Saudi Arabia scraps export customs fees, cuts import charges

Saudi Arabia scraps export customs fees, cuts import charges
ZATCA has announced a series of new initiatives intended to improve trade operations and support the Kingdom’s economic growth. File/Getty Images
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Updated 08 September 2024
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Saudi Arabia scraps export customs fees, cuts import charges

Saudi Arabia scraps export customs fees, cuts import charges
  • Changes announced to simplify trade processes and support business activities
  • New fee structure introduces a $4 charge for customs declaration processing on individual shipments from online stores

JEDDAH: Saudi Arabia will eliminate fees for all customs services related to exports and cut import service fees to 0.15 percent of the goods’ value starting Oct. 6, according to an official release.

The Zakat, Tax, and Customs Authority announced these changes to simplify trade processes and support business activities. The new fee structure introduces an SR15 ($4) charge for customs declaration processing on individual shipments from online stores valued up to SR1,000.

Previously, import fees included SR100 for X-ray inspections per container, SR100 for information exchange services, and SR20 for customs declaration processing. Under the revised system, the maximum import fee will be capped at SR500, with a minimum fee of SR15.

The adjustments are designed to reduce financial burdens on exporters, particularly small and medium-sized enterprises, and to enhance competitiveness. The updated fee structure will standardize costs across land, sea, and air transport, leading to more efficient trade facilitation and economic benefits.

ZATCA has detailed the expected impacts of its new customs fee waiver for Saudi businesses, noting that the changes will enhance the competitiveness and efficiency of the country’s export sectors. The adjustments are designed to reduce import costs and simplify trade procedures, aiming to support the growth of e-commerce.

The introduction of an SR15 flat rate for shipments purchased through online stores underscores ZATCA's commitment to advancing e-commerce and digital trade. This measure is expected to benefit Saudi Arabia’s growing e-commerce sector by lowering cross-border online shopping costs and increasing accessibility to global goods for Saudi consumers.

Recently, ZATCA has announced a series of new initiatives intended to improve trade operations and support the Kingdom’s economic growth, aligning with the nation’s Vision 2030. These initiatives include the Saudi Authorized Economic Operator Program, which aims to streamline customs clearance for trusted businesses. This program provides faster processing, fewer inspections, and priority handling at customs ports for businesses that consistently adhere to regulations.

The Authorized Economic Operator Program is anticipated to simplify international trade for these trusted operators and enhance overall efficiency.

In a major step toward digital transformation, ZATCA has also launched the National Single Window for Trade, known as FASAH. This platform consolidates all trade-related operations into a single digital interface, enabling businesses to manage import and export procedures electronically. FASAH simplifies document submission, approval processes, and shipment tracking, thereby reducing delays and improving transparency in trade operations.

Additionally, ZATCA has rolled out advanced e-tracking systems for shipments entering Saudi customs. This new system offers real-time tracking of goods, helping to minimize delays, reduce fraud risk, and boost logistics efficiency. The implementation of these e-tracking systems represents a significant advancement in Saudi Arabia’s supply chain management.

To encourage greater participation from SMEs in international trade, ZATCA has introduced supportive measures such as customs duty deferrals and simplified clearance procedures. These initiatives aim to ease financial and administrative burdens on SMEs, fostering their growth and engagement in global markets.

In June 2024, ZATCA relaxed the temporary admission regulations for heavy machinery and equipment. This policy change benefits international contractors working on major infrastructure projects by reducing customs duties on temporary imports and eliminating the need for frequent renewals, thereby facilitating smoother and more cost-effective project execution.

ZATCA invites customers and taxpayers to reach out with any inquiries through its unified 24/7 call center at (19993), its X account @Zatca_Care, email at [email protected], or via instant chat on the authority's website at zatca.gov.sa.


Oil Updates – prices recover on hurricane supply disruption fears

Oil Updates – prices recover on hurricane supply disruption fears
Updated 12 sec ago
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Oil Updates – prices recover on hurricane supply disruption fears

Oil Updates – prices recover on hurricane supply disruption fears
  • Hurricane Francine causes offshore production shut-ins
  • About 24 percent of crude production in US Gulf of Mexico shut
  • API shows weekly US crude, gasoline stockpiles fall

TOKYO: Oil prices climbed more than 1 percent on Wednesday, paring some of the previous day’s losses, as concerns about Hurricane Francine disrupting output in the US, the world’s biggest producer, outweighed worries about weak global demand.

Brent crude futures were up 84 cents, or 1.2 percent, to $70.03 a barrel at 10:04 a.m. Saudi time, while US crude futures were at $66.56 a barrel, up 81 cents, or 1.2 percent.

Both benchmarks fell nearly $3 on Tuesday, with Brent hitting its lowest since December 2021 and WTI falling to a May 2023 trough, after OPEC revised down its demand forecast for this year and 2025.

“The market rebounded autonomously as Tuesday’s drop was substantial,” said Yuki Takashima, economist at Nomura Securities, adding supply disruption fears from Francine also lent support.

“Still, downward pressure will likely continue in the near term as investors are worried about a slowdown in demand due to economic slowdown in China and the United States,” he said, adding he had this week lowered his forecast range for WTI for the rest of the year to $60-$80 from $65-$85.

Francine strengthened into a hurricane in the Gulf of Mexico, the US National Hurricane Center said on Tuesday, prompting Louisiana residents to flee inland and oil and gas companies to shut production.

About 24 percent of crude production and 26 percent of natural gas output in the US Gulf of Mexico were offline due to the storm, the US Bureau of Safety and Environmental Enforcement  said on Tuesday.

On Tuesday, OPEC cut its forecast for world oil demand to rise by 2.03 million barrels per day in 2024, from last month’s forecast for growth of 2.11 million bpd, it said in a monthly report.

OPEC also cut its 2025 global demand growth estimate to 1.74 million bpd from 1.78 million bpd.

But the US Energy Information Administration said on Tuesday global oil demand is set to grow to a bigger record this year while output growth would be smaller than prior forecasts.

Oil prices were also supported by a withdrawal in US crude inventories.

US crude oil stocks fell by 2.793 million barrels in the week ended Sept. 6 while gasoline inventories declined by 513,000 barrels, according to market sources citing American Petroleum Institute figures on Tuesday.

Eleven analysts polled by Reuters estimated on average that crude inventories rose by about 1 million barrels and gasoline stocks fell by 0.1 million barrels..

China’s daily crude oil imports rose last month to their highest in a year, customs data and Reuters records showed on Tuesday, but that was still 7 percent less than a year ago and year-to-date imports are 3 percent less than the year before period.

That has led Hiroyuki Kikukawa, president of NS Trading, a unit of Nissan Securities, to predict the market will remain bearish due to fears about slowing global demand, including China’s.


Visa aims for 10-fold rise in Pakistani use of digital payments

Visa aims for 10-fold rise in Pakistani use of digital payments
Updated 11 September 2024
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Visa aims for 10-fold rise in Pakistani use of digital payments

Visa aims for 10-fold rise in Pakistani use of digital payments
  • Partnership with 1Link to enhance remittances and payment security
  • Pakistan has 120,541 point of sales machines, according to central bank data

KARACHI: Visa plans to increase the number of businesses accepting digital payments in Pakistan tenfold over the next three years, the payments giant’s general manager for Pakistan, North Africa and Levant told Reuters.

The comments from Leila Serhan came as Visa announced a strategic partnership with 1Link, Pakistan’s largest payment service provider, aimed at streamlining remittances into the South Asia country and encouraging digital transactions.

Pakistan, with a population of 240 million, is home to one of the world’s largest unbanked populations. Only 60 percent of its 137 million adult population, or 83 million adults, have a bank account, based on central bank estimates.

Visa is investing in building digital payment infrastructure in the country, aiming to make digital payments less costly and more manageable.

Currently, Pakistan has 120,541 point of sales (POS) machines, according to central bank data.

Visa intends to significantly increase this number. 

“Some businesses have more than one POS machine. We’re aiming at ten-folding businesses’ acceptance (of digital transactions),” said Serhan.

The strategy involves technology that transforms phones into payment instruments and accepting various forms of payment, including QR and card tap. Visa aims to expand beyond large cities and mainstream businesses to include smaller merchants.

The 1Link deal aims to improve the process for sending and receiving remittances, including bolstering payments security, boosting such transactions via legal channels.

As one of the top remittance recipients globally, Pakistan relies heavily on funds from overseas Pakistanis, which constitute a vital source of foreign exchange and significantly contribute to the country’s GDP.

“We’re really looking forward to finishing this technical integration in the coming months, and I think it’s going to be a game changer for a lot of the consumers in Pakistan,” said Serhan.

The partnership with 1Link will also enable 1Link’s PayPak cards to be accepted on Visa’s Cybersource Platform for online transactions, despite PayPak being a competitor in digital payments.

Pakistan signed a $7 billion bailout deal with the International Monetary Fund in July, which includes reforms such as raising revenue and documenting the economy.

“Digital payments are going to be at the heart of what the government wants to do from a digitization perspective, and we will continue to partner with them,” Serhan said. 


Standard Chartered starts custody services for digital assets in UAE

Standard Chartered starts custody services for digital assets in UAE
Updated 10 September 2024
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Standard Chartered starts custody services for digital assets in UAE

Standard Chartered starts custody services for digital assets in UAE

DUBAI: Standard Chartered said on Tuesday it had begun offering digital asset custody services in the UAE, with Brevan Howard Digital, the crypto and digital asset division of the British hedge fund, as an inaugural client.

The emerging markets focused bank said it launched the business in the country because of its “well-balanced approach to digital asset adoption and financial regulation.”

“Standard Chartered’s global reputation and demonstrated commitment to this space adds a layer of credibility that is meaningful for institutional adoption,” Brevan Howard Digital CEO Gautam Sharma said in a joint statement.

The UAE has been working hard to attract some of the world’s biggest crypto firms, luring business from Binance, OKX, among others. It has also been trying to develop virtual asset regulation to attract new forms of business.

It has also managed to attract big hedge funds.

Standard Chartered is among several banks that have been extending their foray into the crypto sector as more institutional investors adopt the asset class.


Saudi Arabia to scale back debt issuance in H2: Fitch Ratings

Saudi Arabia to scale back debt issuance in H2: Fitch Ratings
Updated 10 September 2024
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Saudi Arabia to scale back debt issuance in H2: Fitch Ratings

Saudi Arabia to scale back debt issuance in H2: Fitch Ratings

RIYADH: Saudi Arabia plans to reduce its debt issuance in the second half of 2024, thanks to substantial dividend payments from Aramco that have alleviated the need for sovereign financing, according to Fitch Ratings.

This decision comes after a period of significant debt issuance in the first half of the year, reflecting the government’s strategic fiscal management.

In the first half of 2024, Saudi Arabia emerged as the largest issuer of US dollar debt among emerging markets, excluding China, and maintained its position as the top global sukuk issuer.

Fitch Ratings anticipates substantial expansion in Saudi Arabia’s debt market in the coming years. Bashar Al-Natoor, global head of Islamic Finance at Fitch, stated.

“The Saudi sukuk and bond market is expected to surpass $500 billion in outstanding value within the next couple of years.”

Al-Natoor highlighted that most Saudi sukuk rated by Fitch are investment-grade, underscoring the robustness of the country’s Islamic finance sector.

Al-Natoor also emphasized the crucial role of Vision 2030 projects, ongoing diversification efforts, and regulatory reforms in fortifying the country’s debt market. He said: “We expect substantial dollar debt issuance to continue in 2025 as oil revenues moderate,” reflecting the necessity for ongoing financing as Saudi Arabia transitions to a more diversified economy.

As the Kingdom pursues its Vision 2030 objectives, these factors will significantly shape its financial markets.

The report highlights that Saudi Arabia’s strategic debt management and reforms position it as a prominent player in global debt markets during its economic transition.

By mid-2024, Saudi Arabia’s debt capital market had expanded by 18 percent year on year to $407.7 billion, with nearly equal proportions in US dollar and riyal-denominated issuances.

The debt issued in the first half of 2024 equaled the total for all of 2023, underscoring the rapid growth of Saudi Arabia’s debt market.

Approximately two-thirds of the 2024 issuances were sukuk, highlighting the Kingdom’s strong preference for Shariah-compliant financing. Additionally, nearly 10 percent of dollar-denominated debt consisted of environmental, social, and governance instruments, reflecting a growing interest in sustainable finance.

Foreign investor participation in Saudi Arabia’s domestic government debt market has surged to 7.2 percent of local issuances by mid-2024, a significant increase from 0.2 percent in 2022.

Local banks continue to dominate the market, holding over 75 percent of the government debt share, with a pronounced focus on sukuk due to Shariah compliance requirements.

While foreign investor participation in Saudi Arabia’s debt market has risen— thanks in part to reforms and the Kingdom's inclusion in global bond indices—domestic banks remain the dominant players. Many of these banks, adhering to Shariah compliance, focus on sukuk rather than conventional bonds, reinforcing Saudi Arabia’s position as the world’s largest sukuk issuer.

The increase in foreign investments is largely attributed to key reforms, including Saudi Arabia’s entry into global bond indices like the FTSE Emerging Markets Government Bond Index and enhanced integration with international central securities depositories such as Euroclear and Clearstream.

Despite the promising growth in the debt market, Fitch Ratings has cautioned that it remains vulnerable to several risks. These include fluctuations in oil prices and interest rates, concerns over the scale and purpose of debt issuance, and ongoing geopolitical uncertainties.


Closing Bell: Saudi main index rises to close at 11,986

Closing Bell: Saudi main index rises to close at 11,986
Updated 10 September 2024
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Closing Bell: Saudi main index rises to close at 11,986

Closing Bell: Saudi main index rises to close at 11,986

RIYADH: Saudi Arabia’s Tadawul All Share Index rose on Tuesday, gaining 23.7 points, or 0.2 percent, to close at 11,986.  

The total trading turnover of the benchmark index was SR7.18 billion ($1.94 billion), as 143 of the stocks advanced and 80 retreated.   

The Kingdom’s parallel market Nomu rose 104.79 points, or 0.42 percent, to close at 25,600.58. This comes as 32 of the listed stocks advanced, while 31 retreated.   

The MSCI Tadawul Index gained 2.0 points, or 0.12 percent, to close at 1,492.12.   

The best-performing stock of the day was Saudi Enaya Cooperative Insurance Co., whose share price surged 9.94 percent to SR17.92.  

Other top performers were Amana Cooperative Insurance Co. as well as Saudi Industrial Development Co., with their share prices rising 9.85 percent and 5.96 percent, respectively. 

The worst performer was Tourism Enterprise Co., whose share price dropped by 4.21 percent to SR0.91.   

Other worst performers were Saudi Fisheries Co. and Miahona Co., with their share prices slipping 4.14 percent and 4.00 percent to reach SR26.6 and SR30, respectively. 

The best performer in the parallel market was Leaf Global Environmental Services Co., whose share price surged 18.88 percent to SR85.  

Other top performers in Nomu were Fad International Co. as well as Qomel Co., with their share prices rising 5.59 percent and 5.5 percent, respectively. 

The worst performer was Banan Real Estate Co., whose share price dropped by 6.18 percent to SR5.16.   

Other worst performers were Enma Al Rawabi Co. and Al Rashid Industrial Co., with their share prices dropping 4.9 percent and 4.37 percent, respectively. 

On the announcement front, the Capital Market Authority approved the public offering of Jadwa Investment Co. for its “Jadwa Saudi Equity Fund II.”

Jadwa Investment is a prominent Saudi asset management and advisory firm established in 2006. 

Known for its focus on Shariah-compliant investments, the company manages a diverse portfolio that spans private equity, real estate, and public markets. 

This move marks another step in the expansion of the Kingdom’s equity fund landscape, which has been gaining momentum as the nation seeks to diversify its economy away from oil dependency.

This follows a series of reforms aimed at modernizing the financial ecosystem, including presenting more sophisticated investment products and the gradual liberalization of the stock market.

A central part of this modernization effort includes the introduction of exchange-traded funds, real estate investment trusts, and various Shariah-compliant financial instruments that cater to the growing demand for diverse investment options.

These reforms also encompass improvements in transparency, governance, and investor protection. The CMA has implemented stricter disclosure requirements and corporate governance standards, ensuring that companies listed on Tadawul adhere to global best practices.