Investment in Saudi Arabia: The business investment in Saudi Arabia is growing year on year. The foreign direct investment in 2018 was SR 13 billion. The net FDI in Saudi Arabia grew to 257.2% in 2021. Its growth is 9.5%, reaching SR 7.4 billion in the first quarter of 2022 as per Saudi gazette report. Saudi Arabia ranked 14th at the level of G20 countries in the global indices in FDI flows in 2021 according to the World Investment Report 2022 of United Nations Conference on Trade and Development (UNCTAD).
Foreign Investment in Saudi Arabia
Since the launching of Saudi’s Vision 2030 until last year, the foreign investment in Saudi Arabia flows have quadrupled reaching SR 72 billion. The United States led the investors from Japan, Europe, and East Asian countries. As a result, the comprehensive investments in Saudi Arabia were reached to SR 900 billion by the end of 2021, according to the Saudi Minister of Investment.
Khalid Al-Faith, the Minister of Investment in Saudi, said that the preference of investors in general is the energy sector of investment. Secondly, petrochemicals, aviation, and defence were preferred for investment in Saudi Arabia in addition to the mining sector. However, mining is in its infancy stage from an investment point of view. Here investment advisors for complete solutions are available, click for.
Investment Opportunities in Saudi Arabia: Reasons to Invest
The investment opportunities in Saudi Arabia has become the attraction point for foreign investors. The ongoing structural and procedural changes for shifting the Saudi Arabian economy from oil to business sectors has opened doors for investment opportunities in Saudi Arabia. These changes demand larger private sector investors participation in important developmental business segments to raise the Kingdom economy.
There is demand for trusted investment partners and the benchmark for active ownership and creation of market leaders in Saudi Arabia. But partners and owners of new businesses should align with the goals of Saudi Arabia’s ‘Vision 2030’. The Ministry of Investment is creating new opportunities for diversification and growth through investments to maximise value creation for our partners’ and investors’ return. In return they seek for the development of the economy and society in the Kingdom of Saudi Arabia.
The strategic objective of investors should be to contribute in shaping and leading the business sectors they choose to be in. There are diverse opportunities for best investment in Saudi Arabia like:
Investment in Saudi Arabia Sector-wise
The Kingdom of Saudi Arabia has opened its door for foreign investment and private businesses in different industrial sectors. This investment opportunities in various sectors are:
|Industrial Manufacturing||Healthcare and Life Sciences||Pharma and Biotech|
|Agriculture and Food Processing||Environmental Services||Education|
|Transportation and Logistics||Non-weaponized Defence||Financial Services|
|Tourism and Quality of Life||Mining and Metals||Aerospace Defence|
|Human Capital Innovation||Information and Communication Technology||Automotive Value Chain Initiatives|
Factors in Mind Before Investment in Saudi Arabia
There are different questions that arise in the mind of investors before deciding for investment in Saudi Arabia. These questions or factors may be:
- What are the opportunities available for investment in KAS for foreigners or expatriates?
- Are the investment regulations favourable or set for changing to foreign investment?
- Are there any financial support or government incentives for investment?
- Can investment capital be restored from the Kingdom?
- Is investment capital protected by law in the Kingdom of Saudi Arabia?
- Is the geopolitical position and environment favourable for the business market?
- Is the country politically and economically stable for investment?
- What is the currency stability position of the Kingdom globally?
- What are the bankruptcy laws impact on businesses and investment?
- Are the banking and financial systems developed and favourable to foreign investments?
These questions and queries can be better answered with the help of accurate and impartial advice by investment advisors’ team of Fahad Al-tamimi here.
Invest Saudi: Investment Promotion Platform Role
The Ministry of Investment of Saudi Arabia (MISA) has created a separate unit or platform called “Invest Saudi” to support global business expansion into the Kingdom of Saudi Arabia (KSA). Since its inception, the Invest Saudi has become Saudi Arabia’s investment attraction and promotion brand and centre throughout the nation. It promotes, facilitates, and protects investments both foreign and domestic, as well as private sectors businesses for the Saudi’s economic growth. It represents its investment positioning and opportunities in Saudi Arabia before the global business world.
As Saudi Arabia’s economy is flourishing and the nation is liberalising its economic and social policies, Invest Saudi has to play a major role to attract investments. To make investing convenient, Invest Saudi brings required ministries, government agencies, and other players including private sectors closer. As a result they all together promote multi-sectoral investment and business opportunities for forein investors and local private sectors to assist in long-term economic growth of the country. Some of key values, objectives and mission to explore investment in Saudi Arabia of Invest Saudi are:
- To support at every step of business set-up and hand-holding for creating excellent experience among all categories of investors.
- To develop Saudi Arabia as a world-class investment destination for sustainable national economic growth.
- To create a powerful G20 economy based on macroeconomic fundamentals for a long-term and sustainable platform for investment.
- To make investment easy and transparent, the government has taken many needful reforms in the legal process of businesses and licensing.
Investment Funds in Saudi Arabia
Investment fund is the financial capital available to private or public investors for supporting any new or existing businesses either to run or expand the same. It not only provides investment opportunities but effective management expertise and lower investment fees.
There are different types of investment funds available to foreign as well as expatriate investors in industries of their choice. These investment funds are in the form of mutual funds, exchange-traded funds (ETFs), and bonds and provided by:
Jadwa Investment: The Jadwa Investment in Saudi Arabia deals and manages a range of mutual funds as per risk appetite and profile of investors or clients.
Riyad Capital: It is an investment fund that offers its services and funds in Islamic bonds (sukuk), exchange-traded funds, and bond markets of Saudi Arabia.
Al Rajhi Capital: It deals in a comprehensive portfolio of managed mutual funds in Saudi Arabia.
HSBC Global Equity Index Fund: This fund works as a start-up banking solution to support ambitious visionaries. It particularly invests in global sharia-compliant equities and shares.
Each of above investment funds including HSBC provides funds as well as advice as per risk appetite of clients, for example:
- How to invest in Saudi’s different businesses?
- How much does a newcomer invest?
- Where and in which trade they invest?
- What will be costs, risks, and likely return from this investment?
Taxes on Investments in Saudi Arabia
Personal income tax (PIT) is not applicable in Saudi Arabia. However, income tax is levied on a foreigner’s share in the corporation of a Saudi resident. But zakat, a form of Islamic tax, is applied on income from shares in a corporation unless the corporation is traded on the stock exchange. Other taxes are:
- 20% capital gains tax is applied on disposal of shares in a resident corporation.
- Capital gains on disposal of shares become zero if shares were acquired after 2004 of a company traded on the stock exchange.
- 20% corporation tax is levied on the income from a corporate business.
- But there is no stamp duty, capital duty, real property tax as well as inheritance tax in Saudi Arabia.
Frequently Asked Question (FAQs) on Investment in Saudi Arabia
Q. Can foreigners invest in Saudi Arabia?
Ans. Yes, a foreigner can invest in Saudi Arabia through a proper channel available through MISA procedures.
Q. Which country invests the most in Saudi Arabia?
Ans. The United Arab Emirates (UAE) invests the most (21.19%) followed by the USA (20.3%).
Q. How much money do I need to start a business in Saudi Arabia?
Ans. The minimum capital investment of SR 500, 000 is required to establish a limited liability company (LLC) in Saudi Arabia.
Q. Is Saudi Arabia a good country to invest in?
Ans. Yes, Saudi Arabia has become a vibrant economy and a hub of foreign investment due to the application of Vision 2030 of its crown prince.