Saudi Arabia’s Council of Ministers has recently approved the updated investment law, building on previous reforms under Vision 2030 and the National Investment Strategy. The Kingdom’s latest investment law updates bring together several existing freedoms and rights and apply them to investors under one unified framework, ensuring greater transparency, flexibility, and confidence for investors.
The investment law update, in addition to Saudi Arabia’s comprehensive reform agenda, offers investors new opportunities, demonstrating the Kingdom’s commitment to attracting additional foreign direct investment (FDI), even amid a global decline in FDI.
Saudi Arabia’s pro-investment measures
According to the UN Trade and Development’s World Investment Report 2024, 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.
Saudi Arabia’s pro-investment measures in recent years include the introduction of the Civil Transactions Law, Private Sector Participation Law, Companies Law, Bankruptcy Law and Special Economic Zones.
“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,” added Al-Falih.
These initiatives and developments, in addition to incentives, facilities and enablers, have motivated investors to seek the country’s positive, supportive, and stable investment environment.
They have also helped drive rapid investment growth, with gross fixed capital formation increasing by 74 percent from 2016 to nearly $300 billion in 2023. In addition, Saudi Arabia’s FDI inflows rose by 158 percent, from $7.46 billion in 2017 to $19.3 billion in 2023.
“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,” he added.
Regulations to come into effect in 2025
Developed by the Ministry of Investment of Saudi Arabia (MISA), the new investment law updates follow an extensive consultation process with investors and are in line with global best practices. The law is also compatible with the Gulf Cooperation Council (GCC), the World Trade Organization (WTO), and other bilateral investment treaties and international obligations. The executive regulations will come into effect in 2025.
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Law’s key principles
Saudi Arabia’s updated investment law is based on international investment principles, including:
- Greater investor rights: Investors will be afforded the rule of law, fair treatment, property rights and intellectual property protection. Moreover, they will have the freedom to manage investments and seamless fund transfers.
- Transparency and clarity: The updated investment law brings together the rights and duties of investors under a unified legal framework, aligned with international best practice.
- Less regulatory restrictions: A simplified registration will replace international investor licensing.
- Streamlining procedures and governance: Saudi Arabia will ease procedures through dedicated service centers to facilitate government transactions and streamline investment processes.
- Fair competition: Saudi Arabia’s investment law will foster a fair and competitive market where private enterprises can thrive in a dynamic and innovative ecosystem.
- Leveling the playing field: Saudi Arabia will ensure equal procedural treatment without prejudice to domestic or international investors.
- Effective dispute resolution: Investors will gain access to the best-in-class dispute resolution in affiliation with the Saudi Arbitration Center and other affiliates.
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