Opportunities and Challenges of Foreign Investment in the Kingdom

For decades, the Kingdom has been implementing strategies to attract foreign investment as a means to diversify its economy, moving away from the heavy reliance on oil revenues. Recent years have witnessed significant enhancements in the Kingdom’s investment climate, thanks to the comprehensive reforms introduced under the Saudi Vision 2030.
The Kingdom is actively simplifying the business start-up process for foreign investors, establishing special economic zones, and offering attractive tax incentives. To further streamline this process, the Saudi Investment Authority has been created as a single point of contact catering to all needs of foreign investors.
Such concerted efforts have resulted in a marked increase in total foreign direct investment in the Kingdom, rising from $8 billion in 2010 to nearly $19 billion in 2021.
This article aims to highlight the key sectors open to foreign investment in the Kingdom, including technology, tourism, entertainment, and manufacturing. The continuous measures to enhance the business environment are anticipated to draw more foreign capital and technical expertise to the Kingdom in the following years.

However, it is important to note that certain economic activities are prohibited for foreigners in the Kingdom. These restrictions include:

  • Wholesale and retail trade: Foreigners are disallowed from owning or operating any commercial activity related to the sale of goods and products.
  • Travel and tourism agencies: Foreign individuals are restricted from establishing or operating travel and tourism agencies within the Kingdom.
  • Land transport: Non-Saudis are forbidden from owning or operating land transport services such as buses and taxis.
  • Fishing: Non-Saudis are not permitted to engage in commercial fishing or exploitation of fisheries resources.
  • Real estate: Foreigners are barred from owning land or real estate in specific areas like Mecca and Medina.
  • Legal professions: Law practice and legal consultations are exclusively reserved for Saudis.
  • Sale of jewelry and gold: Non-Saudis are prohibited from partaking in the retail jewelry and gold trade.
  • Production and trade of weapons and ammunition.
  • Management of employment offices and labor employment.
  • These are some of the main restrictions imposed on foreign investors’ participation in specific economic activities within the Kingdom.

The role of public-private cooperation in attracting more foreign investment to the Kingdom cannot be overlooked. Public-private partnerships facilitate the creation of appealing investment opportunities and a conducive environment for foreign capital through several means:

  • Establishing joint ventures between public and private entities to execute significant projects such as infrastructure developments.
  • Allowing the private sector to manage and operate some public facilities such as airports and seaports through long-term contracts.
  • Offering enticing investment opportunities in renewable energy, healthcare, and education sectors.
  • Providing a comprehensive package of incentives and tax exemptions to encourage foreign direct investment in joint projects.
  • Offering government guarantees for foreign investments, thereby reducing risk.
  • Enabling global companies to invest, transfer technology, and impart knowledge to the Saudi market.

In conclusion, the Kingdom remains committed to enhancing the business and investment environment through regulatory reforms and the establishment of numerous public-private partnerships. These efforts are expected to bring in more foreign capital to contribute to the development of the national economy, aligning with the objectives of Saudi Vision 2030.