Doing business

(Last updated: 16 Apr 2008)
 

Business opportunities

Austrade’s business development specialists have prepared a range of market profiles that offer potential to assist in your exporting investigations. Austrade’s in-market teams have identified opportunities for Australian exporters in various industries (see 'Profiled industries in this market' on the left side of this page).

In conjunction with the market profiles, the Opportunities Online portal may be a useful addition to your information sources. The database established by Austrade aims to deliver international sales leads ('export opportunities'), including tenders, identified by our overseas network to Australian businesses.

Registering is simple and once this is done you will have the option of accessing a weekly newsletter featuring the most recent opportunities uploaded onto the system in industry sectors of interest to you. Another feature is the ability to view, and also print, the complete page of opportunity details.

For general inquiries concerning Austrade’s services, please contact Austrade Direct on 13 28 78.

Business etiquette

Business tips

Business visits during Ramadan (fasting month) and Hajj (pilgrimage) should be avoided as working hours are shortened and many senior businessmen will not be available.

‘Small talk’ is vital for the establishment of trust and must not be hurried or dispensed with. In introductory business conversations, talk often centres on the health and wellbeing of the other person, but never about his wife and female relatives.

It is not unusual for a Saudi businessman or official to have a number of people in an office all discussing various matters at once. When invited into an office, you will be given a seat, refreshments and be engaged in introductory conversation, after which your host may break off conversation with you and deal with one of his other visitors before returning to you.

It can be a lengthy and complicated process to obtain a visa for a female business visitor. It is generally easier if she is part of a delegation, however, she will only be able to attend business meetings if accompanied by a male representative who should conduct the meeting on her behalf.

Refreshments (eg. coffee, tea) should always be accepted. Coffee is offered to guests in order of their rank, if known to the host. It is customary to drink more than one cup of coffee or tea but not more than your host or others present. To decline a further serving, you shake the cup when handing it back to the server.

In business circles, standard dress for men is a suit and tie. For casual wear, slacks and a short-sleeve shirt are acceptable, but shorts should not be worn in public.

Women should wear long, loose fitting garments. Foreign women have to wear a black cloak called an ‘ abaya’ that drops from the shoulders to the ground and carry a headscarf in Riyadh, the capital of Saudi Arabia. The areas of Jeddah and Dammam tend to be a bit more tolerant.

Social etiquette

Saudis usually greet each other with kisses on the face or on the forehead and walk hand-in-hand. Westerners are often greeted with a handshake.

Saudi men are usually addressed by their first or given name. For example, Mr. Khalid Bin Abdullah Al-Tuwari has the given name of Khalid, is the son of Abdullah, and his family grouping or tribe is Al-Tuwari. He would be called Mr Khalid.

Saudis show a concern for seniority and precedence and visitors should also observe this. For example, ensure that an older or more senior person goes through a door first.

Similarly, if walking together, the guest or senior person should be on the right of the group as a mark of respect.

It is considered offensive to sit with the soles of your shoes or feet facing the other members of your group.

Care should be taken not to express admiration for something owned by your host, or you may have the object offered to you immediately as a gift. This is an ancient custom, still preserved in many traditional areas.

If invited to dinner, unless otherwise stated, it can generally be assumed that only males will attend the function. Women frequently have separate functions. It may be taken as an affront to refuse an entertainment invitation.

It is unlikely that you will be invited to an Arab’s house, unless the host is very aware of Western culture or you have developed a very strong friendship with the person. If you invite a local to dine with you, do not include his wife in the invitation unless you have a prior indication that she may accept.

Do not take a photo of anyone without asking prior permission. Sensitivity to local tradition and laws is essential and caution is strongly advised. It is forbidden to photograph mosques, palaces, government buildings, airports, railroad stations and most souq areas.

Please also note:

Bribery of foreign public officials is a crime. Australian individuals and companies can be prosecuted in Australia for bribing foreign officials when overseas. For more information, go to the Attorney General's Department on foreign bribery.

Tariffs and non-tariff barriers

Tariff

Single-column tariff based on the Harmonised System. Most duties are ad valorem assessed on the C&F value (Incoterms 2000).

Most basic consumer goods (rice, tea, unroasted coffee, barley corn, etc.) are exempt of duty. See also 'Surcharges and fees'.

The most common rate is 5 per cent, with a 20 per cent rate being levied on commodities for which there are domestic substitutes.

Tobacco is subject to a 100 per cent import duty.

Shipments in transit are not subject to duty.

No tariffs on equipment, ordnance, arms and munitions for military purposes. An export letter is required.

Customs authority contact details:

Director General of Customs Affairs
Customs Department
Kingdom Of Saudi Arabia
PO Box 3483
Riyadh
Tel: +966 1 404 3216
Fax: +966 1 404 3412

Import surcharges may occasionally be levied. Port fees may be levied on goods which are exempt of customs duties.

Non-tariff barriers

Import restrictions

The International Conformity Certification Programme (ICCP) was introduced by the Saudi Government in 1995 and is being managed by the SASO. In 1998, SASO announced that all food products are to be eliminated from the pre-shipment. This represents a major reduction in barriers to trade for the Australian food exporters, although exporters are still subject to Saudi quality controls and testing.

Further information on products covered under the ICCP is available from the following ICCP Australian contacts:

SASO Country Office
218 Lorimer Street
Port Melbourne, VIC 3207
Tel: +61 3 9646 0305
Fax: +61 3  9646 0308

SASO Australian Approved Laboratories
Intertek Testing Services
Tel: +61 3 9646 9299
Fax: +61 3 9646 0308
Email: hdhondy@intertest.com.au

ETRS Pty Ltd
Tel: +61 3 9689 6533
Fax: +61 3 9689 6923

General information:

• Consolidated shipments are not allowed. Back-to-back shipment consigned to forwarding agent not allowed for duty exempted shipments.
• Customs clearance is done at airport and seaport customs warehouses. There are no bonded warehouse facilities. Consignee's authorisation letter to broker is required.
• Transshipments via Saudi ports are now allowed through special arrangement with S/S Line agent.
• Temporary import on bond (duty on deposit) is permitted only to the importer under the special arrangements and prior approval from the Ministry.
• Customs duty percentage for general commodities is 5 per cent. Some commodities are 12 per cent and the 20 per cent rate is applied to imported commodities for which they are also domestic substitutes.
• Turnaround shipments are not allowed unless the import entry clearance has been processed.
• Actual description of material is to be declared on the MAWB and OBL and they must match other shipping documents.
• Net weight/gross weight of shipments shown in all shipping documents should match.
• Chemical/hazardous shipments require prior approval before being moved from the port of origin. Based on the details provided, Namma Cargo Services could approach consignee and Customs to expedite the relevant import licences. Chemical/hazardous shipments are dealt with on a case-by-case basis.
• A temporary ban exists on EU imports of meat due to the Creutzfeldt-jakob disease scare.
• Import licences are required for flour, rice and sugar.
• The import of arms and ammunition is strictly controlled.
• A wide range of products must comply with the published standards of the Saudi Arabian Standards Organisation (SASO) to gain entry
• Import permits issued by the appropriate Saudi ministry are required for plants, seeds and agricultural machinery.
• The import of alcoholic beverages, flour, nutmeg, pork, 14-carat gold, and a range of prefabricated buildings is prohibited.
• Commercial agencies are limited to Saudi citizens and imports may be made only through such agents
• There are virtually no foreign exchange restrictions. Banks may require cash deposits when opening letters of credit.

Seaport restrictions on LCL/FCL dry box container:

• All imported shipments should be properly packed/palletised for handling by forklift, including material stuffed in FCL containers. Pallets exceeding 2000kgs/pcs. should be loaded in open top flat rack containers because pallets/pieces loaded in a standard dry box container are not to exceed 2000kg gross per piece. Each package should have proper marks and numbers and be identical to information in the OBL and other shipping documents.

Product certification, labelling and packaging

Labelling and marking

Packing should be strong and should guard against extreme heat in summer, humidity in winter, and possible brief periods of storage in the open.

All products, materials and goods must bear the name of the country of manufacture. If the consignment does not have printed/embossed/engraved phrases 'made in' or 'product of' legible on its packaging, the customs department will not permit the goods to be cleared and the importer's agency will be responsible for returning the goods to the original source.

Port authorities require a label to be affixed to the inside of the container door indicating the following:

• the consignee name and address, plus their telex or cable number
• details corresponding with those on the packing list
• the mode of packaging and the sensitivity/damageability of the contents

Note: a clause to this effect must be inserted in the accompanying documentation. Fines of 500 riyals per bill of lading will be imposed if this information is missing.

General cargo in containers must be palletised/unitised. If cargo is not palletised/unitised a fine of 5000 riyals per container will be imposed on the shipper/consignee. The weight limit is 2000kg per pallet or unit.

Dry bulk material should be packed in bags or bales and palletised, or could be shipped in jumbo bags fitted with lifting points. The shipment of dry bulk cargo by container is prohibited.

Specific regulations covering mechanical freight handling govern the types of containers that may be used.

The regulations governing the marking of packages are quite specific. Depicting human or animal forms and reproducing the government mark are prohibited.

The Saudi Arabian Standards Organisation (SASO) is responsible for establishing labelling guidelines and these are strictly enforced, especially with halal products. Labelling on foods must indicate, in both English and Arabic:

• name of product
• contents
• net weight (in metric)
• production and expiry dates (in Arabic only)
• name of company and country of manufacture

Other general information:

• Adhesive labels on foodstuffs are not permitted.
• Sweets, sugars and tahini sweets are prohibited unless net weight in English and Arabic is clearly marked in outer cover of packet.
• Product literature for pharmaceuticals must be printed in both English and Arabic. Literature for products used in the treatment of neurotic and terminal diseases are exempt.
• Insecticides must include detailed information of contents and use on all cans and packages.
• Operating manuals must accompany every piece of equipment, machinery, device, tool or instrument imported into Saudi Arabia and must be printed in Arabic.
• All cigarette packets must carry a legible indelible health warning in Arabic.
• Special labelling for genetically modified food and non-genetically modified food products is required. 

Special certificates

The following certification from the appropriate Australian authorities is required:

• Articles of raw hair – consignment is free of anthrax germs.
• Used clothing – clothes have been satisfactorily disinfected.
• Consignments of meat and meat products for human consumption must be accompanied by the halal certificate.

All animals, animal products, plants and plant products (including seeds and grains) require health certification issued by the approved authority in the country of origin.

Pharmaceuticals must be accompanied by a certificate of price issued by the approved authority (see 'Guidelines', section 2.3) and legalised by the Saudi Arabian Embassy.

Steel for use in reinforced concrete must be covered by the following:

• A certificate from the factory testifying that the product is subject to continuous experiments at the plant itself. Certificate must include chemical analysis, description of mechanical testing (tension, extension and bending) and diameter.
• A certificate from appropriate authorities testifying that the production of the factory is subject to periodic inspection and testing by that authority.

Exporters may be required to comply with the procedures and guidelines of the International Conformity Certification Program (ICCP), which covers 76 product categories. For details of the ICCP, prospective exporters should contact the Saudi Arabian Standard Organisation (SASO) Country Office in Australia. Contact details are as follows:

PO Box 483
218 Lorimer Street
Port Melbourne VIC 3207
Tel: +61 3 9646 9299
Fax: +61 3 9646 0308

Methods of quoting and payment

Quotations should be in Australian dollars with equivalents in US dollars or Pound Sterling, CIF or CIFC (Incoterms 2000) Jeddah or Dammam. Goods for Riyadh are usually shipped via Dammam.

Payment is usually by letter of credit or sight draft. When opening L/Cs banks usually request a cash deposit which may range up to 100 per cent of the L/C value.

Documentary requirements

Fax signatures are not permitted. Note: Saudi Arabian consulate legalisation will only be made for goods of Australian origin.

Commercial invoice

No prescribed form and five copies are required. The invoice must indicate:

• the country of origin
• all marks and numbers
• net and gross weights in metric
• the value of consignments
• a full description of consignment

The invoice must bear the following declaration: 'We hereby guarantee that this is a true and correct invoice and that the goods referred to are of the origin, manufacture and production of ........ (country of origin) Signed ............. (Director, Secretary, Partner, etc.)'

Must be certified by an approved authority (see 'Guidelines', section 2.3) and legalised by the Saudi Arabian Embassy.

Bill of lading/airway bill

No prescribed form. May be made out To Order.

One non-negotiable copy is required. Details on the bill of lading must correspond with those on the commercial invoice.

Original ocean bill of lading or master airway bill (forwarder's bill of lading or airway bill not acceptable)

Packing list

Must be provided and must describe accurately and in detail the contents of each outer container and show the net weight, gross weight and CIF value (Incoterms 2000). When applicable, details corresponding with those in the packing list must be affixed to shipping container doors.

Certificate of origin

Five copies are required and must be certified by an approved authority and legalised by the Saudi Arabian Embassy.

Public health requirements

Imports of animals, animal products, plants and plant products require health certification issued by an approved authority in the country of origin. In Australia this is usually the Australian Quarantine and Inspection Service (AQIS), Commonwealth Department of Agriculture, Fisheries and Forestry-Australia or the relevant state department of agriculture.

Live plants and seeds may also require prior approval from the Plant Protection Branch, Saudi Ministry of Agriculture.

Import permits are issued by agricultural offices licensed by the Ministry of Commerce, provided the prior approval of the Ministry of Agricultural is obtained.

Shipments of meat and meat products for human consumption must be accompanied by a certificate stating that the animals have been slaughtered in accordance with Islamic rites. Frozen meat and food are subject to strict regulations governing their import and storage.

All imported foods must be approved by the Saudi health authorities.

Artificial sweeteners in food and beverages are subject to stringent restrictions. Pharmaceutical products require prior registration with, and approval for local sales by, the Saudi Arabian Ministry of Health.

Special regulations apply to the entry of articles made of untreated hair (see 'Special certificates').

Insurance

Normal commercial practice but must be with a company with no Israeli connections.

Weights and measures

The metric system.

Taxation

The Saudi income tax regulations are based upon a territorial concept and attempt to tax a foreign entity on profits. If the company is deemed to be a permanent establishment for tax purposes, it would then invite the impact and incidence of taxation.

Earnings outside the Kingdom are not subject to Saudi taxation. Direct sales by a foreign company to a customer in the Kingdom or sales to a distributor for resale in the Kingdom, is not considered doing business in the Kingdom and will not be subject to Saudi taxation. In addition, the foreign company can arrange transportation of the goods from the Saudi port to the project site without subjecting itself to Saudi taxation. However, if the foreign company installs the products, it will be subject to taxation.

Tax exemption for approved projects

Austrade works in conjunction with the Australian Taxation Office ('ATO') to administer the income tax exemption available under section 23AF of the Income Tax Assessment Act 1936 ('Tax Act').

Section 23AF should assist the international competitiveness of Australian companies and governmental organisations competing to win international tenders. Further information is available.