shaimaa Ibrahim

With a target to attract 150 million tourists annually by 2030, Saudi Arabia sets ambitious tourism goals under its Vision 2030 plan. These goals encourage investors to pump more investments into the tourism sector. As a result, there are good opportunities for local companies to provide quality experiences with high standards to enhance visitor experiences. One of these companies is Baheej Tourism Development Company.

Baheej stands at the forefront of innovative companies aiming to develop numerous destinations across the Kingdom of Saudi Arabia with a focus on sustainable development.

Baheej collaborates with major cities and developers in Saudi Arabia to create eco-friendly communities and improve destinations in the Kingdom through an integrated approach to destination management.

Baheej is the result of a cooperative relationship between ASFAR, the Saudi Tourism Investment Company, a fully owned subsidiary of the Public Investment Fund, and the Tamimi-AWN Alliance. Baheej seeks to leverage the flexibility and ambition of the private sector and support ASFAR in achieving its goals to develop exceptional destinations.

In this regard, Sharikat Mubasher met with Abdulrahman Al Bassam, Board Director of Baheej Tourism Development Company, to talk about the company’s services and goals to enhance the local tourism sector in line with the Kingdom’s Vision 2030, in addition to its future plans and investments. 

Al Bassam also discussed the role of new technologies in supporting digital tourism in the Kingdom to boost its leadership in the region and highlighted how startups can benefit from the astonishing growth that the Kingdom is witnessing in the number of tourists to provide innovative solutions and services.

Can you please share more about the investment agreements that were recently signed with the Royal Commission in Yanbu?

We are very excited about our first destination on the West Coast in partnership with the Royal Commission of Yanbu, we strongly believe in Yanbu as a tourism destination, and we want to bring this hidden gem to notoriety.

The hotel will be a 113 keys Lifestyle property operated by Cloud 7, it will feature an oversized rooftop pool club, a specialty restaurant and its design will be inspired by the different styles of Yanbu architecture, the Beach escape will be operated by Kaynuna, we launched this brand as a New groundbreaking beach club leisure offering born in Saudi, for Saudis, on the Red sea riviera.

The Tourism activation center will be phased out and it will open with a 5-star PADI diving center complete with the latest facilities for recreation and professional diving.

A fourth component will be announced in Q1 2025, stay tuned.

As a platinum sponsor of the “Future Hospitality Summit 2024” (FHS), what is the importance of such events in supporting the sector in the Kingdom?

Baheej recognizes the critical importance of such events in supporting the tourism sector in the Kingdom to display its commitment to the Kingdom’s Vision 2030 and sustainable tourism development. 

Such events not only provide a forum that allows us to highlight our strategic investments, and our innovative partnerships with entities like the RCY and Kerten Hospitality, but also serve as platforms for decision-makers, industry leaders, and stakeholders to converge and discuss opportunities, trends, and pressing issues within the hospitality and tourism sectors. 

Moreover, these summits act as networking and collaboration hubs with potential partners and sponsors. The exchange of knowledge, ideas, and practices during such events contribute immensely to the fostering of innovation and driving sustainable growth in the hospitality and tourism landscape.

Lastly, engaging in similar events, Baheej not only demonstrates leadership and expertise but also contributes to shaping the future of tourism in Saudi Arabia. These platforms play a crucial role in aligning industry efforts with Vision 2030’s objectives of promoting economic diversification, job creation, and cultural enrichment while ensuring environmentally sustainable practices and community engagement. 

How does the private sector support the Kingdom’s ambitious plan to achieve sustainable development in the tourism sector in line with Vision 2030?

By adhering to Green Building Standards, implementing eco-conscious practices, and promoting responsible tourism, we will ensure that our projects not only enhance visitor experiences but also safeguard the Kingdom's natural beauty and resources for generations to come.

Key initiatives will include coral reef conservation, marine life hatcheries, beach and dive site cleanups, public education, and a team of staff-members certified by the Green Fins program, with expertise in minimizing environmental impact while diving and snorkelling. These efforts highlight Baheej’s dedication to protecting marine ecosystems and promoting sustainable tourism. 

In your opinion, how will digital tourism contribute to improving travel experiences in the Kingdom?

Digital tourism will improve travel experiences in the Kingdom by seamlessly implementing tools such as AI (Artificial Intelligence) and data analytics to better predict travel trends and adjust prices. For example, AI can analyze social media platforms to spot new travel preferences and help optimize offerings accordingly. 

For Baheej, this means we can utilize AI to offer more personalized services. By tailoring travel itineraries and providing customized recommendations, we can provide our guests with unique and enjoyable experiences. Certain platforms already use AI to offer real-time help and suggestions, which makes travel smoother and more enjoyable.

AI also helps deal with routine tasks and provides support, allowing us to maintain service standards. This technology supports Saudi Arabia’s Vision 2030 by boosting economic growth and making the Kingdom a top tourist destination. 

As a subsidiary of ASFAR, what are the company’s future plans? And what are the expected investments?

Baheej, being the result of a joint venture between ASFAR and the Tamimi-AWN alliance, is mutually benefiting from ASFAR’s growing list of successful partnerships with government entities, highlighting the company’s commitment to mutually beneficial and strategic alliances with the private sector to enhance and promote the tourism industry within promising cities across Saudi Arabia to transform them into attractive destinations. ASFAR is committed to the continuous launch and implementation of new tourism projects, support services, and entertainment attractions. 

Baheej aims to tackle development of tourism destinations for the mid to upscale sector across the kingdom and we are actively working on securing additional projects. 

What are the promising opportunities for startups in the Saudi tourism sector?

According to the World Tourism Barometer report released in January 2024, the Kingdom topped the UN tourism’s ranking for the growth of international tourist arrivals in 2023 compared to 2019 among large destinations, achieving a 56 percent increase in international tourist arrivals. This remarkable recovery rate of 156 percent positions Saudi Arabia as a leader in tourism growth within the Middle East.

This creates fertile ground for startups to introduce innovative solutions and services. Startups can seize opportunities by offering unique experiences and hosting guests in distinctive accommodation models, catering to the evolving preferences of travelers. It is important for these offerings to cater to the mid to upscale market and have accessible price points. 

Furthermore, there is a demand for family-owned local businesses, such as B&B, agritourism, and small tour operators, to contribute to the growth of the tourism sector. By integrating sustainable practices and promoting responsible tourism.

Tourism spending in the Kingdom also set a record, topping SAR 100 billion for the first three quarters of 2023. This underscores the potential and the growing market that startups can tap into. 

Saudi Arabia, long recognized for its oil-based economy, is undergoing a significant transformation process, looking up to diversifying its economic landscape with green and non-oil resources. A critical element to this change is the burgeoning sector of digital commerce, driven by both domestic innovation and global technological trends, in addition to the adoption of the soaring fintech solutions, which paved the way smoother for e-commerce platforms to widespread and freely operate across the Kingdom.

The Kingdom has witnessed a rapid increase in digital commerce over the past decade, as being a key contribution to the country’s broader Vision 2030 initiative, which aims to diversify the economy and reduce its dependence on oil revenues. Consequently, the Saudi government has pumped huge investments in developing the required digital infrastructure and technology to facilitate the expansion of e-commerce.

This was driven by the excessive adoption of smartphones and the internet among the Saudi population of almost all ages. According to recent reports, Saudi Arabia has one of the highest internet penetration rates in the region, with over 90% of the population having access to the internet. This high connectivity has naturally pushed consumers to engage in online shopping, transforming traditional retail habits.

Additionally, the rise of social media platforms as marketing tools has played a crucial role in the expansion of digital commerce. Platforms like Instagram, Snapchat, and Twitter have become powerful tools for businesses to reach consumers and for influencers to drive product sales leading a new wave of digital marketing and advertising strategies tailored to the Saudi market. The e-commerce market that once included businesses operating solely online, now extended to contain those that have a physical presence but also sell products or services online thanks to the means of digital marketing.

Opportunities in Digital Commerce

The expansion of digital commerce in Saudi Arabia offers multiple opportunities for businesses and young entrepreneurs for these reasons:

• The digital revolution taking the world by storm: the digital market offers a vast and relatively untapped consumer base, with a young and tech-savvy population, there is significant potential for growth in various e-commerce sectors, including fashion, electronics, and groceries.
• Saudi Arabia’s unique geography: The Kingdom’s strategic location acts as a gateway to other markets in the Middle East and North Africa (MENA) region, setting Saudi Arabia as a central hub for regional e-commerce, attracting international companies seeking to enter the MENA market.
• Supportive Government: The Saudi government has shown impressive commitment to supporting digital innovation, which also creates a favorable environment for startups and tech companies to be a part of the game. Initiatives such as the Saudi Arabian General Investment Authority (SAGIA) and various incubators and accelerators provide resources and support for new ventures, fostering a thriving entrepreneurial ecosystem.

Challenges Facing Digital Commerce

Despite the promising outlook, there are several challenges hindering the growth of digital commerce in Saudi Arabia that still need much effort to overcome:

• Regulatory environment: While the government has made impressive strides in creating a more favorable business climate, navigating the regulatory landscape can still be complex. Issues related to data protection, online payment security, and e-commerce regulations constantly need to be addressed to ensure a secure and efficient digital marketplace.
• Disparity between urban and rural areas: While major cities like Riyadh and Jeddah are seeing significant growth in digital commerce, rural areas may lag behind due to limited internet access and digital literacy. Bridging this gap is crucial for ensuring that the benefits of digital commerce are equitably distributed.
• Lack of trust in digital payment solutions: Despite the increasing digital engagement, some segments of the population remain cautious about online transactions. Building trust and promoting awareness about the safety and benefits of e-commerce is essential for encouraging broader adoption among doubters. 

It’s safe to say that despite these challenges, the Saudi e-commerce ecosystem is believed to continue to grow in the coming years. The government is supportive of the e-commerce sector and is taking steps to address some of the challenges, either by investing in logistics infrastructure or developing regulations that are more supportive of e-commerce businesses, leading to the elevation of the investment environment, making it healthier and more attractive, welcoming more players into the scene. 

Kholoud Hussein 

Saudi Arabia’s startup ecosystem has witnessed remarkable growth in recent years, driven by a combination of Vision 2030 initiatives, government-backed funding programs, and private sector enthusiasm. As the Kingdom shifts away from its reliance on oil and embraces economic diversification, foreign investment has emerged as a critical driver of this transformation. Foreign direct investment (FDI) is playing a pivotal role in fostering innovation, scaling startups, and integrating Saudi Arabia into the global technology and business landscape. However, with opportunities come challenges, as foreign investment brings with it both potential rewards and complexities that need to be navigated carefully.

The Role of Vision 2030 in Attracting Foreign Investment

At the heart of Saudi Arabia’s drive for innovation and entrepreneurship is Vision 2030, a comprehensive reform plan aimed at diversifying the country’s economy. Launched by Crown Prince Mohammed bin Salman, the plan seeks to turn Saudi Arabia into a global hub for investment, technology, and innovation. The Vision outlines a strong emphasis on foreign direct investment as a means of supporting economic growth, fostering innovation, and creating employment opportunities for Saudi citizens.

The Saudi Arabian General Investment Authority (SAGIA) has been actively promoting foreign investment, offering streamlined processes and incentives for international investors. Speaking at a conference in 2021, Ibrahim Al-Omar, Governor of SAGIA, emphasized the Kingdom’s commitment to creating a conducive environment for foreign investment: “We are making it easier for foreign investors to participate in the Saudi market. By simplifying regulations and offering incentives, we are creating a favorable environment for global companies to invest in sectors like technology, healthcare, and logistics.”

Foreign investment is seen as critical to scaling startups, providing them with the capital they need to grow, expand regionally, and compete on a global stage. According to a report by MAGNiTT, Saudi Arabia’s startup ecosystem attracted $580 million in venture capital funding in 2021, a 270% increase from the previous year, with a significant portion of that funding coming from international investors.

Opportunities Created by Foreign Investment

1. Access to Capital and Scaling Potential

One of the primary benefits of foreign investment is access to the capital needed to scale operations. Startups often require significant funding to develop new technologies, hire talent, and expand into new markets. Foreign investors, particularly venture capital firms and private equity funds, offer substantial capital that many Saudi startups cannot access domestically.

Jada Fund of Funds, a Saudi government initiative to support venture capital and private equity investment, has highlighted the importance of FDI in providing capital. Ibrahim Al-Suwayel, Jada’s Deputy Governor for Investment Development, stated: “Foreign investment provides startups with the financial resources necessary to scale rapidly and enter international markets. These investments also bring knowledge transfer, giving Saudi startups access to global expertise and best practices.”

The presence of foreign capital has already helped several Saudi startups achieve significant milestones. Jahez, a leading food delivery startup in Saudi Arabia, became one of the first Saudi tech startups to go public, with backing from local and international investors. Similarly, STC Pay, a digital payment platform, secured a $200 million investment from Western Union, marking a landmark deal that demonstrated the appetite for investing in Saudi tech startups.

1. Knowledge Transfer and Global Expertise

Foreign investors bring more than just capital; they bring global expertise, which is invaluable for Saudi startups seeking to improve their operations, adopt best practices, and innovate. Many foreign investors come with years of experience in managing and scaling startups in different regions, offering insights that can accelerate the growth of local businesses.

When Western Union invested in STC Pay, it not only provided funding but also facilitated the transfer of knowledge in digital financial services, helping the company improve its operations and scale effectively. In a statement following the deal, Western Union CEO Hikmet Ersek emphasized the importance of collaboration: “Our investment in STC Pay is part of a strategic partnership that goes beyond capital. We are committed to helping STC Pay leverage our expertise in digital financial services, enabling them to expand their offering and reach a broader audience.”

1. Integration into Global Supply Chains

Foreign investment also opens doors for Saudi startups to become part of global supply chains. As international companies invest in local startups, they often incorporate them into their broader operations, helping these businesses connect with new markets and gain international exposure.

For instance, startups in sectors like FinTech, e-commerce, and healthcare technology can benefit from foreign investors’ international networks, gaining access to suppliers, distributors, and customers across the globe. This can lead to partnerships with global corporations and provide a foundation for international expansion.

1. Improving Market Competitiveness

Foreign investment also has the potential to raise the overall competitiveness of the Saudi startup ecosystem. When foreign investors fund startups, they bring with them rigorous standards, high expectations, and industry benchmarks. This can push Saudi startups to enhance their competitiveness, both locally and globally. Moreover, foreign investors often push startups to adopt cutting-edge technology, modern management practices, and innovative business models, which can give them an edge in the market.

Challenges Associated with Foreign Investment

Despite the many opportunities, foreign investment in Saudi startups comes with several challenges. These include issues related to regulation, market competition, and the delicate balance between foreign and domestic interests.

1. Regulatory and Legal Barriers

While the Saudi government has taken significant steps to create a more investor-friendly environment, foreign investors still face regulatory challenges when entering the Saudi market. Complex bureaucracy, licensing issues, and sector-specific regulations can create hurdles for investors looking to establish partnerships with Saudi startups.

In a report by The World Bank, Saudi Arabia was ranked 62nd globally in the Ease of Doing Business 2020 index, a strong improvement from previous years. However, the report also highlighted areas where the regulatory environment could be streamlined, particularly in terms of contract enforcement, property registration, and cross-border trading.

1. Cultural and Market Differences

Foreign investors often encounter challenges related to cultural differences and the unique market dynamics of Saudi Arabia. For startups, these differences can sometimes lead to conflicting expectations or operational misalignments. Investors accustomed to Western markets may find it difficult to navigate the complexities of Saudi Arabia’s business culture, customer preferences, and regulatory environment.

For example, FinTech startups in Saudi Arabia need to navigate Sharia-compliant regulations, which may be unfamiliar to many foreign investors. Understanding the local market’s needs, particularly in terms of consumer behavior and compliance requirements, is essential for ensuring that foreign investment is both effective and sustainable.

1. Dilution of Local Ownership and Influence

Another concern often raised about foreign investment is the dilution of local ownership and the potential for foreign investors to dominate the strategic direction of Saudi startups. While international capital and expertise are valuable, some stakeholders worry that an over-reliance on foreign investment could reduce the influence of local entrepreneurs and diminish the Saudi identity of startups.

Saudi policymakers are keen to strike a balance between encouraging foreign investment and preserving local ownership. The government’s Saudization program and local content requirements are designed to ensure that Saudi citizens remain central to the country’s economic development. However, startups must navigate these policies carefully to maintain access to foreign investment while preserving local control.

1. Fierce Competition for Limited Resources

As foreign investors pour capital into Saudi startups, there is a growing concern that local companies may face increased competition for limited resources, including talent, real estate, and infrastructure. Foreign-backed startups often have more financial leverage, giving them the ability to outbid smaller, locally funded competitors for these critical resources.

This competition could widen the gap between well-funded, foreign-backed startups and smaller, local companies struggling to keep pace. Policymakers need to ensure that domestic startups, especially those in the early stages, are not left behind as foreign investment accelerates.

Striking a Balance: The Way Forward

The influx of foreign investment into Saudi Arabia’s startup ecosystem presents both significant opportunities and notable challenges. As the Kingdom continues to reform its business environment, it is essential to strike a balance between attracting international capital and protecting local interests.

Policymakers must ensure that regulatory frameworks remain flexible enough to encourage foreign investment while preserving Saudi culture and values in the business landscape. Additionally, promoting collaboration between foreign investors and local entrepreneurs can help maximize the benefits of FDI, leading to a more dynamic and globally competitive startup ecosystem.

In conclusion, foreign investment is key to unlocking the full potential of Saudi Arabia’s startup scene. By providing capital, expertise, and access to global markets, foreign investors can help Saudi startups scale and innovate on a global stage. However, as Saudi Arabia continues to grow its startup ecosystem, it must navigate the challenges associated with foreign investment to ensure that this growth is sustainable and inclusive, benefiting both local and international stakeholders.

Kholoud Hussein 

Saudi Arabia’s tech startup scene is experiencing rapid growth, driven by ambitious government initiatives, increasing venture capital investment, and a supportive entrepreneurial ecosystem. The Vision 2030 initiative, which seeks to diversify the Kingdom’s economy away from oil, has been a key catalyst in this transformation, positioning Saudi Arabia as a hub for artificial intelligence (AI), blockchain, and other cutting-edge technologies.

AI: Transforming Industries

AI is one of the most promising sectors within Saudi Arabia's tech startup ecosystem. With applications ranging from healthcare and financial services to retail and transportation, AI is revolutionizing how businesses operate and serve customers.

The Saudi Data and Artificial Intelligence Authority (SDAIA) was established to promote the development of AI in the Kingdom. This has led to increased government and private sector investment in AI startups, with a particular focus on machine learning, data analytics, and robotics. One standout is Mozn, a Saudi startup leveraging AI to provide data-driven solutions for sectors such as banking and cybersecurity. Mozn’s AI-powered tools help organizations automate decision-making processes, enhance efficiency, and reduce risk.

With AI increasingly integrated into both the public and private sectors, Saudi Arabia aims to be a global leader in AI by 2030. This commitment is reflected in the Global AI Summit held in Riyadh, which attracts international AI experts and investors, further solidifying Saudi Arabia’s growing influence in the AI space.

Blockchain: Enhancing Trust and Transparency

Blockchain technology is another area where Saudi startups are making strides. The Saudi Arabian Monetary Authority (SAMA) has been experimenting with blockchain for financial transactions, and several Saudi startups are exploring blockchain applications beyond finance, including supply chain management, real estate, and digital identity verification.

One notable startup in this space is Elevatus, which uses blockchain to secure digital credentials and facilitate talent recruitment. Blockchain’s inherent transparency and immutability are particularly useful for industries requiring high levels of trust and accuracy, and Saudi startups are tapping into this potential to create innovative solutions that can be scaled globally.

The Kingdom’s interest in blockchain is also evident in the National Blockchain Strategy, which aims to position Saudi Arabia as a leader in blockchain research, development, and deployment across various sectors.

Beyond: The Next Frontier for Saudi Startups

While AI and blockchain are leading the charge, other emerging technologies are also gaining traction in the Saudi startup ecosystem. FinTech, cloud computing, cybersecurity, and Internet of Things (IoT) are experiencing significant growth, with startups exploring innovative ways to address challenges in these areas.

Government-backed initiatives such as STC Pay and Tamara have set the stage for the rapid expansion of FinTech startups in the Kingdom. Meanwhile, cybersecurity is a critical concern as the nation digitizes its economy, and startups offering advanced security solutions are seeing increased demand.

In conclusion, Saudi Arabia’s tech startup scene is evolving rapidly, with AI, blockchain, and other advanced technologies at the forefront. Supported by government initiatives, increasing venture capital, and a growing pool of tech talent, Saudi startups are well-positioned to lead the region in innovation. As the Kingdom continues its journey toward economic diversification, its thriving tech ecosystem will play a pivotal role in shaping the future of the digital economy in the Middle East and beyond.

Kholoud Hussein 

Starting a business in Saudi Arabia offers vast opportunities, especially with the country’s rapid economic transformation under Vision 2030. As part of this plan, the Kingdom has made significant strides to encourage entrepreneurship, making it easier for startups to launch and grow. However, navigating the regulatory environment can still be challenging for startups, especially for those unfamiliar with local business practices and legal frameworks. Here’s what startups need to know about regulations in Saudi Arabia.

Business Registration and Legal Structures

The first step in launching a startup in Saudi Arabia is choosing the right legal structure. Options include a limited liability company (LLC), joint stock company (JSC), or a branch of a foreign company. LLCs are the most popular among startups, offering flexibility and limited liability to the shareholders.

The Ministry of Commerce and Investment (MCI) handles the registration process, and startups must ensure compliance with Saudi Arabia's Foreign Investment Law if they are foreign-owned. The Saudi Arabian General Investment Authority (SAGIA) oversees foreign investment and offers guidance to international startups on obtaining the necessary licenses and approvals.

Intellectual Property Protection

For startups focused on technology and innovation, intellectual property (IP) protection is crucial. Saudi Arabia has modernized its IP laws in recent years, and startups can register patents, trademarks, and copyrights with the Saudi Authority for Intellectual Property (SAIP). Having clear IP rights helps startups safeguard their innovations and avoid disputes.

Labor Laws and Saudization

Hiring employees in Saudi Arabia requires an understanding of local labor laws and regulations. The Kingdom has implemented the Nitaqat program, which mandates that companies employ a certain percentage of Saudi nationals, depending on the size and industry of the company. Compliance with Saudization is essential for startups to avoid penalties and remain eligible for certain government incentives.

Startups must also comply with Saudi Arabia’s Labor Law, which governs employee contracts, working hours, and benefits, ensuring that employees are treated fairly and their rights are protected.

Taxation and Zakat

Saudi Arabia has no personal income tax, but businesses, including startups, must pay corporate tax or Zakat, depending on ownership. Saudi-owned businesses are subject to Zakat, which is 2.5% of their assessable income. Foreign-owned businesses are subject to corporate income tax, which is set at 20%. Startups also need to account for Value Added Tax (VAT), currently set at 15%, applicable on most goods and services.

Compliance with Regulatory Authorities

Startups in sectors such as FinTech, e-commerce, or healthcare need to ensure they meet the specific requirements of their respective regulatory bodies. For instance, FinTech startups must comply with the Saudi Arabian Monetary Authority (SAMA) regulations, while e-commerce businesses need to follow E-commerce Law guidelines. It's important for startups to work closely with these regulatory bodies to stay compliant.

Finally, navigating Saudi Arabia’s regulatory environment may seem complex, but the Kingdom has made significant efforts to simplify business regulations and encourage entrepreneurship. By understanding the local legal structures, compliance requirements, and sector-specific regulations, startups can effectively launch and scale in one of the Middle East’s most promising markets. Whether you are a local entrepreneur or an international startup entering Saudi Arabia, staying informed about the regulatory environment is key to long-term success.