ISSN 2330-717X

Saudi Arabia: Investment Licenses Should Be Based On Capability Of Investor – OpEd


By Dr. Qaisar Hamed Metawea


Attracting foreign investments is central to the proper functioning of any economy in both the developing and developed world. Some countries depend heavily on foreign direct investments to support their economies. Such countries enact laws and regulations to regulate foreign investments. As a result, authorities and bodies are established in order to pave the way for foreign investors and remove any obstacles they may face. However, when such government bodies do not function properly, they can become one of the obstacles of attracting foreign investments.

Saudi Arabia has been depending on oil as the most important income source for a very long time. To reduce its dependency on oil and its price fluctuation, Saudi Arabia has been attempting to diversify its income sources. One of the alternatives, which Saudi Arabia is making great strides to obtain, is to attract foreign investment. As a result, it enacted its new Foreign Investment Law by the Royal Decree No. M/1 dated 5-1-1421 Hejrh, corresponding to 10/4/2000 Gregorian, and established the Saudi Arabian General Investment Authority (SAGIA) as a government body to be in charge of monitoring and regulating foreign investments.

When SAGIA started providing its services, it was very organized government body. The quality of services that SAGIA had provided was very high as its officers were well trained and very professional. However, during the past two years, SAGIA has become a disorganized government body and many foreign investors have been complaining about it. SAGIA has been issuing new requirements and procedures every now and then in a chaotic way and then canceling them thereafter. The prudent investor now has to check with SAGIA regularly to make sure that it has not issued new requirements or procedures or canceled the old ones.

The acceptance of the activities of new projects differs from one SAGIA branch to another as some activities may be acceptable to the Riyadh branch, for example, but not to the one in Jeddah, so it seems that it depends on the branch, in which the foreign investors apply to thus creating a confusing and wholly unclear system. Also, SAGIA requests investors to provide it with a very long list of documents in order to issue the investment license. Investors may spend months to prepare the required documents and attest them from competent authorities as well as the Saudi Embassy in their country of origin, as per SAGIA requirements. However, when investors prepare the documents and submit them to SAGIA with their applications, the officials of SAGIA have another checklist, which contains more required documents than the published list. Thus, investors may be asked to provide additional documents, which may take another few months to prepare. This would be very frustrating for many new investors. Even for the required documents, some of them do not exist in the countries of investors but still SAGIA requires them. For example, SAGIA requires construction companies to provide it with classification certificates from their countries but some countries like Turkey do not have such classifications for construction companies. Another problem with SAGIA is that it has been issuing investment licenses to investors but has done little to assist them thereafter to remove any obstacles they face.

On the contrary, SAGIA has been turning on investors when they renew their investment licenses, which need to be renewed annually. Ironically, investors spend at least two to three months each year to prepare the required documents to submit to SAGIA, in order to renew their licenses, when they should spend this time on developing their projects. Nonetheless, after they submit the documents to SAGIA to renew their licenses, it may take SAGIA two to three months to renew them, often with no justified reasons.


Sadly, SAGIA has been treating the applications of potential investors differently. For example, SAGIA has been very careful to issue investment licenses for Middle Eastern investors but that is not the case with Western investors, although some Middle Eastern investors are more capable than Western investors. The criteria for issuing investment licenses for foreign investors should be based upon the capability of the investor to invest, not upon its nationality.

It seems that the management of SAGIA has run out of ideas and that is why it has been issuing orders and requirements in a chaotic way. SAGIA needs new blood with new ideas, which can reorganize it, in order to provide better services to investors. The investment requirements of SAGIA should be reviewed, in order to remove any requirement which is not necessary. Also, if new investors show their capability to invest, they should be granted investment licenses regardless of their nationality. SAGIA should focus on assisting current investors to develop their projects and eliminating any obstacles they face and not planting obstacles in their way.

It is for the benefit of the country to attract more foreign investors to invest and assist the current ones to develop their projects. SAGIA should do a better job, in order to provide its services in a timely and professional way and remove any obstacles that investors may face and not be one of these obstacles. SAGIA should realize that if investors do not have friendly environments to invest, they will look for countries other than Saudi Arabia, which would provide better services and fewer obstacles, and our country would lose such investments.

— Dr. Qaisar Hamed Metawea is attorney at Law-Partner, Mikwar, Akkad & Metawea Law Firm. Write to him at: [email protected]

Arab News

Arab News is Saudi Arabia's first English-language newspaper. It was founded in 1975 by Hisham and Mohammed Ali Hafiz. Today, it is one of 29 publications produced by Saudi Research & Publishing Company (SRPC), a subsidiary of Saudi Research & Marketing Group (SRMG).

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