As a resultof an accelerated effort by the Saudi Arabian General Investment Authority (SAGIA)through the Invest Saudi brand to promote the Kingdom's competitive and openbusiness environment, a total of 1,131 new international companies set upoperations in the Kingdom in 2019. This number marks a 54 percent increase whencompared to the 2018 figures, making 2019 a record year for Saudi Arabia'srapidly-developing business landscape.
Invest Saudiprovided an annual overview of the Kingdom's investment environment in 2019 inits newly-released Investment Highlights Winter 2020 report, highlighting thelatest new international business figures, alongside the year's most importantmilestone deals, projects and reforms.
In terms ofinternational companies established, the final quarter of 2019 proved to be thebusiest period of the year, with the number of new international companiesincreasing to 305 from 238 during the same quarter in 2018. The reporthighlights some 150 investor deals that SAGIA signed across high-priorityVision 2030 sectors in 2019, from tourism to value-added manufacturing.
Commentingon the progress of foreign investment in the Kingdom, Eng. Ibrahim Al-Omar,Governor of the Saudi Arabian General Investment Authority (SAGIA), said:"Guided by Saudi Vision 2030, our country is undergoing a remarkable economictransformation. The continued prosperity of the Kingdom depends on sparkinginnovation, attracting foreign investors and empowering the private sector. Thepositive growth numbers that we have seen in the final quarter of 2019 – andindeed throughout the entire year – represent a significant milestone on theroad to 2030."
Leadinggrowth sectors include construction, manufacturing and ICT, as demand in theseindustries increases alongside infrastructural development and progress of theKingdom's giga projects driving forward in line with Vision 2030. During 2019,193 new construction, 190 manufacturing and 178 ICT companies were established,compared to 111, 113 and 111 established in the three sectors in 2018respectively.
TheKingdom's growing foreign investment landscape is underpinned by sweepingeconomic and social reforms made throughout 2019, aimed at improving SaudiArabia's business climate and attracting new investments. The impact of thesereforms is being recognized on a global scale: Saudi Arabia was ranked theworld's top improver and reformer by the World Bank, climbing 30 places in theWorld Bank's Doing Business 2020 report.
Al-Omarcontinued: "The goal of our reform program is to help realize the potential thatSaudi Arabia holds for the benefit of Saudi nationals and improve ourcompetitiveness. The investment opportunities that the Kingdom offersinternational companies also creates opportunities for the transfer of skills,expertise and best practice to local communities across the Kingdom, whileproviding new private sector job prospects for young Saudi men and women. Weconsider foreign companies who look to Saudi Arabia as growth partners fortheir business expansions – whether they seek a joint-venture with Saudicompanies or choose to set up on their own. Out of the new internationalcompanies setting up in Saudi Arabia in 2019, 69% were full foreign onwershipwhile 31% were joint venture partnerships with local investors. Our 2019figures therefore demonstrate how integral new international businesses are tothe success of our journey toward 2030."
The 1,131new companies that were established in 2019 represent a diverse range of globalmarkets. Strong growth comes from long-standing and strategically-importantSaudi partners such as the United States and United Kingdom, with 100 UKcompanies and 82 US companies setting up in 2019 compared to 24 for bothcountries in 2018. India, Egypt, Jordan and China were also among the topcountries represented, with India's share of the market increasing dramaticallyfrom 30 companies established in 2018 to 140 in 2019, driven by high-profileroyal visits to the country in February 2019. In addition, other top countriesfrom 2018, Jordan and France, were well-represented in 2019.
Al-Omarconcluded: "We want to make it easier for foreign companies to set up and dobusiness in Saudi Arabia. We have taken global best practice models andcombined them local knowledge and insights in order to eliminate unnecessarybarriers to doing business, while making it easier for our new partners fromabroad to understand our unique Saudi culture and customs and how they canbetter integrate and contribute."
SAGIA hasplayed an important role in attracting foreign companies to establishoperations in the Kingdom throughout 2019, facilitating a series of high-levelinvestor forums in countries such as China, India, Germany and South Korea, aswell as hosting delegations to the Kingdom from the US, UK, Japan and Russia.
SAGIA isalso launching high-profile campaigns at key global events leading in to 2020,such as the World Economic Forum in Davos, to raise awareness of the valuableand diverse investment opportunities that Saudi Arabia offers.
