In this page: FDI in Figures | What to consider if you invest in Saudi Arabia | Protection of Foreign Investment | Procedures Relative to Foreign Investment | Office Real Estate and Land Ownership | Investment Aid | Investment Opportunities | Sectors Where Investment Opportunities Are Fewer | Finding Assistance For Further Information
According to UNCTAD's World Investment Report 2024, FDI inflows to Saudi Arabia stood at USD 12.3 billion in 2022, down from USD 28 billion one year earlier (-56%); whereas the total stock of FDI reached USD 215.5 billion. At the end of 2023, manufacturing industries held the largest share of Saudi Arabia's foreign direct investment stock at SAR 259 billion (29%). Wholesale and retail trade, along with motor vehicle and motorcycle repairs, followed with SAR 135 billion (15%). Financial and insurance activities ranked third with SAR 112 billion (12%). In terms of countries, the UAE held the largest foreign direct investment stock in Saudi Arabia at SAR 152 billion, followed by Luxembourg with SAR 102 billion and France with SAR 65 billion (data General Authority for Statistics). In the first three quarters of 2024, FDI inflows to the kingdom reached SAR 54.3 billion.
The country has pushed to increase FDI in recent years as part of the “Vision 2030” plan to end reliance on fossil fuels, and it is aiming for USD 100 billion in annual FDI by 2030. Moreover, Saudi Arabia adopted seven “Guiding Principles for Investment Policymaking”, including non-discrimination, investment protection, investment sustainability, enhanced transparency, protection of public policy concerns, ease of entry for employees, and the transfer of knowledge and technology; and the Saudi Arabian General Investment Authority was upgraded, becoming the Ministry of Investment. Recently, Saudi Arabia also launched a SEZ program that focuses on non-traditional industries, which include cloud computing, tourism, renewable energy, and logistics. Among new investment incentives, Saudi Arabia introduced a Special Integrated Logistics Zone, which offers a 50-year tax exemption for investors, including those with full foreign ownership rights. Moreover, investors benefit from VAT advantages for servicing and assembly operations within the zone. Furthermore, the country established the Saudi Investment Promotion Authority, which will collaborate with the Ministry of Investment to gather opinions and prepare proposals for laws, procedures and manuals. Political and social tensions, reduced access to credit and the policy of “Saudization”, which favours the domestic labour force, have all been obstacles to FDI. Nonetheless, the government has invested heavily in national infrastructure to attract investment, and FDI is seen as one of the most effective ways to diversify the economy and provide employment for younger generations. The government opened the retail and wholesale sectors to 100% foreign ownership and has launched a large privatization programme. On 11 August 2024, Saudi Arabia introduced an Updated Investment Law, replacing the 2000 Foreign Investment Law, effective 180 days after publication. The new law ensures equal treatment for local and foreign investors under similar conditions and offers protection against expropriation, except by judicial ruling, legal procedures, and fair compensation. Foreign investors no longer need a license but must register with the Ministry before investing, following the regulations. For activities listed as excluded, approval from the Ministry is required. The law also allows the competent authority to grant investment incentives based on eligibility criteria. Finally, Saudi Arabia ranks 47th among the 132 economies on the Global Innovation Index 2024 and 69th out of 184 countries on the latest Index of Economic Freedom.
Foreign Direct Investment | 2020 | 2021 | 2022 |
---|---|---|---|
FDI Inward Flow (million USD) | 5,399 | 19,286 | 7,886 |
FDI Stock (million USD) | 241,775 | 261,061 | 268,947 |
Number of Greenfield Investments* | 90 | 150 | 239 |
Value of Greenfield Investments (million USD) | 9,431 | 8,958 | 13,473 |
Source: UNCTAD, Latest data available.
Note: * Greenfield Investments are a form of Foreign Direct Investment where a parent company starts a new venture in a foreign country by constructing new operational facilities from the ground up.
Main Investing Countries | 2022, in % |
---|---|
UAE | 13.7 |
Luxembourg | 13.5 |
USA | 10.0 |
Kuwait | 8.6 |
Netherlands | 7.9 |
UK | 7.8 |
Bahrain | 4.4 |
Jordan | 3.7 |
Japan | 3.3 |
France | 3.0 |
China | 2.7 |
Main Invested Sectors | 2022, in % |
---|---|
Manufacturing | 31.3 |
Transportation and storage | 14.8 |
Wholesale and retail trade; repair of motor vehicles and motorcycles | 12.8 |
Financial and Insurance | 11.4 |
Real Estate | 8.0 |
Construction | 5.9 |
Information and Communication | 3.3 |
Mining and Quarrying | 3.1 |
Electricity, gas, steam and air conditioning supplies | 2.3 |
Source: Saudi Ministry of Investment, Latest data available.
Once Saudi Arabia became a member of the WTO in 2005, the foreign investment climate in the Kingdom substantially improved. From an investor's point of view, the country's strong points are:
While the country has undertaken reforms to encourage foreign investment, the legal framework in resolving commercial disputes is considered by some to be inadequate. There is a lack of transparency in applying intellectual property legislation, and the Government imposes quotas of Saudi employees in companies. Cases of delayed payment of some government contracts have been reported. The traditionally conservative cultural environment, including the enforced segregation of the sexes in most businesses and social settings, may discourage certain investors who are not accustomed to such practises.
Other weak points are:
Country Comparison For the Protection of Investors | Saudi Arabia | Middle East & North Africa | United States | Germany |
---|---|---|---|---|
Index of Transaction Transparency* | 9.0 | 6.4 | 7.0 | 5.0 |
Index of Manager’s Responsibility** | 9.0 | 4.8 | 9.0 | 5.0 |
Index of Shareholders’ Power*** | 7.0 | 4.7 | 9.0 | 5.0 |
Source: The World Bank - Doing Business, Latest data available.
There are ready-to-move-in offices available on rent in various business parks across Kingdom's main cities.
However in case the foreign company is of national interest, the Saudi Government may provide temporary space for a limited period till the company establishes itself in the country.
Foreign investment that fulfils the requirements of the Foreign Capital Investment Code enjoys all privileges of national capital and is entitled to the same treatment, protection, and incentives accorded to national capital, which includes exemption from customs duties on machinery and equipment.
In addition, foreign investors who hire Saudis may benefit from a rewards system, whereby the Government would pay 50% of the employees’ salaries, subject to conditions as specified by the Human Resources Development Fund.
The Saudi Arabian General Investment Authority (SAGIA) and Invest Saudi may be contacted for further information about investment laws and opportunities in Saudi Arabia.
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Latest Update: February 2025