Saudi Gazette report

RIYADH — Minister of Investment Eng. Khalid Al-Falih announced that that the updated Saudi Investment Law and its executive regulations will come into effect from the beginning of 2025. He said that the new law offers unprecedented opportunities for investors, and would enhance the Kingdom’s position as a premier global investment destination.

“The updated law is an extension of many development measures taken by the Kingdom, and confirms its commitment to providing an attractive, supportive and safe environment for local and foreign investors,” he said.

Al-Falih’s remarks came following the approval of the Investment Law and its executive regulations by the Saudi Council of Ministers recently. The updated law aligns with the previously announced reforms under Vision 2030 and the National Investment Strategy. The law demonstrates Saudi Arabia’s commitment to being open for investment, even amid a global decline in foreign direct investment (FDI).

The updated law is one of the pillars of the National Investment Strategy, within the framework of Vision 2030, and the pivotal role of investment in achieving comprehensive development goals and diversifying the resources of the national economy. The new 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.

Eng. Al-Falih said the updated law reaffirms Saudi Arabia’s commitment to creating a welcoming and secure environment for investors and driving economic growth. “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,” he pointed out.

Developed by the Ministry of Investment of Saudi Arabia (MISA), the updated law follows an extensive consultation process with investors and that is 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 updated law is based on international investment principles. These include: 1-Enhanced investor rights: Investors will be afforded the rule of law, fair treatment, property rights, intellectual property protection and the freedom to manage investments and seamless fund transfers.

2-Transparency and clarity: The updated law brings together the rights and duties of investors under a unified legal framework, aligned with international best practice. 3-Eased regulatory restrictions: A simplified registration will replace international investor licensing.

4-Streamlining procedures and governance: Through dedicated service centers to facilitate government transactions and streamline investment processes. 5-Fair competition: The law fosters a fair and competitive market where private enterprises can thrive in a dynamic and innovative ecosystem.

6- Leveling the playing field: Equal procedural treatment without prejudice to domestic or international investors. 7- Effective dispute resolution: Access to the best-in-class dispute resolution in affiliation with Saudi Arbitration Centre and other affiliates.

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 initiatives and developments, in addition to incentives, facilities, and enablers, have motivated investors to seek a positive, supportive, and stable investment environment.

They have also helped to drive rapid investment growth, with gross fixed capital formation increasing by 74 percent from 2016 to nearly $300 billion in 2023, and FDI inflows by 158 percent, from $7.46 billion in 2017 to $19.3billion in 2023.

FDI balance up 61% to $215 billion in 6 years

Minister Al-Falih said that the balance of foreign direct investment increased by 61 percent between 2017 and 2023, reaching about $215 billion. “Foreign direct investment flows increased by 158 percent in 2023 compared to 2017, to reach $19.3 billion, as these initiatives and developments, in addition to incentives, facilities and enablers, have motivated investors to invest in a positive, supportive and stable investment environment,” he said.

Al-Falih noted that the past few years have witnessed the implementation of more than 800 economic reforms aimed to enhance the Kingdom’s global competitiveness. The National Competitiveness Center - in integration with relevant government agencies - played a leading role in implementing it. All of this and other systems and reforms contributed to increasing the total fixed capital formation by 74 percent compared to 2017, to reach nearly $300 billion in 2023.

Al-Falih stressed that the updates introduced to the Investment Law will enhance its contribution to stimulating economic growth and enhancing the Kingdom’s position as a distinguished global investment destination.

On his part, Minister of Municipal and Rural Affairs and Housing Majid Al-Hogail stressed that the updated Investment Law would enhance the creation of a competitive investment environment that consolidates Saudi Arabia’s position as a leading global destination, in order to achieve the Kingdom’s future vision. “The law would contribute to achieving the aspirations of the government leadership to build smart and prosperous cities, by facilitating investments to provide integrated services in the municipal and housing sectors.”

It is noteworthy that the preparation of the Investment Law was carried out in joint cooperation between the Ministry of Investment and several relevant government agencies, and in extensive consultation with a number of international organizations, and by surveying the opinions of investors to ensure its compatibility with international best practices.

The law represents a unified framework for the rights and duties of investors, thus strengthening the relevant established foundations in the Kingdom, including the rule of law, fair treatment, property rights, freedom to manage investments, protection of intellectual property, and smooth transfer of funds. The law also encourages the use of alternative means of dispute resolution among stakeholders.