Saudi Arabia has approved new laws to encourage more investment in the Kingdom.
New laws will enhance transparency and confidence for both domestic and international investors.
It comes as foreign direct investment in Saudi Arabia soared to $215bn in 2024 and the Kingdom looks to attract more business from overseas to the country.
Saudi Arabia investment lawsBuilding on previously announced reforms under Vision 2030 and the National Investment Strategy, the Cabinet has approved an updated investment law for Saudi Arabia.
The updated law brings together several existing freedoms and rights and expressly applies them to investors under one unified framework, providing investors with greater transparency, flexibility and confidence.
The updated law is based on international investment principles. It enhances investor rights by guaranteeing the rule of law, fair treatment, property rights, intellectual property protection, and the freedom to manage investments and seamless fund transfers.
Additionally, the law ensures transparency and clarity by consolidating investor rights and duties within a unified legal framework that aligns with global best practices.
To facilitate investment, the law simplifies the regulatory landscape by replacing the previous international investor licensing with a streamlined registration process.
Furthermore, dedicated service centres will expedite government transactions and streamline investment procedures, enhancing overall governance.
The law fosters a level playing field for both domestic and international investors, promoting fair competition and a dynamic business ecosystem.
To address potential disputes, investors will have access to world-class dispute resolution mechanisms through affiliations with the Saudi Arbitration Centre and other relevant institutions.
The update, in conjunction with Saudi Arabia’s comprehensive reform agenda, offers investors unprecedented opportunities, demonstrating Saudi Arabia’s commitment to being open for investment, even amid a global decline in FDI.
According to the World Investment Report 2024, published by UN Trade and Development, pro-investment measures have accounted for less than half of the new investment policies introduced by advanced economies in each of the last six years.
The pro-investment measures introduced by Saudi Arabia in recent years include the introduction of the Civil Transactions Law, Private Sector Participation Law, Companies Law, Bankruptcy Law and Special Economic Zones.
These reforms have helped drive rapid investment growth, with gross fixed capital formation increasing by 74 per cent from 2017 to nearly $300bn in 2023.
Additionally, FDI stock increased by 61 per cent from 2017 to 2023, reaching almost $215bn in 2023, and FDI inflows have surged by 158 per cent, jumping from $7.5bn in 2017 to $19.3bn in 2023.
These initiatives and developments, in addition to incentives, facilities, and enablers, have motivated investors to seek a positive, supportive, and stable investment environment
Minister of Investment Khalid Al-Falih said: “The law reaffirms Saudi Arabia’s commitment to creating a welcoming and secure environment for investors, driving economic growth, and enhancing the Kingdom’s position as a premier global investment destination.”
“The policy direction outlined in Vision 2030 allows investors to invest with certainty and to grow with confidence at a time when many other markets are experiencing considerable volatility.”
“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.”
Developed by the Ministry of Investment of Saudi Arabia (MISA), the updated law follows an extensive consultation process investors and in line with global best practices.
The law is also compatible with Gulf Cooperation Council (GCC), World Trade Organization (WTO) and other bilateral investment treaties and international obligations.
The executive regulations will come into effect beginning in 2025.
