Saudi, UAE creating an investment future for the region
Gulf governments, especially Saudi and the UAE, have taken new measures to attract and facilitate investment in their business sectors. They issued legislation and reforms that motivate companies to launch projects and enhance their business and investment environments.
On the sidelines of the “Invest in Saudi Arabia” forum at the Dubai Expo, a 400% jump in the issuance of investment licenses compared to the same period the previous year, numbers during Q4 2021 revealed.
Saudi has succeeded in attracting investors through legislative reforms it has set within the framework of the National Investment Strategy, which aims to achieve cumulative investments of more than 12 trillion riyals ($3.2 trillion) by 2030.
Entertainment, tourism, sports, transportation, culture, and education, are among the sectors that will benefit from the promising foreign investment reforms in the Kingdom of Saudi Arabia, along with other sectors. As a result, many job opportunities will open, and expectations are that unemployment will drop to 7 percent by 2030.
New investment system
Vision 2030 has opened all fields of investment to foreigners, through the enactment of new business laws, as the Ministry of Investment is formulating a new system.
The system aims at attracting direct investments and enhancing the investment environment through four pillars: facilitating procedures for entering and protecting direct investments, equal treatment between local and foreign investors by defining investor rights and obligations, supporting the principle of competitive neutrality and fairness, and ensuring equal opportunities in the treatment of direct investments made by investors in the public and private sectors, as this system is applied to all direct investments inside the Kingdom.
In addition to the new system to be adopted after the completion of the referendum on it, there are many advantages that attract the attention of foreign investment in Saudi, including:
- Emerging Industrial Free Zones: In Saudi Arabia, there are two main business start-up zones. The industrial cities and the economic cities are the two free zones available for various investment sectors.
- Delegation Department: It is a department that takes upon itself the task of facilitating the establishment of a business.
- Easy incorporation process: The Saudi government supports its investors by facilitating the requirements and procedures to be completed for the establishment of companies there. It has made the procedure very easy, saving time and effort.
- Diversity of commercial activities: There are many business options available, given the demographic and economic growth in the Kingdom, which allows the investor to innovate with new activities and create diverse opportunities.
- Avoiding double taxation: Since double taxation is the collection of similar taxes in two or more countries from the same taxpayer, and which harms the exchange of goods and services, the movement of capital, technology transfer, and cross-border trade, the country has concluded 137 agreements to avoid this double taxation, which is one of the encouraging factors for investment.
Eliminating 71 percent of business licensing requirements
The strategy of economic diversification by attracting investments is not limited to Saudi Arabia. The UAE is also a pioneer in developing the business environment to remain at its global competitive levels and accelerate economic growth.
It is expected that the impact of the success of “Expo 2020” will remain for decades, which will allow the UAE to strengthen its position in terms of attracting investments and companies from all over the world.
While the International Monetary Fund expected that foreign direct investment flows would rise due to economic stimulus efforts, the Department of Economic Development in Abu Dhabi announced the reduction of procedures and business licensing requirements in the emirate by 71 percent, which previously numbered 28,788.
This is part of its focus on building an integrated system to support investors in order to enhance the emirate’s position as a preferred regional and global destination for business.
The canceled requirements include several areas, the most important of which are healthcare, transportation, food, and agriculture, in addition to public health and the environment.
Among the list of 26 government agencies participating in efforts to reduce business licensing requirements, the percentages of requirements reduction were as follows:
- The Department of Municipalities and Transport “DMT” – the public health sector requirements were reduced by 95%, from 9,654 to 511, covering 1,215 activities.
- The transport sector reduced procedures by 78 percent, from 523 to 115
- Abu Dhabi Agriculture and Food Safety Authority “ADAFSA” with a reduced rate of 74 percent, from 6,587 to 1,716 requirements covering 288 activities
- Abu Dhabi Sports Council by 91 percent, from 949 to 82 requirements covering 58 activities
- The Department of Health by 56 percent from 1,512 to 672 requirements, covering 84 activities.
- Abu Dhabi Police by 79 percent, from 387 to 80 requirements
- The Securities and Commodities Authority by 40% from 1,160 to 700 requirements.
The “Abu Dhabi Economy” also reduced the requirements of 118 commercial activities that it regulates from 709 to 162, or 77 percent, while it reduced the requirements of other activities, such as auto spare parts trading and maintenance, to only one requirement.
In addition to reducing procedures, the smart “Investor Journey platform” to support investors, which was presented at GITEX 2021, provides tools and information that contribute to accelerating the procedures for issuing commercial licenses and direct communication with the relevant authorities in the public and private sectors.