How to Establish a Manufacturing Business in Saudi Arabia

This guide walks you through the complete process of setting up a business in Saudi Arabia as a manufacturer, from legal registration to ongoing compliance.

Factory activity also gained momentum in 2025, with 1,201 manufacturing facilities commencing operations, an 11.7% increase on 2024. The new factories brought more than SR31 billion ($3.8 billion) in investment and created over 45,000 jobs, underscoring the continued expansion of Saudi Arabia’s industrial base.

The growth aligns with the Kingdom’s long-term industrial ambitions, which include increasing the number of factories to 36,000 by 2035. By 2030, the industrial sector is expected to contribute SAR 895 billion ($239 billion) to GDP.

For foreign manufacturers, this creates access to growing procurement opportunities, but success depends on meeting sector-specific requirements around local content, industrial licensing, and Saudization from the outset.

This guide walks you through the complete process of setting up a business in Saudi Arabia as a manufacturer, from legal registration to ongoing compliance.

Why Manufacturing Is Becoming a National Strategic Priority

Saudi Arabia is also prioritizing local production across sectors, including automotive, electronics, food processing, construction materials, defense, and medical devices, with a strong focus on digital transformation. As part of its Future Factories Program, Saudi aims to modernize more than 4,000 factories.

Local content has become a key factor in accessing procurement opportunities, particularly in manufacturing, which sits at the heart of Vision 2030’s diversification strategy. The National Industrial Strategy targets 2.1 million jobs by 2030, while a 40% local-content requirement on government contracts creates built-in demand for domestic suppliers.

Related read: What Foreign Investors Should Know About Saudi Local Content Rules

Can Foreigners Own 100% of a Manufacturing Company?

A manufacturing company in Saudi Arabia can be 100% owned by a foreign shareholder. The primary licensing authority is the Ministry of Investment (MISA), and there is no requirement for a Saudi national partner or sponsor. This applies whether you are establishing a subsidiary of a foreign parent company or a standalone new entity.

There are two eligibility conditions for foreign applicants: your parent company must have been established outside Saudi Arabia for at least one year, and you must be able to submit audited financial statements demonstrating the company's financial stability. Additionally, at least 30% of your manufactured output must be sold within Saudi Arabia.

Choosing the Right Legal Structure For Your Manufacturing Business

For most foreign manufacturers, two options are available:

Limited Liability Company (LLC): The preferred structure for foreign manufacturing firms entering Saudi Arabia. An LLC provides limited liability and offers flexibility in management and profit-sharing. The minimum share capital requirement is SAR 50,000. An LLC can be established as a subsidiary of a foreign parent company.

Branch: A branch operates as a legal extension of its parent company, meaning the parent bears full liability for the branch's obligations. Branches are generally faster to set up but face restrictions on certain business activities and may require additional approvals depending on the manufacturing scope.

Related read: Key Differences and Similarities Between a Subsidiary (LLC) and Branch Office in Saudi Arabia

Documents Required Before You Start The Saudi Business Setup Process

The following documents are typically required for a foreign-owned manufacturing company application:

• Commercial registration of the parent/shareholding company, certified by the Saudi Embassy
• Audited financial statements for the last fiscal year, certified by the Saudi Embassy
• National identity document (if a shareholder is a GCC national not registered in Absher)
• Articles of Association of the parent company
• Board resolution authorizing the establishment of a Saudi entity
• Passport copies for all shareholders and the designated General Manager

All documents issued outside Saudi Arabia must be notarized, attested by the relevant authority in the country of origin, and then legalized at the Saudi Embassy.

Government Incentives for Manufacturers Establishing Operations in Saudi

Saudi Arabia offers a structured package of incentives specifically designed for manufacturers:

• SIDF Financing: The Saudi Industrial Development Fund provides long-term financing for industrial projects, covering up to 75% of project costs. Multipurpose, acquisition, and incentive loan products are available.
• MODON Industrial Lands: The Saudi Authority for Industrial Cities and Technology Zones (MODON) offers industrial land and ready-made factories at competitive lease rates, with extended grace periods and streamlined approval processes.
• Special Economic Zones (SEZs): SEZs in Riyadh, King Abdullah Economic City, Jazan, and Ras Al-Khair offer additional tailored benefits, including reduced tax rates, simplified customs procedures, and world-class infrastructure for qualifying investors.
• Made in Saudi Program: Products manufactured in Saudi Arabia with a minimum of 40% local value-add—covering raw materials, labor, and manufacturing processes—are eligible for the "Made in Saudi" mark.

Industrial Zones: Where to Set Up Your Manufacturing Company

Choosing the right location is a strategic decision that affects logistics costs, utility access, supplier proximity, and regulatory pathways. The Saudi Authority for Industrial Cities and Technology Zones (MODON) oversees 36 industrial cities across the Kingdom, covering more than 209 million square meters of developed land, with integrated infrastructure, pre-built facilities, and investor support services.

Key Industrial Hubs:

Riyadh Industrial Cities: Three major industrial cities serve the capital—Riyadh 1st, 2nd, and 3rd Industrial Cities—alongside Al-Kharj Industrial City and the planned Sudair Industrial City, a large strategically located development roughly midway between Riyadh (120km) and Al-Qassim (160km). These zones are well-positioned for access to domestic demand and government procurement networks and are particularly strong for food processing, plastics, pharmaceuticals, and packaging manufacturing.

Western (Jeddah): Jeddah 1st and 2nd Industrial Cities, along with industrial zones in Makkah and Madinah, serve as key hubs for the western region. These locations are particularly suited to logistics, chemicals, and food industries, benefiting from strong Red Sea access and proximity to pilgrimage-driven demand and trade flows.

Eastern: Dammam 1st, 2nd, and 3rd Industrial Cities, along with Al-Ahsa, form the Kingdom’s primary eastern industrial base. These zones are closely integrated with petrochemical supply chains and are well-suited for petrochemical support industries, metals, and engineering services, benefiting from proximity to Gulf export routes and upstream energy feedstock.

Central / Northern: Industrial cities in Qassim, Hail, Al-Jouf, and Tabuk support a growing mix of agricultural processing, light manufacturing, and pharmaceuticals, leveraging regional production bases and expanding logistics connectivity across the interior and northern corridors.

Southern: Asir, Najran, and Jazan industrial zones are emerging hubs for construction materials, food production, and mining-related industries, supported by access to raw materials and increasing infrastructure investment in the southern regions.

Other Industrial Clusters:

• King Abdullah Economic City (KAEC): A major Red Sea logistics and industrial hub with deep-water port access and integrated SEZ infrastructure
• Jubail Industrial City: The Kingdom’s leading heavy and petrochemical industrial hub
• Yanbu Industrial City: Strong focus on energy-linked and downstream manufacturing industries
• King Salman Energy Park (SPARK): A dedicated energy industrial city designed to serve as a regional hub for energy services, manufacturing, and supply chain integration.

How to Set Up a Manufacturing Company in Saudi Arabia: The Full Process Explained

Stage 1: Legal Entity Establishment (Month 1)

1. Obtain a MISA Investor License from the Ministry of Investment (valid for one year; must be renewed annually)
2. Reserve your company name through the Ministry of Commerce
3. Draft and notarize your Articles of Association (AoA)
4. Secure a Commercial Registration (CR) from the Ministry of Commerce
5. Register with the Chamber of Commerce (CoC)

Stage 2: Authorization and Hiring (Months 2–3)

1. Obtain your official company seal
2. Register with the Ministry of Labor
3. Enroll with GOSI (General Organization for Social Insurance) for employee insurance coverage
4. Register your National address
5. Issue a General Manager (GM) visa
6. Register with ZATCA for VAT compliance

Stage 3: Residency and Banking (Months 4–6)

1. Activate your Chamber of Commerce (CoC) account
2. Obtain health insurance for the GM
3. Complete the GM's medical check-up (mandatory for Iqama issuance)
4. Issue the GM's Iqama (residency permit)
5. Register with Muqeem (tracks residency and visa status)
6. Register with Absher (national digital identity platform)
7. Register with Qiwa (labor contracts, Saudization compliance, employee management)
8. Register with Mudad (payroll protection and wage compliance)
9. Open a corporate bank account with a Saudi bank

If you are planning to set up a business as a foreigner, note that the GM's Iqama is the document that unlocks access to most downstream operational steps — banking, portal registrations, and employment contracts among them.

Manufacturing-Specific Approvals

The standard three-stage setup process above applies to all foreign-owned companies in Saudi Arabia. Manufacturing operations require an additional layer of approvals before production can legally begin. These run in parallel to — not after — the main setup process and should be initiated early.

1. Industrial License (Ministry of Industry and Mineral Resources — MIM)

Issued by the Ministry of Industry and Mineral Resources, the Industrial License authorizes industrial activity across manufacturing sectors and is obtained via the “Senaie” platform.

The license is generally valid for five years and renewable for similar periods. If renewed under an undertaking, validity may be limited to one year.

Key incentives include financial exemptions for workers, customs exemptions on raw materials and equipment, employment support services, chemical release services, and preferential access to government and private sector contracting opportunities.

Required documents vary depending on location:

Inside industrial cities (MODON, Royal Commission for Jubail & Yanbu, Economic Cities & SEZ Authority):

• Valid lease agreement specifying industrial activity
• Commercial Registration aligned with the industrial activity

Outside industrial cities (municipal industrial zones):

• Lease agreement
• Commercial Registration
• Municipal license
• Environmental permit from NCEC
• Civil Defense approval or an accredited safety certificate
• For foreign investors: MISA investment license aligned with activity, products, funding, and workforce details

2. Product Compliance and Sector-Specific Approvals

Beyond the Industrial License, manufacturers must also comply with product-level and sector-specific regulatory requirements before operations and sales.

SASO Certification and SABER Registration

Most regulated manufactured products must comply with the SASO Technical Regulations and be registered through the SABER platform. This includes Certificates of Conformity for regulated goods and Shipment Certificates for both locally manufactured and imported products. Identifying HS codes early is essential to determine applicable technical regulations before production begins.

3- Sector-Specific Approvals (where applicable):

• Food and beverage: SFDA food manufacturing license (in addition to industrial and municipal requirements)
• Cosmetics: SFDA cosmetics manufacturing license via the Ghad system
• Pharmaceuticals: Ministry of Health approval and SFDA pharmaceutical or medical device manufacturing license
• Medical devices: SFDA approval alongside ISO 13485 quality management certification

Ongoing Post-Setup Compliance Requirements in Saudi Arabia

Setup is the starting point, not the endpoint. Once operational, your manufacturing business must maintain compliance across five areas:

• Tax filing with ZATCA: File annual documentation accurately and on time. Corporate income tax stands at 20% of adjusted net income for non-Saudi-owned entities. Withholding tax ranges from 5% to 20% depending on payment type. Zakat is assessed at 2.5% of the Zakat base for the Saudi/GCC ownership share. VAT is set at 15% and is mandatory once annual taxable supplies exceed SAR 375,000.
• License and permit renewals: The GM's Iqama, Commercial Registration, MISA license, Industrial License, and SABER certifications all have expiry dates. Missing a renewal can trigger operational suspension and affect your standing with government procurement entities.
• Government portal management: Keep records current across Muqeem, Qiwa, and Mudad. These platforms are integrated—outdated information in one creates cascading issues.
• Payroll and HR compliance: Process compensation accurately and maintain payroll records aligned with Saudi labor law, which is updated regularly.
• Saudization (Nitaqat): Your business must meet Saudi national employment quotas based on company size and sector. Manufacturing carries sector-specific Nitaqat bands. Falling below the required threshold results in Red Zone status, restricting expatriate hiring and triggering fines.

Related reads

MISA License Renewal: Requirements and Consequences Explained

Winning Government Contracts in Saudi: What Foreign Companies Need to Know

How to Update Your Company’s Articles of Association in Saudi Arabia