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Giant Leap in Saudi Arabia’s Investment Landscape

Giant Leap in Saudi Arabia’s Investment Landscape as 127 Firms Relocate Regional HQs in Q1 2024

The Saudi Ministry of Investment’s relentless efforts to foster a secure and competitive investment environment have borne fruit, evidenced by the relocation of 127 international companies’ regional headquarters to Saudi Arabia in the first quarter of 2024. This marked a staggering 477% increase compared to the same period in 2023, underscoring the Kingdom’s attractiveness as a prime investment destination.

Saudi Arabia’s proactive approach to enhancing its investment climate, particularly through legislative and regulatory reforms, is crucial in drawing global firms to its shores. The Ministry of Investment has worked with various government agencies to streamline investment systems and procedures, solidifying the Kingdom’s appeal to foreign capital.

A key aspect of Saudi Arabia’s strategy involves new tax incentives for multinational corporations. These incentives include a 30-year exemption on corporate income tax and withholding tax related to headquarters activities, along with exclusive discounts and comprehensive support services, such as relocation assistance, concierge services, and professional advice. These measures align with Riyadh’s broader vision to diversify its economy and reduce its dependency on oil.

Legislative and Procedural Enhancements

The Ministry of Investment has addressed 34 legislative and procedural challenges investors face, marking an 89% improvement from the previous year’s first quarter. Additionally, the ministry processed 445 investor visit visa applications, facilitating exploratory visits for potential investors.

Through its electronic platform, the ministry delivered over 58,000 services in Q1 2024, reflecting a 29% increase compared to the same period in 2023. Advisory services provided through comprehensive service centers accounted for 40% of these interactions, highlighting the ministry’s commitment to investor support.

Investment Deals and Sectoral Growth

The first quarter of 2024 witnessed the completion of 64 investment deals, with innovation and entrepreneurship leading the way, accounting for 34 deals. The sports sector followed with 12 deals. The United States emerged as the top source of closed deals with 11, followed by the United Kingdom with 5, and the UAE and Singapore with 3 each. Other deals were distributed among six additional countries.

The ministry issued 3,157 investment licenses in Q1 2024, a 93% increase from the previous year, excluding licenses issued under the Anti-Commercial Concealment Law rectification campaign. The total number of investment licenses reached 3,197 during this period.

The majority of these licenses were concentrated in construction, manufacturing, professional, educational, technical activities, information and communications, accommodation and food services, wholesale and retail trade, and vehicle repair, constituting about 81.8% of the total licenses issued.

Real Estate and Other High-Growth Sectors

Real estate saw the highest growth in investment licenses, with a 253.3% increase compared to Q1 2023. Other significant growth sectors included professional, educational, and technical activities (141.5%) and agriculture, forestry, and fishing (129.4%).

Single-person limited liability companies received approximately 2,112 licenses, limited liability companies obtained 754 licenses, and other company types received 331 licenses.

Top Countries for Investment Licenses

Egypt topped the list of countries with the most investment licenses issued (950), followed by Yemen (346), India (321), Syria (180), and Pakistan (159).

Foreign Direct Investment and Global Competitiveness

Foreign direct investment (FDI) flows into Saudi Arabia grew by 32.2% annually in Q4 2023, while the FDI balance increased by 1.7%. Saudi Arabia also achieved top rankings in several international indicators, including total venture investment, government confidence, and consumer confidence in investment. The Kingdom ranked second in both the Consumer Confidence Index and the Global Competitiveness Index in Cybersecurity.

Promoting Investment through Events

The Ministry of Investment, in collaboration with other government agencies, organized and participated in 13 local and international events in Q1 2024. These events spanned various fields, including real estate, industry, sports, technology, and mining, further promoting the Kingdom as an attractive investment hub.

Coastal Tourism Investment

The report also highlighted the burgeoning investment in Saudi Arabia’s coastal tourism, which combines luxury, natural island beauty, and cultural landmarks, offering exclusive and unique experiences for global tourists.

Saudi Arabia’s robust initiatives and favorable investment climate continue to make it a magnet for international firms seeking a strategic regional base. The Kingdom’s strategic reforms and incentives underscore its commitment to achieving Vision 2030’s goals and establishing itself as a global economic powerhouse.

 

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