2023 Investment Climate Statements: Saudi Arabia

Policies Towards Foreign Direct Investment

The SAG seeks to attract $3 trillion in foreign investment to promote economic development, transfer foreign expertise and technology to Saudi Arabia, create jobs for Saudi nationals, and increase Saudi Arabia’s non-oil exports.

In October 2021, Saudi Arabia announced its National Investment Strategy, which will help it deliver on its Vision 2030 goals. The National Investment Strategy outlines investment plans for sectors including manufacturing, renewable energy, transport and logistics, tourism, digital infrastructure, and health care. The strategy aims to grow the Saudi economy by raising private sector contribution to 65 percent of total GDP and increasing foreign direct investment to 5.7 percent of total GDP. The National Investment Strategy aims to raise net foreign direct investment flows to $103 billion annually and increase domestic investment to about $450 billion annually by 2030.

The Ministry of Investment of Saudi Arabia (MISA), formerly the Saudi Arabian General Investment Authority (SAGIA), governs and regulates foreign investment in the Kingdom, issues licenses to prospective investors, and works to foster and promote investment opportunities across the economy. Established originally as a regulatory agency, MISA has increasingly shifted its focus to investment promotion and assistance, offering potential investors detailed guidance and a catalogue of current investment opportunities on its Invest Saudi website . In August 2022, the Investment Promotion Authority (SIPA) was established to attract national and foreign investment as part of the National Investment Strategy.

The SAG has adopted reforms to improve the Kingdom’s attractiveness as an investment destination. It has reduced the license approval period from days to hours, decreased required customs documents, reduced the customs clearance period from weeks to hours, and increased the investor license period to five years. It has launched e-licenses to provide a more efficient and user-friendly process and an online “instant” license issuance or renewal service to foreign investors that are listed on a local or international stock market and meet certain conditions. The SAG allows 100 percent foreign ownership in most sectors.

Saudi Arabia’s burgeoning entertainment sector provides opportunities for foreign investment. In a country where most public entertainment was once forbidden, the SAG now regularly sponsors and promotes entertainment programming, including live concerts, dance exhibitions, sports competitions, and other public performances. The audiences for many of these events are now gender-mixed, representing a larger consumer base. In addition to reopening cinemas in 2018, the SAG has hosted Formula One and Formula E races, professional golf and tennis tournaments, and a world heavyweight boxing title match. Saudi Arabia’s General Entertainment Authority launched the Saudi Seasons initiative in 2019, which hosts tourism and cultural events in each of the country’s 11 regions. The third iteration of Riyadh Season attracted 12 million visitors during its first 90 days.

The SAG is also seeking foreign investment for its “economic cities” and “giga-projects” that are at various stages of construction. These projects are large-scale, self-contained developments in different regions focusing on particular industries, such as technology, energy, logistics, tourism, entertainment, and infrastructure. Many of these initiatives are developed by subsidiary companies of the Public Investment Fund (PIF), the Kingdom’s sovereign wealth fund. These projects include:

• NEOM: a $1.5 trillion long-term development project to build a futuristic “independent economic zone” and city in northwest Saudi Arabia. This initiative includes:
  • The Line: a 105 mile-long, urban smart city that will have no cars, no streets, and no carbon emissions. This project aims to create 380,000 jobs and contribute $48 billon to domestic GDP by 2030.
  • Oxagon: NEOM’s economic and industrial hub focusing on innovation, research, and technology. Built on the coast, it will include the world’s largest floating structure.
  • Trojena: NEOM’s mountain destination blending natural and developed landscapes. This project will include a man-made lake, a wildlife reserve, and a ski resort that will host the 2029 Asian Winter Games.
  • Sindalah: one of NEOM’s luxury island destinations in the Red Sea. This project will most likely be the first part of NEOM to open to the public.
• Qiddiya: a large-scale entertainment, amusement, sports, housing, and cultural complex near Riyadh.
• King Abdullah Financial District: a commercial center development with nearly 60 skyscrapers in Riyadh.
• New Murabba: a planned commercial downtown in southwest Riyadh spanning almost 12 square miles with residential, retail, hotel, community, and office spaces.
• Red Sea Project: a massive tourism development on the archipelago of islands along the western Saudi coast, which aims to create 70,000 jobs and attract one million tourists per year. This project includes Amaala, a wellness, healthy living, and meditation resort projected to include more than 3,000 luxury hotel rooms and 900 residential villas.
• Diriyah Gate: a $50 billion project transforming Diriyah, a suburb of Riyadh, into a premiere destination for culture and heritage, entertainment, hospitality, retail, and education.
• Asir: a $13 billion project to develop the southwestern region of Asir into a global tourism hub, aiming to attract more than 10 million visitors by 2030.

To attract tourists to these new sites, the SAG introduced a tourist visa in 2019 and an e-visa in 2022 for non-religious travelers. The Kingdom also launched a free, 96-hour “stopover” visa in February 2023. The Kingdom no longer requires foreign travelers staying in the same hotel room to provide proof of marriage or family relations. The SAG is facilitating private investments through its Tourism Development Fund, which has initial capital of $4 billion, and the Kafalah program, which provides loan guarantees of up to $400 million. In addition, the Tourism Fund signed MOUs with local banks to finance projects valued up to $40 billion to stimulate tourism investment and increase the sector’s contribution to GDP.

Investment opportunities in Saudi Arabia’s mining sector continue to expand. In June 2020, the SAG approved a new law allowing foreign companies to enter the mining sector and invest in the Kingdom’s untapped domestic mineral wealth, projected at $1.3 trillion. The SAG seeks to increase the sector’s contribution to GDP by $64 billion, reduce imports by $9.8 billion, and create 200,000 direct and indirect jobs by 2030. Saudi Arabia’s national mining company, Ma’aden, has a $12 billion joint venture with Alcoa for bauxite mining and aluminum production and a $7 billion joint venture with the leading American fertilizer firm Mosaic and the Saudi chemical giant SABIC to produce phosphate-based fertilizers. Saudi company Tasnee and Boeing signed a Memorandum of Understanding in February 2023 to develop aviation-grade titanium alloy value chains in Saudi Arabia. Ma’aden recently announced the formation of a new joint venture with the PIF to invest in strategic minerals projects in third countries. In a bid to attract further investments, Saudi Arabia hosted the second annual Future Minerals Forum in Riyadh in January 2023, which attracted more than 12,000 international participants. The Ministry of Industry and Mineral Resources issued 69 new mining licenses in December 2022.

Saudi Arabia’s transportation sector also provides ample opportunity for international investment. In June 2021, Crown Prince Mohammed bin Salman launched the National Transport and Logistics Strategy to upgrade transportation infrastructure throughout Saudi Arabia. The strategy aims to enhance Saudi Arabia’s position as a global logistics center and cargo hub. As part of the strategy, in March 2023 Saudi Arabia launched a second national air carrier, Riyadh Air, which will serve 100 destinations by 2030. The airline is expected to add $20 billion to non-oil GDP and create more than 200,000 direct and indirect jobs. The SAG also aims to raise air freight sector capacity to more than 4.5 million tons. The strategy includes an initiative to connect Saudi Arabia with the other Arab Gulf states via a railway line. The SAG plans to invest $147 billion in transport and logistics over the next eight years.

Under Vision 2030, Saudi Arabia is transforming its healthcare sector through 23 semi-private “health clusters” – colocated health care facilities and medical cities under local administration. These health clusters represent a significant opportunity for healthcare equipment and technology providers, healthcare services companies, and hospital administrators. Saudi Arabia also plans to open a clinical trials registry and provide incentives for international pharmaceutical companies to bring clinical trials and research and development operations to the Kingdom. The SAG has also committed $1.5 billion to develop digital health services.

Saudi Arabia also aims to become a leader in next-generation technologies such as 5G/6G, artificial intelligence, and the Internet of Things through investments in digital infrastructure and partnerships with private technology companies. The Kingdom established a Science Park on its national labs campus to facilitate information sharing and joint research, and by 2040 aims to invest 2.5 percent of GDP in research, development, and innovation.

Lastly, the Kingdom’s infrastructure sector is open to foreign investment. The SAG launched an $800 billion project to double the size of Riyadh city in the next decade and transform it into an economic, social, and cultural hub for the region. The project includes 18 “mega-projects” in the capital city to improve livability, strengthen economic growth, and more than double the population to 15 million by 2030. The SAG is seeking $250 billion in private sector financing for these projects. The Saudi Downtown Company is also seeking foreign investment in its real estate development projects in 12 Saudi cities.

Limits on Foreign Control and Right to Private Ownership and Establishment

Saudi Arabia fully recognizes rights to private ownership and the establishment of private business. However, the SAG excludes foreign investors from some economic sectors and places some limits on foreign control.

Foreign investors must contend with increasingly strict requirements to base a certain percentage of production within Saudi Arabia (localization), labor policy requirements to hire more Saudi nationals (usually at higher wages than expatriate workers), and an increasingly restrictive visa policy for foreign workers. The SAG implemented new taxes and fees in 2017 and early 2018, including significant visa fee increases.

In February 2021, MISA and the Royal Commission for Riyadh City (RCRC) announced a new directive requiring that companies wanting to contract with the SAG establish their regional headquarters (RHQ) in Saudi Arabia – preferably in Riyadh – by 2024. According to MISA, companies that relocate their regional headquarters to Riyadh will benefit from incentives including a 10-year “Saudization” exemption, spouse work permits, waivers of professional accreditation, visa acceleration, and end-to-end business, personal, and concierge services. Companies must apply for an RHQ License through MISA and RCRC. To be considered an RHQ, a company’s Saudi branch must conduct strategic and management functions such as budgeting, business planning, regional strategy reviews, regional market monitoring, and operational and financial reporting. An RHQ must also start operations within six months after the license is granted and should conduct at least three optional activities from a list provided by MISA and RCRC within the first year of the license’s operation. An RHQ must have 15 full-time employees within the first year and at least three RHQ employees must be C-suite executives. Companies choosing to maintain their regional headquarters in another country will not be awarded public sector contracts beginning in 2024. It remains unclear if the rule would affect contracting by parastatal organizations such as Saudi Aramco.

Foreign investment is currently prohibited in ten sectors:

1. Oil exploration, drilling, and production except services related to the mining sector listed under Central Product Classification (CPC) 5115+883
2. Catering to military sectors
3. Security and detective services
4. Real estate investment in the holy cities, Mecca and Medina (Note: Foreign investment in real estate in Mecca and Medina is allowed in certain locations and limited to 99-year leases.)
5. Tourist orientation and guidance services for religious tourism related to Hajj and Umrah
6. Recruitment offices
7. Commission agents internationally classified under CPC 621
8. Services provided by midwives, nurses, physical therapy services, and quasi-doctoral services classified under CPC 93191
9. Fisheries
10. Poison centers, blood banks, and quarantine services

Foreign firms are barred from investing in the upstream hydrocarbon sector, but the SAG permits foreign investment in the downstream energy sector, including refining and petrochemicals. ExxonMobil, Shell, China’s Sinopec, and Japan’s Sumitomo Chemical are partners with Saudi Aramco in domestic refineries. ExxonMobil, Chevron, Shell, and other international investors have joint ventures with Saudi Aramco and/or the Saudi Basic Industries Corporation (SABIC), which was acquired by Aramco in 2020, in large-scale petrochemical plants. The Dow Chemical Company and Saudi Aramco are partners in the $20 billion Sadara joint venture with the world’s largest integrated petrochemical production complex.

Saudi Aramco also maintains a group of contractors to provide engineering, procurement, construction, hook-up, commissioning and maintenance, and modifications and operations jobs for its offshore oil and gas infrastructure.

Joint ventures almost always take the form of limited liability partnerships in Saudi Arabia, to which there are some disadvantages. Foreign partners in service and contracting ventures organized as limited liability partnerships must pay, in cash or in kind, 100 percent of their contribution to authorized capital. MISA’s authorization is only the first step in setting up such a partnership.

Professionals, including architects, consultants, and consulting engineers, are required to register with, and be certified by, the Ministry of Commerce. In theory, these regulations permit the registration of Saudi-foreign joint venture consulting firms. As part of its WTO commitments, Saudi Arabia generally allows consulting firms to establish a local office without a Saudi partner. Foreign engineering consulting companies, however, must have been incorporated for at least 10 years and have operations in at least four different countries to qualify. Foreign entities practicing accounting and auditing, architecture, and civil planning, or providing healthcare, dental, or veterinary services, must still have a Saudi partner. The Saudi Code of Law Practice was updated in 2022; a foreign law firm can now establish a branch office in Saudi Arabia without a local partner but cannot advise on Saudi law.

In recent years, Saudi Arabia has opened additional service markets to foreign investment, including financial and banking services; aircraft maintenance and repair; computer reservation systems; wholesale, retail, and franchise distribution services; basic and value-added telecom services; and investment in the computer and related services sectors. In 2016, Saudi Arabia formally approved full foreign ownership of retail and wholesale businesses in the Kingdom. While some companies have already received licenses under the new rules, the restrictions attached to obtaining full ownership – including a requirement to invest over $50 million during the first five years and ensure that 30 percent of all products sold are manufactured locally – have proven difficult to meet and have precluded many investors from taking full advantage of the reform.

Other Investment Policy Reviews

Saudi Arabia completed its third WTO trade policy review in March 2021, which included investment policies. The review can be found on WTO’s website .

Business Facilitation

In addition to applying for an investment license  from MISA, foreign and local investors must register a new business via the Ministry of Commerce (MOC), which has begun offering online registration services  for limited liability companies. Though users may submit articles of association and apply for a business name within minutes on MOC’s website, final approval from the Ministry often takes a week or longer. Applicants must also complete several other steps to start a business, including obtaining a municipality (baladia) license for their office premises and registering separately with the Ministry of Human Resources and Social Development, Chamber of Commerce, Passport Office, Tax Department, and the General Organization for Social Insurance. From start to finish, registering a business in Saudi Arabia takes about three weeks.

Saudi officials have stated their intention to attract foreign small- and medium-sized enterprises (SMEs) to the Kingdom. The Small and Medium Enterprises General Authority, Monsha’at , aims to increase SME contribution to the Kingdom’s GDP from 20 to 35 percent by 2030. The SAG continues to roll out initiatives to spur the development of the SME ecosystem in Saudi Arabia. As of 2019, women no longer need a male guardian to apply for a business license. In February 2021, Monsha’at launched the Bank of Small and Medium Enterprises to provide a one-stop shop for SME financing. In March 2022, Monsha’at and the King Abdulaziz City for Science and Technology inaugurated the National Business Innovation Portal (HYPERLINK “https://fikra.sa/”Fikra), which provides guidance and resources for SMEs.

Outward Investment

Saudi citizens, Saudi companies, and SAG entities hold extensive overseas investments. The SAG has transformed its Public Investment Fund (PIF), into a major international investor and sovereign wealth fund. The PIF’s outward investment projects are covered in Section 6 (Financial Sector). Saudi Aramco and SABIC are also major investors in the United States. In 2017, Saudi Aramco acquired full ownership of Motiva, the largest refinery in North America, in Port Arthur, Texas. In December 2021, the ExxonMobil-SABIC $10-billion-dollar joint venture, Gulf Coast Growth Ventures, commenced operations at its new petrochemical facility near Corpus Christi, Texas. Aramco’s expenditures across its U.S. subsidiaries and other U.S. operations totaled more than $60 billion over the last five years, according to Aramco Americas.

Transparency of the Regulatory System

Few aspects of the SAG’s regulatory system are entirely transparent, although Saudi investment policy is less opaque than other areas. Bureaucratic procedures are cumbersome, but red tape can generally be overcome with persistence. Foreign portfolio investment in the Saudi stock exchange is well-regulated by the Capital Markets Authority (CMA), with clear standards for interested foreign investors to qualify to trade on the local market. The CMA has progressively liberalized requirements for “qualified foreign investors” to trade in Saudi securities. Insurance companies and banks whose shares are listed on the Saudi stock exchange are required to publish financial statements according to International Financial Reporting Standards (IFRS) accounting standards. All other companies are required to follow accounting standards issued by the Saudi Organization for Certified Public Accountants.

Stakeholder consultation on regulatory issues is inconsistent. Some Saudi organizations are diligent in consulting businesses affected by the regulatory process, while others tend to issue regulations with no consultation at all. Proposed laws and regulations are not always published in draft form for public comment. An increasing number of government agencies, however, solicit public comments through their websites. In addition, in March 2021, Saudi Arabia’s National Competitiveness Center launched a public consultation platform called “Istitlaa” to solicit feedback on proposed laws and regulations before they are approved. That said, the processes and procedures for stakeholder consultation remain generally opaque and are not codified in law or regulations. There are no private sector or government efforts to restrict foreign participation in the industry standards-setting consortia or organizations that are available. There are no informal regulatory processes managed by NGOs or private sector associations.

International Regulatory Considerations

Saudi Arabia uses technical regulations developed by the Saudi Arabian Standards Organization (SASO), the Saudi Food and Drug Authority (SFDA), and the Gulf Standards Organization (GSO). Although the GCC member states continue to work towards common requirements and standards, each individual member state, and Saudi Arabia through SASO, maintains significant autonomy in developing, implementing, and enforcing technical regulations and conformity assessment procedures in its territory. It can be difficult to resolve technical discretions between the GSO and Saudi Arabia. More recently, Saudi Arabia moved towards adoption of a single standard for technical regulations. This standard is often based on International Organization for Standardization (ISO) or International Electrotechnical Commission (IEC) standards, to the exclusion of other international standards, such as those developed by U.S.-domiciled standards development organizations (SDOs).

Saudi Arabia’s exclusion of these other international standards, which are often used by U.S. manufacturers, can create significant market access barriers for industrial and consumer products exported from the United States. The United States government has engaged Saudi authorities on the principles for international standards per the WTO Technical Barriers to Trade Committee Decision and encouraged Saudi Arabia to adopt standards developed according to such principles in their technical regulations, allowing all products that meet those standards to enter the Saudi market. Several U.S.-based standards organizations, including SDOs and individual companies, have also engaged SASO, with mixed success, in an effort to preserve market access for U.S. products, ranging from electrical equipment to footwear.

As a member of the WTO, Saudi Arabia must notify the WTO Committee on Technical Barriers to Trade of all draft technical regulations as well as the Sanitary and Phytosanitary Committee on various agricultural products. Saudi Arabia does not always notify the WTO about updates to regulations in a timely fashion.

Legal System and Judicial Independence

The Saudi legal system is derived from Islamic law, known as sharia. Saudi commercial law, meanwhile, is still developing. In 2016, Saudi Arabia took a significant step in improving its dispute settlement regime with the establishment of the Saudi Center for Commercial Arbitration (see “Dispute Settlement” section below). Through its Commercial Law Development Program, the U.S. Department of Commerce has provided capacity-building programs for Saudi stakeholders in the areas of contract enforcement, public procurement, and insolvency.

The Saudi Ministry of Justice oversees the sharia-based judicial system, but most ministries have committees to rule on matters under their jurisdictions. Judicial and regulatory decisions can be appealed. Many disputes that would be handled in a court of law in the United States are handled through intra-ministerial administrative bodies and processes in Saudi Arabia. Generally, the Saudi Board of Grievances has jurisdiction over commercial disputes between the government and private contractors. The Board also reviews all foreign arbitral awards and foreign court decisions to ensure that they comply with sharia. This review process can be lengthy, and outcomes are unpredictable.

The Kingdom’s record of enforcing judgments issued by courts of other GCC states under the GCC Common Economic Agreement, and of other Arab League states under the Arab League Treaty, is somewhat better than enforcement of judgments from other foreign courts. Monetary judgments are based on the terms of the contract – e.g., if the contract is calculated in U.S. dollars, a judgment may be obtained in U.S. dollars. If unspecified, the judgment is denominated in Saudi riyals. Non-material damages and interest are not included in monetary judgments, based on the sharia prohibitions against interest and against indirect, consequential, and speculative damages.

As with any investment abroad, it is important that U.S. investors take steps to protect themselves by thoroughly researching the business record of a proposed Saudi partner, retaining legal counsel, complying scrupulously with all legal steps in the investment process, and securing a well-drafted agreement. Even after a decision is reached in a dispute, enforcement of a judgment can still take years. The U.S. government recommends consulting with local counsel in advance of investing to review legal options and appropriate contractual provisions for dispute resolution.

In 2021, the Crown Prince announced draft legal reforms including a new personal status law, civil transactions law, evidence law, and criminal code that aim to increase predictability and transparency in the legal system, facilitating commerce and expanding protections for women. To date, Saudi Arabia has published the new evidence law and the new personal status law, which have been in force since May 2022. The civil transactions law was approved by the Shura council in May 2022, but the new criminal code has not yet been approved.

Laws and Regulations on Foreign Direct Investment

In January 2019, the Saudi government established the General Authority for Foreign Trade (GAFT), which aims to strengthen Saudi Arabia’s non-oil exports and investment, increase the private sector’s contribution to foreign trade, and resolve obstacles encountered by Saudi exporters and investors. The authority monitors the Kingdom’s obligations under international trade agreements and treaties, negotiates and enters into new international commercial and investment agreements, and represents the Kingdom before the WTO. The Governor of GAFT reports to the Minister of Commerce.

Despite the list of activities excluded from foreign investment (see “Limits on Foreign Control and Right to Private Ownership and Establishment” section), foreign minority ownership in joint ventures with Saudi partners may be allowed in some of these sectors. Foreign investors are no longer required to take local partners in many sectors and may own real estate for company activities. They are allowed to transfer money from their enterprises out of the country and can sponsor foreign employees, provided that “Saudization” quotas are met (see “Labor Policies” section). Minimum capital requirements to establish business entities range from zero to $8 million, depending on the sector and the type of investment.

MISA offers detailed information on the investment process, provides licenses and support services to foreign investors, and coordinates with government ministries to facilitate investment. According to MISA, it must grant or refuse a license within five days of receiving an application and supporting documentation from a prospective investor. MISA has established and posted its licensing guidelines online, but many companies looking to invest in Saudi Arabia continue to work with local representation to navigate the bureaucratic licensing process. MISA licenses foreign investments by sector, each with its own regulations and requirements. MISA’s Invest Saudi website lists these sectors here . Generally, MISA requires two documents to receive an investor license: a copy of the entity’s commercial registration from its country of origin and financial statements from the previous year prepared by an internationally acclaimed legal office and authenticated by a Saudi Embassy. MISA also offers several special-purpose licenses for bidding on and performance of government contracts. Foreign firms must describe their planned commercial activities in some detail and will receive a license in one of these sectors at MISA’s discretion. Depending on the type of license issued, foreign firms may also require the approval of relevant competent authorities, such as the Ministry of Health or the Ministry of Tourism.

An important MISA objective is to ensure that investors do not just acquire and hold licenses without investing, and MISA sometimes cancels licenses of foreign investors that it deems do not contribute sufficiently to the local economy. MISA’s periodic license reviews, with the possibility of cancellation, add uncertainty for investors and can provide a disincentive to longer-term investment commitments.

MISA has agreements with various SAG agencies and ministries to facilitate and streamline foreign investment. These agreements permit MISA to facilitate the granting of visas, establish MISA branch offices at Saudi embassies in different countries, prolong tariff exemptions on imported raw materials to three years and on production and manufacturing equipment to two years, and establish commercial courts. To make it easier for businesspeople to visit the Kingdom, MISA can sponsor visa requests without involving a local company. Saudi Arabia has implemented a decree providing that sponsorship is no longer required for certain business visas. While MISA has set up the infrastructure to support foreign investment, many companies report that despite some improvements, the process remains cumbersome and time-consuming.

Competition and Antitrust Laws

The General Authority for Competition ( GAC ) reviews merger transactions for competition-related concerns, investigates business conduct, including allegations of price fixing, can issue fines, and can approve applications for exemptions for certain business conduct.

The competition law, as amended in 2019, applies to all entities operating in Saudi Arabia, and covers all activities related to the production, distribution, purchase, and sale of commodities inside the Kingdom, as well as practices that occur outside of Saudi Arabia and that have an impact on domestic competition. The competition law prohibits anti-competitive practices and agreements. This may include certain aspects of vertically integrated business combinations. Consequently, companies doing business in Saudi Arabia may find it difficult to register exclusivity clauses in distribution agreements but are not necessarily precluded from enforcing such clauses in Saudi courts.

Certain merger transactions must be notified to the GAC, and each entity involved in the merger is obligated to notify the GAC. GAC may approve, conditionally approve, or reject a merger transaction.

Expropriation and Compensation

The Embassy is not aware of any cases in Saudi Arabia of expropriation from foreign investors without adequate compensation. Some small- to medium-sized foreign investors, however, have complained that their investment licenses have been cancelled without justification, causing them to forfeit their investments.

Dispute Settlement

ICSID Convention and New York Convention

The Kingdom of Saudi Arabia ratified the 1958 New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards in 1994. Saudi Arabia is also a member state of the International Center for the Settlement of Investment Disputes Convention (ICSID), though under the terms of its accession it cannot be compelled to refer investment disputes to this system absent specific consent, provided on a case-by-case basis.

Investor-State Dispute Settlement

Since issuance of an Enforcement Law in 2012, foreign and local arbitration awards, along with foreign judgments, may now be taken to the Enforcement Courts in the same manner as domestic judgments. These new enforcement procedures have proven to be generally faster and more effective than the old system, in which these awards and judgments required final review by Saudi courts. The U.S. government recommends consulting with local counsel in advance of investing to review legal options and contractual provisions for dispute resolution.

International Commercial Arbitration and Foreign Courts

Traditionally, dispute settlement and enforcement of foreign arbitral awards in Saudi Arabia have proven time-consuming and uncertain, carrying the risk that sharia principles can potentially supersede any foreign judgments or legal precedents. Even after a decision is reached in a dispute, effective enforcement of the judgment can be lengthy. In several cases, disputes have caused serious problems for foreign investors. In cases of alleged fraud or debt, foreign partners may also be jailed to prevent their departure from the country while awaiting police investigation or court adjudication. Courts can in theory impose precautionary restraint on personal property pending the adjudication of a commercial dispute, though this remedy has been applied sparingly.

The SAG has demonstrated a commitment to improve the quality of commercial legal proceedings and access to alternative dispute resolution mechanisms. Local attorneys indicate that the quality of final judgments in the court system has improved, but that cases still take too long to litigate. The Saudi Center for Commercial Arbitration (SCCA) offers comprehensive arbitration services to domestic and international firms based on the United Nations Commission on International Trade Law (UNCITRAL) rules. The SCCA reports that both domestic and foreign law firms have begun to include referrals to the SCCA in the arbitration clauses of their contracts. While the SCCA is still in the early stages of operation, it appears to be functioning as intended. Awards rendered by the SCCA can be enforced directly by the local enforcement courts without prior review on the merits, assuming there is no obvious conflict with essential sharia principles, most importantly the prohibition against interest.

In December 2017, UNCITRAL recognized Saudi Arabia as a jurisdiction that has adopted an arbitration law based on the 2006 UNCITRAL Model Arbitration Law. UNCITRAL took this step after Saudi judges clarified that sharia would not affect the enforcement of foreign arbitral awards. In May 2020, Saudi Arabia ratified the United Nations Convention on International Settlement Agreements Resulting from Mediation, also known as the “Singapore Convention on Mediation,” becoming the fourth state to ratify the Convention. As a result of Saudi Arabia’s ratification, international settlement agreements falling under the Convention and involving assets located in Saudi Arabia may be enforced by Saudi courts.

Bankruptcy Regulations

In August 2018, the SAG implemented new bankruptcy legislation that seeks to “further facilitate a healthy business environment that encourages participation by foreign and domestic investors, as well as local small and medium enterprises.” The law clarifies procedural processes and recognizes distinct creditor classes (e.g., secured creditors). It also includes procedures for continued operation of a distressed company via financial restructuring. Alternatively, the parties may pursue an orderly liquidation of company assets, which would be managed by a court-appointed licensed bankruptcy trustee. Saudi courts have begun to accept and hear cases under this new legislation.

Investment Incentives

MISA advertises several financial advantages for foreigners looking to invest in the Kingdom, including loan programs; energy and utility enablement in industrial cities; employment support programs; pre-export financing to Saudi exporters; post-shipment financing to international buyers; custom duty drawback and exemption on selected materials, equipment, and machinery; the lack of personal income taxes; and a corporate tax rate of 20 percent on foreign companies’ profits (the lowest among G20 countries). Special incentives and assistance are offered to foreign-affiliated enterprises and international companies looking to establish offices in the Kingdom to promote clustering activities, knowledge transfer, and human capital development within the Kingdom. MISA’s Invest Saudi website also lists various SAG-sponsored regional and international financial programs  to which foreign investors have access.

In 2021, the Crown Prince announced the Shareek (Arabic for “partner”) program to spark economic diversification. The program facilitates investment partnerships between the SAG and companies that can commit to investing a minimum of $5.2 billion by 2030 and have the ability to invest at least $106 million in each additional project. Participating companies will be eligible for loans, grants, and co-investment from the Shareek program, as well as special support from the SAG on regulatory and other issues. The first bundle of projects supported by the Shareek program are mostly led by large Saudi companies such as Saudi Aramco, SABIC, and Ma’aden.

The Saudi Industrial Development Fund ( SIDF ), a government financial institution, supports private sector industrial investments by providing medium- and long-term loans for new factories and for projects to expand, upgrade, and modernize existing manufacturing facilities. The SIDF offers loans of 50 to 75 percent of a project’s value, depending on the project’s location. Foreign investors that set up manufacturing facilities in developed areas (Riyadh, Jeddah, Dammam, Jubail, Mecca, Yanbu, and Ras al-Khair), for example, can receive a 15-year loan for up to 50 percent of a project’s value; investors in the Kingdom’s least developed areas can receive a 20-year loan for up to 75 percent of the project’s value. The SIDF also offers consultancy services for local industrial projects in the administrative, financial, technical, and marketing fields.

The SAG offers several incentive programs to promote employment of Saudi nationals in certain cases. The Saudi Human Resources Development Fund ( HRDF ) offers programs related to work-based training, vocational guidance, empowerment, and income support. For example, HRDF will pay 30 percent of a Saudi national’s wages for the first year of work, with a wage subsidy of 20 percent and 10 percent for the second and third year of employment, respectively (subject to certain limits and caps). “Tamheer” is an on-the-job training program through which the SAG provides Saudi graduates with a bachelor’s or advanced degree with a 3,000 Saudi riyal (SAR) monthly stipend plus occupational hazard insurance for a period of three to six months.

American and other foreign firms can participate in SAG-financed and/or -subsidized research-and-development (R&D) programs run through the Kingdom’s Research, Development, and Innovation Authority.

Foreign Trade Zones/Free Ports/Trade Facilitation

Saudi Arabia does not operate free trade zones or free ports. However, as part of its Vision 2030 program, the SAG is creating special zones with special regulations to encourage investment and diversify government revenues. The SAG launched the first of these zones, the Special Integrated Logistic Zone (SILZ), in 2022. Located in Riyadh next to King Khalid International Airport, the SILZ offers integrated import, export, customs, and electronic waste services. Goods produced or processed in the SILZ are exempt from Saudi Arabia’s 15 percent value added tax and duties under a customs duty suspension arrangement. Firms operating inside the SILZ also enjoy a five-year delay on “Saudization” quotas.

The SAG is considering the establishment of special regulatory zones in certain areas, including at NEOM and the King Abdullah Financial District in Riyadh. During the G20 Leaders Summit in November 2020, the SAG announced plans to launch special economic zones that will be focused on greenfield investment in various sectors including pharmaceuticals, biotechnology, and digital industries. These zones will have a special legislative environment and include attractive incentives, according to the SAG.

Saudi Arabia has established a network of “economic cities” as part of the country’s efforts to reduce its dependence on oil. These economic cities, which are overseen by the Economic Cities and Special Zones Authority (ECZA), include King Abdullah Economic City (KAEC) near Jeddah, Jazan Economic City, and Knowledge Economic City in Medina. Economic cities aim to provide a variety of advantages to companies related to logistics and ease of doing business. The cities offer a range of incentives to attract companies, including subsidized land, reduced-price office space, and access to logistics infrastructure, such as KAEC’s King Abdullah Port.

The Saudi Industrial Property Authority ( MODON  in Arabic) oversees 36 industrial cities, including some still under development, in addition to private industrial cities and complexes. MODON offers incentives for commercial investment in these cities, including competitive rents for industrial land, government-sponsored financing, export guarantees, and certain customs exemptions.

The Royal Commission for Jubail and Yanbu ( RCJY ) established the industrial cities of Jubail, located in eastern Saudi Arabia on the Persian Gulf coast, and Yanbu, located in northwestern Saudi Arabia on the Red Sea coast. A significant portion of Saudi Arabia’s refining, petrochemical, and other heavy industries are in the Jubail and Yanbu industrial cities. RCJY promotes investment opportunities in the two cities and can offer a variety of incentives, including tax holidays, customs exemptions, low-cost loans, and favorable land and utility rates. More recently, the RCJY has assumed responsibility for managing the Ras Al Khair City for Mining Industries and the Jazan City for Primary and Downstream Industries.

In 2017, Saudi Aramco began building the King Salman Energy Park (“SPARK”), a sustainable global energy and industrial hub, in the Eastern Province between Dammam and Al-Ahsa. SPARK aims to attract, establish, and encourage local energy industries in oil exploration, production, refining, petrochemicals, conventional power generation, and water production and treatment. Saudi Aramco plans to finish construction of SPARK in 2035 and expects the hub to add around 100,000 jobs and $6 billion to annual GDP.

Performance and Data Localization Requirements

The government does not impose systematic conditions on foreign investment. In line with its bid to diversify the economy and provide more private sector jobs for Saudi nationals, the SAG has embarked on a broad effort to source goods and services domestically and is seeking commitments from investors to do so. In 2017, the Council of Economic and Development Affairs (CEDA) established the Local Content and Private Sector Development Unit (NAMAA in Arabic) to promote local content and improve the balance of payments. NAMAA is responsible for monitoring and implementing regulations, suggesting new policies, and coordinating with the private sector on all local content matters. In December 2018, a royal decree was issued to establish the Local Content and Government Procurement Authority ( LCGPA ) to develop local content and to improve government procurement operation. The LCGPA is mandated to set local content requirements for individual contracts, track the amount of local content used by contractors, and obtain and audit commitments by contractors to use local content.

Government-controlled enterprises are also increasingly introducing local content requirements for foreign firms. Saudi Aramco’s “In-Kingdom Total Value Add” (IKTVA) program, for example, strongly encourages the purchase of goods and services from a local supplier base. Aramco reached 63 percent localization across all its procurement in 2023 and aims to achieve 70 percent local procurement by 2025.

The General Authority for Military Industries (GAMI) serves as the regulator and licensor for Saudi Arabia’s military industries sector. GAMI is also chartered to develop an indigenous defense industry with the goal of localizing 50 percent of Saudi military procurement spending by 2030. Another key player in the defense sector is Saudi Arabian Military Industries (SAMI) – a wholly-owned subsidiary of the PIF launched in 2017. SAMI aims to be among the top 25 military industries companies in the ‎world by 2030 and supports the Kingdom’s localization goals by forming joint ventures to manufacture locally defense articles.

The government encourages recruitment of Saudi employees through a series of incentives (see “Labor Policies” section for details of the “Saudization” program) and limits placed on the number of visas for foreign workers available to companies. The Saudi electronic visitor visa system defaults to five-year visas for all U.S. citizen applicants. “Business visas” are routinely issued to U.S. visitors who do not have an invitation letter from a Saudi company, but the visa applicant must provide evidence that he or she is engaged in legitimate commercial activity. “Commercial visas” are issued by invitation from Saudi companies to applicants, who have a specific reason to visit a Saudi company. The SAG has recently increased fees for expatriate employers and levies on expatriates with dependents.

Data Treatment

In 2020, the National Data Governance Interim Regulations were issued to deal mainly with government-related data. However, the National Data Regulations also address personal data protection and apply to all entities in Saudi Arabia that process personal data, as well as entities outside the Kingdom that possess personal data related to individuals residing in Saudi Arabia.

In 2021, the Saudi Data and Artificial Intelligence Authority (SDAIA) issued a draft of the Implementing Regulation of the Saudi Personal Data Protection Law (PDPL). A revised version of the PDPL, which addresses stakeholder feedback, will go into effect on September 14, 2023. Companies have one year from enactment to comply with the provisions of the law.

Saudi Arabia’s Medical Practitioners’ Law of 2005 safeguards information obtained during medical practice, including personal data. It is unclear if personal data safeguards on government software applications rolled out during the COVID-19 pandemic provide the same level of personal data protection.

The Saudi E-Commerce Law of 2019, together with its 2020 implementing regulations, covers data protection of consumers’ personal information and applies to all e-commerce providers (domestic and international) that offer goods and services to customers based in Saudi Arabia. Its provisions regulate e-commerce business practices, requiring transparency and consumer protection, as well as protection of customers’ personal data, with the goal to enhance cybersecurity and trust in online transactions. Data retention is also restricted; service providers are not allowed to retain personal data any longer than required to complete business transactions for which data was collected. Also, sharing of data and customer information with third-party providers is prohibited without express permission. In March 2021, the General Authority of Zakat and Tax released guidelines for VAT registration for store owners engaged in e-commerce activities.

In 2020, Saudi Arabia announced two linchpin policies aimed at advancing data mining to meet its ambitious digital transformation goals: the National Digital Economy Policy, and the National Strategy for Data and Artificial Intelligence (NSDAI). Recognizing the need for new data protection and cybersecurity laws and regulations for its evolving digital economy, Saudi Arabia’s Ministry of Communications and Information Technologies (MCIT) has indicated it is willing to take a more pragmatic approach to its data localization regulations, such as the 2018 Essential Cybersecurity Controls, and would provide incentives for big tech joint ventures.

Saudi Arabia’s Cloud Computing Regulatory Framework (CCRF), issued in 2018 and amended in 2019 by the Saudi Communication and Information Technology Commission (CITC), applies to any cloud service provided to cloud customers with a home or business address in Saudi Arabia. The Framework governs the rights and obligations of cloud service providers, customers, businesses, and government entities, and includes data protection principles. Unless expressly allowed by Saudi law, CCRF regulations do not allow cross-border data flows by cloud service providers or customers of sensitive business content, or of highly sensitive and secret content belonging to government agencies and institutions.

Saudi Arabia’s Internet of Things (IoT) Regulatory Framework regulates the use of all IoT services and includes data security, privacy, and protection requirements. The IoT Regulatory Framework specifies data security measures, such as limited retention and data localization for IoT services and networks, which are also regulated by the CITC.

Saudi Arabia’s Electronic Transactions Law imposes obligations on internet service providers (ISPs) to maintain confidentiality of business information and personal data in electronic transactions.

Saudi Arabia’s Anti-Cyber Crime Law seeks to protect the national economy by deterring cybercrimes such as destruction or alteration of data, illegal access to bank or credit information, interruption of computer and information network transmissions, and other disruptions to ICT infrastructure. The law also requires consent from individuals whose personal data or documents are to be disclosed.

In 2018, the Saudi National Cybersecurity Authority (NCA) developed, and continues to update, the country’s Essential Cyber Controls (ECC) regulation with input from multiple Saudi cybersecurity and ICT authorities. The ECC sets the minimum cybersecurity requirements for national organizations that are within its scope of ECC implementation.

There are no requirements for foreign IT providers to turn over source code or provide access to encryption. Other than a requirement to retain records locally for ten years for tax purposes, there is no requirement regarding data storage or access to surveillance.

Real Property

The Saudi legal system protects and facilitates acquisition and disposition of all property, consistent with the Islamic practice of upholding private property rights. Non-Saudi corporate entities are allowed to purchase real estate in Saudi Arabia in accordance with the foreign-investment code. Other foreign-owned corporate and personal property is protected by law. Saudi Arabia has a system of recording security interests and plans to modernize its land registry system.

In 2017, the Saudi Ministry of Municipal, Rural Affairs, and Housing implemented an annual vacant land tax of 2.5 percent of the assessed value on vacant lands in urban centers to spur development. In 2018, in order to increase Saudis’ access to financing and stimulate the mortgage and housing markets, Saudi Arabia’s central bank lifted the maximum loan-to-value rate for mortgages for first-time homebuyers to 90 percent from 85 percent and increased interest payment subsidies for first-time buyers.

Intellectual Property Rights

Saudi Arabia was removed from the U.S. Trade Representative’s (USTR) Special 301 Report Priority Watch List in 2022 due to steps Saudi Arabia took to address stakeholder concerns including the publication of its IP enforcement procedures and increased enforcement against counterfeit and pirated goods, as well as online pirated content.

In 2018, Saudi Arabia established the Saudi Authority for Intellectual Property ( SAIP ) to regulate, support, develop, sponsor, protect, enforce, and upgrade IP fields in accordance with the best international practices. In 2020, SAIP worked to consolidate IP protection competence, including creating a government-wide IPR respect program, establishing a specialized IP court, launching online and in-market enforcement programs, continuing market raids against counterfeit and pirated goods, and conducting significant pro-IPR awareness campaigns. SAIP has cooperated with USTR and the U.S. Patent and Trademark Office (USPTO), including the signing of a second Cooperation Arrangement in December 2021 between SAIP and USPTO. In 2022, the Ministry of Human Resources and Social Development approved the establishment of Saudi Arabia’s first nonprofit intellectual property protection entity, Himayah, to spread societal awareness of intellectual property rights. The SAG also launched its National Intellectual Property Strategy in 2022 to fill specific gaps identified in the Kingdom’s IP ecosystem.

Saudi authorities seized 11,594,130 IP-infringing items during inspection campaigns throughout 2022. SAIP conducted almost 1,500 mystery shopper visits in 2022 and blocked access to 5,529 websites featuring content violating IP standards. Concerns remain regarding enforcement, including a lack of coordination between SAIP and ZATCA on border seizures and the slowness of Saudi commercial courts. While Saudi Arabia’s regulatory data protection (RDP) has improved, pharmaceutical companies note that SAIP’s RDP procedures lack clarity.

For additional information about national laws and points of contact at local IP offices, please see WIPO’s country profiles .

Resources for Rights Holders

Embassy point of contact:
Caroline Sanford
Economic Officersanfordch@state.gov

Regional IPR Attaché:
Aisha Y. Salem-Howey, LL.M.
Intellectual Property Attaché for the Middle East & North Africa
U.S. Patent & Trademark Office
U.S. Department of Commerce
Aisha.Salem-Howey@trade.gov 

Capital Markets and Portfolio Investment

Saudi Arabia’s financial policies generally facilitate the free flow of private capital and currency can be transferred in and out of the Kingdom without restriction. Saudi Arabia maintains an effective regulatory system governing portfolio investment in the Kingdom. The Capital Markets Law, passed in 2003, allows for brokerages, asset managers, and other nonbank financial intermediaries to operate in the Kingdom. The law created a market regulator, the Capital Market Authority (CMA), established in 2004, and opened the Saudi stock exchange (Tadawul) to public investment.

Since 2015, the CMA has progressively relaxed the rules applicable to qualified foreign investors, easing barriers to entry and expanding the foreign investor base. The CMA adopted regulations in 2017 permitting corporate debt securities to be listed and traded on the exchange; in March 2018, the CMA authorized government debt instruments to be listed and traded on the Tadawul. The Tadawul was incorporated into the FTSE Russell Emerging Markets Index in March 2019, resulting in a foreign capital injection of $6.8 billion. Separately, the $11 billion infusion into the Tadawul from integration into the MSCI Emerging Markets Index took place in May 2019. The Tadawul was also added to the S&P Dow Jones Emerging Market Index.

In November 2021, the CMA allowed financial market institutions to accept subscriptions from non-Saudis in real estate funds that invest in assets within the boundaries of Mecca and Medina.

Money and Banking System

The banking system in the Kingdom is generally well-capitalized and healthy. The public has easy access to deposit-taking institutions. The legal, regulatory, and accounting systems used in the banking sector are generally transparent and consistent with international norms. In November 2020, the SAG approved the Saudi Central Bank Law, which changed the name of the Saudi Arabian Monetary Authority (SAMA) to the Saudi Central Bank. Under the law, the Saudi Central Bank is responsible for maintaining monetary stability, promoting the stability of and enhancing confidence in the financial sector, and supporting economic growth. The Saudi Central Bank continues to use the acronym “SAMA” due to its widespread use.

SAMA generally gets high marks for its prudential oversight of commercial banks in Saudi Arabia. SAMA is a member and shareholder of the Bank for International Settlements in Basel, Switzerland.

In 2017, SAMA enhanced and updated its previous Circular on Guidelines for the Prevention of Money Laundering and Terrorist Financing. The enhanced guidelines have increased alignment with the Financial Action Task Force (FATF) 40 Recommendations, the nine Special Recommendations on Terrorist Financing, and relevant UN Security Council Resolutions. Saudi Arabia is a member of the Middle East and North Africa Financial Action Task Force (MENA-FATF). In 2019, Saudi Arabia became the first Arab country to be granted full membership to the FATF, following the organization’s recognition of the Kingdom’s efforts in combating money laundering, financing of terrorism, and proliferation of arms. Saudi Arabia had previously been an observer member since 2015.

Saudi Arabia is forward leaning on the development of financial technology with the exception of cryptocurrency adoption. There are currently three licensed digital banks in the Kingdom (STC Bank, Saudi Digital Bank, and D360) and 23 licensed payment companies. In late 2022, SAMA released legislation, regulatory guidelines, and technical standards to enable the provision of open banking services by banks and financial technology companies. Open banking enables the customers of financial institutions to share their personal financial data with a third-party financial services provider. SAMA also completed a national risk assessment of virtual assets and virtual asset service providers (VASPs), per FATF guidance; however, the assessment has not been made public. VASPs remain illegal in the Kingdom and virtual currency may not be exchanged for Saudi Riyals. In 2021, SAMA introduced the new Instant Payment System (Sarie) to facilitate instant, 24/7 money transfers across local banks.

Credit is normally widely available to both Saudi and foreign entities from commercial banks and is allocated on market terms. The Saudi banking sector has one of the world’s lowest non-performing loan (NPL) ratios, 1.8 percent in 2022. In addition, credit is available from government institutions, such as the SIDF, which allocates credit based on government-set criteria rather than market conditions. Companies must have a legal presence in Saudi Arabia to qualify for credit. The private sector has access to term loans, and there have been a number of corporate issuances of sharia-compliant bonds, known as sukuk.

The New Government Tenders and Procurement Law (New GTPL) applies to procurement by government entities and procurements executed outside of Saudi Arabia. The Ministry of Finance has a pivotal role under the New GTPL to set policies and issue directives, collate and distribute information, maintain a list of boycotts, and approve tender and prequalification forms, contract forms, performance evaluation forms, and other documents. In 2018, the Ministry of Finance launched the Electronic Government Procurement System (HYPERLINK “https://portal.etimad.sa/en-us”Etimad Portal) to consolidate and facilitate the process of bidding and government procurement for all government sectors, enhancing transparency amongst government sectors and competing entities.

Foreign Exchange and Remittances

Foreign Exchange

There is no limitation in Saudi Arabia on the inflow or outflow of funds for remittances of profits, debt service, capital, capital gains, returns on intellectual property, or imported inputs, other than certain withholding taxes. Withholding taxes range from five percent for technical services and dividend distributions, to 15 percent for transfers to related parties, and 20 percent or more for management fees. Bulk cash shipments greater than $10,000 must be declared at entry or exit points. Since 1986, when the last currency devaluation occurred, the official exchange rate has been fixed by SAMA at 3.75 Saudi riyals per U.S. dollar. Transactions typically take place using rates very close to the official rate.

Remittance Policies

With almost 75 percent of the labor force comprised of foreign workers as of 2022, Saudi Arabia is one of the largest remitting countries in the world. Remittances declined by 6.9% to $38.2 billion in 2022, according to SAMA. There are currently no restrictions on converting and transferring funds associated with an investment (including remittances of investment capital, dividends, earnings, loan repayments, principal on debt, lease payments, and/or management fees) into a freely usable currency at a legal market-clearing rate. There are no waiting periods in effect for remitting investment returns through normal legal channels.

The Ministry of Human Resources and Social Development is progressively implementing a “Wage Protection System” designed to verify that expatriate workers, the predominant source of remittances, are being properly paid according to their contracts. Under this system, employers are required to transfer salary payments from a local Saudi bank account to an employee’s local bank account, from which expatriates can freely remit their earnings to their home countries.

Sovereign Wealth Funds

The Public Investment Fund ( PIF ) is the Kingdom’s officially designated sovereign wealth fund. While the PIF lacks many of the attributes of a traditional sovereign wealth fund, it has evolved into the SAG’s primary investment vehicle.

Established in 1971 to channel oil wealth into economic development, the PIF has historically been a holding company for government shares in partially privatized state-owned enterprises (SOEs), including SABIC, the National Commercial Bank, Saudi Telecom Company, Saudi Electricity Company, and others. Crown Prince Mohammed bin Salman is the chairman of the PIF and announced his intention in April 2016 to grow the PIF more than five-fold to a $2 trillion global investment fund by 2030, relying in part on proceeds from the initial public offering of 1.5 percent of Saudi Aramco shares.

As of January 2023, the PIF was the sixth largest sovereign wealth fund with $607 billion in assets under management, according to data released by the Sovereign Wealth Funds Institute. In an effort to rebalance its investment portfolio, the PIF has divided its assets into six investment pools comprising local and global investments in various sectors and asset classes: Saudi holdings; Saudi sector development; Saudi real estate and infrastructure development; Saudi giga-projects (including NEOM, Qiddiya, and the Red Sea Project); international strategic investments; and an international diversified pool of investments. The PIF held $30.9 billion worth of U.S. stocks at the end of 2022. The sovereign wealth fund’s U.S. holdings span diverse sectors, including events and entertainment, tech, financial, electric vehicle, gaming, and e-commerce.

The PIF’s 2021-2025 strategy focuses on launching new sectors, empowering the private sector, developing the PIF’s portfolio, achieving effective long-term investments, supporting the localization of sectors, and building strategic economic partnerships. By 2025 the PIF aims to invest $267 billion into the local economy, contribute $320 billion to non-oil GDP, and create 1.8 million jobs.

In practice, SAMA’s foreign reserve holdings also operate as a quasi-sovereign wealth fund, accounting for the majority of the SAG’s foreign assets. SAMA invests the Kingdom’s surplus oil revenues primarily in low-risk liquid assets, such as sovereign debt instruments and fixed-income securities. SAMA’s foreign reserve holdings peaked at $746 billion in 2014 but have since fallen to $457.6 billion in January 2023. This decline may be due to transfers to the PIF, as well as SAMA’s efforts to finance a recovery in import demand following the COVID-19 pandemic.

Though not a formal member, Saudi Arabia serves as a permanent observer to the International Working Group on Sovereign Wealth Funds.

Privatization Program

Saudi Arabia has undertaken a limited privatization process for state-owned companies and assets dating back to 2002. The pace of Saudi Arabia’s privatization program is accelerating, with investments currently exceeding $50 billion. The process, which is open to domestic and foreign investors, has resulted in partial privatizations of state-owned enterprises in banking, mining, telecommunications, petrochemicals, health, education, housing, transportation, water desalination, insurance, and other sectors.

As part of Vision 2030 reforms, the SAG has announced its intention to privatize additional sectors. Privatization is a key element underpinning the Vision 2030 goal of increasing the private sector’s contribution to GDP from 40 percent to 65 percent by 2030. The program endorses several approaches to privatization, including full and partial asset sales, initial public offerings, management buy-outs, public-private partnerships (build-operate-transfer models), concessions, and outsourcing. The Privatization Program  identifies education, healthcare, transportation, renewable energy, power generation, waste management, sports clubs, grain silos, and water desalination facilities as prime areas for privatization or public-private partnerships.

In 2017, Saudi Arabia established the National Center for Privatization and Public Private Partnerships ( NCP ), which oversees and manages the Privatization Program. The NCP’s mandate is to introduce privatization through the development of programs, regulations, and mechanisms for facilitating private sector participation in entities now controlled by the government. The center has about 200 privatization projects in its pipeline. Generally, Saudi Arabia only provides sovereign guarantees for public private partnerships in the water sector. In July 2021, the Private Sector Participation (PSP) Law went into force. The law aims to increase private sector participation in infrastructure projects and in the provision of public services by providing further certainty to private investors and their lenders. The PSP law allows for improved collection revenues terms; government credit support; compensation on termination of Public-Private Partnership contracts for reasons relating to the procuring authority; appeals and grievances committees; and improved and coordinated procedures for required permits and approvals.

Additional Resources 

Country Reports on Human Rights Practices

List of Goods Produced by Child Labor or Forced Labor 

Sweat & Toil: Child Labor, Forced Labor, and Human Trafficking Around the World 

Comply Chain 

Climate Issues

At the inaugural Saudi Green Initiative forum in October 2021, Saudi Arabia announced its intention to reduce, avoid, and remove greenhouse gas emissions by 278 million tons of CO2 equivalent annually by 2030, committed to achieving net-zero emissions by 2060, and signed the Global Methane Pledge. In November 2021, Saudi Arabia launched the Middle East Green Initiative, placing the Kingdom at the center of regional efforts to meet international targets for climate change mitigation.

Saudi Arabia has linked its climate action efforts to the Circular Carbon Economy (CCE) model, which aims to optimize the entire carbon cycle under the principles of “reduce, reuse, recycle, and remove.” In July 2022, Saudi Arabia signed a Clean Energy Partnership Framework Agreement with the United States to deepen bilateral cooperation on the development of technologies for clean hydrogen; carbon capture, utilization, and storage (CCUS); and energy efficiency. In November 2022, the Saudi Ministry of Energy signed an agreement with Aramco to build the largest CCUS hub in the world in the east coast industrial city of Jubail. The world’s largest green hydrogen plant, scheduled to produce up to 600 tons per day by 2026, is under construction in NEOM, and Aramco and chemical giant SABIC already export blue hydrogen in the form of blue ammonia to South Korea.

By 2030 the SAG plans to generate 50 percent of the country’s electricity from renewables and the other half from natural gas.  Currently, 40 percent of electricity generation comes from the burning of crude oil.  Saudi company ACWA Power, in which the PIF has a 50 percent stake, has been tasked with developing 70 percent of Saudi renewable energy projects.  ACWA Power’s first project under PIF funding, a solar plant in the central city of Sudair, will be one of the largest single-contracted solar PV plants in the world, with an installed capacity of 1,500 megawatts capable of powering 185,000 homes and offsetting nearly 2.9 million tons of emissions each year.

Saudi Arabia aims to recycle 100 percent of solid waste in Riyadh by 2025 and 82 percent of all waste streams countrywide by 2035.  Waste management is a nascent industry, and current recycling stands at only one percent. To reach its waste management goals, the Saudi Investment Recycling Company (SIRC), a wholly owned subsidiary of the PIF, was established in 2017. SIRC is mandated to develop, own, operate, and finance projects across all waste types to establish recycling capacities and build a circular economy.

Resources to Report Corruption

The National Anti-Corruption Commission’s address is:

National Anti-Corruption Commission
P.O. Box (Wasl) 7667, AlOlaya – Ghadir District
Riyadh 2525-13311
The Kingdom of Saudi Arabia
Fax: +966 11 264-5555
E-mail: info@nazaha.gov.sa 

Nazaha accepts complaints about corruption through its website, mobile application, and in-person.