A sea-change in Saudi shipping

18 December 2018
Experts from law firm Clyde & Co assess the impact of Saudi Arabia's decision to grant shipping agent licences to fully foreign-owned firms

The government authorities of Saudi Arabia are collectively working on improving the kingdom’s investment environment as part of the National Transformation Plan and Vision 2030.

The Saudi Arabian General Investment Authority (Sagia), the governing authority for foreign direct investments, has been striving to ease the restrictions on foreign investments in the country.

As part of this, shipping agents will be able to operate independently on the back of Saudi Arabia’s privatisation plans. Until recently, ship agency services could only be performed by a 100 per cent Saudi-owned company or a Saudi national.

Under the recent reforms, however, rather than working with a local investor, foreign shipping companies and ship agents now have the right to operate independently at Saudi Arabian ports – except when it comes to customs clearances and supplying fuel to ships.

Details confirmed

Following a letter issued in August 2018 by the Saudi Minister of Commerce & Investment, it has been confirmed that shipping agency activities do not fall under the Saudi Agency Law and, therefore, are not prohibited activities for non-Saudi owned firms.

This has made it possible for foreign investors to be granted shipping agency licences.

Sagia has confirmed that it is welcoming foreign shipping companies and ship agents and says there are no special requirements for those wishing to conduct the activities of a shipping agency, beyond the regular requirements involved in setting up a company in the kingdom.

This is certainly a positive development for both the marine sector and the Saudi economy.

As for the details, the foreign investment licence will be valid for five years and can be renewed annually. In addition to the foreign investment licence, investors will be required to obtain a shipping agency licence from the Saudi Ports Authority (Mawani) after the establishment of the company and before conducting business.

Mawani and Sagia are working together to implement this change and to implement the necessary procedures to regulate the investment of shipping agencies.

According to Mawani, the activities of shipping agencies include vessel clearance and related activities, including, but not limited to, loading and unloading cargo, booking cargo, paying port dues, representing the shipping line and delivering supplies to ships.

The only services that cannot be performed by foreign direct investment companies are customs clearances and the supply of fuel to ships.

About the authors

saudi shipping clyde & coKhurram Ali (left), legal director and head of international trade and transportation – Saudi Arabia, Clyde & Co

Wala AbObakr, associate (corporate), Clyde & Co

Both are based at Clyde & Co's office in Riyadh.

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