Riyadh revamps investment law as it seeks giga-project cash

Lev Radin/Pacific Press via Zuma Press/Alamy

• ‘Greater transparency and flexibility’
• Update takes effect at start of 2025
• FDI still well below $100bn target

Saudi Arabia has updated its investment laws as it looks to attract more private sector funding for giga-projects.

The update, announced on Sunday, pulls together Vision 2030 reforms and the National Investment Strategy under one framework. It aims to provide investors with “greater transparency, flexibility and confidence”, according to a government statement.

Saudi Arabia has introduced laws covering civil transactions, private sector participation, companies and bankruptcy in recent years, as well as setting up special economic zones.

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These measures have led to an increase in foreign direct investment, although it is still well below the 2030 target of $100 billion a year.

“The updated investment law builds on an extensive diversification agenda, from an enhanced quality-of-life offering to investment-specific measures such as the establishment of special economic zones,” said Khalid Al Falih, Saudi minister of investment.

The regulations will come into effect at the beginning of 2025.

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Carla Slim, regional economist for Mena at Standard Chartered, told AGBI: “The scope of the updated investment law has been broadened to include both local and foreign investors, which levels the legal playing field for domestic and foreign investors – protecting investors’ rights and supporting transparency.”

The multi-billion-dollar giga-projects programme is managed by Saudi Arabia’s Public Investment Fund.

However, according to James Swanston of Capital Economics, the wealth fund “is increasingly being leant on to offset weak FDI, resulting in a slowdown in its investments abroad”.

Some foreign companies are still wary about the ease of doing business in Saudi Arabia, although the government has succeeded in becoming the region’s venture capital centre. Funding for small companies from banks, financial institutions and venture capitalists rose sharply in 2023. 

The government introduced a commercial code last year and anti-corruption measures to encourage foreign investment. 

Companies operating in Saudi Arabia must base their regional headquarters in the kingdom if they want access to government contracts worth SAR1 million ($260,000) or more.

Earlier this month Saudi Arabia amended its labour laws to clarify hiring and firing processes and improve employee rights.