PART 2 – PROCESS TO ENTER THE SAUDI MARKET
The Saudi hospitality sector is experiencing unprecedented growth. However, entering this dynamic marketplace requires navigating a complex web of regulations, with product registration and compliance at the forefront of challenges faced by foreign companies.
Product Registration and Compliance
A. Determining HS codes for your products
Central to this process is the correct determination of Harmonized System (HS) codes, a universal classification system used by customs authorities worldwide. For European exporters, mastering the intricacies of the Saudi Customs Tariff system is not just a bureaucratic hurdle, but a critical step that can make or break their market entry strategy.
Indeed, the Saudi Customs Authority has recently upgraded its tariff system, aligning more closely with international standards while maintaining specific classifications tailored to the Kingdom’s economic priorities. As of 2024, the system comprises thousands of six-digit subheadings, with Saudi Arabia further extending these to eight and ten digits for more precise product identification. Because of this, misclassifying products by using general HS codes, instead of the more specific subheading, can result in significant delays and additional costs in taxes and legal fees to rectify the situation, especially when lower tariff rates could apply under a preferential trade agreement between the EU and GCC countries.
To assist exporters, the Saudi Customs Authority launched an online HS code lookup tool in 2023. However, experts caution that while this tool is helpful, it should not replace professional guidance, especially for complex or novel products.
For European exporters, the challenge is compounded by the need to align their existing European CN codes with the Saudi system. While there is significant overlap, subtle differences can lead to major implications. For instance, certain environmentally friendly products may qualify for reduced tariffs or expedited customs clearance in Saudi Arabia, but only if classified under the correct HS code.
The Saudi government, recognizing the potential stumbling block this presents for foreign investment, has initiated a series of workshops and training programs.
B. SABER certification process
In a bid to enhance product safety and streamline the import process, Saudi Arabia has implemented the Saudi Product Safety Program (SABER), a mandatory certification system. This comprehensive electronic platform, launched by the Saudi Standards, Metrology and Quality Organization (SASO), has become a crucial gateway for consumer goods entering the Kingdom.
The SABER certification process, which replaced the previous Certificate of Conformity (CoC) system, involves two primary steps that European exporters must navigate carefully. The first is obtaining a Product Certificate of Conformity (PCoC), a document that has become the cornerstone of product compliance in Saudi Arabia.
The PCoC, valid for one year, is mandatory for all regulated products, proving that they meet Saudi standards and technical regulations. European exporters must renew this certificate annually to maintain their market access. The renewal process begins 60 days before expiration.
The second crucial step in the SABER process is obtaining a Shipment Certificate of Conformity (SCoC) for each consignment of regulated products. This certificate verifies that the shipment complies with the specifications outlined in the PCoC.
To navigate this process efficiently, European exporters must collaborate with Certification Bodies (CBs) authorized by SASO. As of 2024, there are dozens of bodies recognized globally, including prominent names like SGS, Bureau Veritas, and TÜV SÜD.
The financial implications of the SABER process are significant. The cost for a PCoC starts at SAR 575 (approximately €145) per product, while the SCoC fee is fixed at SAR 403 (about €100) per shipment. The total cost could be higher depending on any additional services or tests required. It’s important to note that these are the base fees, and the actual cost may vary based on the specific requirements for the product and any additional services needed to ensure compliance with Saudi regulations.
European businesses have reported mixed experiences with the SABER system, as many companies still face challenges, particularly with product classification and technical regulation interpretation, despite the improvement in the efficiency of the system.
To address these challenges, SASO launched a dedicated SABER support centre in 2023. The organization also conducts monthly webinars to clarify the certification process and update on regulatory changes.
As Saudi Arabia continues to diversify its economy under the Vision 2030 plan, the SABER system is expected to evolve further. For European exporters, mastering the SABER certification process is no longer optional but a critical component of their Saudi market entry strategy.
C. Other relevant certifications and standards
One of the most significant developments in recent years has been the expansion of the Saudi Food and Drug Authority (SFDA) certification process.
The SFDA certification process has become increasingly sophisticated, with a particular focus on food safety and quality. For instance, the authority introduced new regulations for organic food products, requiring exporters to provide detailed documentation on farming practices and undergo rigorous laboratory testing.
In addition, Saudi Arabia has made significant strides in promoting energy efficiency for electrical products by implementing a mandatory Energy Efficiency Labeling program in 2018, which has since undergone several updates. As of 2024, the program covers several categories of electrical appliances, including air conditioners, refrigerators, and washing machines.
According to SASO’s annual report, compliance with energy efficiency standards led to an important reduction in residential energy consumption in 2023 compared to 2018 levels. This success has prompted the authority to expand the program further. In January 2024, SASO announced plans to include smart home devices in the labelling scheme by 2025, a move that is expected to impact over 500,000 imported products annually.
Similarly, the construction sector, a cornerstone of Saudi Arabia’s economic diversification efforts, has also seen a tightening of regulations. The Saudi Building Code (SBC), first introduced in 2007, underwent a major revision in 2022 to align with international best practices and address the Kingdom’s unique climatic challenges. The updated code places a strong emphasis on sustainability and energy efficiency in building design and construction. In 2023, the Saudi Building Code National Committee reported that a large majority of new construction projects in major cities were fully compliant with the updated code.
The impact of these certification requirements extends beyond individual sectors. The Saudi General Authority for Foreign Trade reported that European companies that successfully obtained the necessary certifications saw an average revenue increase in their Saudi operations within the first year.
However, the path to certification is not without its challenges. A large number of European SMEs still find the certification processes “complex and time-consuming,” with time-to-market delays due to regulatory compliance issues.
Logistics & Customs Clearance
A. Choosing a shipping method
Choosing the right shipping method has become a critical decision that can make or break an exporter’s success in the Saudi market.
For high-value, time-sensitive goods such as pharmaceuticals or perishable foods, air freight remains the preferred option. Jeddah’s King Abdulaziz International Airport, which handled over millions of tons of cargo, has seen a dramatic increase in European imports over the past two years. However, air freight comes at a premium compared to sea freight. This significant cost difference has led many exporters to opt for ocean shipping, especially for bulkier, less time-sensitive goods.
The Port of Jeddah, Saudi Arabia’s busiest seaport, processed several millions TEUs (Twenty-foot Equivalent Units) in 2023, including a large volume of European cargo. The port’s recent expansion project, completed in late 2022, has significantly improved its capacity and efficiency, reducing average container dwell times.
The urgency of delivery also plays a crucial role in shipping decisions. With the rise of e-commerce in Saudi Arabia, there’s increasing demand for fast delivery options.
B. Packaging requirements
The Saudi Standards, Metrology and Quality Organization (SASO) has implemented stringent packaging requirements, forcing European companies to adapt their strategies to comply with durability, labeling, and environmental standards.
In 2023, SASO reported an increase in rejected shipments due to non-compliant packaging, highlighting the critical importance of understanding and adhering to these regulations. The Technical Regulation for Packaging Products, introduced in 2022, covers a wide range of materials including plastic, paper, fiberboard, minerals, wood, textiles, and glass.
One of the key challenges for European exporters is designing packaging that can withstand Saudi Arabia’s extreme temperatures, which can reach up to 50°C in summer. In addition, Saudi Arabia’s high humidity levels in coastal areas like Jeddah where humidity can reach 85%, pose significant challenges.
Moreover, the new regulations also place a strong emphasis on environmental considerations. As of 2024, all plastic packaging entering Saudi Arabia must be either recyclable or biodegradable. This shift has led to an increase in the use of eco-friendly packaging materials by European exporters over the past year.
Finally, labelling requirements have also become more stringent. As of 2023, all packaging must include Arabic labels with detailed product information, including origin, ingredients, and usage instructions.
Now, the Saudi Customs Authority has also stepped up its efforts to enforce these regulations. Therefore, as Saudi Arabia continues to refine its packaging regulations, European exporters must remain vigilant and adaptable. Those who successfully navigate this complex regulatory environment stand to gain significant advantages in one of the Middle East’s most promising markets. With the Saudi packaging industry projected to reach $7.5 billion by 2025, the opportunities for innovative and compliant European exporters are substantial.
C. Labeling and marking regulations
In 2023, SASO reported an increase in rejected shipments due to non-compliant labelling, highlighting the critical importance of understanding and adhering to these regulations. The Technical Regulation for Product Labeling, introduced in 2022, covers a wide range of products from food items to electronics and cosmetics.
One of the key requirements is that all product labels must be in Arabic. This includes essential information such as the product name and description, country of origin, manufacturer’s name and address, and expiration date for applicable products. For European exporters, this often means creating entirely new packaging or labels specifically for the Saudi market.
The country-of-origin labelling has become particularly stringent. As of July 2023, all products must clearly state their origin in Arabic, using the phrase “صنع في” (Made in) followed by the country name.
For food products, the regulations are even more detailed. The Saudi Food and Drug Authority (SFDA) requires that all imported food items display nutritional information, ingredients list, and allergen warnings in Arabic.
The regulations extend beyond just language requirements. For electronic products, energy efficiency labels became mandatory in 2023, requiring clear display of energy consumption ratings in Arabic. This move is part of Saudi Arabia’s broader energy efficiency initiative, which aims to reduce energy consumption by 30% by 2030.
D. Customs Clearance
Saudi Arabia’s recent overhaul of its customs regulations in 2024, marks a significant shift in its approach to international trade.
Indeed, the Zakat, Tax and Customs Authority (ZATCA) of Saudi Arabia has introduced a new set of fee rules on customs services, aimed at simplifying procedures and reducing costs for importers and exporters alike.
One of the most significant changes is the complete waiver of export customs service fees, a decision that has been warmly received by the international business community.
Now, for European exporters, navigating the new import customs service fees structure is crucial. The new mechanism calculates fees at 0.15% of the value of imported goods, including insurance and shipping costs. However, ZATCA has implemented a minimum fee of SAR 30 (approximately €7) and a maximum of SAR 10,000 (about €2,400) per declaration. This cap is particularly beneficial for high-value shipments, potentially saving importers significant amounts on larger consignments.
The new regulations also introduce special provisions for e-commerce, reflecting the rapid growth of this sector in Saudi Arabia. For shipments valued under SAR 1,000 (about €240) purchased by individuals from online stores, a flat fee of SAR 15 (approximately €3.60) will be applied. This move is expected to benefit European small and medium-sized enterprises (SMEs) looking to tap into the Saudi market through online channels.
Despite these positive changes, European exporters must still navigate a complex web of documentation requirements for customs clearance. Essential documents include a detailed commercial invoice, packing list, certificate of origin, bill of lading or airway bill, and the newly introduced SABER certificates – Product Certificate of Conformity (PCoC) and Shipment Certificate of Conformity (SCoC).
Moreover, the customs inspection process remains a critical step for goods entering Saudi Arabia. While ZATCA has made efforts to expedite this process, physical inspections are still common, especially for new exporters or product categories deemed sensitive.
To minimize delays, European exporters are advised to ensure all documentation is meticulously prepared and accurate. ZATCA’s recent implementation of a risk-based assessment system has led to faster clearance times for companies with a track record of compliance. Companies that maintain a high compliance score can expect shorter clearance times short.
With these changes, Saudi Arabia is sending a clear message to European businesses: the Kingdom is open for trade, and it’s becoming easier than ever to do business there. As the dust settles on these new regulations, European exporters who can navigate this evolving landscape stand to gain a significant competitive advantage in one of the Middle East’s most dynamic markets.
Artemis Business Care is here to support you in your international expansion in Saudi Arabia. For more information on the services that we offer to European exporters, please click here.