Foreign Investment in the Kingdom

The Kingdom of Saudi Arabia has been keen on attracting foreign investment to transfer and localize technologies, and expand and exchange expertise to enhance its developmental programs. This type of investment, known as international investment, reflects the objective of a resident entity in one economy to obtain a lasting interest in an enterprise resident in another economy. The resident entity is commonly referred to as the (direct investor) and the enterprise is known as the (direct investment enterprise) The lasting interest involves a long-term relationship between the direct investor and the enterprise, in addition to the direct investor having a significant degree of influence in the management of the enterprise.

Foreign investment in the Kingdom is considered one of the investment systems that contribute to supporting the strength of the national economy of the Kingdom, providing it with a greater ability to interact with the global economy and elevating it to higher levels of efficiency and competitiveness. According to the latest system governing foreign investment in the Kingdom, the General Investment Authority Law of 2000,foreign capital includes money, securities, commercial papers, machinery, equipment, spare parts, raw materials, products, transportation means, intellectual property rights such as patents and trademarks, and any equivalent value owned by a non-Saudi natural or legal person.  

The Kingdom began attracting foreign capital and using it for development in a systematic way with the issuance of the first Foreign Investment Law in 1955, which stipulated that the national capital share must not be less than 51 percent of the total financing.

With the increasing importance of this investment and its impact on the state's finances and the funding of its projects, another Foreign Investment Law was issued in 1963, distinguished by providing some incentives to encourage foreign capital investment, the most significant of which was granting it the same advantages enjoyed by domestic capital, provided that the percentage of the national component does not fall below 52 percent of the total project financing.

The Saudi legislator continued to develop the Foreign Investment Law in accordance with the requirements of the economic reality. The law was amended in 1978, by a Royal Decree, to align with regional and international economic changes and developments. This was followed by the issuance of an updated law by a Royal Decree in 2000, aiming to prepare the national economy for the transition to a knowledge-based economy and support the transfer of technology to the Kingdom.

The law issued in 2000 accommodated the requirements and rules of modern international investment. Consequently, it annulled its predecessor issued in 1978. The law included regulation of foreign investment in the Kingdom, covering conditions, procedures, privileges, and guarantees, as well as a list of activities exempted from foreign investment. Foreign projects enjoyed the privileges and incentives accorded to national projects, and the law outlined the rights, protections, and obligations of foreign investors, as well as the duties and powers of the General Investment Authority (currently the Ministry of Investment), penalties for violating the law, dispute resolution provisions, and taxation.

The updated Foreign Investment Law expands the powers of entities related to foreign investment, opens the door to attracting more capital, and defines a foreign investor as a natural person who does not hold Saudi nationality or a legal person in which not all partners hold Saudi nationality.

The updated Foreign Investment Law granted more flexibility to boost the strength of the national economy and inject more liquidity into it. It allowed up to one 100 percent foreign ownership in many sectors, including gas, power generation, water desalination, and petrochemicals. Additionally, it reduced the corporate income tax related to foreign investment from 45 to 30 percent.

The law has contributed to achieving the desired goals by attracting foreign direct investment flows into the Kingdom. Data from 2004 shows attracting USD1.942 billion, about USD12.097 billion in 2005, and USD18.293 billion in 2006. In 2007, it ranked first among Arab countries in foreign direct investment inflows, as it rose to about USD24.318 billion.

Private investments (both national and foreign) in the Kingdom are subject to general principles and policies that serve the growth of the national economy, leading it to prosperity in line with the targets of Saudi Vision 2030. The implementation of these policies began in development plans, focusing on monitoring the contribution of foreign direct investments in preparing the national economy for the transition to a knowledge-based economy. This is accomplished through contributing to technological development, supporting the transfer of technology to the Kingdom, and incubating and producing it. Additionally, they contribute to the development of technically qualified national talents and encourage strategic alliances between private national companies and technologically advanced global companies to elevate technical content and transfer productive, administrative, and marketing experiences to national production and service activities.

Investments in the Kingdom are active and operate according to principles and policies that include:

Ensuring equality between Saudi and non-Saudi investors, as well as among non-Saudi investors.

Ensuring protection for the properties of all investments, in accordance with the laws in the Kingdom.

Enhancing the sustainability of investments and implementing clear and transparent procedures for addressing investor complaints.

Providing investment incentives when needed, enhancing full transparency in their issuance, and preparing and issuing a list of investment incentives based on general, clear, and non-discriminatory criteria.

Preserving environmental and social standards to ensure the commitment of both Saudi and non-Saudi investors to health, safety, and environmental work rules, as stipulated in the Kingdom's laws, regulations, national policies, and international agreements that the Kingdom has ratified.

Facilitating procedures related to the entry and residence of non-Saudi technical and administrative employees and their families to participate in activities related to foreign investment, in accordance with the Kingdom's laws and international commitments.

Transferring and localizing sciences and technologies resulting from foreign direct investment in accordance with the Kingdom's international commitments.

The Kingdom has many investment opportunities across all economic sectors, alongside numerous potentials that support investment growth and optimal utilization of existing opportunities. The Kingdom ranks fifth among the G20 countries in per capita Gross Domestic Product (purchasing power parity), and the value of foreign direct investment inflows reached around USD5.4 billion in 2020, a 20 percent increase compared to a global decrease of 35 percent in the same year. The percentage of foreign direct investment balance to Gross Domestic Product reached 34.50 percent.

Given the investment opportunities and potentials in the Kingdom, there are seven reasons to invest in it, namely: unique investment opportunities, an ambitious series of reform, a strategic geographical location, attractive real estate solutions, a young and skilled workforce, notable achievements in improving quality of life, and a diverse and dynamic financial sector.

The investment opportunities and incentives in the Kingdom are diverse, with expanding potentials that include a USD1.3 trillion reserve of untapped mining potential, USD100 billion for planned petrochemical investments by Saudi Aramco in the coming decade, USD64 billion for investments in arts, tourism, and entertainment over the next decade, USD224 billion in healthcare spending over the next five years by both the public and private sectors, in addition to USD150 billion for expected investments in transportation and logistics services by 2030, and USD1.8 billion in government-backed venture capital funding.

According to Saudi Vision 2030, it is possible to invest in a variety of sectors, including: healthcare and life sciences, mining and minerals, real estate, financial services, agriculture and food industries, information and communication technology, aviation and defense, tourism and quality of life, industry and manufacturing, transportation and logistics services, pharmaceuticals and biotechnology, human capital and innovation, chemicals, energy, and environmental services.

To improve the investment system and business environment, the Kingdom has implemented several reforms that support the growth of business sectors and contribute to attracting investments. In this context, the National Competitiveness Center (NCC) has worked on implementing a number of reforms aimed at enhancing the competitive environment by studying the obstacles and challenges facing the public and private sectors, identifying and analyzing them to propose solutions and initiatives to implement reforms at the level of laws and regulations to develop the legislative and procedural environment that stimulates competitiveness, relying on the strength of the integrated partnership relationship that it has built and strengthened with both government entities and the private sector.

The reforms undertaken by the NCC encompassed several areas:

Legislative and regulatory reforms.

Reforms related to improving the business environment.

Reforms related to facilitating and automating the business environment.

Reforms related to enhancing women's participation in economic development.

Analysis of challenges and economic studies.

Among the prominent legislative and regulatory reforms that have been implemented in the Kingdom:

Allowing 100 percent foreign ownership in most sectors, including: health, engineering, wholesale and retail trade, mining, education, defense, transportation, publishing, and media.

Issuing the Contractor Classification Law.

Modifying the Law of Precious Metals and Gemstones.

Issuing the new Bankruptcy Law and its Implementing Regulations.

Issuing the Commercial Mortgages Law and its Implementing Regulations.

Developing the Implementing Regulations for the Capital Market Authority and the Companies Law to enhance the protection of minority investors.

Developing the Saudi Building Code bylaws.

Establishing the Saudi Center for Commercial Arbitration.

Issuing Resolutions 713 and 476 to seek public feedback on laws and regulations before being approved.

Issuing the new Government Tenders and Procurement Law and its Implementing Regulations.

Issuing the Securing Rights on Movable Assets Law and its Implementing Regulations.

Issuing the Commercial Courts Law and its Implementing Regulations.

Concerning improving the business environment in the Kingdom, the most prominent reforms have included:

Container clearance at Saudi ports within twenty-four hours, through the single electronic window 'Fasah.'

Licensing for commercial activities to operate twenty-four hours a day.

Sixty minutes to complete real estate ownership transfer procedures.

Reducing the total requirements for investment licenses by 54 percent in accordance with international best practices.

Issuing a resolution not to obligate private sector establishments to have the official stamp for establishments, and to suffice with the ratification of the Chamber of Commerce.

Issuing a resolution not to impose any fees or financial compensation without studying the economic and social impacts.

Unifying the reference of the unified service centers to be under the supervision of one government entity.

Issuing the Royal Order to translate the laws and regulations related to the business environment into English.

Issuing the approval to publish commercial rulings issued by the Supreme Court on the Ministry of Justice website.

Issuing the approval to amend the time frame for updating the electricity tariff rates prior to their application to be at least thirty days after the date of its announcement.

Launching the private sector feedback platform, which aims to be a link between investors and government entities, and to study and analyze challenges and proposals.

Cancel the requirement to obtain a work visa approved by the cultural attaches for health practitioners, and be only satisfied with the (Mumaris plus) classification system issued by the Saudi Commission for Health Specialties.

The Kingdom offers numerous incentives that encourage investments across various sectors, contributing to the diversification of its economy. Developmental five-year plans have consistently focused on reviewing strategies and reassessing certain applicable economic systems and policies. Among the notable reviews:

Reissuing the Foreign Investment System after its review, announcing the review of the Tax Law, and modifying it to become more attractive to investors.

Expanding the issuance of visit visas for businessmen and foreign investors directly from Saudi consulates abroad, facilitating visa procedures to serve the business sector and foreign investment inflow.

Allowing foreigners to own real estate in the Kingdom and amending the visa sponsorship (Kafala) system to serve the interests of all relevant parties.

Encouraging foreign investments, including activating the laws and resolutions governing them, and working on studying the problems that hinder the flow of foreign capital.

The efforts of the Kingdom to join the World Trade Organization have led to further modifications to its economic laws, aiming to increase activity in its economic sectors and expedite the realization process of its developmental aspirations. In this context, the new Foreign Investment Law has been approved, which stipulates various incentives for foreign investors, including:

Aspects related to taxes on foreign investor profits, such as the government bearing 15 percent of the taxes imposed on the profits of foreign companies exceeding SAR100,000 annually and adopting the principle of carrying forward losses for future years.

Foreign investors may obtain more than one license for various activities, with the necessary controls specified by the regulations.

Foreign investments licensed to operate under the provisions of this law may be in one of the following two forms:

First: Establishments owned by a national investor and a foreign investor.

Second: Establishments wholly owned by a foreign investor, and the legal form of the establishment is determined in accordance with the laws and instructions.

Procedural and administrative aspects, such as reviewing the visa sponsorship, residency, and property ownership system for businessmen and foreign investors, the necessity of streamlining the documents required by the foreign partner, and unifying the entity dealing with the investor.

Aspects related to the essence of the law, such as expanding the areas of projects in which the foreign partner is allowed to invest, without limiting them to development projects.

Other aspects, such as allowing foreigners to invest in the stock market.

The Kingdom currently offers a variety of incentives aimed at attracting foreign investments, as part of its efforts to become an attractive and stimulating investment destination. This includes special incentives and support for branches of foreign companies looking to establish regional offices in the Kingdom, with the goal of marketing activity clusters, ensuring knowledge transfer, and contributing to enhancing the growth of national skills and competencies in the Kingdom. This encompasses:

Loan Programs:

- Loan Program for Public and Private Projects: Financing public and private investment projects, including benefits such as reduced interest rates, a grace period ranging from four to six years, and long-term loans extending up to twenty-two to twenty-five years.

Loan Program for Economic Development and Reform in Arab Countries: Providing loans and facilities to assist member countries in addressing the overall balance of payments deficit.

Financing Services for Commercial Transactions of Arab-Origin Goods: Providing refinancing services for Arab-origin exports through credit lines, such as pre-export credits, post-shipment credits, buyer's credits, and import credits.

Political and Commercial Risk Insurance for Investments and Export Credit Guarantee: Schemes and guarantees aimed at encouraging investments in Arab countries and promoting local Arab trade and exports to the world.

Equity and Debt Financing for Institutions and Productive Projects in Member Countries: Offering various financing schemes to support the capital investment of projects and providing loans to companies and productive projects.

Export Credit Financing, Guarantee, and Insurance: The Kingdom provides export credit financing, guarantee, insurance, and other export-related incentives through the Saudi EXIM Bank, the Saudi Industrial Development Fund, and other relevant entities.

Enabling Energy and Utilities: Investors benefit from attractive solutions for energy, water, natural gas, ethane, diesel, and real estate in industrial cities.

Financial Incentives for Research and Development: Financial support for innovators includes multi-purpose loans for local and global research and development projects.

Employment Support Programs: Identifying employment opportunities through dedicated programs.

Credit and Tax Exemptions: Investors benefit from tax exemptions in various areas, such as investments in research and development projects and export profits.

There are also many key supporting elements for the Foreign Investment Law in the Kingdom, including:

The Human Resources Development Fund offers a program aiming at encouraging the training and employment of Saudi citizens.

The 'Tamheer' program for on-the-job training for Saudi graduates.

Training in non-profit institutes.

Rehabilitation of health certificate holders.

The 'Doroob' program for developing the skills of national cadres.

Overcoming the obstacle of customs duties on selected materials, equipment, and machinery.

Tax exemptions on wages and costs of Saudi labor.

Export credit facilities.

Support for energy, water, natural gas, ethane, and diesel.

Financial incentives for research and development projects.

Loan programs for industrial investment.

With the facilities of the Investment Law and the proactive development plans, the Eighth Development Plan witnessed a remarkable increase in the Kingdom's share of foreign direct investment flows, as the value of foreign direct investments increased from about SAR7.28 billion in 2004 to about SAR143.33 billion in 2008, and the rate of increase is estimated at about 110.6 percent on average annually during that period.

The Eighth Development Plan worked to improve the investment environment, and the General Investment Authority, currently the Ministry of Investment, worked on the preparation of an integrated strategy in 2005, which included a number of key initiatives, including: providing comprehensive services and facilities and providing information to all (Saudi and non-Saudi) investors, and attracting new investors, by presenting investment opportunities to targeted international investors.

Saudi Vision 2030 enhanced the general investment system and foreign investment in particular in the Kingdom, as one of its most important goals is to raise the economic level and diversify sources of income. Therefore, the government worked to encourage foreign investors to invest in the Kingdom and established laws and controls for foreign investors to ensure achieving the desired goals and preserving investors' rights.

The Kingdom worked to frame the foreign investment system and provide incentives for it through a regulatory matrix supporting the growth of these investments. The Foreign Investment Law was issued in 2000, which defined the foreign investor as a natural person who is not of Saudi nationality or a legal person whose partners are not all of Saudi nationality, and defined foreign investment as the employment of foreign capital in an activity licensed by this law.

According to the law, a license is issued to invest foreign capital in any investment activity in the Kingdom, whether permanent or temporary, and the foreign investor may obtain more than one license in different activities. Foreign investments licensed to operate may also be establishments jointly owned by a national investor and a foreign investor, or establishments wholly owned by a foreign investor.

The project licensed under this law enjoys all the advantages, incentives, and guarantees enjoyed by the national project according to laws and instructions. The foreign investor may repatriate its share from the sale of equity, liquidation surplus, or profits generated by the establishment abroad, or dispose of them in any other lawful manner. He also has the right to transfer the amounts required to settle any contractual obligations related to the project.

The law has allowed the licensed foreign establishment to own the real estate necessary within the limits of the need to practice the licensed activity or for the purpose of housing all or some of its workers, in accordance with the provisions for non-Saudis ownership of real estate. The foreign investor’s investments may not be confiscated, wholly or partially without a judicial ruling. Moreover, they may not be subject to expropriation, wholly or partially, except for public interest, against fair compensation according to laws and directives.

Regarding any disputes with the foreign investor, the law stipulates that without prejudice to agreements to which the Kingdom is a party, disputes arising between the government and the foreign investor regarding his licensed investments under the law are settled as amicably as possible. If that is not possible, the dispute is settled in accordance with the laws. Disputes arising between the foreign investor and his Saudi partners regarding their investments licensed under this law are settled as amicably as possible. If that is not possible, the dispute is settled in accordance with the laws.

According to the law, all licensed foreign investments are treated in accordance with the applicable tax provisions and their amendments in the Kingdom. The foreign investor must comply with all laws, regulations, and instructions in force in the Kingdom, as well as international agreements to which it is a party. The implementation of the law is without prejudice to the acquired rights of the foreign investments, legally existing before the law entered into force. However, the practice of these projects is governed by the provisions of the Law, as far as conducting their activities or increasing their capital is concerned.

The regulation of the Ministry of Investment was issued on May 25, 2021, as the competent entity and main reference in the Kingdom regarding regulating, developing, and promoting domestic and foreign investment and protecting investors. It may, without prejudice to the powers and responsibilities of other entities, carry out everything necessary to achieve its goals.

This regulation replaced the General Investment Authority issued in 2000, granting the Ministry of Investment the following powers and responsibilities:

Preparing the national investment strategy in the Kingdom, submitting it to complete the necessary regulatory procedures regarding it, supervising its implementation after approval, and proposing any amendment to it.

Preparing general policies for investment development and enhancement, fostering an optimal investment environment, boosting its competitiveness, and elevating it for approval in accordance with the established regulatory procedures, as well as overseeing its implementation after approval.

Proposing investment-related draft laws, reviewing existing laws, proposing amendments, and presenting them for the completion of necessary regulatory procedures.

Issuing investment licenses in compliance with relevant regulatory texts, regulating their processes, providing ministry services to investors, regulating all essential requirements to achieve this, and determining the financial compensation in agreement with the Ministry of Finance and the Non-Oil Revenue Development Center.

Defining indicators to measure the performance of investments within the Kingdom and the measuring mechanism in coordination with concerned entities, and presenting them for approval to the Council of Economic and Development Affairs. The ministry undertakes to oversee their implementation and evaluation post-approval.

Developing executive plans and suitable regulations to facilitate the investment environment in the Kingdom, setting standards for its growth, enhancing its competitiveness, and submitting what requires the completion of pertinent procedures.

Attracting investments through organizing, holding, and participating in conferences, seminars, domestic and international exhibitions, events, and other means, and announcing initiatives aimed at stimulating investments.

Establishing an investment database and its indicators within the Kingdom, to serve as the unified platform and primary reference for information related to the powers of the ministry, and coordinating with relevant entities to provide the ministry with relevant information, data, and reports, according to the national data governance policies and regulations issued by the Saudi Data and Artificial Intelligence Authority.

Supporting Saudi investment abroad, and addressing their challenges with relevant entities within and outside the Kingdom.

Working towards enhancing investment sustainability, bolstering its role, addressing its challenges and obstacles, and proposing feasible incentives.

Coordinating with relevant government entities to enable the ministry to carry out its tasks.

Representing the Kingdom or participating in its representation before organizations, entities, and regional and international conferences and forums related to the ministry's powers.

Conducting studies and research related to its powers, and collaborating with specialized research centers and experts at local and international levels in this field.

Entering into agreements related to the ministry's activities with relevant entities in other countries and international organizations, in accordance with established regulatory procedures.

Representing the government in negotiations with strategic investors, and designing investment incentives and submitting them to complete the necessary,

Any task lawfully assigned to the ministry.

According to Article Three of the regulation, the Minister of Investment is responsible for managing the ministry's affairs and works, making decisions, and taking necessary actions to achieve its assigned objectives as per the provisions of the regulation, specifically:

Approving amendments to the financial regulations followed in the ministry, in agreement with the Ministry of Finance.

Approving administrative regulations governing the ministry's personnel affairs, in agreement with the Ministry of Human Resources and Social Development, and the Ministry of Finance concerning provisions with contained financial impact.

Approving internal regulations governing the ministry, as long as they do not conflict with relevant regulatory texts.

Proposing the ministry's organizational structure and submitting it for completion of necessary regulatory procedures.

Deciding on requests for investment licenses and canceling them in accordance with relevant regulatory texts.

Suggesting a list of types of activities exempted from foreign investment and submitting it for completion of regulatory procedures.

Approving the establishment of branches for the ministry within the Kingdom and offices for it outside the Kingdom, in compliance with regulatory procedures.

Seeking experts and consultants to work either full-time or part-time, to complete certain tasks and services, offer advice, and conduct research and studies as outlined in relevant provisions.

Accepting gifts, donations, grants, bequests, and endowments in accordance with regulatory provisions.

Representing the ministry before the judiciary, government entities, institutions, and other relevant bodies within and outside the Kingdom. He may delegate others to do so.

Appointing ministry employees as per its regulations, supervising them, and overseeing human resources development within the ministry.

Supervising the ministry's organization of investment-related conferences, seminars, domestic and foreign exhibitions, and events, holding and participating in them, and assigning their implementation to whoever he deems fit, in line with established regulatory procedures.

Approving the ministry's draft budget, final accounts, and annual report before submitting them according to established regulatory procedures.

The minister has the authority to delegate some of his powers to any of the ministry’s personnel whom he deems suitable.

In support of the foreign investment system in the Kingdom, the Law of Real Estate Ownership and Investment by Non-Saudis was issued in 2000, replacing the previous Law of Real Estate Ownership by Non-Saudis in the Kingdom, which was issued by a Royal Decree in 1970.

The law allows the non-Saudi investor with natural or corporate personality, licensed to practice any professional, vocational, or economic activity to acquire the real estate necessary for practicing the activity. This includes the real estate required for his residence and the residence of his employees, following the approval of the entity issuing the license. The real estate may also be rented. If the license involves the purchase of buildings or lands for constructing buildings on them and investing them by means of selling or renting, the total cost of the project, land and construction, must not be less than SAR30,000,000. This amount may be amended by the Council of Ministers. It is also stipulated that such real estate be invested within five years from its acquirement.

The law allows non-Saudi natural persons legally residing in the Kingdom to acquire real estate for their private residence, after obtaining a license from the Ministry of Interior. The implementation of this law's provisions does not affect the following:

Rights to ownership granted to non-Saudis under previous laws. The provisions of this Law must be enforced after its entry into force, upon transfer of real estate ownership.

Privileges included in the rules regulating real estate ownership by citizens of Gulf Cooperation Council (GCC) countries.

Acquirement of right to ownership or any other original right in rem to real estate by way of inheritance.

Laws, Council of Ministers’ resolutions, and Royal Orders prohibiting ownership at certain locations.

The Kingdom holds numerous distinguished potentials and opportunities for investors, characterized by abundant natural resources and a strategic location that holds a key position in the heart of key trade routes connecting three continents. Under the Saudi Vision 2030, numerous economic reforms have effectively generated fresh business prospects, enhanced the primary strategic assets of the Kingdom, and propelled both economic expansion and diversification.

Following the launch of Saudi Vision 2030, among its key objectives related to attracting foreign direct investments were raising the percentage of foreign direct investments from the GDP from 3.8 percent to the global average of 5.7 percent, and increasing the foreign direct investment volume in the Kingdom from thirty to seventy billion for 2020.

In pursuit of achieving the targets of Vision 2030, the Ministry of Investment strives, amid increasing investment opportunities, to enable investors to access them. It aims to provide the maximum possible facilitation and flexibility in licensing procedures and investor services by providing representatives from relevant government entities to complete the required procedures. Additionally, it supports investors throughout all stages of their business, from establishment to commencement.

Saudi Vision 2030 works towards achieving several goals regarding attracting foreign direct investments, including:

Elevating the Kingdom's ranking in the Logistics Performance Index from forty-nine to twenty-five globally and achieving regional leadership.

Increasing the percentage of foreign direct investments from the GDP from 3.8 percent to the global average of 5.7 percent.

Raising the volume of foreign direct investments in the Kingdom according to the National Transformation Program.

Transitioning the national economy from the twenty-fifth position in the Competitiveness Index to one of the top ten positions.

Applying the National Classification of Economic Activities (ISIC4) to investment licenses.

Privatizing limited government services to enhance attracting foreign direct investment.

Providing promising investment opportunities for local and foreign investors (Qiddiya, Faisaliah, NEOM, Quality of Life Program 2020, etc.).

Increasing the value of the Public Investment Fund's assets from SAR600 billion to over SAR7 trillion.

Encouraging local and foreign investment in the health, municipal services, housing, finance, energy, and other sectors.

Increasing support for tourism companies through the Culture and Entertainment Support Program, in addition to opening up new horizons for foreign direct investment in various economic sectors in the Kingdom.

To ensure facilitations for foreign investors and keep pace with the latest global investment practices, the 'Invest Saudi' platform was launched as a unified national identity for marketing investment in the Kingdom. It has been developed and launched as one of the initiatives to achieve Saudi Vision 2030. "Invest Saudi" works to facilitate investor work and remove obstacles to investments that support the Kingdom's economic growth and enhance its role as a major player in the global business economy.

"Invest Saudi" was specifically designed to provide clear, unified, and effective information on investment opportunities in the Kingdom for foreign and local investors on the one hand, and private sector companies on the other. It is the main starting point for foreign investors seeking assistance and support in the stages preceding, accompanying, or following their entry into the Kingdom. The website (investsaudi.sa) is one of the most prominent marketing channels for the "Invest Saudi" identity to present the investment environment and competitive advantages of the Kingdom, highlight promising investment opportunities in all sectors, and facilitate communication with investors locally and globally.

Among the work strategies of "Invest Saudi" is its role in unifying messages and efforts between all ministries and government entities to enhance the Kingdom's position as an attractive investment destination and shed light on various business and investment opportunities, as part of its support for the Kingdom's long-term economic growth. It seeks to achieve many goals, including:

Transforming the Kingdom into a global investment powerhouse and achieving the desired goals of Vision 2030.

Enhancing the status and reputation of the Kingdom among investors by highlighting attractive opportunities and successful experiences.

Providing appropriate opportunities for investors, each according to their field, to support their activities in the Kingdom.

Increasing investors' awareness of the country's historical and civilizational prosperity, and of the tremendous opportunities the Kingdom holds.

Creating an investment environment characterized by high efficiency and ease of doing business by working and cooperating closely with local and foreign partners.

The Kingdom continued its efforts to develop its business environment, implementing a record number of reforms in 2016, while in 2018, it implemented six reform measures representing the largest number of reforms in the Middle East and North Africa region, according to the World Bank's 2018 Doing Business report. Between 2003 and 2018, the Kingdom implemented thirty reforms, most of which focused on starting a business (seven reforms), property registration (five reforms), and getting credit (four reforms). As a result, the average time required to start a business became eighteen days in Riyadh, compared to an average of eighty-one and a half days in 2003.

As a result of its efforts to ease doing business and improve the investment atmosphere, the Kingdom advanced thirty places in the 2020 Doing Business report issued by the World Bank, becoming the most advanced and reformed country among 190 countries around the world. The Kingdom succeeded in reducing the gap with the world's leading benchmark countries by 7.7 points, the highest among all participating countries.

The various reforms implemented by the Kingdom at the level of laws, regulations, and procedures contributed to its progress in this area, resulting from cooperation with more than fifty government entities, in addition to the private sector, which enhanced the Kingdom's competitiveness and raised its ranking in global reports to become one of the most prominent investment destinations globally, and it continues working to reach the top ten most competitive countries in the world.

As part of its efforts to diversify the economy, the Kingdom strengthened its investments across the industrial system by encouraging investment in various regions to achieve balanced development. Three economic cities were inaugurated in 2006 in Hail, al-Madinah al-Munawwarah, and Jazan, in addition to King Abdullah Economic City in Rabigh, which was launched in 2005.

Economic cities contribute to attracting more national and foreign investments as they are comprehensive cities that contain facilities, services, and varied and sophisticated living standards, in addition to the possibility of easily accessing main cities through different channels. King Abdullah Economic City and Knowledge Economic City represent a model for those cities that are financed, developed, and operated by the private sector under the direct supervision and support of the government. These cities provide promising solutions and opportunities in business (industrial and services), housing, and entertainment with high-quality standards.

Economic cities seek to achieve several goals, including:

Attracting investments with added value.

Diversifying the sources of the national economy.

Improving public services and raising living standards.

Encouraging innovation and entrepreneurship.

Developing strategic sectors.

Providing the suitable environment to explore new business concepts, models, and practices.

To stimulate investment flows in non-oil sectors, the Kingdom launched the Special Economic Zone (SEZ) program, covering sectors including technology, logistics services, and tourism. Special Economic Zones intend to offer tax advantages, zakat and customs duties benefits, and incentives, and ease licensing requirements for international investors.

The Economic Cities and Special Zones Authority is developing new special economic zones with investor-friendly regulatory environments. These zones can remove bottlenecks, accelerate reforms in a controlled manner, stimulate economic diversification, and attract prominent investors. It is expected that these zones will serve unserved sectors in the Kingdom’s domestic market or adjacent regional and global markets.

The Economic Cities and Special Zones Authority is the regulatory umbrella for cities and special economic zones in the Kingdom. As such, it sets the regulatory framework for special economic zones to facilitate the work of supervising entities to enable them to build and operate special economic zones. The authority plays a vital role in achieving the goals of Saudi Vision 2030 by attracting foreign investment, strengthening economic ties with international partners, and improving local, regional, and global trade and transport networks.

In 2019, the authority’s scope of expertise was expanded to include oversight of special economic zones and preparing the appropriate regulatory environment to attract business. Work is underway to establish special economic zones to take advantage of the Kingdom's potential as a global business hub, where these zones will play a major role in achieving the goals of the economic development march within Saudi Vision 2030.

The special economic zones announced by Crown Prince, Prime Minister, and Chairman of the Council of Economic and Development Affairs His Royal Highness Prince Mohammed Bin Salman Bin Abdulaziz Al Saud in 2023, are among the most competitive in the world to attract the most important qualitative investments. They represent a promising opportunity to join the world's leading companies to launch new innovations and expand business in basic and emerging sectors across the Kingdom's strategic locations. They include:

King Abdullah Economic City's Special Economic Zone

Ras al-Khair Special Economic Zone

The Jazan Special Economic Zone

Cloud Computing Special Economic Zone in Riyadh

These zones represent the first phase of a long-term program aimed at attracting international companies, encouraging foreign direct investment, and promoting the growth of future qualitative sectors. This will be achieved by providing world-class infrastructure to support local and international investors, and providing outstanding investment opportunities supported by an integrated and advanced system of laws and regulations. Incentives offered to companies include competitive tax rates, exemptions for imports, production inputs, machinery, and raw materials from customs duties, allowing 100 percent foreign ownership, and the ability to attract the world’s best human resources.

The regional headquarters of multinational companies in the Kingdom support efforts to attract foreign investment. They are headquarters established in accordance with the provisions of Saudi laws to provide support, management, and strategic direction to their branches and subsidiaries in the Middle East and North Africa region. The Regional Headquarters Program is a joint initiative between the Ministry of Investment and the Royal Commission for Riyadh City that invites global companies to move their regional headquarters to the Kingdom.

Services of the regional headquarters in the Kingdom include moving services: temporary offices, apartments or villas, local recruitment, and other services to facilitate the move. Operational services include: reservations, event organization, sports and fitness, and personal assistant. Facilitation services include: recruitment, business set-up, housing and schools, and recruitment agencies for male and female domestic workers. As for professional services, they include: tax affairs consultancy, government relations officer, and opening bank accounts. Exclusive discounts include: airlines, offices, housing, and schools.

Limited government services have been privatized to achieve integration and support plans to attract foreign direct investors. Furthermore, promising investment opportunities were offered to local and foreign investors, such as Qiddiya, NEOM, and the Quality of Life Program, as well as encouraging local and foreign investments in the sectors of health, municipal services, housing, funding, energy, etc.

The Kingdom's international presence in many international treaties and agreements helps stimulate and encourage foreign direct investment, including its membership in the World Trade Organization, which requires it to promote trade liberalization and accelerate integration into the global economy. Regionally, it is a member of the Gulf Cooperation Council, in addition to signing treaties to avoid double taxation on income and capital with twenty-nine countries, as well as agreements with twenty-three countries to encourage and protect investments by single contracting companies in the other party's territory.

The Ministry of Investment, as the executive arm of the state, continues its efforts to facilitate attracting foreign direct investment and providing a suitable environment for its businesses in various sectors, as well as informing investors of opportunities available in the Kingdom. It works to provide diverse standardized information about the market, provide regular reports and case studies, develop reports and customized information, share contact information and database, and provide feasibility study assistance.

The ministry's role also extends to all logistic services related to national partners, such as agencies and institutions, and linking them to investors, including commercial and industrial entities, local companies for potential partnerships, and specialized services, in addition to small and medium enterprises (SMEs) in the supply chain, while defining provided incentives and support, and facilitating business activities.

Foreign investment witnessed remarkable growth in 2019, covering all targeted sectors. The General Investment Authority (currently the Ministry of Investment) issued 291 foreign investment licenses during the second quarter of 2019, equivalent to more than double compared to the same period in 2018, an increase of 103 percent compared to the first quarter of 2019.

With the development of the business environment and structural reforms carried out by the Kingdom, this was reflected in data issued by the Saudi Central Bank and the United Nations Conference on Trade and Development (UNCTAD). Foreign direct investment in the Kingdom increased by 7.9 percent in the first half of 2020, compared to a 49 percent decrease in global foreign direct investment.

Foreign direct investment flows in the Kingdom continued to rise, achieving a 14.7 percent increase in 2022 compared to 2021, recording about SAR30 billion after excluding Aramco's 2021 deal from the flows.

In this regard, the National Investment Strategy aims to enable the targets of Saudi Vision 2030, by making the Kingdom among the fifteen largest economies in the world by 2030, with the cumulative value of investments exceeding SAR12 trillion. Among the investment objectives of the National Investment Strategy by 2030 is for the value of foreign direct investment flows to reach SAR388 billion with a contribution ratio of 5.7 percent to GDP.

Foreign direct investment works to achieve great added value to the national economy in the Kingdom. Among the main advantages of attracting such investment in general are:

Transferring modern technology to productive economic sectors with investment appeal.

Raising the efficiency of technical and managerial skills of national human resources.

Providing capital, especially in countries with low levels of domestic savings.

Creating direct and indirect job opportunities.

Improving citizen welfare by providing several alternatives of international quality.

Increasing the competitiveness of national products, both in global and domestic markets.

Encouraging spending on research and development activities to keep pace with technical and economic developments.

There are a number of key elements that support the Foreign Investment Law in the Kingdom and make it an attractive international destination for investments, represented in the following:

Globally, the Kingdom is a member of the World Trade Organization and is committed to further liberating trade systems and accelerating integration into the global economy.

Regionally, the Kingdom is a member of the Gulf Cooperation Council and the Greater Arab Free Trade Area.

On the bilateral level, the Kingdom has signed conventions for the avoidance of double taxation on taxes and capital with twenty-nine countries, as well as agreements on the promotion and protection of investments of entities of one contracting party in the territory of the other party with twenty-three countries around the world.

In addition, there are four key elements of the financial system that are important for any foreign investor:

Corporate income tax: Applies to foreign ownership of a company headquartered in the Kingdom with a statutory rate of 20 percent, the lowest level among the G20.

Zakat tax is charged on the company's headquarters in the Kingdom at 2.5 percent of the Zakat base.

Application of value added tax.

Subscription to social insurance for Saudi employees only.

Among the national markets that also work to attract foreign investors is the stock market. The Capital Market Authority has introduced several measures to increase the appeal of the Saudi capital market by allowing resident foreign investors to invest directly in the Saudi stock market, allowing them access to the stock market through swap agreements, allowing qualified investors from foreign financial institutions to invest in listed securities, allowing strategic foreign investors to own strategic shares in listed companies, and allowing them to invest directly in debt instruments.

The methods of investing in the capital market identified by the Capital Market Authority (CMA) have diversified. A non-resident foreign investor in the Kingdom can now invest in securities as a qualified foreign investor, final beneficiary in swap agreements, foreign strategic investor, and direct investor.

The development of the business environment and structural reforms have contributed to the development of growth in the ownership percentage of qualified foreign investors in the 'Tadawul' capital market. The year 2022 witnessed record levels of net foreign investment in the main market, which reached about SAR184 billion in the same year. The value of foreign investors' ownership in the main market reached SAR347 billion at the end of 2022, equivalent to 14.2 percent of the total value of free shares. Thus, the growth rate of foreign investments during 2022 is the highest since the market joined emerging market indices in 2019.

In order to expand the investment umbrella, a foreign investor not residing in the Kingdom can invest in securities:

As a qualified foreign investor, according to the rules governing the investment of qualified foreign financial institutions in listed securities, allowing him to invest in all listed securities.

As the final beneficiary in swap agreements, according to the CMA's circular in this regard, allowing him to invest in all listed securities.

As a foreign strategic investor, according to the instructions regulating foreign strategic investors owning strategic shares in listed companies, allowing him to invest in the shares of listed companies.

As a direct investor, allowing him to invest in the parallel market and debt instruments, in addition to investment funds.

The Qualified Foreign Investor program was also launched, giving international investors direct access to the Saudi capital market. The program was launched in June 2015 and amended in June 2019 to mitigate registration requirements and expand the scope of qualified institutional investors. The accession of the Saudi capital market to emerging market indices with the world's major indices in 2019 increased interest in the program. By October 2019, more than 1,500 international financial institutions had joined the Qualified Foreign Investor program as qualified foreign investors.

Opening the Saudi stock market for investment by qualified foreign financial institutions contributes to achieving many long-term goals, including:

Enhancing institutional investment in the Saudi capital market, which will support market stability and reduce volatility by attracting specialist investors who add their expertise to the local market with long-term investment goals.

Transferring knowledge and expertise to local financial institutions and investors, and raising the professionalism of participants in the Saudi capital market by attracting high-level specialized professional expertise.

Improving the performance of listed companies, especially in disclosing financial information, as well as improving the performance of specialized investment companies.

Enhancing the position of the Saudi capital market to be a leading market. Increasing its chances of upgrading its global classification to be an Emerging Market according to the classification of relevant global indices, chiefly the Morgan Stanley Capital International (MSCI) index, which many other markets seek to reach.

Raising the level of research, studies, and evaluations conducted on the market in general and listed companies in particular, thus providing all dealers with more accurate information and fairer assessments.

To stimulate foreign investment, increase the attractiveness and efficiency of the capital market, and enhance its competitiveness locally and internationally, in 2023 the Capital Market Authority adopted the rules governing foreign investment in securities, the amended investment accounts instructions, the amendment of the Implementing Regulations of the Companies Law for Listed Joint Stock companies, and the glossary and rules of the CMA regulations.

The amendments included mitigating requirements for foreign investors and mitigating disclosure requirements and ongoing obligations to facilitate qualified foreign investors entering the Saudi capital market, and to reduce discrepancies between requirements for qualified foreign investors compared to other investor categories in the Saudi capital market. They also included developing qualification requirements that must be met by qualified foreign investors to invest in shares listed on the main market, and cancelling requirements to submit qualification requests and qualified foreign investor assessment agreements.

The amendments also included developing conditions for non-resident foreign investment in listed securities through swap agreements, including canceling the duration condition imposed on the agreement, and the requirement to notify the CMA before concluding a swap agreement. A new channel was also added for foreign investment in shares listed on the main market. The rules regulating foreign investment in securities replaced the rules regulating qualified foreign financial institutions’ investment in listed securities, instructions regulating foreign strategic investors’ ownership of strategic shares in listed companies, and guidelines for non-resident foreign investment in the parallel market.

Updating the rules regulating qualified foreign financial institutions’ investment in listed securities helped double the number of foreign investors. The number of foreign investors grew by 179 percent from 2018 to 2022, and the percentage of foreign investor ownership of the total market value of free stocks rose from 3.77 percent in 2018 to 14.21 percent by the end of 2022.

Laws and regulations define a foreign investor as a natural person who does not hold Saudi nationality, or a corporate person where not all partners hold Saudi nationality. They define foreign investment as employing foreign capital in a licensed activity under the law and these regulations.

As per the Implementing Regulations of the Foreign Investment Law, foreign capital means the following funds and rights, if owned by a foreign investor:

Cash, securities, and commercial papers.

Profits from foreign investment when employed to increase capital, expand existing projects, or establish new projects.

Machinery, equipment, fixtures, spare parts, means of transport, and production requirements related to the investment.

Intellectual rights such as licenses, intellectual property rights, technical knowledge, managerial skills, and production methods.

A number of terms and controls have been set for licensing foreign investment, including:

The activity requiring a license for investment should not be among the list of activities excluded from foreign investment.

The technical specifications of the product and production method should conform to Saudi, Gulf, or international specifications.

The license applicant should not have received any final verdicts or decisions due to substantial violations of the provisions of this law.

The license applicant should not have received any previous verdicts, including verdicts for financial or commercial violations, inside or outside the Kingdom.

The license applicant must adhere to the terms, conditions, declarations, and commitments attached to the investment licensing application form.

Granting the license should achieve investment objectives and the CMA's purposes. These terms and controls apply to license renewal applications.

To assist foreign investors, they need to know licensing procedures and procedures for foreign investment, including:

To start a business activity in the Kingdom, an aspiring investor must first obtain a foreign investor license.

The Ministry of Investment in the Kingdom is the concerned entity for improving the investment environment and providing all services to investors.

There are different types of investment licenses, each with its specific requirements such as minimum accepted capital and maximum foreign capital.

Those aspiring to invest can apply for a license online through the Ministry of Investment portal.

As a result of investment facilities and incentives, granting investment licenses continued to rise in 2020. As per the Investment Highlights report for the third quarter of 2020 issued by the Ministry of Investment, 306 investment licenses were issued during said quarter, a 21 percent annual and 96 percent quarterly increase. Moreover, 68 percent of issued licenses were completed for 100 percent foreign-owned projects.

The foreign investor in the Kingdom follows a specific mechanism to obtain investment licenses, as follows:

The foreign investor is allowed to obtain more than one license to practice a specific activity, or any other different activities approved by the Ministry of Investment.

To obtain an agricultural, industrial, or service license, the form designated for that must be filled out and signed by the applicant or his authorized representative.

Once the General Investment Authority receives all the documents related to the license, the decision to issue the license for the project will be issued within a period not exceeding thirty days.

The remote license renewal service program has been launched.

The foreign investor enjoys a number of rights to invest in the Kingdom, including:

First: The rights of the applicant for a new investment license:

The right to respond to the new license request.

The right for the rejection of the issuance of the new license to be justified.

The right to appeal the rejection decision before the Board of Grievances.

Second: The rights of the foreign investor during the license term:

The right to enjoy all the advantages, incentives, and guarantees enjoyed by the national project according to the laws and instructions and by the Foreign Investment Law.

The right to renew the license (for the complete application with documents).

The right to be given an appropriate grace period to remedy violations detected.

The right to respond to the written notification letter of violations within the specified period.

The right to own real estate in accordance with the provisions of the Foreign Ownership of Real Estate Law (details are elaborated in the Investors Services and Consultations Guide issued by the General Investment Authority, currently the Ministry of Investment).

The right not to confiscate investor investments except by judicial ruling, as well as the right not to seize ownership except for the public interest and in return for compensation according to the Foreign Investment Law.

The right for the sponsorship of non-Saudi employees to be on the licensed establishment.

The right for the investor's sponsorship to be on the licensed establishment if the controls and conditions mentioned in the Investors Services and Consultations Guide issued by the General Investment Authority, currently the Ministry of Investment, are available.

The right to transfer his proceeds from the sale of his share, from the surplus of liquidation, or from the profits achieved by the establishment abroad, or to dispose of them by any other legitimate means, and he has the right to transfer the necessary amounts to fulfill any contractual obligations related to the project.

The right to respond to a license amendment request (for a complete application with documents).

The right to receive a justified rejection for any amendment request or request that falls under the special requests in the Investors Services Guide issued by the General Investment Authority, currently the Ministry of Investment.

The right to respond to any inquiry or complaint.

The rights of the foreign investor in the Kingdom include other rights after license cancellation, which are:

The right to appeal the decisions of the General Investment Authority after being notified of the decision to the Grievance Committee.

The right to appeal the decision of the Grievance Committee before the Board of Grievances after being notified of the decision.

The right to issue a license for the purpose of liquidation.

The right to obtain a single-use exit and re-entry visa for the canceled license.

The right to obtain an exit and re-entry visa for companions.

The right to renew the residence once for the canceled license.

The right to transfer sponsorship for a resident foreigner who takes the initiative to apply for voluntary license cancellation.