On February 25th, 2020 the Saudi Arabian General Investment Authority (SAGIA) became the Ministry of Investment of Saudi Arabia (MISA), under the leadership of the widely-respected former Saudi Minister of Energy Khaled Alfalih. This transition has elevated the status of SAGIA to a ministerial level, which reflects the high priority placed by the government on attracting foreign investment into the Kingdom.
On a practical level for companies entering into the Kingdom, there is no immediate difference in the investor license process arising from this change. The plan is to empower the new ministry to become much more effective in its mandate of attracting foreign investment and so should be making the process easier in due course.
SAGIA was formed as an authority in the year 2000 to open the Kingdom to foreign investors, as prior to the introduction of the SAGIA investor license it was impossible for non-locals to take ownership stakes in Saudi companies. At the outset, the SAGIA structure was limited to the largest international firms making substantial investments into the country. The process to gain approval was time consuming and filled with bureaucratic challenges as well as quite costly. Very few companies were granted approval to obtain SAGIA investment licenses and the overall impact on the diversification of the economy was limited.
In the year 2018, SAGIA launched the “Invest Saudi” brand globally as a platform to raise awareness about the attractiveness of the domestic market to multinational companies seeking expansion geographies.This was paired with regulatory changes reducing the financial and bureaucratic hurdles on foreign companies to set up 100% owned entities in the Kingdom. At this time, AstroLabs became the first international business incubator licensed by SAGIA and started assisting companies from around the world to set up locally. AstroLabs signed a partnership agreement with SAGIA in 2018 to attract the most innovative companies to the market.
On the heels of these changes, 2019 witnessed a massive 54% year-on-year increase in the number of foreign companies licensed in Saudi Arabia, with over 1,000 new entrants registered. The plan at the beginning of 2020 was to further accelerate this growth pace and, for this reason, the government placed one of the most respected public servants and business leaders, Khalid Alfalih, to helm the newly-formed ministry.
In summary, although there are no immediate changes based on the change from SAGIA to MISA, the upgrade of the foreign investment attraction department from a government “authority” to a ministry signals extra focus being placed on this area of the economy. We expect to see enhancements to the experience of foreign investors and a greater volume of businesses entering into the country soon.