Prime Highlights:
The country’s net foreign direct investment surged by 37% to SR16 billion ($4.27 billion) in Q3 2024.
Outflows of FDI stand at 74.36% year on year with respect to the same period last year while inflows are down by 7.22%.
With this boom in foreign investment has come regulatory reforms in three-way labor, company, and investment laws.
The vision 2030 of the Kingdom is to reach an annual FDI of $100 billion by 2030 and increase its contribution of FDI to GDP to 5.7%.
Key Background:
The three months through September 2024 saw a 37% surge of net foreign direct investment, the General Authority of Statistics said, which was 37%. Saudi Arabia registered a leap of net foreign direct investment to SR16 billion or $4.27 billion. Although that was still the largest recorded, these overall inflows were lesser.
The net FDI witnessed a remarkable increase primarily because of a sharp decline of 74.36% in the FDI outflows that declined to SR2 billion. Nevertheless, FDI inflows or investments made to Saudi Arabia during this review period declined to SR18 billion by going down by 7.22%.
This is happening at a time when Saudi Arabia continues to implement major regulatory reforms aimed at boosting foreign investment into the country under its Vision 2030 program. The objective is to transform the Kingdom into a leading global investment destination and to catch up with the end-of-the-decade target of attracting an annual $100 billion of FDI. By the end of the decade, it aims to improve its gross domestic product (GDP) contribution from FDI to 5.7%.
New investment laws, along with modernizing frameworks of labor and companies and civil transactions, present a proof of commitment regarding improvement of the business environment that recently was witnessed in that country.Among the most significant changes is the substitution of the foreign licensing system with a simplified registration process under the management of the Ministry of Investment. This change will likely improve protections for foreign investors, treat both domestic and international businesses equally, and increase investor confidence.
In addition, amendments to the labor law have been done, providing more employee benefits, such as extended parental leave and better mechanisms to resolve disputes. These should help strengthen employer-employee relationships, thus making Saudi Arabia a more attractive place for international business.
The developments in the Kingdom have also been witnessed in the partnerships it has built at regional and international levels, as seen from the tax treaty with Qatar and a space exploration framework with the US. This can also be attributed to joining the Cement and Concrete Breakthrough Initiative, where the country pledged to sustainability. As for 2024, Saudi Arabia welcomed FDI inflows, amounting to SR96 billion in a year that increased 50% from the last; thus, it seems that such reforms are valid for improving the global competitiveness of the Kingdom.
