Foreign Investment in Saudi Arabia Rises  

(MENAFN - Arab News) JEDDAH, 13 August 2007 — The Kingdom of Saudi Arabia has attracted SR68.6 billion in foreign direct investment (FDI) last year, a recent statement issued by the Saudi Arabian General Investment Authority (SAGIA) said.

The investments which primary came from the US, Japan, the European Union (EU) and new player Malaysia have risen from 38 percent in 2000 to 47 percent in 2006, with petrochemical sector the most popular investment category.

"With Saudi Aramco's recent expansion of its refineries and the building of the Kingdom's economic cities, foreign investment in the country has become more attractive to investors abroad mainly due to the liberalization of investment rules in which SAGIA has played a vital role," Abdulrahman Mousa, an Investment Specialist at SAGIA told Arab News.

Mousa further said that a number of initiatives to promote bi-lateral trade agreements between Saudi Arabia and foreign investors are also being encouraged by SAGIA accompanied by certain investment incentives such as the elimination of dual taxation on foreign investments.

" At first the Kingdom was skeptical about allowing foreigners to invest, but now Saudi Arabia is realizing that foreign investment will bring added value through new technological advancements in the administrative and production sectors to the country," Mousa said.

The volume of foreign investment compared to 2005 grew by 51 percent, while the volume of domestic investment amounted to SR125 billion for the same year registering a growth rate of 9 percent from the same year.

The recent increase in interest by foreign investors to the Kingdom may have to do with the Ministry of Commerce and Industry's decision to lower the establishment cost for new companies," said Awad Al-Awad, undersecretary to the SAGIA Govenor, according to the statement.

Confirming this fact, Dr. John Sfakianakis, chief economist at SABB said, I feel the reason that Saudi Arabia is experiencing such an overwhelming response to its opportunities to foreign investors is twofold. The first reason lies with the Kingdom's economy which has become more competitive and geared toward investment and the second reason is due to the recent relaxation of foreign investment rules."

Sfakianakis added that after the Kingdom's entrance as the 149th member of the World Trade Organization (WTO) nearly two years ago, made it become more business oriented and investor friendly.

The recent shortening of the negative list of investments, revised to comply with regulations and conditions of the WTO, has attracted the outside world.

Foreign investors can now invest in such sectors as transportation, satellite transmission and communication services, insurance services and wholesale and retail trade.

However, the Kingdom continues to prohibit foreign investment in the oil drilling and exploration sector.