QUESTIONS? 844.937.3268


Official Name: Kingdom of Saudi Arabia

Internet Domain: .sa
International Dialing Code: +966
Time Zone: UTC+3

Table of Contents

Location and Size Comparative Economic Indicators
Government Credit and Collections
Legal System Risk Assessment
People Business Climate
Economy Business Protocol
Economic Indicators Articles of Interest
Sources of Further Information

Location and Size

Saudi Arabia is located in the Middle East, bordering the Persian Gulf and the Red Sea, north of Yemen. Area: 1,960,582 million sq. km. (784,233 sq. mi.), slightly more than one-fifth the size of the continental United States.

Named after the ruling Al Saud family, which came to power in the 18th century, the country includes the Hijaz region - the birthplace of the Prophet Muhammad and the cradle of Islam and home to Islam's two holiest shrines in Mecca and Medina.


The modern state of Saudi Arabia was founded in 1932. The government is a hereditary monarchy governed according to Islamic law (Shari’a). Saudi Arabia has been ruled since its foundation by the Al Saud dynasty. The current head of state is King Abdullah Bin-Abd-al-Aziz Al Saud.

The Basic Law that articulates the government's rights and responsibilities was promulgated by royal decree in 1992. It declares that Saudi Arabia is a monarchy ruled by the sons and grandsons of King Abd Al Aziz Al Saud, and that the Holy Qur'an is the constitution of the country. Legislation is by resolution of the Council of Ministers and the Shura Council, ratified by royal decree, and must be compatible with the Shari'a.

Legal System

Justice is administered according to the Shari'a (Islamic Law) by a system of religious courts whose judges are appointed by the king on the recommendation of the Supreme Judicial Council, composed of 12 senior jurists. The independence of the judiciary is protected by law. The king acts as the highest court of appeal and has the power to pardon.

Commercial disputes are handled by special committees. Saudi Arabia has not accepted compulsory International Court of Justice (ICJ) jurisdiction. (What does this mean?)


Most Saudis are ethnically Arab. Some are of mixed ethnic origin and are descended from Turks, Iranians, Indonesians, Indians, Africans, and others, most of whom immigrated as pilgrims and reside in the Hijaz region along the Red Sea coast. Many Arabs from nearby countries are employed in the kingdom. There also are significant numbers of Asian expatriates mostly from India, Pakistan, Bangladesh, Indonesia, and the Philippines. There are less than 100,000 Westerners in Saudi Arabia.

  • Population: 28,146,656 including 5,576,075 non-nationals (July 2008 est.)
  • Population growth rate: 1.954% (2008 est.)
  • Languages: Arabic (official)
  • Literacy: 78.8% (2003 est.)
  • Ethnic Make-up: Arab (90% of native pop.), Afro-Asian (10% of native pop.)
  • Religions: Islam


Saudi Arabia possesses more than 20% of the world's proven petroleum reserves, ranks as the largest exporter of petroleum, and plays a leading role in OPEC. The petroleum sector accounts for roughly 75% of budget revenues, 45% of GDP, and 90% of export earnings. About 40% of GDP comes from the private sector. Roughly 5.5 million foreign workers play an important role in the Saudi economy, particularly in the oil and service sectors.

Saudi Arabia continues to pursue rapid industrial expansion, led by the petrochemical sector. The Saudi Basic Industries Corporation (SABIC is now one of the world’s leading petrochemical producers. The government also promotes private sector involvement in petrochemicals. The government plans new investments in the mining sector and in refining.

Conservatism has impeded political and economic liberalization. Rapid demographic growth and a poor education system have spawned high unemployment that poses a threat to the social climate. Regional geopolitical instability has affected the investment environment.

Currency: Riyal (SAR)

Leading Markets (2007): US 16.9%, Japan 16.1%, South Korea 10.3%, China 8%, Taiwan 4.8%

Leading Exports-commodities: petroleum and petroleum products 90%

Leading Suppliers (2007): US 12.6%, China 9.4%, Germany 8.8%, Japan 8.1%, Italy 5%, UK 4.5%, South Korea 4.1%

Leading Imports-commodities: machinery and equipment, foodstuffs, chemicals, motor vehicles, textiles

Top Industries: crude oil production, petroleum refining, basic petrochemicals, ammonia, industrial gases, sodium hydroxide (caustic soda), cement, fertilizer, plastics, metals, commercial ship repair, commercial aircraft repair, construction

Top Agricultural Products: wheat, barley, tomatoes, melons, dates, citrus; mutton, chickens, eggs, milk

Economic Indicators

2004 2005 2006 2007(e) 2008(f) 2009(f)
GDP (USD billion) 250.7 315.8 349.1 374.5 407.0

GDP per capita (USD)

11,126.5 13,657.9 14,733.5 15,416.0 16,349.0
Economic growth: (%) 5.3 6.1 4.3 3.5 6.0 5.0
Current account balance (USD billions) 51.9 91.0 99.1 87.0 174.6 145.9
Current account balance (%GDP) 20.7 29.4 28.4 23.1 34.3 28.3
Inflation (%) 0.3 0.7 2.3 4.1 11.7 10.8
Exports (USD billions) 126.0 181.5 211.3 226.5 365.0 379.6
Imports (USD billions) 41.1 54.5 63.9 82.6 108.3 138.6
Foreign debt (% of GDP) 11.1 10.9 13.4 17.3 14.5 16.7
Foreign exchange reserves (in months of imports) 18.0 22.7 22.9 22.0 19.4 17.9
Exchange rates (SAR per USD) 2008 avg to Dec 4 3.8 3.8 3.8 3.7 3.8
Exchange rates (SAR per EUR) 200 avg to Dec 4 4.7 4.7 4.7 5.1 5.6

(e) estimate (f) forecast

Comparative Economic Indicators -- 2007

Saudi Arabia Iran Oman Yemen Sudan Syria
Population* (millions) 28.1 65.9 3.3 23.0 40.2 19.7
Population growth* (%) 2.0 0.8 9.2 3.5 2.1 2.2
Literacy (2003)(%) 78.8 77.0
(2002 est)
81.4 50.2 61.1 79.6
(2004 census)
GDP** (USD billions)) 546.0 762.9 60.9 56.2 81.0 90.4
GDP per capita** (USD) 19,800.0 11,700.0 19,000.0 2,500.0 1,900.0 4,700.0
Economic growth (%) 3.5 5.8 6.5 3.6 11.2 3.9
Inflation (%) 4.1 17.1 5.9 10.0 8.0 12.2
Unemployment rate (%) 13-25%
(2004 est)
12.0 15.0
(2004 est)
(2003 est)
(2002 est)
Exports (USD billions) 226.5 93.7 22.4 6.9 0.8 11.2
Imports (USD billions) 82.6 55.6 11.1 7.5 0.8 13.0
Foreign debt (% of GDP) 17.3 8.4 26.7 25.8 60.0 27.8
Currency Riyal
Exchange rates (per USD)
2008 to Dec. 4
3.8 9,596.9 0.4 200.5 2.1 51.3
Exchange rates (per EUR)
2008 to Dec. 4
5.6 14,174.2 0.6 296.8 3.1 76.1

* 2008 estimates
** PPP – Purchasing Power Parity

Credit and Collections

Overseas Press & Consultants (OP&C) Evaluation

  • Collection Experience: Fair-Good
  • Exchange Delays: 3 months
  • Preferred Credit Terms: Unconfirmed letter of credit
  • Minimum Credit Terms: Unconfirmed letter of credit

ABC-Amega’s collection experience in Saudi Arabia

Saudi Arabia is a very interesting place to collect. Assuming several factors, collections can certainly be accomplished from Saudi debtors:

  1. Sales contracts must be Shari’a compliant. We recommend you consult with a specialist in the construction of Shari’a compliant contracts or you may see your documents declared void as contrary to Islam.
    • Interest may not be charged.
    • The Saudi Courts will not recognize a foreign choice of law clause as it violates Shari’a.
    • Saudi Arabia is a signatory to the 1958 NY Convention on the Enforcement of Foreign Arbitration Awards, but will not enforce Awards granted in foreign jurisdictions if rendered in a fashion contrary to Shari’a.
  2. For American sellers/creditors, care must be taken to avoid violating U.S. anti-blacklisting statutes. U.S. sellers should also ensure compliance with OFAC’s SDN (Specially Designated Nationals) list
  3. The seller should maintain a duplicate set of ORIGINAL documents. If originals are not available, Certified/Notarized/Apostilled documents must be available.
  4. It’s preferable for the documents to be bilingual – Arabic/seller language. Otherwise, you may be required to provide translations.
  5. Saudi Arabia does not have a time bar for commercial cases. However, as with all debts, and unlike fine wines, they do not improve with age.

Dispute Resolution

Saudi commercial law is still developing. Saudi Arabia is a signatory of the New York Convention of 1958 on the Recognition and Enforcement of Foreign Arbitral Awards, and is also a member of the International Center for the Settlement of Investment Disputes (also known as the Washington Convention). However, dispute settlement in Saudi Arabia continues to be time-consuming and uncertain. Even after a decision is reached in a dispute, effective enforcement of the judgment can still take years.

In December 2005, the Saudi government announced the formation of the Saudi International Arbitration Commission (SIAC), the first formal arbitration program for the business community. The SIAC falls under the Saudi chapter of the International Chambers of Commerce, and has adopted the same arbitration system employed by the International Court of Arbitration.

Risk Assessment

Coface Country Risk Rating: A4 -- A somewhat shaky political and economic outlook and a relatively volatile business environment can affect corporate payment behavior. Corporate default probability is still acceptable on average.

Ducroire Delcredere Political Risk Rating: 1 – lowest risk
Ducroire Delcredere Commercial Risk Rating: C – highest risk

Business Climate

Improvement of the investment climate is an important part of the Saudi government's broader program to liberalize the country's trade and investment regime, diversify an economy overly dependent on oil and petrochemicals, promote employment for a very young population, and become an active player in the World Trade Organization (WTO) following its accession in December 2005.

The government encourages investment in transportation, education, health, information and communications technology, life sciences and energy, in six “Economic Cities” that are in various states of development. The Economic Cities are to be new, comprehensive developments in different regions focusing on particular industries. Prospective investors will find attractive Saudi Arabia's economic stability, large market, sound infrastructure, a well-regulated banking system and relatively high per capita income.

Unemployment is high, and the large youth population (40% of the population are under 15 years of age) generally lacks the education and technical skills the private sector needs. The government has substantially boosted spending on job training and education, infrastructure development, and government salaries -- as part of its effort to attract foreign investment and diversify the economy

Commercial Law: Saudi Arabia has commercial law that is generally applied consistently. Bankruptcy law was enacted in 1996. Articles contained in the law allow debtors to conclude financial settlements with their creditors through committees under the Saudi Chambers of Commerce and Industry or through the Board of Grievances.

Economic Freedom: Saudi Arabia's economy is 62.8 percent free, according to the 2008 Index of Economic Freedom, making it the world's 60th freest economy. Saudi Arabia scores very well in fiscal freedom, labor freedom, and business freedom. Saudi Arabia is weak in investment freedom, financial freedom, and freedom from corruption.  

Transparency of Regulatory System: There are few aspects of the Saudi government's regulatory system that are transparent, although Saudi investment policy is less opaque than many other areas. Saudi tax and labor laws and policies tend to favor high-tech transfers and the employment of Saudis rather than fostering competition. Bureaucratic procedures are cumbersome, but red tape can generally be overcome with persistence.

Intellectual Property, Patents and Trademarks: Saudi Arabia recently undertook a comprehensive revision of its laws covering intellectual property rights to bring them in line with the WTO agreement on Trade Related Aspects of Intellectual Property Rights (TRIPs).

The Saudi Government has revised its Copyright Law, is devoting increased resources to marketplace enforcement, and is seeking to impose stricter penalties on copyright violators. The Saudi Government has stepped up efforts to force pirated printed material, recorded music, videos, and software off the shelves of stores. However, many pirated materials are still available in the marketplace.
Saudi Arabia has one of the best trademarks laws in the region, but enforcement still lags, and procedures are inconsistent.

Saudi Arabia has not signed and ratified the WIPO internet treaties.

Corruption: Saudi Arabia has some, limited laws aimed at curbing corruption. Foreign firms have identified corruption as an obstacle to investment in Saudi Arabia. Government procurement is an area often cited. Bribes, often disguised as “commissions," are reputed to be commonplace.

Saudi Arabia has signed but not ratified the UN Anticorruption Convention. Saudi Arabia is not a signatory of the OECD Convention on Combating Bribery.

Political Violence: The government's efforts to integrate Saudi Arabia more fully into the world economy have been opposed by Islamic extremists who have targeted Saudi oil facilities and foreign workers for terrorist attacks. The U.S. Department of State continues to warn American citizens to defer non-essential travel to Saudi Arabia due largely to targeted attacks against American citizens that have resulted in deaths and injuries.

For more detailed information on these topics, visit the 2008 Investment Climate Statement – Saudi Arabia, of the U.S. Department of State. The World Trade Organization (WTO) also provides a snapshot of statistics related to Trade and Trade Policy in Saudi Arabia.

Business Protocol

The cultural environment in Saudi Arabia is highly conservative; the country adheres to a strict interpretation of Islamic religious law (Shari'a). Men and women are not permitted to attend public events together and are segregated in the work place.

There is no civil code of law and Shari'a requires that the murderer or drug dealer be beheaded, the adulterer stoned, the fornicator flogged and the habitual thief have his right hand amputated--albeit never on the basis of circumstantial evidence for any of these offences. Blood money for accidental killing [e.g. in a road accident] is also legally enforceable. The result is a generally peaceful, well-ordered society.

Business Appointments: The importance Saudis attach to courtesy and hospitality can cause delays that prevent keeping to a strict schedule. It is therefore customary to make appointments for times of day rather than precise hours. Unlike in the west, Saudi secretaries do not normally have authority to make appointments for their bosses.

Business Attire: The only absolute requirement of dress code in the Kingdom is modesty. For men, this means covering everything from navel to knee. Short sleeves are therefore acceptable but not short trousers. The female dress code requires covering everything except the face, hands and feet in public. However, a woman can wear literally anything she wants providing she covers it with an abaya [standard black cloak] and headscarf when she goes out.

Names and Titles: The use of first names denotes more familiarity than in the west and there is no real equivalent to Mister, although the Saudis borrow the Hashemite noble title “Sayyed” for this purpose in correspondence.

Conversation: It is up to the host to set the subject of conversation. He will normally begin with platitudes [like How are you? How are you enjoying your visit? etc.]. Be forthcoming but always polite. Intelligent argument is admired and welcome but only when it is courteous and reasoned. Argue as appropriate but never quarrel. The more feedback you provoke, no matter how forceful -- so long as it is not angry -- the more highly you are esteemed.

Gifts: Gifts should only be given to the most intimate of friends. Beware of expressing admiration for something belonging to another because it makes him feel obliged to make a gift of it.

Meetings and Negotiations: The standard greeting is “As-salam alaikum,” [peace be upon you] to which the standard reply is “Wa alaikum as-salam,” [and upon you be peace]. On arrival at the reception room, the visitor should stand in the doorway and utter the former of these phrases. Only after receiving the reply is he entitled to enter. In the event of no reply, he may repeat the greeting but continued failure to reply means that he is not welcome.

Acceptable Public Conduct: To the Saudis, good manners are all important. However, Saudi and western concepts of courtesy can be precise opposites. In the west, for example, it is very polite for a man to hold a door for a lady, or at least allow her to pass first. The same gesture is offensive by Saudi standards because the man puts himself in a position to ogle the woman from behind.

Articles of interest about Saudi Arabia

The struggle against al-Qaeda, Economist, Oct. 23, 2008

Come buy, Saudi Arabia opens its stockmarket, at last, to foreign investors, Economist, Aug. 27, 2008

Sources for further information on doing business in Saudi Arabia

Doing Business in Saudi Arabia, Ali & Partners

Doing Business in Saudi Arabia, U.S. Commercial Service

Embassy of the United States Riyadh

U.S.-Saudi Arabian Business Council


Subscribe to the Credit-to-Cash Advisor
Monthly e-Newsletter -- It's Free

This information is provided by ABC-Amega Inc. Providing international receivable management and debt collection services for exporters to more than 200 countries including Saudi Arabia. For further information, contact [email protected].

This report represents a compilation of information from a wide variety of reputable sources.

Economic Indicators: Variety of sources including the CIA World Factbook, Coface Country Rating, Economist Country Briefings, Federation of International Trade Associations (FITA) Country Profiles.

Risk Assessment information: Provided with permission by Coface Country Rating. Also Belgian credit insurance company Ducroire Delcredere

Information on credit terms and the probability of prompt payment are provided, with permission, from Overseas Press and Consultants (OP&C) as published in IOMA's Report on "Managing Credit, Receivables & Collections," August 2008.

Historical Exchange Rates: The Currency Site.