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Saudi Arabia announces ‘record year’ for foreign investments in 2019


Saudi Arabia said it had a ‘record year’ for investments in 2019 with a 54% increase in international companies setting up operations in the Kingdom and a 10% increase in foreign direct investments for the Jan-Sep period.

The Saudi Arabian General Investment Authority (SAGIA) said in a report released on Sunday (Jan 19), that 1,131 new international companies set up operations in the country in 2019 compared to 736 in 2018.

“In terms of international companies established, the final quarter of 2019 proved to be the busiest period of the year, with the number of new international companies increasing to 305 from 238 during the same quarter in 2018,” said the authority in a statement.

69% of these new foreign investor licences were based on full foreign ownership and the remaining 31% were joint ventures with local investors, said SAGIA.

India leads with 140 new foreign investor licences from only 30 in 2018.

There were 100 new UK companies in 2019 and 82 from the USA, from only 24 for both countries in 2018, SAGIA said.

The authority said leading growth sectors include construction, manufacturing and ICT as demand in these industries increases with infrastructural development of big projects.

“During 2019, 193 new construction, 190 manufacturing and 178 ICT companies were established, compared to 111, 113 and 111 established in the three sectors in 2018 respectively,” said SAGIA.

Saudi Arabia since 2015 started making changes to its investment laws as the country looked to attract foreign funds to diversify its economy away from hydrocarbons.

Sectors now open to 100% foreign ownership include healthcare, education, retail, military industries and real estate brokerage.

The Kingdom opened its stock market to foreign investors in 2015 and in June 2019 it went on to relax its 49% limit of strategic foreign ownership in publicly traded companies.

Saudi Arabia New Foreign Investor Licences - Selected Sectors
  2018 2019
Wholesale and retail trade 65 102
Accommodation and food services 32 55
Human health 20 28
Financial and insurance 19 26
Data source: Saudi Arabian General Investment Authority

 

FDI

FDI inflows tracked by SAGIA increased by 10.2% to $3.5 billion for January to September, from $3.18 billion for the same period in 2018 and $1.16 billion in 2017, according to the authority’s report.

This is broadly comparable to data from the United Nations’ UNCTAD that reported $3.2 billion in FDI flows for Saudi Arabia in 2018 and $1.419 billion in 2017.

INVESTOR DEALS

SAGIA highlighted top deals of 2019, including in the agri-food sector where it signed an MoU with Danish biotechnology firm Unibio and its local partner Edhafat to develop a new facility to convert natural gas into high-protein livestock feed.

The authority also pointed out the $120 million Brazil’s BRF will pump in to build a food processing plant in 2020.

In the pharmaceutical industry, UK’s GlaxoSmithKline and SAGIA signed an agreement allowing GSK to expand its local manufacturing capacity.

Local vaccines production was also considered, with Brazil’s Institutio Butantan agreeing to conduct a feasibility study to invest in the sector.

In tourism, $27 billion worth of deals were signed in 2019, including the $10 billion USA’s Triple 5 will invest in a series of mixed-use tourism, hospitality and entertainment destinations, and UAE’s Majid Al Futtaim will pour in $5.3 billion to develop a mixed-use shopping and entertainment destination.

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