30 Asian Legal Business | October 2024 While investor interest in Saudi Arabia has been growing in the last few years, stalling foreign direct investment numbers highlight the kingdom’s need for further reforms to meet its ambitious targets of $100 billion in annual FDI by 2030. Saudi Arabia drew $5.18 billion in FDI in Q2, which was little changed from $5.17 billion in Q2 last year, the General Authority of Statistics data showed. Although FDI volumes in Q2 rose 14.5 percent from the first quarter of 2024, total inflows in the first half were similar to the first six months of last year at $9.6 billion, versus $9.5 billion. The International Monetary Fund, in a recent country report, said reforms to enhance Saudi Arabia’s attractiveness for foreign investment are progressing. This recognised the record high number of foreign investment licenses and increasing licenses for firms to establish regional headquarters in the country. “Enhancing private sector development will require providing more clarity to investors and removing remaining bottlenecks identified, including those in the regulatory and business environment,” the IMF said. The new Investment Law aims to do just that. The law isn’t just a facelift, it’s a complete makeover. The existing requirement for foreign investment licenses has been a significant barrier, which the new law replaces with a simpler registration process under a new national register of investors. Experts anticipate that the simplified registration process will significantly reduce bureaucratic hurdles for foreign investors. Middle East In a move that’s making waves in the global investment community, Saudi Arabia has unveiled its new Investment Law, set to take effect in Feb. 2025. The Saudi Arabian government, in its pursuit of Vision 2030, is betting big on this new law to diversify its economy and reduce dependence on oil revenues. The royal flush they’re hoping for includes attracting more foreign direct investment, creating a level playing field for domestic and foreign investors, streamlining investment procedures, enhancing investor protections, and promoting fair competition. Both domestic and foreign businesses are eyeing this development with keen interest. The expectation is that this new law will open doors wider than ever before, allowing for easier market entry and operation in the Kingdom. “This is a clear signal to the market that the Kingdom is serious about attracting foreign investment,” says Sean Huber, a Saudi Arabia-based partner at global law firm Greenberg Traurig. Clear signals Saudi Arabia’s new investment law is a legislative ace up the kingdom’s sleeve that signals a conducive, clear and equal-opportunity climate for global capital. But only time will tell whether this new law will truly be a game-changer, or just another mirage in the desert of economic reforms. By Nimitt Dixit • New law aims to attract foreign investment • Equal treatment for domestic and foreign investors • Enhanced dispute resolution options for global investors
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