Saudi Arabia crosses SR2 trillion foreign investment milestone in 2020 despite pandemic

RIYADH: Foreign investment in Saudi Arabia surpassed SR 2 trillion ($ 0.53 trillion) for the first time at the end of 2020, despite the financial impact of the COVID-19 pandemic.

The total value of investment from abroad increased 9% year-on-year, to SR 173.3 billion, in 2020, compared to SR 1.833 trillion at the end of 2019, according to data from the Saudi Central Bank (SAMA ).

Fadhel Al-Buainain, member of the Shoura Council, said this step was remarkable and reflected the attractiveness of the Saudi market. He attributed the growth to the success of government programs designed to diversify the investment opportunities on offer and the legislative processes put in place to support and nurture the Kingdom’s investment ecosystem.

Al-Buainain, who is also a board member of the Saudi Financial Association, said the government was able to attract SR 173.3 billion during a global pandemic when travel and movement was limited and that there was pressure on government and corporate reserves was a resounding endorsement of the Kingdom’s handling of the crisis.

“Of course, foreign capital is looking for opportunities in emerging markets. . . in particular the Saudi market, which offers rewarding investment opportunities, security and returns, in addition to important partnerships in major global pioneering projects, ”said Al-Buainain.

He added that the opportunities resulted from progress made under the Vision 2030 program and partnerships led by the sovereign wealth fund, the Public Investment Fund.

Talat Zaki Hafiz, economist and financial analyst, said the increase in capital entering Saudi Arabia was due to “the significant improvement in the investment environment in the Kingdom”. This was the result of “upgrading a number of investment laws,” he said.

In addition, Hafiz said that the government’s announcement of a number of large projects, such as The Line, and projects related to clean and renewable energy, has caught the attention of global investors.

“The announcement of SR 27 trillion ($ 7 trillion) that will be spent by the government over the next 10 years has caught the attention of foreign investors,” Hafiz said. “I think the government’s decision to diversify its economy away from oil has created huge investment opportunities for foreign and local investors.”

Saudi Arabia‘s Ministry of Investment (MISA) issued 466 foreign investor licenses in the fourth quarter of 2020, the highest number of licenses recorded in a quarter since 2005. This represents a 52% increase over the previous year. previous quarter and 60% over the same period in 2019.

Hafiz said this was helped by Saudi Arabia’s improvement in the World Bank’s Doing Business 2020 report, dropping from 30 points to 62 in the latest ranking.

“Saudi Arabia’s impressive business reforms this year demonstrate its commitment to fulfilling a main pillar of its National Vision 2030 – a thriving economy,” Issam Abousleiman, World Bank regional director of the Board, said in October. Cooperation of the Gulf (GCC).

“Relaxing the business climate for local entrepreneurs to thrive as well as for foreign investors to work in the Kingdom shows a way forward to create more jobs for Saudi youth and women and to create sustainable and inclusive growth. “

Saudi Arabia has made its biggest improvement in starting a new business. According to the World Bank, starting a business in the Kingdom now costs just 5.4% of per capita income, compared to 16.7% on average in the Middle East and North Africa.

“One of the most important factors that attracted foreign investors is the publication of new legislation and amendments to some existing legislation,” said Ayed Alblaihshi, a municipal investment specialist.

According to the World Bank report, some of the reforms that had a big impact were making it easier to get a building permit online, streamline electricity supply, relax access to credit, make it easier ‘export and import of goods. and make the insolvency rules much clearer.

Alblaihshi said that the fact that growth was not confined to a specific sector was a tribute to the government’s goal of diversifying the economy away from dependence on a few areas, such as hydrocarbons.

“This confirms and strengthens the maintenance of confidence in the local market to attract foreign investment in the next period, in order to achieve the goals of Vision 2030,” he said.

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