Saudi Arabia unveils investment principles as it courts foreign investors
The seven-point agenda will support the development of a competitive investment environment in the kingdom
Saudi Arabia unveiled seven investment principles that include equality for foreign and Saudi investors as the Arab world’s biggest economy looks to attract global conglomerates to boost foreign direct investment.
Established through a royal decree, the seven-point agenda will support the development of a competitive investment environment in the kingdom, which is going through a massive economic overhaul, the Saudi Arabian General Investment Authority said in a statement on Tuesday.
“The rapid pace of economic transformation in the coming years is opening exciting investment opportunities – both in Saudi, a G-20 economy opening up to international businesses, and in the broader Middle East,” said Ibrahim Al Omar, governor of Sagia. “These principles will play an important role in underpinning the reforms that are making it easier for investors to access these markets,”.
Saudi Arabia, the world's biggest oil exporter, is undergoing a series of social and economic reforms to cut its dependence on the sale of hydrocarbons. The kingdom is focusing on increasing the contribution of its non-oil economy to gross domestic product by cultivating a local manufacturing industry and attracting FDI. The non-oil sector accounts for about 40 per cent of GDP at present. The collapse of oil prices in mid-2014 from a peak of $115 per barrel to lows of below $30 per barrel in 2016 accelerated the momentum to overhaul the economy.
Under its Vision 2030 programme, Saudi Arabia has set the target of increasing foreign investment to 5.7 per cent of the country’s GDP from 3.8 per cent. Last year, FDI recorded a 127 per cent year-on-year growth, according to Sagia, which did not provide further details. The World Bank has ranked Saudi Arabia as the fourth-largest reformer within the G-20 in its latest Doing Business report.
The seven principles that will act as guidelines for current and future investment regulations include: ensuring equality between Saudi and foreign investors; protection of investments in compliance with the laws in Saudi Arabia; enabling the sustainability of investment and maintaining transparency when addressing investors complaints.
The agenda also addresses: access to equal investment incentives and implementing transparent, non-discriminative criteria for eligibility; implementing social and environmental standards; facilitating access procedures for foreign workers and their families, and ensuring the transfer of knowledge, technology and enhancement of local human capital.
Sagia, the kingdom’s state-backed inward investment agency, is also working with the World Bank to improve the country’s global ranking in terms of ease of doing business and has identified 400 reforms that could help it attract more investments. About 40 per cent of those measures have been completed so far, Mr Al Omar said in October at the Future Investment Initiative conference in Riyadh.
The establishment of a commercial arbitration centre, allowing investors to start their business within 24 hours through Sagia’s online portal and cutting containers’ clearance time at ports from two weeks to 24 hours, are among the reforms that have been carried out, he said.
Saudi Arabia is ranked 92nd among 190 countries, ahead of states such as India, the Philippines, Argentina and Lebanon, according to the 2018 World Bank rankings.
Updated: January 23, 2019 11:59 AM