The Saudi Arabian General Investment Authority (SAGIA) was established in 2000 to be a major driver in the Kingdom’s efforts to liberalize its economy. It has certainly fulfilled that role and over the last 14 years SAGIA has been a chief strategist, leading promoter and the administrative front office for the Kingdom’s business as Saudi Arabia’s economic policies and regulatory framework have evolved significantly.
Well-known for it’s promotion of Saudi Arabia’s Economic Cities initiative, SAGIA has also pushed hard to improve and feature the Kingdom’s performance in benchmark studies such as the World Bank’s Doing Business report, the World Economic Forum’s Global Competitiveness Report, and the IMD’s World Competitiveness Yearbook.
Over the past two years, SAGIA’s primary operational focus appears to have swung away from an emphasis on high-cost, long-term heavy industry initiatives towards policies intended to attract technology-driven businesses that can be expedited to provide both jobs and training for Saudis. In a March 2014 Financial Times article discussing SAGIA, Abdulaziz Al-Gasim, a Riyadh-based lawyer observed that, “SAGIA has been changing direction and moving away from the previous strategy. It wants to attract small and medium-size businesses, investments that transfer technology, training and know-how.”
It may be that the transition in SAGIA’s strategy coincided with the arrival in 2012 of Abdullatif Al-Othman, an experienced, long-time senior executive with Saudi Aramco, who succeeded Amr Dabbagh as Governor of SAGIA. More likely, SAGIA’s changed focus is the result of a re-shuffling of Saudi national economic priorities following the Arab Spring in 2011. Many of the issues that had been of long-term concern — Saudization, job-creation and private-sector growth — all of the sudden acquired a much shorter time horizon and moved to the very top of the Kingdom’s strategic response to the political and economic challenges of the Arab Spring.
Not unlike the Nitaqat Program that is fundamentally reforming the Saudi labor market, SAGIA’s increased emphasis on technology transfer and job-creating investments is not entirely smooth sailing. In it’s September 2014 Briefing Note, An Overview of Recent Developments at the Saudi Arabian General Investment Authority, Clifford Chance examines SAGIA’s new fast-track policies for the contracting, light manufacturing and restaurants sectors. The overview expresses some concern with the clarity of the guidelines and comments on the new approach in general:
SAGIA is an instrument of government policy and a critical one at that with a proven track record. It is an important gate-keeper for anybody seeking access to Saudi markets. Savvy businesses will be alert to these changes, find the right legal and local partners and capitalize on this transition.
