Finance

Saudi Arabia cuts more red tape to tempt foreign investors

September 4, 2024

Saudi Arabia’s assistant investment minister, Ibrahim Al Mubarak, says FDI has risen 150% since 2016

Registration to be simplified
Changes to commercial code
Riyadh keen to tackle ‘problem area’

Saudi Arabia is simplifying its registration process for foreign investors as part of its strategy to attract more international companies.

The government approved a revamp of its investment law last month, aiming to reassure overseas investors that they would be on a level playing field with Saudi nationals.

The reforms come into effect in January and assistant investment minister Ibrahim Al Mubarak said “one of the key changes is that we’re moving from investment licensing into a more simplified registration process for the investors”.

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The lack of ease of doing business had been “a problem area”, he added.

Al Mubarak also pointed to changes to the Saudi commercial code and to company and bankruptcy laws, a premium residency programme, and special economic zones offering tax and other incentives.

Total foreign direct investment for 2023 was SAR46 billion ($12.3 billion), according to the General Authority for Statistics. This is well below the $100 billion a year that has been set as a 2030 target – and the 2022 inflow of almost $33 billion.

Al Mubarak said the longer-term picture was more promising. “From 2016 to today we have a 150 percent increase. We look at the underlying trends,” he said.

“We’ve had 230 deals closed in 2023. We have seen a tenfold increase in investment licences, from around 3,000 to 30,000 in 2023.”

Sahiqa Bennett, a British technology entrepreneur who has been advising the Saudi government, said the procedures had become easier since 2019, but Riyadh’s desire to vet entrants and rising interest from potential investors had led to slowed the process.

Bennett said: “Some of the red tape was there to make sure people had enough funds, were credible and had achieved something elsewhere. Now they want to make the ecosystem more robust. If you have a ton of startups but lack investors, it’s a problem.”