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Ready to explore ‘Saudi Arabia this week’ by Analytix, with the latest weekly news updates and business insights from Saudi Arabia. Here we go!
From 18th August to 25th August 2024
Saudi’s New Investment Law to support investors
RIYADH: Saudi Arabia launched a new investment law on August 11, 2024. The law is a part of Saudi Arabia’s strategy to diversify its economy and become a top investment destination. By building confidence in the legal and regulatory environment, the law shall enhance the attractiveness, reliability, and competitiveness of the business environment in Saudi Arabia to both local and international investors. The law will come into effect 180 days after its publication, that is the early 2025.
Key features of the New Investment Law
The new law contains several reforms to enhance the investment environment in Saudi Arabia, providing the fair and favorable landscape for the local and foreign investors. Some of the law’s key features include:
- Simplified Processes: The law eases the various process involved in starting, managing and exiting investments in Saudi Arabia, making it easier for the business to operate in the country.
- Investor Protection: It enhances the investor’s rights and guarantees that investments cannot be confiscated or expropriated without legal processes and reasonable compensation.
- Equal Treatment: Local and Foreign Investors will receive the same treatment; this is a drastic change from previous laws whereby foreign investment entities were required to obtain separate licenses.
- Investment Freedom: The law provides investment freedom, and investors may undertake all business activities that are legal to invest in, though some limitations to foreign investors in certain activities may still apply.
No more separate Foreign Investment License
One of the significant changes in the new law is the removal of the prior law’s requirement for foreign investors for Foreign Investment Licenses. This measure cuts across the registration process and brings foreign investors to parity with local investors. The role of the Ministry of Investment (MISA) will operate and maintain a national register of all investors while other supporting regulations will be offered through their business centres.
This change will ease the process of entering Saudi Arabia’s market and regulate foreign businesses more efficiently; further information about its impact on capital controls and shareholders’ rules is expected to appear in the Implementing Regulations.
Investor Rights and Dispute Resolution
The Investment Law introduces protections for investors, including:
- Equal and Fair Treatment: All the investors will get equal treatment under similar circumstances, hence putting efficiency in the environment of the business.
- Rights to Funds and Property: It will be entirely possible for investors to manage and transfer their investments and property without any delay.
- Dispute Resolution: The law also confirms that the investors have the right to appeal for the resolution of disputes through courts or other means such as arbitration and mediation.
Incentives and Special Economic Zones
To encourage investment, the law contains new incentives that investors will be offered based on the criteria set by the Saudi Government and its agencies. Special Economic Zones shall be granted the powers to offer sector specific measures, standard provisions for which are to be provided in the Implementing Regulations.
Saudi Arabia’s new Investment Law is a step forward in terms of establishing a more friendly and competitive market for businesses. Through investing freedom and equal treatment, the law aims to make Saudi Arabia the most preferred investment hub for international investors.
In light of this new law, it is now the opportune time for any and all businesses to start looking for opportunities in Saudi Arabia. Investors are advised to seek relevant authorities or consult with experts on how these changes can be benefit their investments in Saudi Arabia.
Saudi to see positive GDP growth in H2 2024
RIYADH: Saudi Arabia’s GDP growth forecasts show positive growth in the second half of 2024 at 1.7% for the year and 4.7% for 2025, according to Credit Sights. The economic position of the country is gradually becoming positive as the decline in GDP has reduced in the last quarters.
The deliberate act of lowering the production of oil by 8.5% was a strategic move by Saudi authorities to defend global oil prices and stabilize public finances. However, Saudi Arabia’s trade terms are favorable despite the current cuts in productions, given that crude oil prices need to remain around $80 per barrel that could provide a slightly positive external surplus for the year.
Saudi Arabia’s sovereign USD bonds have experienced an increase at 2.7% year-to-date. These bonds are currently offered at 25 basis points inside the Emerging Markets Investment Grade (EM IG) index which points to their high returns on the market.
Credit Sights remains optimistic about the further growth of Saudi sovereign bonds, urging investors to stake on these assets as a long-term investment with great potential given the favorable global economy and geopolitics.
Riyadh Airport hits new record with 130,000 passengers in a single day
RIYADH: King Khalid International Airport (KKIA) in Riyadh recorded the highest passenger traffic at the end of July and beginning of August 2024. Operated by Riyadh Airports Company (RAC), the airport served 3.5 million passengers in July 2024 compared to the record in June, 3.1 million.
On August 1, 2024, KKIA recorded 130,000 passengers in a single day, which arrived previous records of 125,000 on July 25 and 124,000 on June 13. Its operational efficiency is also evident by the high seat occupancy recording at the rate of 91 percent in July.
Commenting on the result, Ayman AboAbah, the CEO of Riyadh Airports Company, thanked the airport’s team and its partners for their efforts to improve productivity and create a high-quality experience for passengers. However, amid global disruptions within the aviation industry, KKIA had an on-time departure rate of 88% in June and 84% in July 2024, reflecting its dedication to providing quality service and robust business continuity strategies.
184 foreign firs move regional HQs to Saudi Arabia in H1 2024: MISA
RIYADH: In the first half of 2024, 184 foreign companies moved their regional headquarters to Saudi Arabia after getting investment licenses aa per the report of the Ministry of Investment of Saudi Arabia (MISA). This move reflects the Kingdom’s efforts in increasing its investment environment and improve investor experiences.
A total of 57 companies secured licenses in the second quarter, 84% higher than the license granted in the same period in 2023. Investment licenses granted in the first half of 2024 were 2,728, 49.6% more than the previous year, excluding the licenses under Anti-Commercial Cover-Up Law correction campaign. Some of the sectors to benefit from these licenses include construction, manufacturing professional services, education, technology and retail. Most significantly, the mining and quarrying industry had the fastest rate in license issuance with 209.1% increase.
The report also highlighted key measures to facilitate investment, such as “Sustainability Pioneers” initiative by the Ministry of Economy and Planning, which fosters cooperation of leading companies to tackle environmental issues and advance Saudi Arabia’s sustainable development under Vision 2030.
Also, the Fashion Commission introduced ‘The Lab’ initiative in Riyadh to support designers with easier manufacturing and increased investment in the fashion industry.
Furthermore, the Saudi-British Strategic Partnership Council was created to drive economic contribution in 13 areas promoting trade and innovation between the two nations.
Other milestones in the field of education included Saudi Arabia attracting Foreign Direct Investment for 13 private-public institutions, welcoming new international schools, and higher ranks globally for the Saudi universities in research and innovation.
