Saudi Arabia reports rebound in foreign investor licences in third quarter

Ministry of Investment issues 306 new foreign licences after kingdom eases Covid-19 restrictions and steps up economic activity

The Kingdom Tower stands in the night above the Saudi capital Riyadh November 16, 2007. REUTERS/Ali Jarekji (SAUDI ARABIA) - GM1DWPNRBQAA

Saudi Arabia said there was a rebound in the issuance of foreign investor licences in the third quarter after the kingdom eased Covid-19 restrictions and stimulated economic activity.

The Ministry of Investment issued 306 new investor licences to international companies in the third quarter, a 96 per cent increase from the second quarter and a 21 per cent rise from the same period last year, it said in a statement on Tuesday.

"These latest figures demonstrate that Saudi Arabia retains the long-term confidence of the global investor community into the second half of this year and is achieving steady and positive economic recovery, despite the ongoing impact of the Covid-19 pandemic on the global economy," Khalid Al Falih, Minister of Investment of Saudi Arabia, said.

The kingdom has made attracting greater foreign investment a key pillar of its Vision 2030 plan to diversify the economy and reduce its reliance on hydrocarbons.

The rebound in foreign investor licence issuances comes after investor activity slowed in the second quarter, with 47 per cent fewer licences awarded due to the impact of the pandemic, the ministry said. However, business started to pick up in June as the kingdom eased restrictions and ramped up economic activity.

Each month of the third quarter saw a steady year-on-year increase in issuances, with the highest number of new licences recorded in September, which accounted for nearly 40 per cent of all licenses issued.

Over the first three quarters of 2020, the ministry issued more than 800 licences, only 3 per cent lower than the same period in 2019 and 60 per cent higher than the first three quarters of 2018, it said.

During the third quarter, 68 per cent of the licences were for fully foreign-owned projects, while the remaining 32 per cent went to joint ventures with Saudi companies.

The figures are part of the ministry's new Investment Highlights Fall 2020 report, which provides an overview of the development of the kingdom's investment climate in the third quarter of 2020.

India, Egypt and the UK were the top sources of new foreign projects during the third quarter.

Entrepreneurship, education, financial services and housing continued to draw the highest number of new foreign investment projects during the period, followed by the industrial and manufacturing, and transport and logistics sectors.

Total FDI for the kingdom in the first half of 2020 was up 7.9 per cent, compared with a 49 per cent decrease in global FDI inflows in the same period, the report said, citing data from the Saudi Central Bank and United Nations Conference on Trade and Development.

In the third quarter, investments in non-oil manufacturing factories saw a record-breaking level of $3.1 billion as the Ministry of Industry and Mineral Resources issued several new big capital licenses, the report said.

During the period, foreign portfolio investment in the Tadawul stock exchange rose 37 per cent year-on-year to a record level of $38bn, it said.

The General Authority for Military Industries received "many inquiries" from the private sector and is currently examining nearly 100 licences, Mohammed Al-Athel, deputy governor for Military Acquisition at GAMI, said in the report.

GAMI has licensed 54 international and local companies since the last quarter of 2019, the report showed.

The report also highlighted three key investment projects, including the $5.3bn Al Khomrah logistics zone, a $120 million brass and copper plant and $40m to $45m in water desalination projects.

“Resilience against a backdrop of global uncertainty is a clear sign that the Saudi opportunity has not changed," Mr Al Falih said.