Building on previously announced reforms under Vision 2030 and the National Investment Strategy, the Cabinet has approved an updated investment law for Saudi Arabia. The updated 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.
The new investment law will come into effect beginning in 2025 and it cancels the Foreign Investment Law which was last update in March 2014.
On the occasion of the newly announced law, Khalid Al-Falih, Minister of Investment said, “The law reaffirms Saudi Arabia’s commitment to creating a welcoming and secure environment for investors, driving economic growth, and enhancing the Kingdom’s position as a premier global investment destination… 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.”
Developed by the Ministry of Investment of Saudi Arabia (MISA), the updated law follows an extensive consultation process investors and in line with global best practices. The Ministry studied international and regional standard practices, such as: (Indonesia, Singapore, Germany, United Arab Emirates, Turkey, United States of America) with the aim of identifying the methodologies and practices followed in the countries benchmarked, addressing the challenges faced, and developing concepts to enhance the regulatory environment for investment. The law is also compatible with Gulf Cooperation Council (GCC), World Trade Organization (WTO) and other bilateral investment treaties and international obligations.
Domestically, The Ministry reviewed and studied the feedback received – through «Istitlaa» platform – or directly from relevant government agencies (such as: the Saudi Central Bank, the General Authority for Competition, and the Saudi Authority for Intellectual Property), the private sector, local and foreign investors, and from relevant consultancy offices. In addition, the Ministry held meetings and workshops with a number of government agencies, the private sector, local and foreign investors, Saudi universities, international organizations, and other relevant bodies to discuss the law, listen to their feedback and views on it, and update the law in light of those feedback and views.
According to Fahad Abuljadayel writing for Bloomberg, “The updated investment law enhances investor rights by guaranteeing the rule of law, fair treatment and the freedom to transfer funds without delay, among other things, the Ministry of Investment said on Sunday. Foreign investor licenses will also be scrapped and replaced with a “simplified” registration process, while dedicated service centers will open to help expedite the process of investing in Saudi Arabia.”
Carla Slim, regional economist for Mena at Standard Chartered, told AGBI, “The scope of the updated investment law has been broadened to include both local and foreign investors, which levels the legal playing field for domestic and foreign investors – protecting investors’ rights and supporting transparency.”
The government introduced a commercial code last year and anti-corruption measures to encourage foreign investment. Earlier this month Saudi Arabia amended its labour laws to clarify hiring and firing processes and improve employee rights
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