Ministry of Investment of Saudi Arabia sees strong rebound in foreign investment licenses in Q3 2020
The Ministry of Investment of Saudi Arabia (MISA) announced today that 306 new international companies were granted investor licenses in the third quarter of 2020, translating to a 96% quarter-on-quarter increase compared to the period between April and June.
The latest figures mark a swift rebound in investor activity after an unprecedented slowdown in Q2, which saw a 47% year-on-year decline in the number of licenses awarded due to the impact of the COVID-19 pandemic. However, the contraction began to reverse in June as the Kingdom began to lift lockdown restrictions and scale up economic activity.
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Growth in the number of licenses throughout the third quarter continued the recovery trend seen at the previous quarter’s end, with each month in Q3 witnessing a steady year-on-year increase. The highest volume of new licenses was recorded in September, which accounted for nearly 40% of all licenses issued.
Over the first three quarters of 2020, MISA issued more than 800 licences, only 3% lower than the same period in 2019 and 60% higher than the first three quarters of 2018.
MISA 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 in the third quarter of this year.
His Excellency Khalid Al Falih, Minister of Investment of Saudi Arabia, said: “These latest figures demonstrate that Saudi Arabia retains the long-term confidence of the global investor community into the second half of this year and is achieving steady and positive economic recovery, despite the ongoing impact of the COVID-19 pandemic on the global economy.
“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.”
In addition to detailing a variety of macro-economic indicators, MISA’s Investment Highlights also includes analysis of the business opportunities available to investors in the Kingdom – including a special focus on Saudi Arabia’s G20 Presidency and recent developments in the defense and security sector.
Led by the General Authority for Military Industries (GAMI), Saudi Arabia aims to localize 50% of its military expenditure in line with Vision 2030. To this end it has implemented a series of legislative reforms to make the industry more attractive to investors, including opening military manufacturing and trading activities up to 100% foreign ownership. The report 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.
Other recent data included in the report also points to signs of resilience in the Saudi market against a backdrop of ongoing uncertainty. The report notes that figures from General Authority for Statistics demonstrated a 19% surge in manufacturing activities at the end of Q2 as the Kingdom’s Industrial Production Index climbed to 118 in July following a downturn 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% year-on-year growth increase despite an overall decline compared to the previous three-month period.
Major sources of new foreign investment projects in the third quarter continued to represent a diverse range of global markets and sectors. Leading growth markets such as India and Egypt (with 30 companies each) and long-term economic partners such as the UK (with 16 companies) were the principal sources of new foreign investors.
MISA’s Emerging Sectors, which include entrepreneurship, education, financial services and housing, continued to see the highest number of new foreign investment projects in Q3, followed by the industrial and manufacturing and transport and logistics sectors.
