The Middle East is presently in the middle of a historic economic shift, as it positions itself as the main destination for the world’s investors and entrepreneurs. For several years, the UAE was the undisputed gateway to the Middle East. But with the swift execution of Saudi Vision 2030, the Kingdom of Saudi Arabia (KSA) has now become a powerhouse that commands attention. For multinational companies, the question is no longer “if” they should enter the Gulf but now: Saudi Arabia vs UAE for Business: Where Should Foreign Companies Expand First? At Arabian Access, we have the expertise to guide businesses through these complicated environments. In this in-depth guide, we will pit the two giants of the GCC against each other to help you determine where your business adventure should start.
Saudi Arabia for Business
Saudi Arabia is the biggest economy in the Arab region. Its change is driven by Vision 2030, a huge roadmap that seeks to shift the economy from oil. The country is pouring trillions of dollars into “Giga-projects” such as NEOM, Qiddiya, and the Red Sea Project. For foreign businesses, Saudi Arabia for business presents a huge, untapped market of more than 36 million people, a young population, and a government that is aggressively cutting red tape to attract FDI (Foreign Direct Investment).
UAE the Business Hub
The UAE, led by Dubai and Abu Dhabi, has been taking decades to refine its position as a global trading hub. It presents a highly developed ecosystem, excellent infrastructure, and a lifestyle that draws global talent. UAE for businesses is still the same as ease of doing business, with many Free Zones and a 100% foreign ownership policy that has been in place for longer than the recent developments in KSA.
Saudi Arabia vs UAE for Business
But where should foreign businesses look to expand first? The answer to Saudi Arabia vs UAE for Business is as follows. Saudi Arabia has a much larger domestic market, and it is still in a relatively earlier stage of its transformation. For businesses in the areas of construction, manufacturing, healthcare, education, tourism, and infrastructure, Saudi Arabia provides the scale that the UAE simply cannot offer. UAE, for businesses, on the other hand, is better suited for businesses that require an already established trading hub or regional headquarters solution.
The UAE is easier to set up in quickly, especially in its free zones. But the regulatory environment in Saudi Arabia has improved immensely, and the government has made business setup more predictable and structured. For businesses that are willing to invest in the regulatory environment, Saudi Arabia for business is definitely an option.
The cost of setup and functioning in the UAE, particularly in Dubai, is one of the highest in the region. Saudi Arabia, while not entirely cost-free, provides competitive alternatives, especially in non-Riyadh prime areas. Government incentives for eligible projects in Saudi Arabia can greatly mitigate the cost of setup.
It is at this point that the balance shifts firmly in favor of many global firms. The Vision 2030 plan in Saudi Arabia ensures that government outlays and private investment will continue to be substantial in the short to medium term. The magnitude of projects such as NEOM, the Red Sea Project, Diriyah, and many others has ensured that there is a constant stream of opportunities that simply do not exist in the UAE.
In contrast to most of the UAE’s free zones, to operate with the Saudi government or with the largest Saudi companies, it is usually necessary to have a licensed local entity. The Saudi government and Saudi projects that align with Saudi Vision 2030 prefer suppliers and partners who have a strong in-country presence. For those interested in pursuing this market, Saudi Arabia vs UAE for Business leans heavily towards choosing Saudi Arabia first.
Where Should Foreign Companies Expand First?
For most foreign businesses considering Where Should Foreign Companies Expand First, the trend is increasingly towards Saudi Arabia, especially for those focusing on the construction, energy, tourism, manufacturing, healthcare, technology, and professional services sectors. Saudi Arabia for business provides an enormous market of over 36 million consumers, primarily consisting of a young and technology-aware generation with immense spending power.
The UAE is well-known for its Free Zones. Free Zones in the UAE offer 100% foreign ownership, no taxes (in most Free Zones), and simplified customs. Establishing a business in the UAE is quicker and requires less paperwork upfront for small to medium-sized businesses.
As for those who ask, “Where Should Foreign Companies Expand First? Is it Saudi Arabia vs UAE for Business?”, the answer is often dependent on the speed of regulations versus long-term substance. The UAE for businesses continues to be the best in the region for “speed to market” with its existing Free Zones and simplified customs procedures. Nevertheless, Saudi Arabia for business is rapidly catching up with simplified MISA licensing and the Regional Headquarters (RHQ) mandate, providing 30-year tax holidays for companies aiming to serve massive government Giga-projects. Although the UAE provides a “tax-light” environment with 5% VAT, the long-term strategic support and financial resources of Saudi Arabia’s PIF make it the ultimate destination for companies aiming for unparalleled regional scale.
How Arabian Access Helps
While the question of Saudi Arabia vs UAE for Business can be answered by statistics alone, the truth is that to make the right decision, you need more than just statistics, you need local presence on the ground. At Arabian Access, we are a premier management consultancy that takes the uncertainty out of the equation by offering comprehensive support, from carrying out feasibility studies to decide Where Should Foreign Companies Expand First to handling complicated MISA licenses and Free Zone registrations. Our experts serve as your conduit to the local government, taking care of all PRO services, government affairs, and HR plans, such as Saudization, to ensure that your business is founded on a bedrock of complete compliance and local knowledge.
If you focus on Saudi Arabia for business to benefit from the huge Giga-projects or the UAE for businesses to benefit from the global logistics, Arabian Access will make your expansion seamless. We are experts in tax and compliance, handling all aspects of 15% VAT and Zakat returns in the Kingdom and corporate tax in the Emirates. If you are a foreign company still wondering Where Should Foreign Companies Expand First?, let our Riyadh team and regional consultants help you along the way. Get in touch with Arabian Access today and turn the Saudi Arabia vs UAE for Business puzzle into your biggest regional advantage.
Making the Right Decision with the Right Partner
The Saudi Arabia vs UAE for Business debate will likely continue to change and adapt as both countries continue to develop, but for international businesses looking to focus on long-term expansion, the Kingdom’s vision-led transformation and sheer size make it an attractive first stop. Getting it right in this region means more than simply deciding which market to expand into; it means getting it right in that market, with that level of local knowledge and foresight. For those asking Where Should Foreign Companies Expand First?, the answer is to align your business strategy with the unprecedented opportunities that exist in Saudi Arabia today for business.
With Arabian Access, you get access to a team of experts who intimately know the business environment and are able to foresee complex regulatory challenges. Whether you are targeting the UAE for businesses or the tremendous expansion potential of KSA, we have the expertise to help you confidently deliver your vision. If you are considering Saudi Arabia vs UAE for Business for your next international expansion, let Arabian Access help you on your way. Contact us today to arrange a free consultation and lock in your strategic foundation in the Gulf.
