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Qatar

Executive Summary

The State of Qatar is one of the world’s largest exporters of liquefied natural gas (LNG) and has one of the highest per capita incomes in the world. Despite a decrease in the gross domestic product (GDP) in 2020, which stemmed from depressed hydrocarbon sales and the COVID-19-induced economic slowdown, Qatar’s real GDP recovered by the second quarter of 2021 and is expected to grow by four percent in 2022, according to the International Monetary Fund’s (IMF) projections. This positive outlook is driven mainly by Qatar Energy’s ambitious plans to expand LNG production by more than 60 percent over the next five years. To maintain high-level government spending on projects in preparation for the 2022 FIFA World Cup, Qatar projects a modest $2.2 billion budget deficit in 2022, based on an oil price assumption of $55 per barrel.

The government remains the dominant actor in the economy, though it encourages private investment in many sectors and continues to take steps to encourage more foreign direct investment (FDI). The dominant driver of Qatar’s economy is the energy sector, which has attracted tens of billions of dollars in FDI. In line with the country’s National Vision 2030’sgoal of establishing a knowledge-based and diversified economy, the government of Qatar has recently introduced reforms to its foreign investment and foreign property ownership laws. These recent legislations allow up to 100 percent foreign ownership of businesses in most sectors and real estate in newly designated areas. In 2020, the government also enacted legislation to regulate and promote public-private partnerships.

There are significant opportunities for foreign investment in infrastructure, healthcare, education, tourism, energy, information and communications technology, and services. The government allocated $20 billion for major projects in these sectors in 2022. Measured by the amount of inward FDI stock, manufacturing, mining and quarrying, finance, and insurance are the primary sectors that attract foreign investors. The government provides various incentives to attract local and foreign investments, including exemptions from customs duties and certain land-use benefits. The corporate tax rate is 10 percent for most sectors, and there is no personal income tax. One notable exception is the corporate tax of 35 percent on foreign firms in the extractive industries, including but not limited to those in natural gas extraction.

Although the government of Qatar took recent measures to prosecute human rights violations, including improving its human trafficking legislation, addressing forced labor, and setting minimum wages, the country continues to face significant challenges that may affect foreign businesses. These include but are not limited to restrictions on free expression and peaceful assembly, restrictions on labor unions, discrimination against women in law and practice, and reports of forced labor.

To curb corruption and anti-competitive practices, the government created a regulatory regime consisting of various enabled government agencies, including the Transparency Authority, the National Competition Protection Authority, and the Anti-Monopoly Committee. To improve transparency, the government streamlined its procurement processes in 2016, creating an online portal for all government tenders. Nonetheless, personal connections reportedly play a significant role in business deals.

In recent years, Qatar has significantly bolstered its U.S. investments through its sovereign wealth fund, the Qatar Investment Authority (QIA), and its subsidiaries, notably Qatari Diar. In 2019, QIA pledged to allocate $45 billion to U.S. investments, after it opened an office in New York City in 2015 to facilitate its U.S. investments. The November 2021 fourth annual U.S.-Qatar Strategic Dialogue further strengthened strategic and economic partnerships and addressed obstacles to investment and trade. The fifth round of strategic talks is expected to take place in Doha in 2022.

Table 1: Key Metrics and Rankings
Measure Year Index/Rank Website Address
TI Corruption Perceptions Index 2021 31 of 180 http://www.transparency.org/research/cpi/overview 
Global Innovation Index 2021 68 of 132 https://www.globalinnovationindex.org/analysis-indicator 
U.S. FDI in partner country ($M USD, historical stock positions) 2020 USD 15.5 billion https://apps.bea.gov/international/factsheet/ 
World Bank GNI per capita 2020 USD 55,990 https://data.worldbank.org/indicator/NY.GNP.PCAP.CD 

1. Openness To, and Restrictions Upon, Foreign Investment

3. Legal Regime

4. Industrial Policies

5. Protection of Property Rights

6. Financial Sector

7. State-Owned Enterprises

The State Audit Bureau oversees state-owned enterprises (SOEs), several operating as monopolies or holding exclusive rights in most economic sectors. Despite the dominant role of SOEs in Qatar’s economy, the government has affirmed support for the local private sector. It encourages small and medium-sized enterprise development as part of its National Vision 2030. The Qatari private sector is favored in bids for local contracts and generally receives favorable terms for financing at local banks. The following are Qatar’s major SOEs:

Energy and Power:

Qatar Energy, its subsidiaries, and its partners operate all oil and gas activities in the country. The government wholly owns QE. Non-Qataris can invest in its stock exchange listed subsidiaries, but shareholder ownership is limited to two percent and total non-Qatari ownership to 49 percent.

Qatar General Electricity and Water Corporation (Kahramaa) is the sole utility provider in the country and is majority-owned by Qatari government entities. To privatize the sector, the Qatar Electricity and Water Company (QEWC) was established in 2001 as a separate and private provider that sells its desalinated water and electricity to Kahramaa. Other privatization efforts included the Ras Laffan Power Company, based in 2001, and 55 percent owned by a U.S. company.

Aerospace:

Qatar Airways is the country’s national carrier and is wholly owned by the state.

Services:

Qatar General Postal Corporation is a state-owned postal company. Several other delivery companies compete in the courier market, including Aramex, DHL Express, and FedEx Express.

Information and Communication:

Ooredoo Group is a telecommunications company founded in 2013. Ooredoo (previously known as Q-Tel) dominates both the cell and landline telecommunications markets in Qatar and partners with telecommunications companies in 13 Middle East, North Africa, and Asia markets. It is the dominant player in the Qatari telecommunications market and is 70 percent owned by Qatari government entities. Ooredoo Group is listed on the Qatari Stock Exchange.

Vodafone Qatar is Qatar’s only other telecommunications operator, with the quasi-governmental entity Qatar Foundation owning 62 percent of its shares. Other Qatari government entities and Qatar-based investors own the remaining 38 percent. Vodafone Qatar is listed on the Qatari Stock Exchange.

Qatari SOEs may adhere to their own corporate governance codes and are not required to follow the OECD Guidelines on Corporate Governance. Some SOEs publish online corporate governance reports to encourage transparency, but there is no general framework for corporate governance across all Qatari SOEs. SOEs listed on the stock exchange must publish financial statements at least 15 days before annual general meetings in two local newspapers (in Arabic and English) and on their websites. When an SOE is involved in an investment dispute, the case is reviewed by the appropriate sector regulator (for example, the Communications Regulatory Authority for the information and communication sector).

8. Responsible Business Conduct

There is a general awareness in Qatar of responsible business conduct. Many companies publicize their Corporate social responsibility (CSR) initiatives, the majority of which cover environmental issues as well. Qatar participates in the Extractive Industries Transparency Initiative (EITI) as an economy dependent on extractive industries. Nonetheless, the Qatari government has not improved transparency regarding its petroleum industry management, as no regulatory body oversees resources extraction or revenue management. Moreover, Qatar has no freedom of information law.

The Government of Qatar maintains a reporting regime for suspicious transactions and requirements for consumer due diligence and record-keeping. The Ministry of Commerce and Industry has a dedicated Consumer Protection and Combating Commercial Fraud Department, which has intensified its efforts by monitoring records and inspection of stores and factories that sell or manufacture counterfeit goods. The ministry prosecutes business misconduct and announces these violations publicly.

Qatari law prohibits all forms of forced or compulsory labor and reserves two percent of jobs in government agencies and public institutions for persons with disabilities. The law also prohibits the employment of children under 16 years of age. The Ministry of Labor (MOL), the Ministry of Interior (MOI), and the National Human Rights Committee (NHRC) conduct training sessions for migrant laborers to inform them of their rights while in Qatar. In 2018, the United States and Qatar signed a government-to-government memorandum of understanding on exchanging expertise and fostering capacity building on combating human trafficking. In 2019, the U.S. Department of Labor and MOL signed a Memorandum of Understanding on labor, focusing on labor inspections and protecting domestic workers’ rights in Qatar.

Some Qatari non-governmental organizations (NGOs) focus on labor rights and often work with the government. Researchers from international NGOs such as Amnesty International and Human Rights Watch continue to visit and report on labor developments in the country with limited interference from authorities. International labor NGOs have been able to send researchers to Qatar under the sponsorship of academic institutions and quasi-governmental organizations such as the NHRC. Global media and human rights organizations continue to allege numerous abuses against foreign workers, including forced or compulsory labor, withheld wages, unsafe working conditions, and poor living accommodations.

Private security companies cannot operate in Qatar without an appropriate license granted by the MOI, per Law 19/2009 on Regulating the Provision of Private Security Services. As of 2009, Qatar has been a signatory to the Montreux Document on Private Military and Security Companies.

9. Corruption

Corruption in Qatar does not generally affect the conduct of business, although the power of personal connections plays a significant role in business culture. Qatar ranked as the second least corrupt country in the Middle East and North Africa, according to Transparency International’s 2021 Corruption Perceptions Index, and ranked 31st out of 180 nations globally with a score of 63 out of 100, with 100 indicating full transparency.

Qatari law imposes criminal penalties to combat corruption by public officials, and the government actively implements these laws. Corruption and misuse of public money are a focus of the executive office. Law 22/2015 imposes hefty penalties for corrupt officials. Decree 6/2015 restructured the Administrative Control and Transparency Authority, granting it juridical responsibility, a budget, and direct affiliation with the Amir’s office. The authority’s objectives are to prevent corruption and ensure that ministries and public employees operate with transparency. Transparency is also mandated when investigating alleged crimes against public property or finances perpetrated by public officials.

Law 11/2016 grants the State Audit Bureau more financial authority and independence, allowing it to publish parts of its findings (provided that confidential information is removed), a power it did not previously have. Individuals convicted of embezzlement are subject to prison terms of no less than five and up to ten years. The penalty can be extended to a minimum term of seven and a maximum term of fifteen years if the perpetrator happens to be a public official in charge of collecting taxes or exercising fiduciary responsibilities over public funds. Qatar State Security Bureau and the Office of the Public Prosecutor handle investigations of alleged corruption charges. The Criminal Court makes final judgments.

Bribery is a crime in Qatar, and the law imposes penalties on public officials convicted of acting in return for monetary or personal gain and on other parties who take actions to influence or attempt to influence a public official through monetary or other means. The current Penal Code (Law 11/2004) governs corruption regulations and stipulates that individuals convicted of bribery may be sentenced up to ten years in prison and fines amounts equal to the amount of the bribe but no less than $1,374.

To promote a fairer, more transparent, and more expeditious public-sector tendering process, the government issued Procurement Law 24/2015, which abolished the Central Tendering Committee and established in its stead a Procurement Department within the Ministry of Finance that has oversight over most government tenders. The new department has an online portal that consolidates all government tenders and provides relevant information to interested bidders, facilitating the process for foreign investors ( https://monaqasat.mof.gov.qa ).

Qatar is not a party to the Organization for Economic Cooperation and Development’s (OECD) Convention on Combating Bribery of Foreign Public Officials. However, Qatar ratified the UN Convention for Combating Corruption (by Amiri Decree 17/2007) and established a National Committee for Integrity and Transparency (by Amiri Decree 84/2007). The permanent committee is headed by the Chairman of the State Audit Bureau. In 2013, Qatar opened the Anti-Corruption and Rule of Law Center in Doha in partnership with the United Nations. The center’s purpose is to support, promote, and disseminate legal principles to fight corruption (https://rolacc.qa/).

Despite these efforts, some American businesses cite a lack of transparency in government procurement and customs as recurring issues when operating in the Qatari market. U.S. investors and Qatari nationals who happen to be agents of U.S. firms are subject to the provisions of the U.S. Foreign Corrupt Practices Act.

10. Political and Security Environment

Qatar is a politically stable country with low rates of crime. There are no political parties, labor unions, or organized domestic political opposition. The U.S government rates Qatar as a medium risk country for terrorism, including threats from transnational actors.

The State Department encourages U.S. citizens in Qatar to stay in close contact with the U.S. Embassy in Doha for up-to-date threat information. The Department invites U.S. visitors to Qatar to enroll in its Smart Traveler Enrollment Program to receive further information on safety conditions in Qatar: https://step.state.gov/step/.

11. Labor Policies and Practices

Qatar has one of the world’s highest migrant workers to indigenous population ratios, with foreigners making up nearly 90 percent of the country’s population. Qatar’s resident population is estimated at 2.78 million as of January 2022, doubling in the last decade. Qatari citizens are estimated to number approximately 300,000 – around 11 percent of the total population. Qatar’s labor force consists primarily of expatriate workers. The largest group of foreign workers comes from the Indian sub-continent.

Males make up around 72 percent of the population. As of the second quarter of 2021, about 60 percent of the female population aged 15 years and above were economically active, compared to 95 percent of males. However, local statistics may not fully account for all employed females as calculations as primarily based on residency statuses, which are family, not employment-based for most migrant females.

Qatar’s unemployment rates are among the lowest globally, with a 0.1 percent unemployment rate for men and a 0.5 percent unemployment rate for women, as of 2021. The government mandates that Qataris make up at least 60 percent of the employees of state-owned enterprises or companies where the government is a majority investor and 80 percent of those entities’ human resources workforce. Children of Qatari women are considered Qataris for purposes of calculating this localization ratio. Over three-quarters of employed Qatari citizens work for the government.

The Ministry of Labor (MOL) regulates the recruitment of expatriate labor. Labor Law 14/2004 largely governs employment in Qatar and allows the terminating party to terminate employment without providing reasons. The law requires employers to pay employees owed wages and other benefits in full, provided they have performed expected work duties during the notice period, which varies based on years of employment. The English common law governs companies registered with QFC, and labor issues are administered by QFC’s Regulation 10/2006.

There are no labor unions in Qatar. Non-citizens are not eligible to form worker committees or go on strike. However, according to an agreement between MOL and the International Labor Organization (ILO), joint worker committees including 50-50 representation of workers and employers exist in a small number of cases for all medium to large-sized companies. Law 12/2004 on Private Associations and Foundations and subsequent regulations grant Qatari citizens the right to form workers’ committees in private enterprises with more than 100 Qatari citizen workers. Qatari citizens employed in the private sector also have the right to participate in approved strikes. Still, the restrictive conditions imposed by the law make the likelihood of an approved strike remote. Regardless of nationality, individuals working in the public sector are prohibited from joining unions. Workers at labor camps occasionally go on strike over non-payment or delayed wages; however, this practice is technically illegal.

Local courts handle disputes between workers and employers, but the process is widely regarded as inefficient. To speed up the process of resolving labor disputes, the government established Labor Disputes Settlement Committees headed by a judge and representatives from MOL. As of 2018, there are three such committees, all of which operate outside of the traditional Supreme Judicial Committee structure and are required to address any complaints within three weeks.

Law 17/2020 sets the minimum basic wage for workers and domestic workers at $275 per month and $220 for lodging and meals if not provided by the employer. To combat the problem of late and unpaid wages, the government issued Law 1/2015, amending specific provisions of Labor Law 14/2004 on wage protection and mandating electronic payment to all employees subject to the local labor law. The government requires all employers to open bank accounts for their employees and pay wages electronically through a system subject to audits by an inspection division at the MOL; this requirement, however, does not apply to domestic workers. Employers who fail to pay their workers face penalties between $550 and $1,650 per case and possible prison sentences. Those penalties, however, are rarely implemented. The system currently applies to over 1.4 million workers.

The Labor Law prohibits the employers’ withholding of workers’ passports and stiffens penalties for transgressors. To eliminate forced labor, the government issued Law 19/2020, enabling employees to switch employers without requiring the employer’s permission. This new legislation complimented Law 13/2018, allowing workers covered by the Labor Law to leave the country without requiring exit permits.

To protect workers from fraudulent employment contracts, the Ministry of Interior (MOI) established the Qatar Visa Centers (QVCs) to simplify residency procedures for expatriate workers from India, Nepal, Sri Lanka, Pakistan, Bangladesh, and the Philippines. In partnership with MOI and MOL, contracted companies set up QVCs in these countries to facilitate biometric enrollment, medical records verification, and work contracts before contracted workers enter Qatar.

Qatar is a member of the ILO and maintains that its labor law meets ILO minimum requirements. In 2017, Qatar made commitments to address some ILO complaints by launching a comprehensive three-year ILO technical cooperation program. In 2018, the ILO opened a Doha office.

In 2018, the Qatari Minister of Foreign Affairs signed a labor-related MOU with the Department of State during the U.S.-Qatar Strategic Dialogue. The MOU laid out plans for cooperation in combating trafficking-in-persons, including strengthening the labor sector to reduce instances of forced labor. In 2019, MOL signed an MOU with the U.S. Department of Labor to enhance cooperation in labor inspection and protecting domestic workers’ rights.

14. Contact for More Information

Economic Specialist
U.S. Embassy, Doha
22nd February Street, Al Luqta District, P.O. Box 2399, Doha, Qatar
+974-4496-6000
EskandarGA@state.gov

Saudi Arabia

Executive Summary

In 2021, the Saudi Arabian government (SAG) continued its ambitious socio-economic reforms, collectively known as Vision 2030. Spearheaded by Crown Prince Mohammed bin Salman, Vision 2030 provides a roadmap for the development of new economic sectors and a transition to a digital, knowledge-based economy. The reforms aim to diversify the Saudi economy away from oil and create more private sector jobs for a young and growing population.

To accomplish these ambitious Vision 2030 reforms, the SAG is seeking foreign investment in burgeoning sectors such as infrastructure, tourism, entertainment, and renewable energy. Saudi Arabia aims to become a major transport and logistics hub linking Asia, Europe, and Africa. Infrastructure projects related to this goal include various “economic cities” and special economic zones, which will serve as hubs for petrochemicals, mining, logistics, manufacturing, and digital industries. The SAG plans to double the size of Riyadh city and welcomes investment in its multi-billion-dollar giga-projects (including NEOM, Qiddiya, the Red Sea Project, and Amaala), which are the jumping-off points for its nascent tourism industry. The Kingdom is also developing tourism infrastructure at natural sites, such as AlUla, and the SAG continues to grow its successful Saudi Seasons initiative, which hosts tourism and cultural events throughout the country.

The Saudi entertainment and sports sector, aided by a relaxation of social restrictions, is also primed for foreign investment. The country hopes to build hundreds of movie theaters and the SAG aims to sign agreements for production studios in Saudi Arabia for end-to-end film production. The SAG seeks to host world class sporting events and has already hosted the European Golf Tour, Diriyah ePrix, Dakar Rally, and Saudi Formula One Grand Prix. In addition, recent film festivals and concerts have demonstrated strong demand for art and cultural events. Lastly, the SAG is eager for foreign investment in green projects related to renewable energy, hydrogen, waste management, and carbon capture to reach net-zero emissions by 2060. It is particularly interested in green capacity-building and technology-sharing initiatives.

Despite these investment opportunities, investor concerns persist regarding business predictability, transparency, and political risk. Although some activists have recently been released, the continued detention and prosecution of activists remains a significant concern, while there has been little progress on fundamental freedoms of speech and religion. The pressure to generate non-oil revenue and provide increased employment opportunities for Saudi citizens has prompted the SAG to implement measures that may weaken the country’s investment climate going forward. Increased fees for expatriate workers and their dependents, as well as “Saudization” policies requiring certain businesses to employ a quota of Saudi workers, have led to disruptions in some private sector activities. Additionally, while specific details have not yet been released, Saudi Arabia announced in 2021 that multinational companies wanting to contract with the SAG must establish their regional headquarters in Saudi Arabia by 2024.

The SAG has taken important steps since 2018 to improve intellectual property rights (IPR) protection, enforcement, and awareness. While some concerns remain regarding IPR protection in the pharmaceutical sector, no new incidents related to regulatory data protection for health and safety information have been reported since October 2020, and in March 2022 Saudi Arabia issued a public statement stipulating that data protection in the Kingdom is for five years. While the sharp downturn in oil prices in 2020 put pressure on Saudi Arabia’s fiscal situation, the subsequent spike in oil prices has increased government revenue and the SAG expects a budget surplus in 2022.

Table 1: Key Metrics and Rankings
Measure Year Index/Rank Website Address
TI Corruption Perceptions Index 2021 52 of 180 http://www.transparency.org/research/cpi/overview
Global Innovation Index 2021 66 of 132 https://www.globalinnovationindex.org/analysis-indicator
U.S. FDI in partner country ($M USD, historical stock positions) 2020 $11,386 https://apps.bea.gov/international/factsheet/
World Bank GNI per capita 2020 $21,930 http://data.worldbank.org/indicator/NY.GNP.PCAP.CD

 

1. Openness To, and Restrictions Upon, Foreign Investment

3. Legal Regime

4. Industrial Policies

5. Protection of Property Rights

6. Financial Sector

7. State-Owned Enterprises

SOEs play a leading role in the Saudi economy, particularly in water, power, oil, natural gas, petrochemicals, and transportation. Saudi Aramco, the world’s largest exporter of crude oil and a large-scale oil refiner and producer of natural gas, is 94.5 percent SAG-owned, and its revenues typically contribute the majority of the SAG’s budget. Four of the eleven representatives on Aramco’s board of directors are from the SAG, including the chairman, who serves concurrently as the Managing Director of the PIF. In December 2019, the Kingdom fulfilled its long-standing promise to publicly list shares of Saudi Aramco. The initial public offering (IPO) of 1.5 percent of Aramco’s shares on the Saudi Tadawul stock market on December 11, 2019, was the largest-ever IPO and valued Aramco at $1.7 trillion. The IPO generated $25.6 billion in proceeds, exceeding the $25 billion Alibaba raised in 2014 in the largest previous IPO in history. In February 2022, the SAG announced the transfer of four percent of Aramco’s shares to the PIF. Crown Prince Mohammed bin Salman announced that after the transfer, the state will remain Aramco’s largest shareholder, retaining more than 94 percent of the total shares.

In March 2019, Saudi Aramco signed a share purchase agreement to acquire 70 percent of SABIC, Saudi Arabia’s leading petrochemical company and the fourth largest in the world, from the PIF in a transaction worth $69.1 billion; the acquisition was completed in 2020. Five of the nine representatives on SABIC’s board of directors are from the SAG, including the chairman and vice chairman. The SAG is similarly well-represented in the leadership of other SOEs. The SAG either wholly owns or holds controlling shares in many other major Saudi companies, such as the Saudi Electricity Company, Saudia Airlines, the Saline Water Conversion Company, Ma’aden, the National Commercial Bank, and other leading financial institutions.

8. Responsible Business Conduct

There is a growing awareness of corporate social responsibility (CSR) in Saudi Arabia. The King Khalid Foundation issues annual “responsible competitiveness” awards to companies doing business in Saudi Arabia for outstanding CSR activities. In March 2021, the SAG approved the formation of a committee on corporate social responsibility in the Ministry of Human Resources and Social Development.

Saudi Arabia does not participate in the Extractive Industries Transparency Initiative.

9. Corruption

In December 2019, King Salman issued royal decrees creating the Oversight and Anti-Corruption Commission (“Nazaha”). Nazaha is responsible for promoting transparency and combating all forms of financial and administrative corruption. Nazaha reports directly to King Salman and has the power to dismiss a government employee even if found not guilty by the specialized anti-corruption court. Throughout 2021, Nazaha published monthly press releases detailing its arrests and investigations, often including high-ranking officials, such as generals and judges, from every ministry in the SAG. The releases are available on the Nazaha website at http://www.nazaha.gov.sa/en/Pages/Default.aspx .

Foreign firms have identified corruption as a barrier to investment in Saudi Arabia. Saudi Arabia has a relatively comprehensive legal framework that addresses corruption, but many firms perceive enforcement as selective. The Combating Bribery Law and the Civil Service Law, the two primary Saudi laws that address corruption, provide for criminal penalties in cases of official corruption. Government employees who are found guilty of accepting bribes face 10 years in prison or fines up to US$267,000. Ministers and other senior government officials appointed by royal decree are forbidden from engaging in business activities with their ministry or organization. Saudi corruption laws cover most methods of bribery and abuse of authority for personal interest, and in December 2021 Saudi Arabia amended the Combating Bribery Law to criminalize foreign bribery. Only senior Nazaha officials are subject to financial disclosure laws. The government is considering disclosure regulations for other officials but has yet to finalize them.

SAMA oversees a strict regime to combat money laundering. Saudi Arabia’s Anti-Money Laundering Law provides for sentences up to 10 years in prison and fines up to $1.3 million. The Basic Law of Governance contains provisions on proper management of state assets and authorizes audits and investigations of administrative and financial malfeasance.

The Government Tenders and Procurement Law regulates public procurements, which are often a source of corruption. The law provides for public announcement of tenders and guidelines for the award of public contracts. Saudi Arabia is an observer of the WTO Agreement on Government Procurement (GPA).

Saudi Arabia ratified the UN Convention against Corruption in April 2013 and signed the G20 Anti-Corruption Action Plan in November 2010. Saudi Arabia was admitted to the OECD Working Group on Bribery in February 2021, and the International Anti-Corruption Academy (IACA) elected Saudi Arabia to its Board of Governors in April 2022.

The Kingdom ranks 52 out of 180 countries in Transparency International’s Corruption Perceptions Index 2021.

10. Political and Security Environment

The Department of State regularly reviews and updates travel advisories to apprise U.S. citizens of the security situation in Saudi Arabia and frequently reminds U.S. citizens of recommended security precautions. Please visit www.travel.state.gov  for further information, including the latest travel advisory.

11. Labor Policies and Practices

The Ministry of Human Resources and Social Development (MHRSD) sets labor policy and, along with the Ministry of Interior, regulates recruitment and employment of expatriate labor, which makes up a majority of the private sector workforce. About 76 percent of jobs in the country are held by expatriates, who represent roughly 38 percent of the total population. The largest groups of foreign workers come from India, Pakistan, Bangladesh, Egypt, the Philippines, and Yemen. Saudis occupy about 93 percent of government jobs, but only about 24 percent of the total jobs in the Kingdom. Roughly 46 percent of employed Saudi nationals work in the public sector.

The removal of guardianship laws and travel restrictions for women, the introduction of workplace protections, and recent judicial reforms that provide additional protection have enabled more women to enter the labor force. From 2016 to 2020, the Saudi female labor participation rate increased from 19 percent to 33 percent. As of Q4 2021, Saudi Arabia’s General Authority for Statistics estimates unemployment at 6.9 percent for the total population and 11 percent for Saudi nationals, but these figures mask a high youth unemployment rate, a Saudi female unemployment rate of 22.5 percent, and low Saudi labor participation rates (51.5 percent overall; 35.6 percent for women). With approximately 60 percent of the Saudi population under the age of 35, job creation for new Saudi labor market entrants will remain a challenge.

The SAG encourages Saudi employment through “Saudization” policies that place quotas on employment of Saudi nationals in certain sectors, coupled with limits on the number of visas for foreign workers available to companies. In 2011, the Ministry of Labor and Social Development (the forerunner of MHRSD) laid out a sophisticated plan known as Nitaqat, under which companies are divided into categories, each with a different set of quotas for Saudi employment based on company size.

The SAG has taken additional measures to strengthen the Nitaqat program and expand the scope of Saudization. The MHRSD has mandated that certain job categories in specific economic sectors only employ Saudi nationals. The ministry has likewise mandated that only Saudi women can occupy retail jobs in certain businesses that cater to female customers. Many elements of Saudization and Nitaqat have garnered criticism from the private sector, but the SAG claims these policies have substantially increased the percentage of Saudi nationals working in the private sector over the last several years and has indicated that there is flexibility in implementation for special cases.

Saudi Arabia’s labor laws forbid union activity, strikes, and collective bargaining. However, the government allows companies that employ more than 100 Saudis to form “labor committees” to discuss work conditions and grievances with management. In 2015, the SAG published 38 amendments to the existing labor law with the aim of expanding Saudi employees’ rights and benefits. In March 2021, MHRSD implemented its Labor Reform Initiative (LRI), which allows foreign workers greater job mobility and freedom to exit Saudi Arabia without the need for the employer’s permission. Domestic workers are not covered under the provisions of either the 2015 regulations or the LRI; separate regulations covering domestic workers were issued in 2013, stipulating employers provide at least nine hours of rest per day, one day off a week, and one month of paid vacation every two years.

Saudi Arabia has taken significant steps to address labor abuses, but weak enforcement continues to result in credible reports of employer violations of foreign employee labor rights. Foreign workers (particularly domestic staff) have encountered employer practices, including passport withholding and non-payment of wages, that constitute trafficking in persons. The Department’s annual Trafficking in Persons Report details concerns about labor law enforcement within Saudi Arabia’s sponsorship system. It is available at https://www.state.gov/reports/2021-trafficking-in-persons-report/saudi-arabia/.

Overtime work is normally compensated at time-and-a-half rates. The minimum age for employment is 14. The SAG does not adhere to the International Labor Organization’s convention on protecting workers’ rights. Non-Saudis have the right to appeal to specialized committees in the MHRSD regarding wage non-payment and other issues. Penalties issued by the ministry include banning infringing employers from recruiting foreign and/or domestic workers for a minimum of five years.

13. Foreign Direct Investment and Foreign Portfolio Investment Statistics

Table 2: Key Macroeconomic Data, U.S. FDI in Host Country/Economy
Host Country Statistical source* USG or international statistical source USG or International Source of Data:  BEA; IMF; Eurostat; UNCTAD, Other
Economic Data Year Amount Year Amount
Host Country Gross Domestic Product (GDP) ($M USD) 2020 $700,118  2020 $700,118 www.worldbank.org/en/country
Foreign Direct Investment Host Country Statistical source* USG or international statistical source USG or international Source of data:  BEA; IMF; Eurostat; UNCTAD, Other
U.S. FDI in partner country ($M USD, stock positions) N/A N/A 2020 $11,386 BEA data available at https://apps.bea.gov/international/factsheet/
Host country’s FDI in the United States ($M USD, stock positions) N/A N/A 2020 $6,262 BEA data available at https://www.bea.gov/international/direct-investment-and-multinational-enterprises-comprehensive-data
Total inbound stock of FDI as % host GDP N/A N/A 2020 34.5% UNCTAD data available at

https://unctad.org/topic/investment/world-investment-report

* Source for Host Country Data: Saudi General Authority for Statistics   

According to the UNCTAD World Investment Report, in 2020 Saudi Arabia’s total FDI inward stock was $241.862 billion and total FDI outward stock was $128.759 billion.

Detailed data for inward direct investment (below) is as of 2010, which is the latest available breakdown of inward FDI by country.

Table 3: Sources and Destination of FDI
Direct Investment from/in Counterpart Economy Data
From Top Five Sources/To Top Five Destinations (US Dollars, Millions)
Inward Direct Investment Outward Direct Investment
Total Inward $169,206 100% Total Outward N/A N/A
Kuwait $16,761 10% Country #1 N/A N/A
France $15,918 9% Country #2 N/A N/A
Japan $13,160 8% Country #3 N/A N/A
United Arab Emirates $12,601 7% Country #4 N/A N/A
China, P.R. $9,035 5% Country #5 N/A N/A
“0” reflects amounts rounded to +/- USD 500,000.

*Source: IMF Coordinated Direct Investment Survey (2010 – latest available complete data)

14. Contact for More Information

Economic Section and Foreign Commercial Service Offices
Embassy of the United States of America
P.O. Box 94309
Riyadh 11693, Saudi Arabia
Phone: +966 11 835-4000

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