Strategy Note /
Global

Saudi Arabia: Tariff increase on 99 products, positive for selected picks

  • Zakat, Tax and Customs Authority raised the tariff on 99 merchandise and commodities

  • The tariff increase is in the range of 5.5% to 25%

  • We believe this in-line with Vision 2030, as the government has been pursuing to support local content

Iyad Khalid Ghulam
Iyad Khalid Ghulam

Head of Equity Research

SNB Capital
14 June 2022
Published by

Zakat, Tax and Customs Authority raised the tariff on 99 merchandise and commodities, in line with the ceiling committed by the Kingdom in the WTO. The move is in-line with the local content drive to support local industries and agricultural products. The tariff increase is in the range of 5.5% to 25%. The main categories of products on which the tariffs have increased includes: Agriculture and Fisheries, Poultry, Chemicals ( Organic and Inorganic), Air Conditioners, Telegraph and Telecom cables. Further details on the subcategories can be found in the following link: https://uqn.gov.sa/?p=13904

 Our View

  •  We believe this in line with Vision 2030, as the government has been pursuing to support local content, protect producers and decrease the dependence on imports. Vision 2030 aims to increase the private sector’s contribution to GDP and launched several initiatives to enable the private sector to increase its contribution. In addition, it should also help in job creation as local production will start to pick up.

  • This will also help the economy in its revenue diversification goals, where it is targeting to improve its non-oil revenue contribution.

  • The majority of the list includes Agriculture and Fisheries, such as vegetables and olive oil. We believe this would be positive for Food companies such as Almarai, Nadec and Jouf Agriculture.

  • Chemicals and petrochemical products are also included in the list. However, we believe the impact is limited as most companies secure their products from SABIC and other Saudi producers. Also, the supply chain issues forced local companies to switch to local producers since 2020.

  • Air conditioners were also included in the list, increasing the tariff from 5-12% to 15%. We believe this will be positive for Zamil and Shaker.