Ministry issues record Saudi business licences in Q1

Yohanes Alex Wijaya/Alamy via Reuters Connect

• Investment ministry issues 3,157 licences
• A 9% increase on Q4 2023
• Construction and manufacturing dominate

Saudi Arabia’s Ministry of Investment issued a record number of business licences in the first quarter of 2024, as the country tries to drum up foreign investor interest for its economic expansion plans.  

The ministry issued 3,157 licences, a 9 percent rise from 2,884 issued in the last quarter of 2023, which was the previous high. 

Only 351 licences were issued in the first quarter of 2020, when the policy of encouraging business growth was still in its infancy. 

---

---

Construction and manufacturing dominated the investment licences issued, with 864 and 620 respectively, according to figures from the Saudi business portal Argaam.

The numbers appear to back up the government’s claim that non-oil economic activity is growing despite the oil production cuts that caused a 0.8 percent GDP contraction in 2023. Non-oil activity accounted for 50 percent of 2023’s GDP figure. 

The report did not say how many of the licences were from local companies. The government now requires foreign companies to set up regional headquarters in Saudi Arabia for access to contracts worth SAR1 million ($270,000) or more. 

• New Saudi visas aim to lure ‘high-wealth investors’
• ‘No loopholes for companies’ to be found in Saudi HQ rules
• Saudi FDI inflow up but still far short of target

But foreign direct investment is lagging behind government targets, deepening financial constraints that have caused a rethink about some of the giga-projects at the heart of Saudi Arabia’s massive economic transformation programme. 

The government says it has also introduced easier visa procedures and eased business regulations to bring more foreign capital into the country. 

The government faces three years of budget deficits as the oil price fails to hit its breakeven price, while high interest rates have increased the costs of borrowing, causing the Public Investment Fund to slow down spending. 

Financial and insurance services accounted for 21 licences. In February investment bank Rothschild & Co opened an office in Riyadh’s King Abdullah Financial District to manage advisory services including mergers and acquisitions, debt advisory and restructuring and private equity.