Saudi Arabia unveils new investment regulations to boost foreign capital

Saudi Arabia has unveiled new regulations aimed at enhancing transparency and simplifying the investment process in the Kingdom, as part of its efforts to attract more foreign capital and support economic diversification.

According to a statement issued on Monday from Saudi Arabia's Ministry of Investment, the Saudi Cabinet has approved an updated investment system that strengthens investors' rights and aims to "develop and enhance the competitiveness of the investment environment, contribute to economic development, and create job opportunities by providing an attractive investment climate."

Under the new amendments, the process of establishing investments, owning assets, and exiting or liquidating investments has been "simplified," with provisions to "guarantee and enhance investors' rights," "ensure equal treatment between local and foreign investors," and "provide transparent, efficient, and fair procedures for investors and their investments."

The reforms also support the principle of competitive neutrality, fairness, and equal opportunity in investment treatment.

The amendments allow investors to use alternative dispute resolution methods such as arbitration, mediation, and reconciliation, with the possibility of granting investment incentives to both local and foreign investors.

Foreign direct investment (FDI) inflows amounted to approximately $19 billion in 2023, exceeding the annual average of $17 billion between 2017 and 2022 but falling short of last year's target of $22 billion.

FDI inflows in the first quarter amounted to $4.5 billion, with the Kingdom targeting inflows of $29 billion in 2024. By 2030, Saudi Arabia aims to attract more than $100 billion in FDI annually.

Saudi Minister of Investment Khalid Al-Falih stated in a press release that the new system reaffirms the Kingdom's commitment to providing an attractive, supportive, and secure environment for both local and foreign investors.

As part of the new reforms, foreign investor licenses will be abolished and replaced with a "simplified" registration process. Additionally, dedicated service centers will be established to expedite investment processes in the Kingdom.

These reforms are expected to take effect in early 2025.

Saudi Arabia has taken several steps in recent years to attract foreign investment, including issuing specialized visas for investors, creating special economic zones with lower tax rates, and introducing new laws related to civil transactions and bankruptcy.

The Kingdom emphasized that the updated law aligns with international practices and was developed in consultation with global investors and international organizations.

In recent years, Saudi Arabia has implemented over 800 economic reforms, contributing to a 74% increase in gross fixed capital formation since 2017, reaching nearly $300 billion in 2023. The stock of FDI also increased by 61% during the same period, reaching approximately $215 billion.