In a strategic move aimed at enhancing the investment environment and unifying economic standards in the region, the Saudi Ministry of Industry and Mineral Resources approved the executive regulations for the Unified Industrial Regulation System for the Gulf Cooperation Council (GCC) countries. This decision comes within the framework of ongoing efforts to deepen economic integration among GCC countries and create a common industrial market characterized by transparency and legislative stability, which directly contributes to achieving the objectives of the national visions of the Gulf states, most notably Saudi Arabia’s Vision 2030, which positions the industrial sector as a fundamental pillar for diversifying sources of income.
Scope of the system and exceptions for strategic sectors
The new regulations clearly define the scope of the system's provisions, encompassing all industrial facilities that transform raw materials into finished or semi-finished products. However, given the unique nature of certain sovereign natural resources, the regulations exclude projects related to oil exploration and extraction, as well as mineral extraction projects that do not involve processing that alters the product's form or content. These sectors are subject to specific legislation and regulations designed to safeguard the nation's natural resources.
Licensing procedures: from initial approval to production
The regulations meticulously structure the industrial investor's journey to ensure ease of doing business, beginning with obtaining "initial approval." The regulations mandate that the relevant authorities process approval applications within 30 days of their completion. The project file must include accurate information, such as:
1. The trade name and legal structure of the establishment.
2. The nature of the industrial activity and the size of the invested capital.
3. The expected production capacity and product details.
This step is considered the cornerstone for ensuring the viability of projects and their alignment with national industrial strategies.
Digital transformation and transparency in procedures
In line with the technological advancements witnessed in the Kingdom and the Gulf countries, the regulations emphasize the adoption of electronic forms and systems for submitting applications, thus expediting processes and reducing bureaucracy. They also stipulate the establishment of a dedicated register for license applications, ensuring priority processing and transparency. In the event of a rejection, the regulations require the relevant authority to provide clear justifications for the refusal, with failure to respond within 60 days considered an implicit rejection. This provides the investor with legal clarity, enabling them to take subsequent actions.
Industrial Register: Post-Operational Obligations
The regulatory role did not stop at the establishment phase but extended to the operational and production phases. The regulations imposed specific obligations on factory owners, most notably:
First, registration in the industrial register within 60 days of commencing actual production.
Second, annual renewal of the registration certificate to ensure the industrial database is up-to-date.
Third, disclosure of operational data such as workforce size (national and foreign), production costs, and actual capacity.
This data is a fundamental pillar for economic decision-makers, as the regulations stipulate the issuance of periodic statistical bulletins reflecting the reality of the industrial sector, thus helping investors and analysts accurately interpret market trends.
Expected economic impact
This unified regulatory framework is expected to attract more foreign direct investment to the region, as international investors consistently seek clear and standardized legal environments. The system will also enhance the competitiveness of Gulf products by raising quality standards and ensuring compliance with specifications, thereby opening up broader export opportunities to global markets and supporting the transformation of Gulf countries from consumers of manufactured goods to global manufacturing hubs.
