Development funds and banks
Agricultural Development Fund, Industrial Fund, Human Resources Development Fund, Social Development Bank, National Development Fund
Initiatives introduced by Saudi Arabia’s development funds aim to mitigate any financial and economic impacts that the private sector may experience during the COVID-19 pandemic, and will provide the following support:
- Extending the grace period and rescheduling loans for companies struggling with loans and payments amounting to more than SAR 6 billion
- Providing SAR 1 billion worth of direct and indirect loans to finance working capital
- Allocating SAR 4 billion to provide employment support and training programs that will allow more than 300,000 beneficiaries to work in the private sector
- SAR 1 billion going to help private sector employees who have not previously benefited from the support programs available
- Allocation of SAR 4 billion to provide social loans to low-income families during 2020, with 100,000 Saudi citizens set to benefit
- Increasing the direct lending portfolio for micro and small enterprises to SAR 2 billion, set to help 6,000 male and female entrepreneurs
- Allocation of a portfolio worth SAR 2 billion to provide financing support to small- and medium-size health facilities, with 1,000 existing health facilities benefitting from the funds
- Allocation of SAR 2 billion to finance indirect lending programs through financial institutions
Ministry of Finance
The Ministry of Finance has allocated 120 billion Saudi riyals for private sector support in the following areas:
- Submission and payment of the following for commercial businesses are postponed for a period of 3 months:
- Submission of tax declarations and payment of selective taxes owed
- Submission of VAT declarations and payment of VAT owed
- Supply of declarations, payment of income tax and payment of their obligations.
- Submission of zakat returns and payment of zakat owed
- Payment of the fees due by some government services and municipal fees
- Collection of import duties (bank guarantee required)
- Payment of the following for commercial businesses are postponed for a period of 9 months:
- Loan installments owed to a number of development funds and banks
- Loan installments owed under the Corporate Sustainability Initiative program
- Expansion of financing supporting target economic sectors, which includes deploying working capital
- Expatriates whose residency permit ends from the end of March 2020 to the end of June 2020 are exempted from the allowances and considerations above
Saudi Arabian Monetary Authority (SAMA)
SAMA has implemented a Postponement of Payments Program worth SAR 30 billion to help funding authorities providing capital to Micro, Small and Medium Enterprises (MSMEs) and other institutions and companies, which allows for the delay of repayments of loans and other financial obligations to the relevant funding authorities for a period of 6 months.
- Beneficiaries: All MSMEs as defined by SAMA Institution Circular No. 381000064902 dated 16/06/1438 AH (15th March, 2017) and finance companies subject to SAMA supervision
- Postponement period: All premiums due (including accrued profits) from 14th March 2020 to 14th September 2020
- Entities providing funding: Banks and financial institutions subject to the Saudi Arabian Monetary Authority (SAMA)
- Amount of financing available: SAR 30 billion , aimed at reducing the expected effects of low cash flows on MSMEs, allowing their repayments to be delayed for a period of 6 months
- Note: The total amount given to financing agencies will be allocated to cover the cost of funding provided to MSME beneficiaries.
- Funding commitments: Parties providing funding should communicate with beneficiaries through a documented and approved means of communication to notify them of the rescheduling of financing and the postponement of their due installments according to the prescribed delay period, without any additional cost. They must also provide details of the several options being made available to the beneficiary regarding rescheduling.
- Terms and conditions: The program applies only to facilities classified in the first stage of loan impairment (according to the IFRS 9 standard) from the date of 14th March 2020. The facilities classified in the second and third phases will be dealt with according to the usual procedures followed by funding agencies.
- Application requirements: Funding agencies must sign the necessary agreements with SAMA to implement the program.
The Industrial Fund has introduced an initiative to support projects in the industrial sector affected by the outbreak, which involves restructuring and postponing loan payment conditions for all small and medical project teams that will settle their installments during 2020.
The Fund is also developing the following services:
- Considering postponing and restructuring loan payments for medium and large-size projects which are affected by the precautionary measures taken the Saudi government, and those projects whose installments will be repaid during 2020
- Working on developing a product for its partners, which aims to support the operating expenses of small and medium factories affected by the current economic conditions
|The Public Authority for Small and Medium Enterprises (SMEs) has introduced the following support measures:
• Exempting expatriates whose residency ends between the end of March 2020 to the end of June 2020 from the necessary financial requirements needed for visa renewal, by extending their residency period for a period of three months without reapplication
• Enabling employers to recover any work visa fees incurred after the issuance of permits which were not used during the period of the entry and exit ban even if they were stamped at the airport. Alternatively, work visas will be extended for an additional three months without charge
• Enabling employers to extend unused exit and return visas during the period of the entry and exit ban for a period of three months without charge
• Enabling business owners to delay the following, taking into account the commercial activities most affected, by extending the postponement period as needed:
o Supplying value-added tax, selective goods tax and income tax
o Submission of zakat returns and payment of zakat owed
o Implementing procedures to stop services and seizure of funds by the General Authority of Zakat and Income
• Grant zakat certificates without restrictions on the period of approval for the fiscal year 2019
• Expanding the acceptance of installment requests without requiring a down payment by the General Authority of Zakat and Income
• Postponing the collection of customs duties on imports for a period of 30 days, provided that a bank guarantee is presented for the next three months, while introducing the necessary standards to extend the delay period for the most affected activities as needed
• Postponing the payment of some government service fees and municipal fees due on private sector establishments for a period of three months, while introducing the necessary standards to extend the delay period for the most affected activities as needed
• Authorizing the Minister of Finance to approve lending and other forms of financing and exemptions of payment of fees and returns on loans granted until the end of the year 2020 for the Corporate Sustainability Program initiative
Ministry of Industry and Mineral Resources (MODON)
The Ministry of Industry and Mineral Resources has introduced the following initiatives to support the industrial and mineral resources sectors during this period:
- Reducing 25% of the financial compensation for factories that have an operating license from March 2020 to the end of the year 2020
Supporting factories that have operating licenses, and whose operational activities have been affected by the emerging coronavirus and precautionary measures to address it, by postponing the payment of the necessary financial fees for their facilities for a period of three months
- Extending the operating licenses of the producing factories for an additional period to the end of 2020
- Exemption from financial compensation for contract amendments for the year 2020
- Extending the period of completion of the requirements for the issuance and renewal of industrial licenses for a period of 60 days for licenses that expired during the period of business suspension, thereby allowing investors an extended time limit to help them meet the necessary requirements
- Extending the duration of employment support ending during the 60-day business suspension period
- Extending the duration of customs exemption ending during the 60-day business suspension period
- Extending the duration of chemical exemption ending during the 60-day business suspension period
Saudi Food and Drug Authority
The Saudi Food and Drug Authority has formed a working group to motivate factories and manufacturing facilities across the Kingdom to produce infection prevention supplies.
The initiative aims to motivate factories to maximize productivity by doing the following:
- Boost the rate of production of personal protection equipment (PPE) and other protective products to ensure that they are continuously available to the Kingdom’s domestic market
- Reduce any organizational, financial or operational difficulties that prevent factories from producing essential supplies
The following entities are collaborating on this initiative:
- Ministry of Industry and Mineral Resources
- Industrial Fund
- Local Content and Governmental Procurement Authority
- Saudi National Industrial Cluster Development Program
Saudi Export Development Authority
Saudi Exports have worked to accelerate the activation of the vital role the Export Bank plays in stimulating Saudi non-oil exports, in particular in the industrial and mineral resources sectors.
The Saudi Export Incentive Program supports the following export activities:
- Individual participation in e-commerce platforms: Offset a portion of the costs of registering products on e-commerce sites and other platforms helping to attract potential customers
- Individual participation in international exhibitions: Compensation of part of the costs paid for individual participation in specialized international exhibitions in which the Saudi Export Authority does not participate
- Obtaining product certificates: Compensation of part of the costs of issuing export-related certificates required from foreign countries (g. a certificate of local and international conformity)
- Marketing and Advertising: Offsetting a portion of the costs of the marketing and advertising activities necessary to promote Saudi products in foreign markets
- International Product Registration: Partial compensation for the value of costs of international product registration with government agencies to allow goods to be imported and sold outside the Kingdom
- Facilitate visits of potential buyers: Promote and facilitate business development efforts by offsetting part of the costs of visiting potential buyers
Specialized training: Partial compensation for the registration costs of specialized training programs, participation in seminars and workshops, or obtaining certifications for export specialists from international training institutes
- Consulting services: Offsetting part of the costs of surveying “business strategies and planning and supply chains" with the aim of effectively competing and succeeding in international markets
- Legal support: Partial compensation of the costs of specialized legal advice
Funding Support Program
The Funding Support Program has allocated up to SAR 6 billion for financing entities to enable them to exempt micro, small and medium enterprises (MSMEs) from the costs of funding support provision. The program will help to guarantee financing for MSMEs, contribute to reducing the cost of lending, and support the expansion of funding opportunities.
• Beneficiaries: All MSMEs according to SAMA Institution Circular No. 381000064902 dated 16/06/1438 AH (15th March 2017) and finance companies subject to SAMA supervision
• Period of exemption: From 14th March 2020 to 31st December 2020
• Costs covered: Exempting funding beneficiaries from fees (issuance, renewal, extension, and rescheduling) resulting from the guarantees issued by the program
• Entities providing funding: Banks and financial institutions subject to the supervision of SAMA
• Requirements - The requests of the beneficiaries should be submitted through “Kafalah” Program according to the current procedures.
• Terms and conditions for funding agencies:
o Provide an official exemption notice to the facility benefiting from the guarantee program, including exempting the facility from the program fees due
o Provide the facility with a statement showing the total fees paid for the sponsorship program on a monthly basis, which must include:
the names of the establishments benefiting from the enterprise support program;
the amount of the fee paid for program;
and a copy of the exemption notice provided to the facility starting at the end of March 2020
Human Resources Development Fund
The Human Resources Development Fund is providing SAR 5.3 billion worth of support to help private sector businesses employ and train Saudis citizens.
Funding covers the following areas:
- Employment support worth SAR 2 billion: Supporting 100,000 job seekers in the private sector, in addition to offering and activating remote working tools, as alternative options to regular working environments
- Training support worth SAR 800 million: Allocated to 100,000 beneficiaries to provide greater access to training and development opportunities
- SAR 1.5 billion going to support job seekers
- Private Sector Employees Support Path worth SAR 1 billion: To support private sector employees who were recruited from the beginning of July 1, 2019, who were not previously supported by the Fund's support and empowerment programs
Ministry of Human Resources and Social Development
|The Ministry of Human Resources and Social Development announced seven initiatives applicable during the current period:
• Lifting the suspension of wage protection
• Lifting the suspensions due to non-payment of fines collected
• Stopping recruitment fines
• Lifting the temporary suspension of private sector facilities to correct the activity
• Immediately calculate the employment of the Saudi citizen in the "Nitaqat" program for all establishments.
• Continuity of service for the “SAFWA” (VIP) clients around the clock.
• Enabling the secondment of personnel through the AJEER temporary employment program to reduce workload burdens on the affected sectors and assist companies operating in these sectors with expected high demand
General Authority of Zakat and Tax
The General Authority of Zakat and Tax (GAZT) has announced the following initiatives to benefit the private sector:
- Postponement of the acknowledgment and payment of VAT, selective goods tax, zakat, income tax and withholding tax, including exempting businesses from fines resulting from temporary non-payment
- Postponement of VAT and selective tax in customs for registered taxpayers
- Suspension of fines for late payment of premiums, amendment of tax returns for taxpayers, non-cooperation fines for taxpayers and examination fines
Saudi Arabian Monetary Authority "SAMA"
Support and finance – The Private Sector shall receive support and finance by effecting precautionary measures that serve the interest of customer, bank, and national economy as a whole. The support varies between adjusting and restructuring existing financing without any additional costs or fees, with a view to mitigate the effects of COVID-19 pandemic and enable private sector institutions to continue and maintain their business normally.
Adoption and implementation - Private sector customer plans shall be adopted and implemented in order to maintain the employment levels for the enterprises affected by COVID-19 pandemic, by providing the necessary finance and support to retail customers who have lost their jobs in the Private Sector.
Exemption - All customers shall be exempted from the following fees, for at least 6 months:
Fees for transactions made via electronic channels.
Fees payable when the balance fells below the minimum.
Any fees imposed on refinancing or termination of existing agreements - whether finances or deposits.
Review - Interest rates and other fees payable on credit cards shall be re-evaluated for current or future customers, in accordance with the current low interest rates resulting mainly from distressed economic conditions.
Refund - foreign currency exchange fees imposed by the bank shall be refunded to customers who wish to cancel the same or who have canceled travel reservations made using credit cards, cards directly connected to their current accounts (Mada) or prepaid cards.
Ministry of Justice
- "E-court" initiative launched by MOJ in order to facilitate services provided to beneficiaries and to provide smarter government services:
- Electronic Property Conveyance – allow issuance and transfer of real estate ownership electronically, as follows:
- The landlord enters the Najiz portal using the unified access account.
- Select "a new application".
- Select the desired instrument from the ownership instruments list.
- Confirm and validate entered data.
- Enter the private bank account number and sale price.
- Enter buyer's details.
- The Application is approved.
- A text message is then sent to the buyer indicating that there is a request for a property conveyance.
- The buyer is requested to click on the link in the text message, and confirm his\her ID through the unified access account.
- The buyer selects "my applications" and approves the selected one.
- The buyer then credits the amount to the trust account.
- Once the sale amount is credited in full to the trust account, MOJ proceeds with the real estate transaction and orders the sale amount to be transferred to landlord’s account, and issue the Title Deed electronically to the buyer.
Human Resource Development Fund (HRDF)
Provide financial support to 80,000 Saudi nationals employed in the Private Sector from early July 2019 retroactively, as follows:
- The 30% Financial support shall continue to be provided for two years retroactively - for both years.
- Financial support shall be provided to employees whose salaries range between USD 1K and 4K.
- The program targets non-beneficiaries of other employment support programs provided by HRDF.
- Maximum support amount is USD 800, or 50% of the salary, whichever is lower.
- Additional support amounts shall be provided to female employees, employees with special needs, or those living in non-major cities or working in small enterprises.
Technical & Vocational Training Corporation (TVTC)
To fulfill its social role and provide support to the Private Sector under these current circumstances, TVTC announces that it will allow private sector's training facilities to provide its training courses free of charge. This contribution is encouraged by TVTC administration by taking the following procedures:
- Exempt training facilities from the fees payable for authenticating free training program certificates.
- Exempt training facilities from the fees payable for consideration of any application for a development course outside the venue where free training courses are delivered.
For training facilities to benefit from this support, they shall:
- Comply with executive rules and training instructions.
- Clarify that the training course is "free of charge" in its advertisements for such courses.
Note: registration for trainees and training approval shall be made online.
Ministry of Energy, Industry and Mineral Resources (MEIM) - Saudi Industrialists & Exporters Forum
Aiming to provide the necessary support, which has a role in encouraging private sector business continuity, MEIM announces that it has made an urgent inventory of all outstanding and overdue financial amounts for the benefit of industrial enterprises, in both Government and Private Sector. Kindly visit the following link and fill in the required data before the end of Thursday, April 2, 2020. Please note that the provided information shall be true and genuine and shall be substantiated by necessary documents.
Small and Medium Enterprise General Authority (Monshaat)
Lending – Monshaat launches an indirect lending initiative at USD 426.67K in capital for small and medium enterprises (SMEs in cooperation with Social Development Bank, with the aim to:
Open up new horizons and channels for lending SMEs through approved financing companies in the Kingdom of Saudi Arabia (KSA).
Provide competitive financing solutions and tools for entrepreneurs and SMEs.
Support SMEs sector to ensure continuity and development of its business.
To benefit from this initiative, please contact our non-bank financial institutions partners on this link: https://www.monshaat.gov.sa/ar/service/266
Refunds – In this 7-billion-Riyal initiative, the government fees paid by SMEs shall be refunded:
The eligible SMEs shall be refunded government fees to be specified.
The initiative aims at encouraging SMEs to enter business market.
The initiative is based on supporting them to achieve growth within the first years of work.
To benefit from this initiative, please apply through "Esterdad" online platform, which you can access by clicking here.
Investment Fund – A Government Venture Capital Fund Initiative for SMEs, with a budget of USD 746.7K, where investment is made in the SMEs referred to, which will have a positive return, as follows:
Investment within its early stages of growth will play a role in bridging the gaps in SMEs’ current financing, which are not subject to equity funding or investment through financial institutions.
To benefit from this initiative, please visit the following link: https://svc.com.sa.
Ministry of Finance:
Projects Support Fund – with a budget of USD 2.67 Billion, Projects Support Fund shall provide low-interest loans aiming to:
Finance major projects in health, tourism, real estate and education sectors, which have a high economic return to ensure continuity and completion of projects.
To benefit from this initiative, please click here.
Increase Kafalah Program capital – Kafalah Program offers an initiative with a budget of USD 213.3K to finance SMEs. This initiative aims at helping SMEs through the following:
Obtain the necessary Islamic finance to grow their business.
Encourage financial institutions to deal with SMEs sector.
Attract and encourage a new segment of SMEs' owners, who do not have any previous experience in dealing with the financing agencies.
The initiative generally aims at developing SMEs sector to achieve their vital role in the economy.
To benefit from this initiative, please apply to one of the cooperating financing agencies and obtain a finance application under Kafalah program.
General Organization for Social Insurance (GOSI):
In response to the Royal Order to support the private sector in the current circumstances, GOSI provides such support to Saudi employees working in the private sector, specifically those who are working at the enterprises affected by COVID-19, as follows:
Compensation – GOSI compensates the affected employees by paying 60% of the monthly pay registered with GOSI. These payments will be available for a period of three months as from early May 2020.
Terms and Conditions – In order to be eligible for the compensation, the following conditions shall be met:
Employees shall have a valid unemployment insurance coverage, effective prior to January 1, 2020.
The compensation shall be paid to no more than 70% of the total number of Saudi employees working at the enterprise or five employees, whichever is higher.
Compensation shall not cover sectors, which are not highly affected by COVID-19 pandemic, including:
Financial sector, which includes those licensed by SAMA, including banks, finance and insurance companies, insurance brokers and licensees from the Capital Market Authority.
Food and supplies supermarkets.
After expiry of the period set for payment of compensation, the enterprise shall resume payment of salaries to the covered employees.
The enterprise shall continue to pay salaries to the rest of its employees, including non-covered Saudi and non-Saudi employees.
The enterprise shall regularly pay salaries to its employees, during the first quarter (Q1) of 2020.
Council of Ministers Resolutions to support the private sector:Exempting small enterprises, which have 9 employees or less, including the owner from:Paying the financial charge prescribed pursuant to Clause (2) of the Council of Ministers Resolution No. (353) of 1432 AH, as amended by the Council of Ministers Resolution No. (197) of 1438 AH, as follows:
Exemption for 2 expatriates working in the enterprise, in case the owner has time to work therein and the enterprise is registered with GOSI.
Exemption for 4 expatriates working in the enterprise, if at least one of its employees in addition to the owner working therein are Saudi nationals and registered with GOSI. In all cases, the maximum that can be exempted is 4 expatriates only.
Amending the organization of Urban Planning and Development Authorities issued by the Council of Ministers Resolution No. (475) dated 07/06/1437 AH.
Economic Cities and Special Zones Authority (ECZA)
In pursuit of its national role, ECZA launched some initiatives aimed at mitigating the economic impacts of Novel Coronavirus pandemic (Covid-19). These initiatives are as follows:
- Grace period for payment of investment licensing services fees until the end of 1st half of 2020.
- Immediate and automatic renewal of investment licenses that are about to expire, until the end of 1st half of 2020.
- Grace period for payment of real estate services due fees until the end of 1st half of 2020.
- Grace period for payment of municipal services due fees until the end of 1st half of 2020.
- Grace period for payment of fines recorded until the end of 1st half of 2020.
- Suspend disconnection of services until the end of 1st half of 2020.
Saudi Arabian Monetary Authority (SAMA):
SAMA introduced additional initiatives to counter the impacts of Covid-19 pandemic, which are due to last for six months, namely:
- Exempting customers from the fees for conducting banking operations through electronic channels.
- Exempting customers from any fees imposed on refinance transactions or termination of agreements (whether finance or deposits).
- Exempting customers from activation fees for any of the e-banking services.
- Exempting customers from low balance fees (for those who are subject to such fees)
In addition, SAMA launched various initiatives for credit cards, by urging banks to:
- Review and re-evaluate interest rates on credit cards, in line with the current low interest rates.
- Refund the foreign currency exchange fees to customers, who wish to cancel, or have cancelled travel reservations
SAMA also launched additional programs to support SMEs during Covid-19 crisis, which are as follows:
- Lending Finance Program
- How it works: Granting credit facilities at a subsidized cost to financers to grant soft loans to beneficiaries.
- Beneficiaries: MSMEs.
- Objective: To support business continuity and growth during the current crisis, which is exceptional.
- Finance repayment period: Begins six months after the finance is delivered.
- Term: from March 14, 2020 to March 14, 2021.
- Amount: SAR 13.2 billion (around USD 3.52 billion).
- Implementation Mechanism: The financer informs the beneficiary that the financing cost is subsidized, and documents this declaration.
- Financers: Banks and finance companies subject to the supervision of SAMA.
- Loan guarantee Program
- How it works: Exempting the beneficiaries from guarantee fees imposed by "Kafalah" program.
- Beneficiaries: MSMEs.
- Objective: To reduce lending cost.
- Term: March 14, 2020 to December 31, 2020.
- Amount: SAR 6 billion (around USD 1.6 billion).
- Implementation Mechanism: The financer formally notifies the beneficiary of the exemption.
- Financers: Banks and finance companies subject to the supervision of SAMA.
- POS and e-commerce transaction fees subsidy program
- How it works: Exempting beneficiaries from POS and e-commerce transaction fees
- Beneficiaries: Stores and private sector establishments.
- Objective: To support beneficiaries and ensure continued growth and expansion in provision of payment services.
- Term: March 14, 2020 to June 14, 2020.
- Amount: SAR 800 million (around USD 213.3 million).
- Fee Calculation Mechanism: according to merchant service agreements.
- Financers: Banks and finance companies subject to the supervision of SAMA.
In the context of KSA's initiatives to address the economic impacts resulting from Covid-19 precautionary measures, Saudi Customs launched an initiative aimed at facilitating the business of low-risk importers, which is as follows:
- As of April 19, 2020, importers, after agreeing to the electronic declaration, may apply for postponing payment of customs fees and other service fees, according to the following conditions:
- Postponement shall be for a period of 30 days from the date the customs declaration is cleared.
- No guarantees required.
- Approval or rejection takes from 3 to 5 working days.
- To benefit from the initiative, the applicant shall:
- Apply electronically via the e-portal of Saudi Customs.
- Enable Saudi Customs to view the financial statements by visiting "qawaem" of the Ministry of Commerce.
- Fill in the required fields on the e-portal and agree to the electronic declaration.
For more about the initiative, please visit the Saudi Customs website: www.customs.gov.sa/LG
According to the Royal Order of His Majesty the Custodian of the Two Holy Mosques, below are additional initiatives to counter the consequences of Covid-19 pandemic:
Support, exemption, and expediting payment of Private Sector dues
- Allocating SAR 50 billion (around USD 13.3 billion) to expedite payment of the private sector dues.
- Offering a 30% discount on the value of electricity bill for consumers in the commercial, industrial and agricultural sectors for a period of two months (April - May), with the possibility of extension if needed.
- Optionally allowing subscribers in the industrial and commercial sector to pay 50% of the value of the monthly electricity bill for the months (April, May, and June), provided that the remaining dues are collected in divided installments throughout a period of six months starting from January 2021 with the possibility of postponing the payment period if required.
- To support self-employed individuals who are not employed by any company and registered with the Transport General Authority in the activities of passenger transport and were stopped due to Covid-19 precautionary measures, by paying a minimum amount of salaries to them.
- Rapid activation of Council of Ministers Resolution requiring companies in which the State owns more than (51%) of its capital, to take into account the general principles and rules for putting out to tender works and purchases and giving preference to local content and SMEs.
- Additional allocations to Health sector, whereby the volume of support to Health sector reaches SAR 47 billion (around USD 12.53 billion), with a view to raising the health sector's readiness.