JEDDAH, 22 June 2006 — Saudi Arabian General Investment Authority (SAGIA) has urged authorities to make the Kingdom’s labor laws more investment friendly in order to attract much needed domestic and foreign funds for carrying out projects in vital economic, health, energy and education sectors.
“Labor laws are one of the main obstacles facing investments in the Kingdom,” SAGIA said in a report, carried by Al-Riyadh Arabic daily. “There is a lack of skilled labor and difficult recruitment procedures.”
The government has implemented measures to create jobs for its unemployed youth, restricting certain jobs to Saudi nationals and preventing foreign recruitment. Many foreign investors complain that they encounter difficulties in implementing projects due to the lack of skilled and experienced workers.
SAGIA’s call to soften labor laws comes in the wake of plans to establish three mega economic cities in Rabigh, Hail and Madinah, which are expected to attract investment projects worth SR100 billion, SR30 billion and SR25 billion respectively. SAGIA has already signed deals with Saudi and foreign companies to carry out vital projects in the three cities.
The SAGIA report pointed out that the new investment projects in the Kingdom had created jobs for 243,000 people, including 64,000 Saudis.
The projects implemented in 2005 alone provided employment to 43,000 workers, the report added. There are more than six million expatriate workers in the Kingdom who work mainly in the private sector.
The Council of Ministers last Monday gave more powers to SAGIA, allowing the authority to supervise economic cities and set out state policies for developing domestic and foreign investment.
According to the revised SAGIA law, the organization will supervise the implementation of the cities’ infrastructure facilities, identify the sites for investors in view of their activities, help them receive licenses from relevant Saudi authorities and propose executive plans and regulations to further improve the Kingdom’s investment climate.
The SAGIA report noted substantial improvement in the country’s investment environment. The authority issued licenses for joint projects worth SR202 billion in 2005 compared to SR15 billion in the previous year. Foreign direct investment also rose from SR7 billion in 2004 to SR17 billion last year.
The authority has been playing six strategic roles to attract investment: Marketing investment projects, providing comprehensive services to investors, developing economic sectors; promoting regional development, encouraging young Saudi male and female investors, and improving the investment climate by introducing investment-friendly regulations.
According to the report, SAGIA was successful in reducing the period for the issuance of licenses from 30 to three days. It issued 642 licenses for joint projects as well as foreign direct investment projects in 2005. It also opened marketing offices in major capitals around the world. The report was bullish about Saudi Arabia’s economic growth and stability and hoped that it would encourage foreign investors to put their money in the Kingdom.
