Transportation License in Saudi Arabia
Transportation forms a critical cog in the wheel of logistics and supply chain management in Saudi Arabia where a number of options are available, including roads, air, sea, and changing of rails. This mixed transportation framework is one that serves as the spine for all other economic activities in the country and plays a very important role in the overall development of country.
Understanding the Importance of a Transportation License
What is the importance of a Transportation License?
Beginning any transportation venture without a license is like sailing without a compass. Obtaining a transportation license not only regulates your operations but also meets the required regulations thus making clients and partners to trust you.
GCS Group: Your Gateway to Licensing Success
We appreciate the importance of a strong foundation for your business at GCS Group. Our team of specialists is committed to providing you with a comprehensive support throughout the entire licensing procedure, offering personalized solutions that suit your business needs.
The creation of an integrated logistics zone in Riyadh located next to Riyadh International Airport is a crucial step in transforming the Kingdom into one of the world’s top transportation and logistics hubs. As such, the General Authority of Civil Aviation (GACA) has played a central role in developing an environment that supports economic growth and attracts foreign businesses.
This strategic initiative is in line with the government’s vision to encourage private sector involvement in the transport sector. The introduction of Public-Private Partnership Program shows the commitment of the government to provide collaborative opportunities that foster innovation, productivity, and ensure sustainable development in the transport and logistics sector.
The integrated logistics zone in Riyadh is set to be a strong catalyst of economic growth under its favorable business environment for local and foreign businesses. Situated close to Riyadh International Airport, the logistics zone is well-positioned to ensure smooth and effective cargo movements that consolidate the Kingdom’s linkage with the world economy.
Through private sector involvement, therefore, the government seeks to harness the knowledge, capital, and creativity of businesses in improving the performance of the transportation and logistics sector as a whole. The collaboration strategy not only promotes economic diversification but also makes the Kingdom an attractive place for investments in the fast-changing logistics industry.
Types of Transportation Licenses
Acquaintance with the specifics of various licenses is an essential point to be understood by any firm willing to enter the transporter industry. Saudi Arabia issues several licenses, including Commercial Vehicle Licenses, Passenger Transport Licenses, and Freight Transport Licenses. Each has a specific function to meet the needs of various transport businesses.
Transport Sector in Saudi Arabia at a Glance
The logistics sector of Saudi Arabia is all set to witness significant growth and development, backed by a complete government plan to invest more than SR500 billion ($133.3 billion) in different infrastructure projects until 2030. The regulatory authorities that largely shape and control the logistics industry include the General Authority of Civil Aviation (GACA), the Saudi Ports Authority (SPA), and the Public Transport Authority.
Investment and Development
The investment plan proposed by the government includes the modernization of ports, airports, railways, and other vital infrastructure elements. This massive investment aims to develop a resilient and contemporary logistics system that will make Saudi Arabia a regional logistics leader.
Market Size and Growth
The logistics sector in Saudi Arabia is expected to see a high Compound Annual Growth Rate (CAGR) of 6.7% between 2020 and 2025. This shows that the country is determined to emerge as a major player in the logistics world. Consequently, the industry is anticipated to generate 10% of the Saudi GDP by 2030, demonstrating its growing role in the economic milieu.
Freight Network and Connectivity
In Saudi Arabia, the freight network is tremendous as more than 40,000 trucks cover a large geographical area covering eight countries in the Middle East and Central Asia. Such strategic positioning makes the country a critical node in regional trade, stating that it is the largest logistics market in the Gulf Cooperation Council (GCC). The thriving transport and infrastructure projects boost the connectivity and efficiency of the logistics network.
The Significance Of The Transport Sector In Saudi Arabia
GCS Group is a major player in the transport sector and is aware of the multifaceted importance of this sector for Saudi Arabia. Our passion for perfection reflects the significant meanings that transport has for the development of the economy, position, thriving state support, and tourism industry growth.
Driving Economic Growth
The transport system acts as a catalyst for the economy because it facilitates the movement of goods and people in the large area of Saudi Arabia. GCS Group offers a variety of transportation solutions that play an important role in ensuring a smooth flow of commerce all across the nation, connecting businesses and consumers. Through our effective logistics and transportation services, we play an active role in supporting the nation’s economy through trade and commerce on a local and global level.
With its location at the intersection of three continents, Saudi Arabia enjoys a unique strategic position, making it a central junction of global commerce. The group capitalizes on this geographical advantage to provide unexcelled transport services that link the business to local and international markets. The strategic approach that we apply and the extended network contribute to a smooth flow of goods, where Saudi Arabia becomes a significant global logistics and trade centre.
The transport sector is critical to Saudi Arabia’s economic development, and the government is aware of this. In response to the government’s vision, GCS Group’s conformity to the regulatory standards adopted innovative technologies and focused on sustainable business operations. The continuous help from the government reinforces our commitment to quality, nurturing a team spirit that drives the transport industry.
Boosting the Tourism Industry
The transport sector is a key industry that serves to support the rapid development of the tourism industry in Saudi Arabia. This is one of the sectors that GCS Group gives to in that it provides efficient and dependable transport services that improve the overall feeling of the visitor. From ensuring smooth airport transfers to organizing logistics for group travel, our services actively help to make Saudi Arabia a preferred tourist destination, thus developing the sector and diversifying the national economy.
Transport Licensing Requirements In Saudi Arabia
International firms that look at the public land transport sector are presented with a huge opportunity to develop sustainable mobility solutions and feed from the ever-increasing demand for efficient transport services. Securing relevant licenses is one of the necessities needed to engage in such an industry. This paper discusses the licensing procedure and reviews alternative investment opportunities a firm can take to venturing into providing public transport services.
Before discussing the investment modalities, international firms should guide past the license specifics for public land transport services. There would be regulations of such processes from the governments to institute security, dependability and conformity with local laws. Licensing procedures can differ from country to country, often implying multi-layered assessments of indicators such as operational plans and safety measures and only following financial viability. As such, companies would have to receive licenses from the relevant local transport authorities by engaging with them, thus illustrating that they are committed to offering quality mass transport facilities.
License to practice bus public transportation within cities
Board Resolution for Investment in Saudi Arabia: The Company’s Board of Directors is officially set to invest in the Kingdom of Saudi Arabia. The resolution has important elements, including names of shareholders, capital amount, division of shareholders’ shares, business activities, location, and appointment of General Manager powers, among others. The Saudi Embassy officially attests to this resolution to imply that the document is legally verified.
Commercial Registry from Country of Origin: An attested copy of the commercial registry of the subject business entity’s country of origin is presented with authentication from the Saudi Embassy. It is a key evidence of the Company’s existence, registration, legitimacy and status in its home country, thereby validating its operation.
Track Record of Contract Completion: The Company shows its compliance with contract implementation deadlines over five years, following data from the Company indicating that. It also showcases the reliability of this organization when fulfilling this project on the time provided, with confidence that all these deadlines shall be met for as long as possible.
Financial Documentation for Project Viability: The firm provides complete documentation proving its financial strengths parallel the project’s capital needs. It entails instances of shareholder inputs, conformity with the project implementation plan, and compatibility with financial limits particular to the nature of the activity. Such an extensive financial document guarantees the truth and relevance of the investment plan.
Rules and Restrictions
- Saudi Shareholder Alignment: Make sure that the number of Saudi shareholder(s) and their capital are accordingly proportioned with the financial limitations defined for one or another activity.
- Financial Criteria for Foreign Companies: Foreign enterprises wishing to be issued with a license should have an average revenue of at least 3 billion Saudi riyals during the past three years, plus an asset value of 1.5 billion Saudi riyals.
- International Presence: Foreign companies with a minimum employee strength of 10,000 people should acquire licenses from two or more countries.
- Capital Requirements for Bus Services: Follow the specifications of the Ministry of Investment in the case of the companies from the service sector, and determine the least amount of capital in 500,000 SAR concerning the service of obtaining, operating, and maintaining the bus.
- Saudi Shareholder Transportation License: Where one is a Saudi shareholder, give him a printout of the Department of Transportation/Public Transportation Authority license specifically for bus transportation activities.
- Nationalization Quotas: Follow the nationalization quotas set by the Ministry of Labor and Social Development for transportation services after any amendments.
- Clean License Record: The license seeker entity should not have had a past revocation of prescribed trading within and outside Saudi Arabia in the past ten years before this lawyer application.
- Traffic Safety Compliance: Only if there is no such record, in the form of neither fines nor penalties, both in Saudi Arabia and outside its borders, over ten years before the license request is made, is the instance acceptable.
- Emergency Approval: Allow use of public transport, especially during emergencies, crises and wars, after approval from the relevant authorities in Saudi Arabia.
- Adherence to Standards: However, ensure that technical specifications and manufacturing processes meet Saudi, Gulf or global standards.
- Security Improvement Plans: Present annual development plans to elevate security levels to form part of the Public Transport Ministry for an audit.
License to practice metro public transportation within cities
Board Resolution for Investment in Saudi Arabia: The Company’s Board of Directors has formally decided to inject into the Kingdom of Saudi Arabia. The resolution contains all the details, including the names of the shareholders, the capital, the division of shareholders’ shares, the Company’s business activity, the place, the general manager and their powers. The Embassy of Saudi Arabia authenticates this resolution to ascertain its legality.
Commercial Registry Authentication: A transcript of the business entity’s commercial registry of origin from its origin country has been obtained. The Saudi Embassy has attested to the authenticity of this document. The commercial registry contains essential information on the business, ultimately confirming its legal status and presence in the home country.
Track Record of Timely Contract Completion: The Company’s five-year record demonstrates commitment through compliance with the contract’s completion timelines. The proof of previously completed contracts on time and with the desired results is available, showing the Company is serious about deadlines.
Financial Documentation for Project Viability: The Company has filed complete financial documentation to support the investment proposal. This also encompasses the proof of financial capabilities precise to the project’s capital need to have the shareholder contributions’ breakdown and confirmation that it aligns with the project’s implementation plan. The financial documents follow the established financial limitations related to the offered type of activity, thus ensuring the practicality and longevity of the future program.
Rules and Restrictions
- Shareholder Alignment: Make sure that the Saudi shareholder(s) hold shares of the Company as per financial limitations, taking into account the mandated minimum capital limits for bus purchase, operation, and maintenance.
- Financial Criteria: Ensure that the foreign enterprise complies with the economic criteria, including an average revenue of at least 3 billion Saudi riyals per the previous three years and an asset value of at least 1.5 billion Saudi riyals.
- Global Presence: Ensure that the foreign Company maintains licenses from two foreign countries and employs more than 15,000 people, as required by the standards.
- Capital Requirements: Arriving at the minimum standard of the Ministry of Investment in terms of the sector of services wherein the Company carried out, the minimum capital requirement for the proposed activities is met (500,000 SAR).
- Nationalization Quotas: Comply with the transportation sector’s nationalization quotas set by the Ministry of Labor and Social Development according to the current amendments.
- Clean Record: Confirm that the establishment requesting the license has not received a license revocation, vertically or horizontally, no later than ten years before the application.
- Traffic Safety Compliance: Confirm a clearance regarding fines or penalties related to traffic safety outside of Saudi Arabia for the ten years preceding the license request.
- Emergency Preparedness: Permission from the competent Saudi authorities to use public transportation during emergencies and crises and in case of war.
- Standards Adherence: Ensure that your technical specifications match the Saudi, GCC or international standards and the production processes.
- Security Improvement Plans: Submit the current fighter’s assessment of the annual plans to the Public Modes of Transportation Ministry by the end of the year to present the increases in security level.
License to practice other transport
Shareholding Partner Documentation: Submit an officially certified copy of the commercial registration of the shareholding partner duly authenticated by the Saudi Embassy. Also, provide a copy of the national ID to the system for GCC partners not yet registered with ABSHAR. This guarantees the federation’s regulatory principles and ease of processing.
Financial Statements Certification: Supply the last three years of the firm’s financial statements in Saudi Arabia duly certified by the Saudi Embassy. This stage confirms that the company has solid financials and is doing financially well, thereby lending a sense of credibility to the application process. The certification increases the credibility of the numbers being showcased.
Comprehensive Business Plan: Elaborate on a business plan defining potential sites where the company will be located and the branches it will have. This plan will have to be grounded on the findings of an economic feasibility study, which will give insight into whether the expansion will be viable and the likelihood of success. This strategic paper also serves as a guide to the company’s development, which can be used as a reference by decision-makers and for external stakeholders who might analyse an approach chosen by the company.
Rules and Restrictions
- Global Operations Presence: The new business to be formed must show evidence that it has meaningful previous activity across at least three foreign markets. This presents the company’s ability to run successfully on a global level.
- Financial Capacity: According to the minimum requirements recommended for an activity, the enterprise’s capital should not be less than 10 million Saudi riyals. This threshold is financial and enables the businesses to be stable and reliable.
- Adherence to Regulatory Commitments: The enterprise is accountable for conforming to all orderly assurances relevant to its activity. They sure include the processes of absolute compliance to Saudization standards and percentages created by the Ministry of Human Resources and Social Advancement. A compliance mechanism must be established since observance of the regulatory standards is a necessity.
- Exemption for Technical Services Providers: Only firms that supply services through technical channels do not need to meet the requirements mentioned above. This acknowledges their distinction as technical service providers and recognizes their capacity to contribute to the market.
- Leasing of Vehicles Exemption: This refers to the businesses that deal with leasing non-driver vehicles but involve various transport means, e.g. cars, trucks, buses, car rental brokers, and freight brokers, which are exempted from the above provisions. This exclusion recognizes the peculiarities of the organizational processes in vehicle leasing companies.
- Facilitation of Vehicle Leasing Activities: Additionally, firms dealing with vehicles without driver leasing are given leeway, enabling them to operate as per their core business and not be cushioned with rigorous requirements. It aims to encourage and support enterprises leasing their motile to coordinate.