Since the release of the Kingdom’s Vision 2030 strategy in 2016, the country has undergone a transformation. The word is often used liberally and with hyperbole, but you only have to look how quickly Saudi’s regulatory ecosystem has evolved to know that this is genuinely transformation.
And the results do speak for themselves – foreign investment into Saudi has steadily risen since the Vision.
A fast-evolving regulatory landscape
With over 600 reforms undertaken in recent years, the landscape is continuously changing – while this constant evolution does create an element of uncertainty, they are ultimately intended to create a more conducive environment for the private sector. Key reforms include:
- The creation of the Saudi Business Center as a One Stop Shop for key government services
- Simplified and expedited construction permits and civil defense approvals
- Simplified and expedited property registration, digitized land records and transparent fee schedule
- Streamlined electricity connections and faster meter installations
- Improved access to credit through secured transactions law and insolvency law, and out-of-court enforcement
- Recent announcement to waive import duties on certain manufacturing goods to boost industrial activity
- Strengthened protections for minority investors, increased access to evidence at trial, shareholding rights, disclosures
- Strengthened contract enforcement, transparency on court procedure and performance, e-systems, civil procedure changes
A new investment platform through Special Economic Zones
In May 2023, the Kingdom launched 5 special economic zones. These are potentially the first of many, and seen as a response to two things:
- Intense regional competition, in particular the UAE, who have leveraged a vast free zone ecosystem to industrialize at pace
- The constant reforms in the wider economy, recognizing the potential uncertainty this may create for investors
The regulations are being finalized, but are expected to further appeal to international investors, including through:
- Best-practice company establishment regulations and a simplified licensing process
- Flexibility on labour, including standardized contracts and ability to transfer labour between different SEZ companies
- Greater protection and transparency and tax, enabled by KSA’s 30 double taxation agreements
- Unrestricted foreign ownership and capital repatriation
While challenges still remain on the ground, the pace of change demonstrates a Kingdom serious about doing business.