The Investment Ministry of Saudi Arabia has reported that a total of 306 new foreign companies were issued investor licenses in the kingdom in the third quarter (Q3) of 2020 which marks a 96 percent increase over the previous three-month period.
The ministry released the figures as part of its new Investment Highlights Fall 2020 report, which provides an overview of the development of the Kingdom’s investment environment.
A show of resilience
Khalid Al-Falih, Saudi Minister of Investment, said the latest figures show that the Kingdom has been able to sustain the long-term confidence of the global investor community and is achieving a “steady and positive” economic recovery.
“Resilience against a backdrop of global uncertainty is a clear sign that the Saudi opportunity has not changed. We look forward to continuing our support of foreign investors as they access and enjoy the benefits of the Kingdom’s emerging opportunities,” he said.
The coronavirus pandemic brought an unprecedented slowdown in the second quarter when the Kingdom went into lockdown, leading to a 47 percent year-on-year decline in the number of licenses awarded.
However, after Saudi Arabia started to ease lockdown restrictions and increase economic activity, the contraction began to reverse in June, with the latest figures demonstrating a significant rebound in investor activity.
An increase in the number of licenses granted throughout Q3 continued the recovery trend seen at the previous quarter’s end, with each month in the quarter witnessing a steady year-on-year increase.
September recorded the highest volume of new licenses, accounting for nearly 40 percent of all licenses issued. Over the first three quarters of 2020, the ministry issued more than 800 licenses, only 3 percent lower than the same period in 2019 and 60 percent higher than the first three quarters of 2018.
Top areas of investments
According to the report, India, Egypt and the UK were the leading sources of foreign investment projects in Q3.
In Q3, the ‘Emerging Sectors,’ which include entrepreneurship, education, financial services and housing, continued to see the largest number of new foreign investment projects, followed by the industrial and manufacturing sectors, transport and logistics.
The report also included an overview of the market opportunities available to investors in the Kingdom, in addition to the macro-economic indicators. This includes a special emphasis on the G20 Presidency of Saudi Arabia and recent developments in the defense and security sector.
The Kingdom aims to localize 50 percent of its military expenditure in line with Vision 2030. To this end, a series of legislative reforms has been implemented by the General Authority for Military Industries (GAMI) to make the industry more attractive to investors, including opening military manufacturing and trading activities up to 100 percent foreign ownership.
The report also highlights how the sector aims to enable the localization of broader Saudi industrial and technological capabilities through its custom Industrial Participation Program. It also provides an overview of the licensing process for defense sector investors, forecasted GDP contribution, and specific segments the industry aims to target and develop.
The data in the report also indicate signs of resilience, amid global economic uncertainty, in the Saudi market.
The report notes that figures from the General Statistics Authority showed a 19 percent rise in manufacturing activity at the end of Q2, as the Industrial Output Index of the Kingdom rose to 118 in July after a decline of 99 in April.
Point-of-sales data provided by the Saudi Central Bank for Q3 also mirrored the quarterly upswing seen in other areas, with point-of-sales transactions continuing on a positive trajectory and recording a 40 percent year-on-year growth increase despite an overall decline compared to the previous three-month period.