“Saudi Arabia’s FDI Reforms: Navigating Challenges for Long-Term Growth”
Saudi Arabia remains committed to its reform agenda, with a primary focus on strengthening foreign direct investment (FDI) and diversifying investment strategies, even in the face of a recent slowdown in its financial account, according to reports from the Saudi Central Bank and the Ministry of Finance.
In the second quarter of 2023, FDI inflows saw a 21% decline compared to the same period last year, totaling SR6.2 billion ($1.65 billion). FDI outflows, representing capital invested abroad by Saudi entities, experienced a 53% decrease, reaching SR18.34 billion.
Despite these figures, Albara’a Al-Wazir, an economist at the US-Saudi Business Council, pointed out that the Ministry of Investment issued 1,819 investment licenses in Q2, marking a significant 94% increase from the previous year.
Al-Wazir emphasized that Saudi Arabia’s proactive legal, economic, and social changes, aligned with Vision 2030, aim to attract higher FDI levels. The Ministry of Investment granted licenses to 180 companies to establish regional headquarters in the Kingdom before the January 2024 deadline, a move expected to accelerate FDI.
The economist anticipates that the regional headquarters program, coupled with tax incentives such as a 30-year corporate income tax exemption, will contribute to attracting foreign companies. These measures, including zero income tax for entities relocating their regional headquarters, are designed to stimulate long-term economic impact, fostering a favorable investment climate in Saudi Arabia.
(Source By: Arab News)
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