Saudi economic reform is delivering results

Saudi economic reform is delivering results

Saudi economic reform is delivering results
Saudi Arabia’s Council of Ministers approved the creation of a residency permit scheme for qualified international expatriates last week. (File/ Reuters)

Saudi Arabia is currently undergoing a broad program of reforms with the aim of making it easier to invest and grow a business in the Kingdom.

At the center of these reforms, our aim is to enable the private sector to play a larger role in the economy and for innovative global businesses and entrepreneurs to come to Saudi Arabia and drive greater productivity and efficiency.

So we were very pleased to see that the International Monetary Fund (IMF) argued last week that economic reforms in Saudi Arabia “have started to yield positive results.”

Following their visit to the Kingdom as part of the Article IV mission, they noted that “non-oil growth has picked-up, female labor force participation and employment have increased, the successful introduction of the value-added tax has underpinned an increase in non-oil fiscal revenues, energy price reforms have helped reduce per capita consumption of gasoline and electricity, measures have been introduced to compensate low and middle-income households for the higher costs resulting from reforms, and fiscal transparency has increased. Reforms to the capital markets, legal framework, and business environment are progressing well.”

Of course, while we are pleased with the rapid progress we have made in a short space of time, we also know it is important not to become complacent.

With that in mind, we have continued to pursue reforms in order to enhance the investment environment in a number of different areas.

For example, one area we have been keen to enhance is how easy it is for international expatriates to move to Saudi Arabia and build a long-term foundation and a network, rather than just come for a short period.

With this in mind, last week, Saudi Arabia’s Council of Ministers approved the creation of a residency permit scheme for qualified international expatriates. This scheme will provide international expatriates with a range of additional rights, including enabling them to request visas for their families and own real estate. There will be two separate forms of the program, one acting as a residency permit, and one which is renewable on an annual basis.

Likewise, when we looked at some of the key barriers that companies were facing, one of the most important was the level of red tape around business licensing.

In order to address this, we created the National Licensing and Reform Program (NLRP) — which was established by “Tayseer,” a cross-government entity that helps to drive economic reform.

Through the program, the number of licensing requirements in Saudi Arabia has been reduced by more than half and the NLRP has already successfully eliminated or modified more than 60 percent of over 5,500 licenses selected for reform.

Furthermore, we have enabled 100 percent foreign ownership in a wide range of new sectors from courier services, to education, to health care and life sciences. To give you a sense of the impact of this on investors, 70 percent of the new international investment licenses issued in 1Q 2019 were for entities with 100 percent foreign ownership.

Finally, we are not just looking to attract large multinationals, we are also looking to encourage entrepreneurs to develop their ideas and their businesses in Saudi Arabia. This past year, SAGIA also launched a specialized Entrepreneur License, which allows international entrepreneurs to launch a fully foreign-owned startup company in Saudi Arabia. We have already seen more than 100 entrepreneur licenses issued since late 2017, with more than 45 issued in the first three months of this year alone.

As noted by the IMF, these reforms are beginning to have an impact. The number of new foreign business licenses issued by SAGIA in 1Q 2019 was 70 percent higher than the same period last year and the level of FDI in 2018 was 127 percent higher than in 2017.

This momentum has come because of the reforms we have implemented, but also because international investors and stakeholders have worked with us to identify the challenges they are facing and develop solutions to them.

We are keen to maintain this momentum throughout this year and we look forward to hearing more from investors about the opportunities they see in the Saudi market and what we can do to help them to access it.

• Ibrahim Al-Omar is governor of the Saudi Arabian General Investment Authority. This article was first published by Invest Saudi.

Disclaimer: Views expressed by writers in this section are their own and do not necessarily reflect Arab News' point of view