Aràbia Saudita flag Aràbia Saudita: Invertir a l'Aràbia Saudita

Inversió estrangera directa (IED) a l'Aràbia Saudita

FDI in Figures

FDI flows to Saudi Arabia had gradually declined due to political factors and lower oil prices; however, economic diversification and new projects outside the oil and gas sector helped reverse the trend. According to UNCTAD's World Investment Report 2021, FDI inflows in Saudi Arabia remained resilient despite the pandemic, increasing by 20% to USD 5.5 billion in 2020, up from USD 4.6 billion one year earlier. Notably, investments rebounded in the last quarter of 2020, reaching nearly USD 1.9 billion. Policy interventions aimed at diversifying investment seem to be effective: key investments in financial services, retail, e-commerce, and ICT have been reported. The stock of FDI in the country increased in 2020 and reached USD 241 billion. The United Arab Emirates, the United States, France, Singapore, Japan, Kuwait and Malaysia are the main investors in Saudi Arabia. The investments are mainly oriented towards the chemical industry, real estate, fossil fuels, automobiles, tourism, plastics and machinery. In the first half of 2021, Saudi authorities reported that FDI inflows rose 33% from the same period in 2020.
Meanwhile, outflows from Saudi Arabia decelerated sharply (-64% to USD 4.9 billion). This was the result of the Saudi Public Investment Fund focusing back on domestic investment to offset the negative economic effects of the pandemic, along with a slowdown in FDI inflows.

The Kingdom has pushed to increase FDI in recent years as part of the Vision 2030 plan to end reliance on fossil fuels, and it is aiming for USD 100 billion in annual FDI by 2030. Moreover, Saudi Arabia adopted seven “Guiding Principles for Investment Policymaking”, including non- discrimination, investment protection, investment sustainability, enhanced transparency, protection of public policy concerns, ease of entry for employees, and the transfer of knowledge and technology; and the Saudi Arabian General Investment Authority was upgraded, becoming the Ministry of Investment. Recently, Saudi Arabia also launched a SEZ program that focuses on non-traditional industries, which include cloud computing, tourism, renewable energy, and logistics. Political and social tensions, reduced access to credit and the policy of “Saudization”, which favours the domestic labour force, have all been obstacles to FDI. Nonetheless, the government has invested heavily in national infrastructure to attract investment, and FDI is seen as one of the most effective ways to diversify the economy and provide employment for younger generations. The government opened the retail and wholesale sectors to 100% foreign ownership and has launched a large privatization programme. The authorities welcome FDI due to its ability to transfer technology, employ and train the national workforce, foster economic development and enhance local raw materials. The country's controlled inflation and relatively stable exchange rate, openness to foreign capital in upstream gas, as well as extensive privatisation programmes are among the advantages attracting investors to the country. The dynamic performance of the banking sector is driving the growth of the non-oil sector. Lastly, access to the world's largest oil reserves, very low energy costs and a high standard of living are decisive factors for foreign investors. Nevertheless, foreign investment is currently prohibited in 10 sectors, including oil exploration, drilling, and production; fisheries; security and detective services; and real estate investment in the holy cities of Mecca and Medina.

Saudi Arabia ranked 62nd out of 190 economies in the latest World Bank's Doing Business Report, up by 30 places from the previous edition. The country was also ranked the world's top improver on the list, mainly as a result of significant progress recorded in trading across borders and obtaining credit.

 
Foreign Direct Investment 201820192020
FDI Inward Flow (million USD) 4,2474,5635,486
FDI Stock (million USD) 231,814236,376241,862
Number of Greenfield Investments* 10513487
Value of Greenfield Investments (million USD) 15,54912,52610,673

Source: UNCTAD, Latest available data

Note: * Greenfield Investments are a form of Foreign Direct Investment where a parent company starts a new venture in a foreign country by constructing new operational facilities from the ground up.

 
Country Comparison For the Protection of Investors Saudi Arabia Middle East & North Africa United States Germany
Index of Transaction Transparency* 9.0 6.4 7.0 5.0
Index of Manager’s Responsibility** 9.0 4.8 9.0 5.0
Index of Shareholders’ Power*** 7.0 4.7 9.0 5.0

Source: Doing Business, Latest available data

Note: *The Greater the Index, the More Transparent the Conditions of Transactions. **The Greater the Index, the More the Manager is Personally Responsible. *** The Greater the Index, the Easier it Will Be For Shareholders to Take Legal Action.

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What to consider if you invest in Saudi Arabia

Strong Points

Once Saudi Arabia became a member of the WTO in 2005, the foreign investment climate in the Kingdom substantially improved. From an investor's point of view, the country's strong points are:

  • Economic stability
  • Largest world oil reserves, important position in OPEC
  • A large local market with a high spending power (and a population of over 35 million)
  • A strategy of economic diversification (with the program Saudi Vision 2030)
  • Sound infrastructure
  • Consolidated finances
  • Well-regulated banking system
Weak Points

While the country has undertaken reforms to encourage foreign investment, the legal framework in resolving commercial disputes is considered by some to be inadequate. There is a lack of transparency in applying intellectual property legislation, and the Government imposes quotas of Saudi employees in companies. Cases of delayed payment of some government contracts have been reported. The traditionally conservative cultural environment, including the enforced segregation of the sexes in most businesses and social settings, may discourage certain investors who are not accustomed to such practises.

Other weak points are:

  • High dependence on hydrocarbons sector
  • High unemployment rate among natives, and under-employment of women
  • Economy is dependant on public spending
  • Weak political governance
  • Weak economic transparency
  • Deteriorated regional geopolitical environment.
Government Measures to Motivate or Restrict FDI
According to the law on foreign direct investment, being licensed to operate in Saudi Arabia as a foreign investor is necessary to obtain any permit to start operations. In 2018, the Saudi Council of Ministers approved full foreign investments in the transport, recruitment, audio visual and real estate sectors. Foreign direct investments (FDI) can be made in Saudi Arabia in all business activities that are not restricted to those which must be exclusively undertaken by Gulf Cooperation Council nationals or companies owned by them, the negative list (oil and mining sector, some services, etc.). Foreign investors are no longer required to have local partners in a number of sectors and may own property for company activities. They are allowed to repatriate their company money and can sponsor foreign employees, subject to certain criteria in accordance with the Nitaqat (Saudisation) programme. In order to facilitate investments in the Kingdom, the Saudi Arabian General Investment Authority (SAGIA) has set up an Investment Services Centre (ISC). The ISC must decide to grant or refuse a license within 30 days of receiving an application from an investor. Finally, the Saudi Centre for commercial arbitration has been created, which assures foreign investors an inexpensive fee in case of commercial arbitration. 

The Saudi government launched Saudi Vision 2030, an ambitious development program that foresees important opportunities for foreign investors in the sectors of education, housing, health and energy, among others. In 2016, Saudi Arabia authorised the acquisition of 100% of assets by foreign investors in retail and wholesale trade. A privatisation program has also been launched. The government also tries to attract FDI in the sectors of renewable energy and entertainment.

Invest Saudi
was created by the Ministry of investment (MISA) to be the national investment promotion brand of the Kingdom and offer several services to investors. Saudi Arabia's incentives and support schemes are specifically designed to encourage investment with the potential to diversify and improve the Kingdom's competitiveness. The incentives include financial, fiscal and employment support.

Nevertheless, other recent governmental initiatives aimed at favouring employment of Saudi citizens may discourage foreign investors: cost of working permits for foreigners, quota of foreign worker employees, stricter policy of localisation and introduction of a VAT beginning of 2018.
Bilateral investment conventions signed by Saudi Arabia
Saudi Bilateral Investment Agreements

Find out more about Investment Service Providers in Saudi Arabia on GlobalTrade.net, the Directory for International Trade Service Providers.

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Actualitzacions: May 2022

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