Saudi Arabia turns away foreign investments

Saudi Arabia
Saudi Arabia

A walk in shiny malls of Riyadh, full of well known European and American brands, gives the impression of a country open to the outside world, as well as operating some of the largest industries, from Exxon Mobil by Unilever. The richest economy in the Gulf with a growth of nearly 4%, a population of 30 million and inexpensive energy, Saudi Arabia, has to attract companies like the holy town of Mecca attracts the believers. While there are done efforts to succeed, the leadership proves too be too selective.

Saudi Arabia

Saudi Arabia

Earlier this week the state agency for investment promotion, the SAGIA, announced the creation of a fast track service that will process the requests of foreign investors in five days. A few days later, the department heads, Abdul Latif al Atman, announced that he will throw out of the country small foreign companies that do not add enough value to the Saudi economy. In recent months, the department has revoked the licenses of twelve foreign companies for violations of their operating conditions. Most traders may have the same fate because they did not obey a law which entered into force last year and requires them to employ a minimum number of Saudis.

Saudi Arabia

Saudi Arabia

In accordance with the relevant UN agency, the UNCTAD, foreign direct investment in the country fell by more than two thirds to 12.2 billion dollars in the past four years. Mr. Othman, however, argues that the government does not care anymore about companies that come, sell equipment and leave, like the 1980s. Diplomats and businessmen in Saudi Arabia indicate that businesses are still encouraged to hire and train locals with high specificity, but also those that can help the country meet the rapidly growing demands for the new infrastructure, such as the Chinese.

Saudi Arabia

Saudi Arabia

Despite the efforts of SAGIA to facilitate the entry of foreign firms, coordination among different government agencies is incomplete and still need the right connections for the bureaucracy. The worst is that SAGIA has announced that it will begin to evaluate domestic and foreign enterprises basis of their compliance with the objectives and will offer incentives, from cheap energy to more long term residence permits for their staff.

Saudi Arabia

Saudi Arabia

By Nicole P.

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