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Saudi DirectoryArticle Details

Investment in Saudi Arabia

Date Added: August 17, 2010 10:19:06 PM
Author: ARAmedia
Category: Oil & Gas


Saudi Arabia’s investment environment reflects the country’s traditions of liberal, open-market private enterprise policies. There are no restrictions on foreign exchange and no restrictions on the repatriation of capital and profits. The Saudi Government officially encourages foreign direct investment. From the earliest days of its industrial development until the present, the Kingdom has sought to harness and benefit from the experience and expertise of foreign companies. The government is especially supportive of foreign investment in joint ventures with Saudi partners, although wholly foreign-owned firms are allowed to operate in the Kingdom without restrictions. Such entities are rare, however, because of the attractive incentives available to firms with at least 25 percent Saudi equity.

The Saudi Government is in the process of revising its foreign investment law to make the investment climate even more favorable for foreign investors. The revised foreign investment law is expected to be announced by the end of 1999. The government is also reviewing its tax codes and customs procedures to streamline the process.

Saudi Arabia is continuing to encourage foreign investment in a manner which will allow it to absorb the benefits of modern technology and know how, while preserving its proud religious and social traditions. Foreign investment in the Kingdom is rising steadily. By March 1999, there were 1,581 joint venture projects in Saudi Arabia, involving $39.6 billion in overall investment, compared with 1,496 projects in January 1998, totaling $38.2 billion. U.S. companies are the leading foreign participants, with 259 joint ventures in the Kingdom. The total value of joint U.S.-Saudi projects was $17.5 billion. Other major investors in Saudi Arabia are Japan, the United Kingdom, France, Switzerland and Germany.

The Ministry of Industry and Electricity is responsible for licensing all foreign direct investment with the exception of banks, which are licensed by the Ministry of Finance and National Economy, and mineral concessions, which are handled by the Ministry of Petroleum and Mineral Resources.

Under the "Foreign Capital Investment Act," foreign capital should be invested in development projects that fit within the framework of the Kingdom’s development plan at the time of the investment. "Development projects" were defined by the Ministry of Industry and Electricity in a February 12, 1990 resolution as including industrial, agriculture, health, contracting, and specialized service projects. In addition, projects that involve technology transfer, and projects that have a Saudi partner owning a minimum of 25 percent equity are strongly favored.

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