Customs Analysis in Exporting to Saudi Arabia
Manufacturers looking to export their products abroad need to consider various factors when evaluating export markets. One of those factors is the customs clearance infrastructure and processes within a given country. This article presents an overview of the time and cost it takes for a local partner to clear imported products through customs in Saudi Arabia. This overview, along with a regional comparison, should help you better qualify Saudi Arabia as an export market for your products.
Saudi Arabia is located within the Middle East & North Africa region. It has a population of roughly 34 million people as of 2018. 77% of the population lives in urban areas. The World Bank categorizes it as a high income country with a GDP per capita (PPP) of USD$55300 per person.
The "World Bank's Doing Business project" publishes an evaluation of countries based on their efficiency of cross border trade. When assessing import efficiency within a country it primarily reviews four factors:
1. The time for border compliance (imports): Compliance time associated with the country's customs regulations, inspections and handling that takes place at its port or border. Assumes a US$50,000 imported shipment of auto parts weighing 15 tons for calculation purposes.
2. The cost of border compliance (imports): Compliance cost associated with the country's customs regulations, inspections and handling that takes place at its port or border. Assumes a US$50,000 imported shipment of auto parts weighing 15 tons for calculation purposes.
3. The time for document compliance (imports): The time for obtaining documents, preparing documents, processing documents, presenting documents and submitting documents. Assumes a US$50,000 imported shipment of auto parts weighing 15 tons for calculation purposes.
4. The cost of document compliance (imports): The cost for obtaining documents, preparing documents, processing documents, presenting documents and submitting documents. Assumes a US$50,000 imported shipment of auto parts weighing 15 tons for calculation purposes.
When evaluating border compliance time and cost amongst major regional economies, Saudi Arabia ranks 11th regionally in terms of border compliance time and 13th regionally in terms of border compliance cost. A US$50,000 imported shipment of auto parts would take 228 hours to clear border customs and cost roughly US$779.
|Country||Border Compliance Time (Hours)||Border Compliance Cost (USD)|
|United Arab Emirates||54||$678|
When evaluating document compliance time and cost amongst major regional economies, Saudi Arabia ranks 10th regionally in terms of document compliance time and 11th regionally in terms of document compliance cost. A US$50,000 imported shipment of auto parts would take 122 hours in Saudi Arabia to have documents prepared & cleared and would cost roughly US$390.
|Country||Document Compliance Time (Hours)||Document Compliance Cost (USD)|
|United Arab Emirates||12||$283|
Detail for Border Compliance Time and Cost
Border compliance time and cost are calculated as a function of three driving factors: the time/cost related to working with customs authorities, the time/cost related to working with other agencies and finally border handling time/cost. The border compliance time and cost for Saudi Arabia are driven by working with custom authorities, other authorities and border handling.
|Detail Type||Time (Hours)||Cost (USD)|
|Working with Custom Authorities||93||$241|
|Working with Other Agencies||99||$200|
Detail of Document Compliance Time and Cost
Document compliance time and cost is a function of the various documents required by the country when importing goods. For Riyadh, the documents required when importing goods from abroad include Trade license, Commercial invoice, Customs declaration, Bill of Lading, Packing List, Certificate of Origin, Certificate of Conformity and SOLAS Certificate.
Another factor that influences import trade efficiency is transportation costs. For shipments bound to Riyadh, the port where goods would most likely land would be Jeddah port. When calculating transportation cost for the US$50,000 auto parts shipment, the World Bank calculates that the shipment that would land at Jeddah port would need to be transported 995 km with an average travel time of 14 hours. This brings the delivery transportation cost for the shipment to roughly US$1692.
Greater use of technology within the customs clearance process helps improve efficiency and lower time and cost associated with customs clearance. Today many countries use digital systems to streamline the customs clearance process. Many of these customs systems are known as EDI or Electronic Data Interchange systems. More recently however, there has been a push to develop even more integrated customs clearance systems known as SW or single window systems. These systems provide greater integration within a given country and between multiple countries when managing customs clearance.
Saudi Arabia does have an EDI system known as SaudiEDI. It is also building an unnamed SW system.