The Law of Tourism Development Fund is a set of regulations governing the Tourism Development Fund in the Kingdom of Saudi Arabia. The law was issued on June 18, 2020, and consists of fifteen articles. It states that the fund has legal personality and financial and administrative independence, and is organizationally linked to the National Development Fund. Its headquarters is in Riyadh City, and it aims to promote tourism development in the Kingdom in accordance with applicable strategies and policies.
Powers of the Tourism Development Fund
Article Four of the Law of Tourism Development Fund stipulates that the fund has the necessary powers to achieve its objectives, in accordance with relevant laws, including the following:
- Investing, acquiring, and disposing of assets, investing in securities, and contributing to the development of tourism areas in specific locations, whether directly or through partnerships with the public or private sector.
- Funding entities operating in the tourism sector and its support services, including the development of technology and infrastructure, and providing guarantees to entities licensed by the Saudi Central Bank.
- Concluding contracts and agreements with financing entities for the provision of guarantees or full, partial, or additional funding to entities.
- Providing consultation to entities operating in the related fields.
- Funding training centers, college programs, and institutes specialized in tourism, and providing specialized training programs in tourism.
- Accepting liens and other guarantees.
- Extending loans and providing other forms of funding.
- Obtaining loans and issuing other debt and financing instruments in coordination with the National Debt Management Center and the National Development Fund.
- Proposing initiatives related to the activities of the fund and implementing existing ones, subject to applicable procedures.
The fund’s direct or indirect liabilities may not exceed the value of its assets.
Regulatory framework in the Law of Tourism Development Fund
Article Five of the law stipulates that the fund may have a board of directors chaired by the Minister of Tourism and have five members. The board’s members are nominated by its Chairman and appointed pursuant to a decision by the chairman of the board of the National Development Fund. Their membership lasts for three years, renewable once.
Without prejudice to the powers of the National Development Fund, the board is entrusted with developing the fund’s policy in accordance with this law and relevant laws. To achieve the fund’s objectives, the board undertakes all duties, assumes all powers, makes decisions, and takes measures and other actions, including the following:
- Approving policies and strategies related to the fund’s activities, as well as plans and programs relating to their implementation.
- Supervising the fund’s implementation of its duties.
- Approving the fund’s organizational structure.
- Approving the fund’s administrative and financial regulations, in addition to any other internal or technical regulations necessary for carrying out its affairs.
- Determining the maximum amount of funding, as well as the intended beneficiaries.
- Approving the fund’s investment policies.
- Approving the acquisition, sale, and pledge of all forms of property.
- Approving loans and provision of other forms of funding.
- Approving the obtainment of loans and the issuance of other debt and financing instruments, in coordination with the National Debt Management Center and the National Development Fund.
- Approving the fund’s conclusion of agreements and contracts, in accordance with applicable statutory procedures.
- Reviewing the fund’s periodic operational reports and taking necessary action thereon.
- Approving the establishment of fund branches within the Kingdom as needed.
- Approving the fund’s draft budget, final accounts, and annual activity report, and submitting the same to the National Development Fund for review prior to completion of statutory procedures.
- Proposing draft laws related to the fund’s duties and amendments to existing laws, and submitting the same for completion of statutory procedures.
- Accepting gifts, donations, grants, bequests, and endowments, subject to applicable rules.
- Appointing an external auditor and internal comptroller.
- Setting criteria for determining fees for the fund’s services.
The board may form standing or ad hoc committees from among its members or others to assign certain duties thereto. The formation decision designates the committee chairman and members, their remuneration, and duties. The board may delegate certain powers to any of its members or to the fund’s Executive Director.
The law stipulates that the Board of Directors of the fund may convene upon a call by its Chairman at least twice a year, and as needed. The Chairman appoints a deputy from among board members to assist him and to represent him in his absence. Board meetings are considered valid if attended by the majority of its members, including the Chairman or his deputy.
Executive management in the Law of Tourism Development Fund
The fund may have an executive director whose appointment and dismissal are pursuant to a board decision. The appointment decision may determine his remuneration and other financial benefits. The Executive Director may manage the fund, and his responsibilities are focused on supervising and managing the fund’s operations, as well as any powers and tasks assigned by the board. The fund employees are subject to the Labor Law and the Social Insurance Law.
The budget of the Tourism Development Fund
According to Article Nine of the law, the fund may have an independent annual operational budget, and its fiscal year may be that of the state. The fund has a capital of SAR15 billion. Such capital may be increased pursuant to a resolution by the Council of Ministers upon a recommendation by the board of the National Development Fund. The fund’s resources consist of the following: Financial support provided by the State to serve its funding activities, cash flows from loans extended from its capital, returns on its investments and assets, fees for its services, gifts, donations, grants, bequests, and endowments accepted by the Board, and any other resource approved by the board in accordance with applicable laws and instructions.
Funding in the Law of Tourism Development Fund
Funding provided by the fund has the privileges and guarantees afforded to State Treasury rights and may be collected in accordance with the State Revenues Law. The fund may have an account with the Saudi Arabian Monetary Authority (currently the Saudi Central Bank) and may open other accounts with banks authorized to operate in the Kingdom; disbursement from such accounts is made in accordance with the fund’s approved budget.
The board appoints an external auditor, or more, licensed to operate in the Kingdom to audit the fund’s accounts, transactions, data, annual budget, and final accounts, and approve his fees. The auditor’s report is submitted to the board and a copy thereof is, upon the Board’s approval, submitted to the General Court of Audit.
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