during the process. Upon the completion of the inspection, the customer receives an inspection report, which needs to be picked up in-person. 3 Obtain external works from utility 40 calendar days SAR 24,500 Agency : Saudi Electricity Company (SEC) The external works consist of laying out cables from the warehouse to the closest supply on the LV network. The material is all 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. Connection fees were increased, as part of a recent change in low-voltage standards from 127/220 V to 230/400 V. As such, a new "administrative decision" ruled that connection fees be changed in January 2012 from fixed per range of capacities to a fee per kVA specified by capacity range. The decision was issued by the Saudi Arabia Electricity and Cogeneration Regulatory Authority based on article (9) of the electricity regulations, as well as Ministerial decisions 169 and 324. 4 Obtain meter installation from the utility 7 calendar days SAR 230.15 Agency : Saudi Electricity Company (SEC) The client needs to submit a separate application for meter installation and final supply. 5 Obtain Electricity Release Certificate 7 calendar days SAR 0 Agency : Municipality The Municipality reviews the Certificate of Completion from the Department of Civil Defense (obtained during the Dealing with Construction Permit indicator). The Municipality also requires a document from SEC proving that the wiring and installation follows the electricity regulations (received in the Procedure 2 from Utility as a result of inspection) to issue the Certificate. The municipality authorizes the release of electricity, and the warehouse is energized. Takes place simultaneously with previous procedure. Page 19 Doing Business 2019 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) 1.9 System average interruption frequency index (SAIFI) 1.4 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) 1 Does the distribution utility use automated tools to monitor outages? Yes Mechanisms for restoring service (0-1) 1 Does the distribution utility use automated tools to restore service? Yes Regulatory monitoring (0-1) 1 Does a regulator—that is, an entity separate from the utility—monitor the utility’s performance on reliability of Yes supply? Financial deterrents aimed at limiting outages (0-1) 1 Does the utility either pay compensation to customers or face fines by the regulator (or both) if outages Yes exceed a certain cap? Communication of tariffs and tariff changes (0-1) 0 Are effective tariffs available online? Yes Link to the website, if available online https://www.se.com.s a/en- us/Customers/Pages /TariffRates.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 20 Doing Business 2019 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 2018. See the methodology for more information. What the indicators measure Case study assumptions Procedures to legally transfer title on To make the data comparable across economies, several assumptions about the immovable property (number) parties to the transaction, the property and the procedures are used. • Preregistration procedures (for example, The parties (buyer and seller): checking for liens, notarizing sales agreement, paying property transfer taxes) - Are limited liability companies (or the legal equivalent). - Are located in the periurban area of the economy’s largest business city. For 11 • Registration procedures in the economy's largest economies the data are also collected for the second largest business city. business city. - Are 100% domestically and privately owned. • Postregistration procedures (for example, filling - Have 50 employees each, all of whom are nationals. title with municipality) - Perform general commercial activities. Time required to complete each procedure The property (fully owned by the seller): (calendar days) - Has a value of 50 times income per capita, which equals the sale price. • Does not include time spent gathering - Is fully owned by the seller. information - Has no mortgages attached and has been under the same ownership for the past • Each procedure starts on a separate day - 10 years. though procedures that can be fully completed - Is registered in the land registry or cadastre, or both, and is free of title disputes. online are an exception to this rule - Is located in a periurban commercial zone, and no rezoning is required. - Consists of land and a building. The land area is 557.4 square meters (6,000 • Procedure is considered completed once final square feet). A two-story warehouse of 929 square meters (10,000 square feet) is document is received located on the land. The warehouse is 10 years old, is in good condition, has no • No prior contact with officials 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 Cost required to complete each procedure (% of entirety. property value) - Will not be subject to renovations or additional construction following the purchase. • Official costs only (such as administrative fees, - Has no trees, natural water sources, natural reserves or historical monuments of duties and taxes). any kind. - Will not be used for special purposes, and no special permits, such as for • Value Added Tax, Capital Gains Tax and illicit residential use, industrial plants, waste storage or certain types of agricultural payments are excluded activities, are required. - Has no occupants, and no other party holds a legal interest in it. 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) Page 21 Doing Business 2019 Saudi Arabia Registering Property - Saudi Arabia Indicator Saudi Arabia Middle East & OECD high Best Regulatory North Africa income Performance Procedures (number) 2 5.6 4.7 1 (4 Economies) Time (days) 1.5 29.7 20.1 1 (New Zealand) Cost (% of property value) 0.0 5.7 4.2 0.0 (Saudi Arabia) Quality of the land administration index (0-30) 10.5 14.2 23.0 None in 2017/18 Figure – Registering Property in Saudi Arabia and comparator economies – Ranking and Score DB 2019 Registering Property Score 0 100 90.88: United Arab Emirates (Rank: 7) 81.61: Saudi Arabia (Rank: 24) 74.03: Oman (Rank: 52) 66.40: Jordan (Rank: 72) 62.11: Regional Average (Middle East & North Africa) 55.00: Egypt, Arab Rep. (Rank: 125) 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. Figure – Registering Property in Saudi Arabia – Procedure, Time and Cost Time (days) Cost (% of property value) 1.2 1.4 1 Cost (% of property value) 1.2 1 0.8 Time (days) 0.8 0.6 0.6 0.4 0.4 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 2019 Saudi Arabia Figure – Registering Property in Saudi Arabia and comparator economies – Measure of Quality 30 25 22.5 22.0 Index score 20 15 13.5 14.2 10.5 10 9.0 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 Less than one day, no charge Agency : First Notary Public Department online 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. 2 Notary drafts the deed and parties sign before the notary 1 day no charge 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. Takes place simultaneously with previous procedure. Page 23 Doing Business 2019 Saudi Arabia Details – Registering Property in Saudi Arabia – Measure of Quality Answer Score Reliability of infrastructure index (0-8) 4.0 What is the institution in charge of immovable property registration? First Notary Public Department In what format are the majority of title or deed records kept in the largest business city—in a Computer/Scann 1.0 paper format or in a computerized format (scanned or fully digital)? ed Is there an electronic database for checking for encumbrances (liens, mortgages, restrictions Yes 1.0 and the like)? Institution in charge of the plans showing legal boundaries in the largest business city: Municipality of Ryadh In what format are the majority of maps of land plots kept in the largest business city—in a Computer/Scann 1.0 paper format or in a computerized format (scanned or fully digital)? ed Is there an electronic database for recording boundaries, checking plans and providing Yes 1.0 cadastral information (geographic information system)? Is the information recorded by the immovable property registration agency and the cadastral Separate 0.0 or mapping agency kept in a single database, in different but linked databases or in separate databases databases? Do the immovable property registration agency and cadastral or mapping agency use the No 0.0 same identification number for properties? Transparency of information index (0–6) 2.0 Who is able to obtain information on land ownership at the agency in charge of immovable Only 0.0 property registration in the largest business city? intermediaries and interested parties Is the list of documents that are required to complete any type of property transaction made Yes, online 0.5 publicly available–and if so, how? Link for online access: https://www.moj.g ov.sa/Documents /Regulations/pdf/ 70.pdf Is the applicable fee schedule for any property transaction at the agency in charge of Yes, online 0.5 immovable property registration in the largest business city made publicly available–and if so, how? Link for online access: https://www.moj.g ov.sa/ar/Systems AndRegulations/ Pages/Regulatio ns_RealEstate.as px https://www.moj.g ov.sa/ar/eService s/Pages/RealEst ate.aspx Does the agency in charge of immovable property registration commit to delivering a legally No 0.0 binding document that proves property ownership within a specific time frame–and if so, how does it communicate the service standard? Link for online access: Is there a specific and separate mechanism for filing complaints about a problem that No 0.0 occurred at the agency in charge of immovable property registration? Contact information: Are there publicly available official statistics tracking the number of transactions at the Yes 0.5 immovable property registration agency? Page 24 Doing Business 2019 Saudi Arabia Number of property transfers in the largest business city in 2017: Total of 217,144 property transactions in the 1439 Hijri year in Riyadh Who is able to consult maps of land plots in the largest business city? Only 0.0 intermediaries and interested parties Is the applicable fee schedule for accessing maps of land plots made publicly available— No cost 0.5 and if so, how? Link for online access: Does the cadastral or mapping agency commit to delivering an updated map within a Yes, in person 0.0 specific time frame—and if so, how does it communicate the service standard? Link for online access: Is there a specific and separate mechanism for filing complaints about a problem that No 0.0 occurred at the cadastral or mapping agency? Contact information: Geographic coverage index (0–8) 0.0 Are all privately held land plots in the economy formally registered at the immovable property No 0.0 registry? Are all privately held land plots in the largest business city formally registered at the No 0.0 immovable property registry? Are all privately held land plots in the economy mapped? No 0.0 Are all privately held land plots in the largest business city mapped? No 0.0 Land dispute resolution index (0–8) 4.5 Does the law require that all property sale transactions be registered at the immovable Yes 1.5 property registry to make them opposable to third parties? Is the system of immovable property registration subject to a state or private guarantee? Yes 0.5 Is there a specific compensation mechanism to cover for losses incurred by parties who No 0.0 engaged in good faith in a property transaction based on erroneous information certified by the immovable property registry? Does the legal system require a control of legality of the documents necessary for a property Yes 0.5 transaction (e.g., checking the compliance of contracts with requirements of the law)? 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 Yes 0.5 transaction? If yes, who is responsible for verifying the identity of the parties? Registrar; Is there a national database to verify the accuracy of identity documents? Yes 1.0 For a standard land dispute between two local businesses over tenure rights of a property General court worth 50 times gross national income (GNI) per capita and located in the largest business city, what court would be in charge of the case in the first instance? How long does it take on average to obtain a decision from the first-instance court for such a More than 3 0.0 case (without appeal)? years Are there any statistics on the number of land disputes in the first instance? Yes 0.5 Number of land disputes in the largest business city in 2017: From October 2016 until July 2017 (year 1438 in Saudi Arabia) there were had 3.897 Real Estate disputes in Riyadh. Page 25 Doing Business 2019 Saudi Arabia 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 2019 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 2018. 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 • Rights of borrowers and lenders through indicators. The depth of credit information index measures rules and practices collateral laws (0-10) affecting the coverage, scope and accessibility of credit information available • Protection of secured creditors’ rights through through a credit registry or a credit bureau. The strength of legal rights index bankruptcy laws (0-2) 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 Depth of credit information index (0–8) determined whether a unitary secured transactions system exists. Then two case • Scope and accessibility of credit information scenarios, case A and case B, are used to determine how a nonpossessory security distributed by credit bureaus and credit registries interest is created, publicized and enforced according to the law. Special emphasis (0-8) 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 Credit bureau coverage (% of adults) secured lender, BizBank. • Number of individuals and firms listed in largest In some economies the legal framework for secured transactions will allow only case credit bureau as a percentage of adult population A or case B (not both) to apply. Both cases examine the same set of legal provisions Credit registry coverage (% of adults) relating to the use of movable collateral. • Number of individuals and firms listed in credit Several assumptions about the secured borrower (ABC) and lender (BizBank) registry as a percentage of adult population 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 2019 Saudi Arabia Getting Credit - Saudi Arabia Indicator Saudi Arabia Middle East & OECD high Best Regulatory North Africa income Performance Strength of legal rights index (0-12) 1 2.2 6.1 12 (5 Economies) Depth of credit information index (0-8) 8 5.1 6.7 8 (42 Economies) Credit registry coverage (% of adults) 0 14.7 21.8 100.0 (4 Economies) Credit bureau coverage (% of adults) 63.2 15.5 65.3 100.0 (25 Economies) Figure – Getting Credit in Saudi Arabia and comparator economies – Ranking and Score DB 2019 Getting Credit Score 0 100 70.00: United Arab Emirates (Rank: 44) 65.00: Egypt, Arab Rep. (Rank: 60) 45.00: Saudi Arabia (Rank: 112) 36.00: Regional Average (Middle East & North Africa) 35.00: Jordan (Rank: 134) 35.00: Oman (Rank: 134) 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. Figure – Legal Rights in Saudi Arabia and comparator economies 8 7 6 6 Index Score 5 5 4 3 2.2 2 1 1 1 0 0 Saudi Arabia Egypt, Arab Rep. Jordan Oman United Arab Emirates Middle East & North Africa Page 28 Doing Business 2019 Saudi Arabia Details – Legal Rights in Saudi Arabia Strength of legal rights index (0-12) 1 Does an integrated or unified legal framework for secured transactions that extends to the creation, publicity and No enforcement of functional equivalents to security interests in movable assets exist in the economy? Does the law allow businesses to grant a non possessory security right in a single category of movable assets, without No requiring a specific description of collateral? Does the law allow businesses to grant a non possessory security right in substantially all of its assets, without requiring a No specific description of collateral? May a security right extend to future or after-acquired assets, and does it extend automatically to the products, proceeds and No replacements of the original assets? Is a general description of debts and obligations permitted in collateral agreements; can all types of debts and obligations be No secured between parties; and can the collateral agreement include a maximum amount for which the assets are encumbered? Is a collateral registry in operation for both incorporated and non-incorporated entities, that is unified geographically and by No asset type, with an electronic database indexed by debtor's name? 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 No online by any interested third party? Are secured creditors paid first (i.e. before tax claims and employee claims) when a debtor defaults outside an insolvency Yes procedure? Are secured creditors paid first (i.e. before tax claims and employee claims) when a business is liquidated? No Are secured creditors subject to an automatic stay on enforcement when a debtor enters a court-supervised reorganization No procedure? Does the law protect secured creditors’ rights by providing clear grounds for relief from the stay and sets a time limit for it? Does the law allow parties to agree on out of court enforcement at the time a security interest is created? Does the law allow No 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? Figure – Credit Information in Saudi Arabia and comparator economies 8 8 8 8 7 7 6 6 5.1 Index Score 5 4 3 2 1 0 Saudi Arabia Egypt, Arab Rep. Jordan Oman United Arab Emirates Middle East & North Africa Page 29 Doing Business 2019 Saudi Arabia Details – Credit Information in Saudi Arabia Depth of credit information index (0-8) Credit Credit Score bureau registry 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 Yes No 1 financial institutions - distributed? Are at least 2 years of historical data distributed? (Credit bureaus and registries Yes No 1 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.) 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 Yes No 1 credit registry? Can banks and financial institutions access borrowers’ credit information online Yes No 1 (for example, through an online platform, a system-to-system connection or both)? Are bureau or registry credit scores offered as a value-added service to help Yes No 1 banks and financial institutions assess the creditworthiness of borrowers? Total Score ("yes" to either public bureau or private registry) 8 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 14,735,443 0 Number of firms 160,121 0 Total 14,895,564 0 Percentage of adult population 63.2 0 Page 30 Doing Business 2019 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 2018. See the methodology for more information. What the indicators measure Case study assumptions • Extent of disclosure index (0–10): Review and To make the data comparable across economies, a case study uses several approval requirements for related-party assumptions about the business and the transaction. transactions; Disclosure requirements for related- party transactions The business (Buyer): • Extent of director liability index (0–10): Ability - Is a publicly traded corporation listed on the economy’s most important stock of minority shareholders to sue and hold exchange. If there are fewer than ten listed companies or if there is no stock interested directors liable for prejudicial related- exchange in the economy, it is assumed that Buyer is a large private company with party transactions; Available legal remedies multiple shareholders. (damages, disgorgement of profits, fines, - Has a board of directors and a chief executive officer (CEO) who may legally act on imprisonment, rescission of the transaction) behalf of Buyer where permitted, even if this is not specifically required by law. • Ease of shareholder suits index (0–10): - Has a supervisory board in economies with a two-tier board system on which Mr. Access to internal corporate documents; James appointed 60% of the shareholder-elected members. Evidence obtainable during trial and allocation of - Has not adopted bylaws or articles of association that go beyond the minimum legal expenses requirements. Does not follow codes, principles, recommendations or guidelines that are not mandatory. • Extent of conflict of interest regulation index - Is a manufacturing company with its own distribution network. (0–10): Simple average of the extent of disclosure, extent of director liability and ease of The transaction involves the following details: shareholder indices - Mr. James owns 60% of Buyer, sits on Buyer’s board of directors and elected two • Extent of shareholder rights index (0-10): directors to Buyer’s five-member board. Shareholders’ rights and role in major corporate - Mr. James also owns 90% of Seller, a company that operates a chain of retail decisions hardware stores. Seller recently closed a large number of its stores. • Extent of ownership and control index (0-10): - Mr. James proposes that Buyer purchase Seller’s unused fleet of trucks to expand Governance safeguards protecting shareholders Buyer’s distribution of its food products, a proposal to which Buyer agrees. The price from undue board control and entrenchment 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 • Extent of corporate transparency index (0-10): outside the authority of the company. Corporate transparency on ownership stakes, - Buyer enters into the transaction. All required approvals are obtained, and all compensation, audits and financial prospects required disclosures made—that is, the transaction was not entered into fraudulently. • Extent of shareholder governance index (0– - The transaction causes damages to Buyer. Shareholders sue Mr. James and the 10): Simple average of the extent of shareholders executives and directors that approved the transaction. rights, extent of ownership and control and extent of corporate transparency indices • Strength of minority investor protection index (0–10): Simple average of the extent of conflict of interest regulation and extent of shareholder governance indices Page 31 Doing Business 2019 Saudi Arabia Protecting Minority Investors - Saudi Arabia Indicator Saudi Arabia Middle East & OECD high Best Regulatory North Africa income 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 4.7 5.3 10 (Cambodia) Ease of shareholder suits index (0-10) 4.0 4.5 7.3 10 (Djibouti) Extent of shareholder rights index (0-10) 8.0 5.1 6.4 10 (Kazakhstan) Extent of ownership and control index (0-10) 8.0 4.7 5.4 None in 2017/18 Extent of corporate transparency index (0-10) 10.0 5.8 7.6 10 (6 Economies) Figure – Protecting Minority Investors in Saudi Arabia and comparator economies – Ranking and Score DB 2019 Protecting Minority Investors Score 0 100 80.00: Saudi Arabia (Rank: 7) 75.00: United Arab Emirates (Rank: 15) 58.33: Egypt, Arab Rep. (Rank: 72) 51.83: Regional Average (Middle East & North Africa) 46.67: Jordan (Rank: 125) 46.67: Oman (Rank: 125) 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. Figure – Protecting Minority Investors in Saudi Arabia and comparator economies – Measure of Quality Saudi Arabia 10 9 9 8 8 4 Egypt, Arab Rep. 9 3 8 7 5 3 Jordan 8 4 4 6 3 3 Oman 4 5 8 4 4 3 United Arab Emirates 7 9 10 9 6 4 OECD high income 7.4 5.5 6.5 5.2 6.3 7.4 Middle East & North Africa 5.8 4.7 6.4 4.7 5.1 4.5 0 10 20 30 40 50 60 Sub-Indicator Score Extent of corporate transparency index (0-10) Extent of director liability index (0-10) Extent of disclosure index (0-10) Extent of ownership and control index (0-10) Extent of shareholder rights index (0-10) Ease of shareholder suits index (0-10) Page 32 Doing Business 2019 Saudi Arabia Details – Protecting Minority Investors in Saudi Arabia – Measure of Quality Answer Score Extent of conflict of interest regulation index (0-10) 7.3 Extent of disclosure index (0-10) 9.0 Whose decision is sufficient to approve the Buyer-Seller transaction? (0-3) Shareholders 3.0 excluding interested parties 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 2.0 all material facts Must Buyer disclose the transaction in periodic filings (e.g. annual reports)? (0-2) Disclosure on the 2.0 transaction and on the conflict of interest Must Buyer immediately disclose the transaction to the public? (0-2) Disclosure on the 1.0 transaction only Extent of director liability index (0-10) 9.0 Can shareholders representing 10% of Buyer's share capital sue for the damage the Yes 1.0 transaction caused to Buyer? (0-1) Can shareholders hold Mr. James liable for the damage the transaction caused to Buyer? (0- Liable if unfair or 2.0 2) prejudicial Can shareholders hold the other directors liable for the damage the transaction caused to Liable if negligent 1.0 Buyer (0-2) Must Mr. James pay damages for the harm caused to Buyer upon a successful claim by Yes 1.0 shareholders? (0-1) Must Mr. James repay profits made from the transaction upon a successful claim by Yes 1.0 shareholders? (0-1) 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 2.0 or prejudicial Ease of shareholder suits index (0-10) 4.0 Before suing, can shareholders representing 10% of Buyer's share capital inspect the Yes 1.0 transaction documents? (0-1) Can the plaintiff obtain any documents from the defendant and witnesses at trial? (0-3) No 0.0 Can the plaintiff request categories of documents from the defendant without identifying No 0.0 specific ones? (0-1) Can the plaintiff directly question the defendant and witnesses at trial? (0-2) Preapproved 1.0 questions only 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 (0-10) 8.7 Extent of shareholder rights index (0-10) 8.0 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 Yes 1.0 shareholders? 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 No 0.0 shares? Page 33 Doing Business 2019 Saudi Arabia Must shareholders approve the election and dismissal of the external auditor? Yes 1.0 Are changes to the rights of a class of shares only possible if the holders of the affected Yes 1.0 shares approve? Assuming that Buyer is a limited company, does the sale of 51% of its assets require Yes 1.0 member approval? Assuming that Buyer is a limited company, can members representing 10% call for a Yes 1.0 meeting of members? Assuming that Buyer is a limited company, must all or almost all members consent to add a Yes 1.0 new member? Assuming that Buyer is a limited company, must a member first offer to sell their interest to No 0.0 the existing members before they can sell to non-members? Extent of ownership and control index (0-10) 8.0 Is it forbidden to appoint the same individual as CEO and chairperson of the board of Yes 1.0 directors? 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 Yes 1.0 of their term? Must the board of directors include a separate audit committee exclusively comprising board No 0.0 members? Must a potential acquirer make a tender offer to all shareholders upon acquiring 50% of Yes 1.0 Buyer? 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 Assuming that Buyer is a limited company, must Buyer have a mechanism to resolve No 0.0 disagreements among members? Assuming that Buyer is a limited company, must a potential acquirer make a tender offer to Yes 1.0 all shareholders upon acquiring 50% of Buyer? Assuming that Buyer is a limited company, must Buyer distribute profits within a maximum Yes 1.0 period set by law? Extent of corporate transparency index (0-10) 10.0 Must Buyer disclose direct and indirect beneficial ownership stakes representing 5%? Yes 1.0 Must Buyer disclose information about board members’ primary employment and Yes 1.0 directorships in other companies? 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 Yes 1.0 agenda? 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 Assuming that Buyer is a limited company, must members meet at least once a year? Yes 1.0 Assuming that Buyer is a limited company, can members representing 5% put items on the Yes 1.0 meeting agenda? Assuming that Buyer is a limited company, must Buyer's annual financial statements be Yes 1.0 audited by an external auditor? Page 34 Doing Business 2019 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 2018 covering for the Paying Taxes indicator calendar year 2017 (January 1, 2017 – December 31, 2017). See the methodology for more information. What the indicators measure Case study assumptions Tax payments for a manufacturing company in Using a case scenario, Doing Business records taxes and mandatory contributions a 2017 (number per year adjusted for electronic medium size company must pay in a year, and measures the administrative burden and joint filing and payment) 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 • Total number of taxes and contributions paid or laws, time taken to comply with the requirements of postfiling processes and time withheld, including consumption taxes (value waiting. added tax, sales tax or goods and service tax) • Method and frequency of filing and payment To make data comparable across economies, several assumptions are used: - TaxpayerCo is a medium-size business that started operations on January 1, 2016. Time required to comply with 3 major taxes It produces ceramic flowerpots and sells them at retail. All taxes and contributions (hours per year) recorded are paid in the second year of operation (calendar year 2017). Taxes and • Collecting information, computing tax payable mandatory contributions are measured at all levels of government. • Preparing separate tax accounting books, if The VAT refund process: required - In June 2017, TaxpayerCo. makes a large capital purchase: the value of the • Completing tax return, filing with agencies 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 • Arranging payment or withholding equally expensed per month (875 times income per capita divided by 12). The Total tax and contribution rate (% of commercial 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, profits) sales and the machine and the tax reporting period is every month. Input VAT will • Profit or corporate income tax exceed Output VAT in June 2017. • Social contributions, labor taxes paid by The corporate income tax audit process: employer - An error in calculation of income tax liability (for example, use of incorrect tax • Property and property transfer taxes depreciation rates, or incorrectly treating an expense as tax deductible) leads to an • Dividend, capital gains, financial transactions incorrect income tax return and a corporate income tax underpayment. TaxpayerCo. taxes 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 • Waste collection, vehicle, road and other taxes due. TaxpayerCo. submits corrected information after the deadline for submitting the annual tax return, but within the tax assessment period. Postfiling Index • Time to comply with a VAT refund (hours) • Time to obtain a VAT refund (weeks) • Time to comply with a corporate income tax correction (hours) • Time to complete a corporate income tax correction (weeks) Page 35 Doing Business 2019 Saudi Arabia Paying Taxes - Saudi Arabia Indicator Saudi Arabia Middle East & OECD high Best Regulatory North Africa income Performance Payments (number per year) 3 17.7 11.2 3 (Hong Kong SAR, China) Time (hours per year) 39 196.7 159.4 49 (Singapore) Total tax and contribution rate (% of profit) 15.7 32.7 39.8 26.1% (32 Economies) Postfiling index (0-100) 0.00 50.08 84.41 None in 2017/18 Figure – Paying Taxes in Saudi Arabia and comparator economies – Ranking and Score DB 2019 Paying Taxes Score 0 100 99.44: United Arab Emirates (Rank: 2) 90.16: Oman (Rank: 12) 75.00: Saudi Arabia (Rank: 78) 74.52: Regional Average (Middle East & North Africa) 71.48: Jordan (Rank: 95) 52.73: Egypt, Arab Rep. (Rank: 159) 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. Figure – Paying Taxes in Saudi Arabia and comparator economies – Measure of Quality 100 85.32 80 Index score 60 50.08 40 36.54 34.69 20 0.00 0 Saudi Arabia Egypt, Arab Rep. Jordan Oman United Arab EmiratesMiddle East & North Africa Page 36 Doing Business 2019 Saudi Arabia Details – Paying Taxes in Saudi Arabia Tax or Payments Notes on Time Statutory Tax base Total tax Notes on mandatory (number) Payments (hours) tax rate and TTCR contribution contribution rate (% of profit) Employer 1.0 online 16.0 12% gross salaries 13.54 paid - Labor contributions Zakat 1.0 online 23.0 2.5% Higher of 2.18 zakat base or taxable income Employee 0.0 online and 10% gross salaries 0.00 withheld paid - Social jointly security contributions Vehicle fee 1.0 0.00 small amount Totals 3 39 15.7 Page 37 Doing Business 2019 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 Page 38 Doing Business 2019 Saudi Arabia Details – Paying Taxes in Saudi Arabia – Measure of Quality Answer Score Postfiling index (0-100) 0.00 VAT refunds Does VAT exist? No Does a VAT refund process exist per the case study? N/A Restrictions on VAT refund process N/A Percentage of cases exposed to a VAT audit (%) Not applicable Is there a mandatory carry forward period? No Time to comply with VAT refund (hours) No VAT No VAT Time to obtain a VAT refund (weeks) No VAT No VAT 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) 70.0 0 Time to complete a corporate income tax correction (weeks) 33.6 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 39 Doing Business 2019 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 2018. 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 Time: Time is measured in hours, and 1 day is 24 hours (for example, 22 days are or border handling in origin economy recorded as 22×24=528 hours). If customs clearance takes 7.5 hours, the data are • Obtaining, preparing and submitting documents recorded as is. Alternatively, suppose documents are submitted to a customs agency required by destination economy and any transit at 8:00a.m., are processed overnight and can be picked up at 8:00a.m. the next day. economies The time for customs clearance would be recorded as 24 hours because the actual • Covers all documents required by law and in procedure took 24 hours. practice, including electronic submissions of Cost: Insurance cost and informal payments for which no receipt is issued are information excluded from the costs recorded. Costs are reported in U.S. dollars. Contributors Border compliance 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 • Customs clearance and inspections experts in international trade logistics and are informed about exchange rates. • Inspections by other agencies (if applied to more than 20% of shipments) Assumptions of the case study: - For all 190 economies covered by Doing Business, it is assumed a shipment is in a • Handling and inspections that take place at the warehouse in the largest business city of the exporting economy and travels to a economy’s port or border warehouse in the largest business city of the importing economy. - It is assumed each economy imports 15 metric tons of containerized auto parts (HS Domestic transport 8708) from its natural import partner—the economy from which it imports the largest • Loading or unloading of the shipment at the value (price times quantity) of auto parts. It is assumed each economy exports the warehouse or port/border product of its comparative advantage (defined by the largest export value) to its • Transport between warehouse and port/border natural export partner—the economy that is the largest purchaser of this product. Shipment value is assumed to be $50,000. • Traffic delays and road police checks while - The mode of transport is the one most widely used for the chosen export or import shipment is en route 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 40 Doing Business 2019 Saudi Arabia Trading across Borders - Saudi Arabia Indicator Saudi Arabia Middle East & OECD high Best Regulatory North Africa income Performance Time to export: Border compliance (hours) 50 58.0 12.5 1 (19 Economies) Cost to export: Border compliance (USD) 363 442.4 139.1 0 (19 Economies) Time to export: Documentary compliance (hours) 60 67.9 2.4 1 (26 Economies) Cost to export: Documentary compliance (USD) 105 244.6 35.2 0 (20 Economies) Time to import: Border compliance (hours) 228 105.4 8.5 0 (25 Economies) Cost to import: Border compliance (USD) 779 536.0 100.2 0 (28 Economies) Time to import: Documentary compliance (hours) 90 75.5 3.4 1 (30 Economies) Cost to import: Documentary compliance (USD) 390 269.0 24.9 0 (30 Economies) Figure – Trading across Borders in Saudi Arabia and comparator economies – Ranking and Score DB 2019 Trading Across Borders Score 0 100 79.39: Oman (Rank: 72) 79.03: Jordan (Rank: 74) 71.50: United Arab Emirates (Rank: 98) 60.17: Regional Average (Middle East & North Africa) 54.31: Saudi Arabia (Rank: 158) 42.23: 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. Figure – Trading across Borders in Saudi Arabia – Time and Cost Time (hours) Cost (USD) 250 228 900 779 800 200 700 Time (hours) Cost (USD) 600 150 500 363 390 90 400 100 60 300 50 50 200 105 100 0 0 Export Export Import Import - - - - Border Documentary Border Documentary Compliance Compliance Compliance Compliance Page 41 Doing Business 2019 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) Export: Clearance and inspections required 24.0 150.0 by customs authorities Export: Clearance and inspections required 0.0 0.0 by agencies other than customs Export: Port or border handling 50.0 213.0 Import: Clearance and inspections required 36.0 240.4 by customs authorities Import: Clearance and inspections required 98.8 200.0 by agencies other than customs Import: Port or border handling 129.2 338.5 Page 42 Doing Business 2019 Saudi Arabia Details – Trading across Borders in Saudi Arabia – Trade Documents Export Import Bill of lading Bill of lading Certificate of origin Certificate of origin Commercial invoice Commercial invoice Customs declaration Customs declaration Packing list Packing list SOLAS certificate Trade license Certificate of conformity SOLAS certificate Page 43 Doing Business 2019 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 2018. See the methodology for more information. What the indicators measure Case study assumptions Time required to enforce a contract through the The dispute in the case study involves the breach of a sales contract between 2 courts (calendar days) 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 • Time to file and serve the case enforcement. • Time for trial and to obtain the judgment To make the data comparable across economies, Doing Business uses several • Time to enforce the judgment assumptions about the case: Cost required to enforce a contract through the - The dispute concerns a lawful transaction between two businesses (Seller and courts (% of claim) Buyer), both located in the economy’s largest business city. For 11 economies the data are also collected for the second largest business city. • Attorney fees - The buyer orders custom-made goods, then fails to pay alleging that the goods are • Court fees not of adequate quality. - The value of the dispute is 200% of the income per capita or the equivalent in local • Enforcement fees currency of USD 5,000, whichever is greater. - The seller sues the buyer before the court with jurisdiction over commercial cases Quality of judicial processes index (0-18) worth 200% of income per capita or $5,000. • Court structure and proceedings (-1-5) - The seller requests the pretrial attachment of the defendant’s movable assets to secure the claim. • Case management (0-6) - The dispute on the quality of the goods requires an expert opinion. • Court automation (0-4) - The judge decides in favor of the seller; there is no appeal. • Alternative dispute resolution (0-3) - The seller enforces the judgment through a public sale of the buyer’s movable assets. Page 44 Doing Business 2019 Saudi Arabia Enforcing Contracts - Saudi Arabia Standardized Case Claim value SAR 153,864 Court name Riyadh Commercial Court City Covered Riyadh Indicator Saudi Arabia Middle East & OECD high Best Regulatory North Africa income Performance Time (days) 575 622.0 582.4 None in 2017/18 Cost (% of claim value) 27.5 24.7 21.2 None in 2017/18 Quality of judicial processes index (0-18) 10.5 6.1 11.5 None in 2017/18 Figure – Enforcing Contracts in Saudi Arabia and comparator economies – Ranking and Score DB 2019 Enforcing Contracts Score 0 100 75.88: United Arab Emirates (Rank: 9) 63.41: Saudi Arabia (Rank: 59) 60.02: Oman (Rank: 73) 55.56: Jordan (Rank: 108) 55.04: Regional Average (Middle East & North Africa) 42.75: Egypt, Arab Rep. (Rank: 160) 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. Figure – Enforcing Contracts in Saudi Arabia – Time and Cost Time (days) Cost (% of claim value) Cost (% of claim value) 1200 31.2 35 1010 1000 26.2 27.5 30 24.7 Time (days) 21.2 25 800 21.0 642 622.0 598 20 582.4 575 600 15.1 445 15 400 10 200 5 0 0 Egypt, Jordan Middle OECD Oman Saudi United Arab East high Arabia Arab Rep. & income Emirates North Africa Page 45 Doing Business 2019 Saudi Arabia Figure – Enforcing Contracts in Saudi Arabia and comparator economies – Measure of Quality Saudi Arabia 2 2.5 2 4 Egypt, Arab Rep. 2 0 3.5 Jordan 3 2 1 2 Oman 2.5 0 4 United Arab Emirates 2 4 3 5 OECD high income 2.5 3.1 2.3 3.6 Middle East & North Africa 2.2 0.8 0.4 2.8 0 2 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) 10.5 Court structure and proceedings (-1-5) 4.0 Case management (0-6) 2.5 Court automation (0-4) 2.0 Alternative dispute resolution (0-3) 2.0 Page 46 Doing Business 2019 Saudi Arabia Details – Enforcing Contracts in Saudi Arabia – Measure of Quality Answer Score Quality of judicial processes index (0-18) 10.5 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 1.5 2. Small claims court 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) 2.5 1. Time standards 0.5 1.a. Are there laws setting overall time standards for key court events in a civil Yes case? 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 No granted? 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 No 0.0 disposition report; (ii) clearance rate report; (iii) age of pending cases report; and (iv) single case progress report? 4. Is a pretrial conference among the case management techniques used before the No 0.0 competent court? 5. Are there any electronic case management tools in place within the competent court for Yes 1.0 use by judges? 6. Are there any electronic case management tools in place within the competent court for Yes 1.0 use by lawyers? Court automation (0-4) 2.0 1. Can the initial complaint be filed electronically through a dedicated platform within the yes 1.0 competent court? 2. Is it possible to carry out service of process electronically for claims filed before the Yes 0.0 competent court? 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 No general public through publication in official gazettes, in newspapers or on the internet or court website? 4.b. Are judgments rendered in commercial cases at the appellate and supreme No court level made available to the general public through publication in official gazettes, in newspapers or on the internet or court website? Alternative dispute resolution (0-3) 2.0 1. Arbitration 1.5 Page 47 Doing Business 2019 Saudi Arabia 1.a. Is domestic commercial arbitration governed by a consolidated law or Yes consolidated chapter or section of the applicable code of civil procedure encompassing substantially all its aspects? 1.b. Are there any commercial disputes—aside from those that deal with public No order or public policy—that cannot be submitted to arbitration? 1.c. Are valid arbitration clauses or agreements usually enforced by the courts? Yes 2. Mediation/Conciliation 0.5 2.a. Is voluntary mediation or conciliation available? Yes 2.b. Are mediation, conciliation or both governed by a consolidated law or No consolidated chapter or section of the applicable code of civil procedure encompassing substantially all their aspects? 2.c. Are there financial incentives for parties to attempt mediation or conciliation No (i.e., if mediation or conciliation is successful, a refund of court filing fees, income tax credits or the like)? Page 48 Doing Business 2019 Saudi Arabia Resolving Insolvency Doing Business studies the time, cost and outcome of insolvency proceedings involving domestic legal entities. These variables are used to calculate the recovery rate, which is recorded as cents on the dollar recovered by secured creditors through reorganization, liquidation or debt enforcement (foreclosure or receivership) proceedings. To determine the present value of the amount recovered by creditors, Doing Business uses the lending rates from the International Monetary Fund, supplemented with data from central banks and the Economist Intelligence Unit. The most recent round of data collection was completed in May 2018. See the methodology for more information. What the indicators measure Case study assumptions Time required to recover debt (years) To make the data on the time, cost and outcome comparable across economies, several assumptions about the business and the case are used: • Measured in calendar years • Appeals and requests for extension are included - A hotel located in the largest city (or cities) has 201 employees and 50 suppliers. The hotel experiences financial difficulties. Cost required to recover debt (% of debtor’s - The value of the hotel is 100% of the income per capita or the equivalent in local estate) currency of USD 200,000, whichever is greater. - The hotel has a loan from a domestic bank, secured by a mortgage over the hotel’s • Measured as percentage of estate value real estate. The hotel cannot pay back the loan, but makes enough money to • Court fees operate otherwise. • Fees of insolvency administrators In addition, Doing Business evaluates the quality of legal framework applicable to • Lawyers’ fees judicial liquidation and reorganization proceedings and the extent to which best • Assessors’ and auctioneers’ fees insolvency practices have been implemented in each economy covered. • Other related fees Outcome • Whether business continues operating as a going concern or business assets are sold piecemeal Recovery rate for creditors • Measures the cents on the dollar recovered by secured creditors • Outcome for the business (survival or not) determines the maximum value that can be recovered • Official costs of the insolvency proceedings are deducted • Depreciation of furniture is taken into account • Present value of debt recovered Strength of insolvency framework index (0- 16) • Sum of the scores of four component indices: • Commencement of proceedings index (0-3) • Management of debtor’s assets index (0-6) • Reorganization proceedings index (0-3) • Creditor participation index (0-4) Page 49 Doing Business 2019 Saudi Arabia Resolving Insolvency - Saudi Arabia Indicator Saudi Arabia Middle East & OECD high Best Regulatory North Africa income Performance Recovery rate (cents on the dollar) 0.0 26.3 70.5 None in 2017/18 Time (years) No Practice 2.8 1.7 0.4 (Ireland) Cost (% of estate) No Practice 13.8 9.3 1.0 (Norway) Outcome (0 as piecemeal sale and 1 as going 0 .. .. .. concern) Strength of insolvency framework index (0-16) 0.0 5.9 11.9 None in 2017/18 Figure – Resolving Insolvency in Saudi Arabia and comparator economies – Ranking and Score DB 2019 Resolving Insolvency Score 0 100 49.67: United Arab Emirates (Rank: 75) 42.34: Oman (Rank: 100) 42.27: Egypt, Arab Rep. (Rank: 101) 32.69: Regional Average (Middle East & North Africa) 30.31: Jordan (Rank: 150) 0.00: Saudi Arabia (Rank: 168) Note: The ranking of economies on the ease of resolving insolvency is determined by sorting their scores for resolving insolvency. These scores are the simple average of the scores for the recovery rate and the strength of insolvency framework index. Figure – Resolving Insolvency in Saudi Arabia – Time and Cost Time (years) Cost (% of estate) 4.5 25 22.0 4.0 Cost (% of estate) 4 20.0 20.0 3.5 3.2 20 Time (years) 3.0 3 2.8 2.5 13.8 15 2.5 2 1.7 9.3 10 1.5 1 3.5 5 0.5 0 0 Egypt, Jordan Middle OECD Oman No United Arab East high Practice Arab Rep. & income Saudi Emirates North Arabia Africa Page 50 Doing Business 2019 Saudi Arabia Figure – Resolving Insolvency in Saudi Arabia and comparator economies – Measure of Quality Saudi Arabia 0 2 0 Egypt, Arab Rep. 4 2.5 2 1 Jordan 2 2 1 0 Oman 4 2 1 0 United Arab Emirates 6 2 1 2 OECD high income 5.3 2.8 2.2 1.9 Middle East & North Africa 3.3 2.2 1.2 0.4 0 2 4 6 8 10 12 14 Sub-Indicator Score Management of debtor's assets index (0-6) Commencement of proceedings index (0-3) Creditor participation index (0-4) Reorganization proceedings index (0-3) Note: Even if the economy’s legal framework includes provisions related to insolvency proceedings (liquidation or reorganization), the economy receives 0 points for the strength of insolvency framework index, if time, cost and outcome indicators are recorded as “no practice.” Figure – Resolving Insolvency in Saudi Arabia and comparator economies – Recovery Rate Recovery rate(cents on the dollar) 100 80 60 38.0 40 27.3 28.4 26.3 23.4 20 0.0 0 Saudi Arabia Egypt, Arab Rep. Jordan Oman United Arab EmiratesMiddle East & North Africa Page 51 Doing Business 2019 Saudi Arabia Details – Resolving Insolvency in Saudi Arabia Indicator Answer Score Proceeding No Practice According to the research conducted by the team, there were no foreclosure, liquidation or reorganization proceedings filed in the country in the last 12 months. Due to this circumstance, it is not possible to assess the time, the cost or the outcome associated with the insolvency scenario described in the case study. Outcome piecemeal sale According to the research conducted by the team, there were no foreclosure, liquidation or reorganization proceedings filed in the country in the last 12 months. Due to this circumstance, it is not possible to assess the time, the cost or the outcome associated with the insolvency scenario described in the case study. Time (in years) No Practice According to the research conducted by the team, there were no foreclosure, liquidation or reorganization proceedings filed in the country in the last 12 months. Due to this circumstance, it is not possible to assess the time, the cost or the outcome associated with the insolvency scenario described in the case study. Cost (% of No Practice According to the research conducted by the team, there were no foreclosure, liquidation or estate) reorganization proceedings filed in the country in the last 12 months. Due to this circumstance, it is not possible to assess the time, the cost or the outcome associated with the insolvency scenario described in the case study. Recovery rate 0.0 (cents on the dollar) Page 52 Doing Business 2019 Saudi Arabia Details – Resolving Insolvency in Saudi Arabia – Measure of Quality Answer Score Strength of insolvency framework index (0-16) 0.0 Commencement of proceedings index (0-3) 2.0 What procedures are available to a DEBTOR when commencing insolvency proceedings? (b) Debtor may 0.5 file for liquidation only Does the insolvency framework allow a CREDITOR to file for insolvency of the debtor? (b) Yes, but a 0.5 creditor may file for liquidation only What basis for commencement of the insolvency proceedings is allowed under the (a) Debtor is 1.0 insolvency framework? generally unable to pay its debts as they mature Management of debtor's assets index (0-6) 0.0 Does the insolvency framework allow the continuation of contracts supplying essential goods No 0.0 and services to the debtor? Does the insolvency framework allow the rejection by the debtor of overly burdensome No 0.0 contracts? Does the insolvency framework allow avoidance of preferential transactions? No 0.0 Does the insolvency framework allow avoidance of undervalued transactions? No 0.0 Does the insolvency framework provide for the possibility of the debtor obtaining credit after No 0.0 commencement of insolvency proceedings? Does the insolvency framework assign priority to post-commencement credit? (c) No priority is 0.0 assigned to post- commencement creditors Reorganization proceedings index (0-3) 0.0 Which creditors vote on the proposed reorganization plan? N/A 0.0 Does the insolvency framework require that dissenting creditors in reorganization receive at No 0.0 least as much as what they would obtain in a liquidation? Are the creditors divided into classes for the purposes of voting on the reorganization plan, No 0.0 does each class vote separately and are creditors in the same class treated equally? Creditor participation index (0-4) 0.0 Does the insolvency framework require approval by the creditors for selection or No 0.0 appointment of the insolvency representative? Does the insolvency framework require approval by the creditors for sale of substantial No 0.0 assets of the debtor? Does the insolvency framework provide that a creditor has the right to request information No 0.0 from the insolvency representative? Does the insolvency framework provide that a creditor has the right to object to decisions No 0.0 accepting or rejecting creditors' claims? Note: Even if the economy’s legal framework includes provisions related to insolvency proceedings (liquidation or reorganization), the economy receives 0 points for the strength of insolvency framework index, if time, cost and outcome indicators are recorded as “no practice.” Page 53 Doing Business 2019 Saudi Arabia Labor Market Regulation Doing Business presents detailed data for the labor market regulation indicators on the Doing Business website (http://www.doingbusiness.org). The report does not present rankings of economies on these indicators or include the topic in the aggregate ease of doing business score or ranking on the ease of doing business. The most recent round of data collection was completed in May 2018. See the methodology for more information. What the indicators measure Case study assumptions Hiring To make the data comparable across economies, several assumptions about the (i) whether fixed-term contracts are prohibited for worker and the business are used. permanent tasks; (ii) maximum cumulative duration of fixed-term contracts; (iii) length of the The worker: probationary period; (iv) minimum wage. - Is a cashier in a supermarket or grocery store, age 19, with one year of work experience. Working hours - Is a full-time employee. (i) maximum number of working days allowed per - Is not a member of the labor union, unless membership is mandatory. week; (ii) premiums for work: at night, on a weekly rest day and overtime; (iii) whether there are The business: restrictions on work at night, work on a weekly rest - Is a limited liability company (or the equivalent in the economy). day and for overtime work; (iv) whether - Operates a supermarket or grocery store in the economy’s largest business city. nonpregnant and nonnursing women can work For 11 economies the data are also collected for the second largest business city. same night hours as men; (v) length of paid annual - Has 60 employees. leave. - Is subject to collective bargaining agreements if such agreements cover more than 50% of the food retail sector and they apply even to firms that are not party to them. Redundancy rules - Abides by every law and regulation but does not grant workers more benefits than (i) whether redundancy can be basis for terminating those mandated by law, regulation or (if applicable) collective bargaining workers; (ii) whether employer needs to notify agreements. and/or get approval from third party to terminate 1 redundant worker and a group of 9 redundant workers; (iii) whether law requires employer to reassign or retrain a worker before making worker redundant; (iv) whether priority rules apply for redundancies and reemployment. Redundancy cost (i) notice period for redundancy dismissal; (ii) severance payments due when terminating a redundant worker. Job quality (i) whether law mandates equal remuneration for work of equal value and nondiscrimination based on gender in hiring; (ii) whether law mandates paid or unpaid maternity leave; (iii) length of paid maternity leave; (iv) whether employees on maternity leave receive 100% of wages; (v) availability of five fully paid days of sick leave a year; (vi) eligibility requirements for unemployment protection. Page 54 Doing Business 2019 Saudi Arabia Labor Market Regulation - Saudi Arabia Details – Labor Market Regulation in Saudi Arabia Answer Hiring Fixed-term contracts prohibited for permanent tasks? No Maximum length of a single fixed-term contract (months) No limit Maximum length of fixed-term contracts, including renewals (months) 48.0 Minimum wage applicable to the worker assumed in the case study (US$/month) 0.0 Ratio of minimum wage to value added per worker 0.0 Maximum length of probationary period (months) 3.0 Working hours Standard workday 8.0 Maximum number of working days per week 6.0 Premium for night work (% of hourly pay) 0.0 Premium for work on weekly rest day (% of hourly pay) 50.0 Premium for overtime work (% of hourly pay) 50.0 Restrictions on night work? No Whether nonpregnant and nonnursing women can work the same night hours as men No Restrictions on weekly holiday? Yes Restrictions on overtime work? No Paid annual leave for a worker with 1 year of tenure (working days) 18.0 Paid annual leave for a worker with 5 years of tenure (working days) 26.0 Paid annual leave for a worker with 10 years of tenure (working days) 26.0 Paid annual leave (average for workers with 1, 5 and 10 years of tenure, in working days) 23.3 Redundancy rules Dismissal due to redundancy allowed by law? Yes Third-party notification if one worker is dismissed? No Third-party approval if one worker is dismissed? No Third-party notification if nine workers are dismissed? No Third-party approval if nine workers are dismissed? No Retraining or reassignment obligation before redundancy? No Priority rules for redundancies? No Priority rules for reemployment? No Redundancy cost Notice period for redundancy dismissal for a worker with 1 year of tenure 8.6 Notice period for redundancy dismissal for a worker with 5 years of tenure 8.6 Notice period for redundancy dismissal for a worker with 10 years of tenure 8.6 Notice period for redundancy dismissal (average for workers with 1, 5 and 10 years of tenure) 8.6 Severance pay for redundancy dismissal for a worker with 1 year of tenure 2.2 Page 55 Doing Business 2019 Saudi Arabia Severance pay for redundancy dismissal for a worker with 5 years of tenure 10.8 Severance pay for redundancy dismissal for a worker with 10 years of tenure 32.5 Severance pay for redundancy dismissal (average for workers with 1, 5 and 10 years of tenure) 15.2 Job quality Equal remuneration for work of equal value? No Gender nondiscrimination in hiring? No Paid or unpaid maternity leave mandated by law? Yes Minimum length of maternity leave (calendar days)? 70.0 Receive 100% of wages on maternity leave? Yes Five fully paid days of sick leave a year? Yes Unemployment protection after one year of employment? Yes Minimum contribution period for unemployment protection (months)? 12.0 Page 56 Doing Business 2019 Saudi Arabia Business Reforms in Saudi Arabia In the past year, Doing Business observed a peaking of reform activity worldwide. From June 2, 2017, to May 1, 2018, 128 economies implemented a record 314 regulatory reforms improving the business climate. Reforms inspired by Doing Business have been implemented by economies in all regions. The following are reforms implemented since Doing Business 2008. = Doing Business reform making it easier to do business. = Change making it more difficult to do business. DB2019 Getting Electricity: Saudi Arabia improved the reliability of electricity supply by imposing a new compensation scheme to incentivize the utility to improve service reliability. Protecting Minority Investors: Saudi Arabia strengthened minority investor protections by providing clear rules for the liability of directors and increasing the role of shareholders in major decisions. Trading across Borders: Saudi Arabia made exporting and importing easier by launching a new electronic single window and extending the hours of operation of customs at the Jeddah port. Enforcing Contracts: Saudi Arabia made enforcing contracts easier by introducing an e-system that allows plaintiffs to file the initial complaint electronically and amending the civil procedure rules to introduce time standards for key court events. DB2018 Starting a Business: Saudi Arabia made starting a business easier through the use of an online system that merges the name reservation and submission of the articles of association into one procedure. Saudi Arabia also improved the online payment system, removing the need to pay fees in person. Registering Property: Saudi Arabia improved the efficiency of its land administration system by implementing an online platform to check for ownership and encumbrances and by streamlining the property registration process. Additionally, Saudi Arabia made registering property easier by improving the land administration system’s dispute resolution mechanisms. Protecting Minority Investors: Saudi Arabia strengthened minority investor protections by increasing shareholder rights and role in major decisions, clarifying ownership and control structures, requiring greater corporate transparency and regulating the disclosure of transactions with interested parties. Paying Taxes: Saudi Arabia made paying taxes by improving its online platforms used by taxpayers for filing and paying taxes. Trading across Borders: Saudi Arabia reduced the time for documentary compliance for exports and imports by reducing the number of documents required for customs clearance. Enforcing Contracts: Saudi Arabia made enforcing contracts easier by introducing an electronic case management system for the use of judges and lawyers. DB2017 Starting a Business: Saudi Arabia made starting a business easier by reducing the time to notarize a company's article of association. Protecting Minority Investors: Saudi Arabia strengthened minority investor protections by strengthening ownership and control structures of companies and by increasing corporate transparency requirements. Paying Taxes: Saudi Arabia made paying taxes more difficult by introducing a more complex income tax return. Labor Market Regulation: Saudi Arabia increased the length of the notice period for redundancy dismissals. DB2016 Registering Property: Saudi Arabia made property transfers faster by introducing a new computerized system at the land registry. DB2014 Trading across Borders: DB2013 Getting Electricity: Saudi Arabia made getting electricity more expensive by increasing the connection fees. Paying Taxes: Saudi Arabia made paying taxes easier for companies by introducing online filing and payment systems for social security contributions. Enforcing Contracts: Saudi Arabia made enforcing contracts easier by expanding the computerization of its courts and introducing an electronic filing system. Page 57 Doing Business 2019 Saudi Arabia DB2012 Starting a Business: Saudi Arabia made starting a business easier by bringing together representatives from the Department of Zakat and Income Tax and the General Organization of Social Insurance at the Unified Center to register new companies with their agencies. DB2011 Dealing with Construction Permits: Saudi Arabia made dealing with construction permits easier for the second year in a row by introducing a new, streamlined process. Getting Credit: An amendment to Saudi Arabia’s commercial lien law enhanced access to credit by allowing out-of-court enforcement in case of default. Trading across Borders: Saudi Arabia reduced the time to import by launching a new container terminal at the Jeddah Islamic Port. Resolving Insolvency: Saudi Arabia speeded up the insolvency process by providing earlier access to amicable settlements and putting time limits on the settlements to encourage creditors to participate. DB2010 Starting a Business: Saudi Arabia made starting a business easier by introducing a one-stop center at the Ministry of Commerce that merged registration procedures and simplified publication requirements. Dealing with Construction Permits: Saudi Arabia made dealing with construction permits less time consuming by introducing a 1-day permitting procedure that enables builders to obtain a temporary building permit allowing them to begin construction after 1 day and a final building permit after 1 week. DB2009 Starting a Business: Saudi Arabia reduced the time and cost to start a business by eliminating non-value-added formalities. Registering Property: Saudi Arabia made property registration faster and easier by adopting a comprehensive electronic system for registering title deeds. Protecting Minority Investors: Saudi Arabia strengthened investor protections by prohibiting interested parties from voting on the approval of related-party transactions and by increasing sanctions against directors found liable for harm to a company resulting from a transaction in which they had a personal interest. Resolving Insolvency: Saudi Arabia introduced strict deadlines for bankruptcy procedures, with the result that auctions of debtors’ assets now take place more quickly than before. DB2008 Starting a Business: Saudi Arabia made starting a business easier by eliminating the paid-in minimum capital requirement and speeding up company registration. Getting Credit: Saudi Arabia’s private credit bureau launched a commercial credit bureau that issues reports on companies, including on their credit exposure. Trading across Borders: Saudi Arabia made importing easier by abolishing the requirement for a consular certificate, allowing the electronic transfer of data (and therefore eliminating the requirement for hard copies of documents) and improving the capacity of facilities in the port of Jeddah. Page 58 Doing Business 2019 Saudi Arabia Page 59