DUBAI: Foreign investment in Saudi Arabia grew at its fastest rate in 10 years in the first quarter of 2020, with a near 20 percent rise in the number of new international startups in the Kingdom.
Minister for Investment Khalid Al-Falih said that the coronavirus pandemic slowed the rate of improvement toward the end of the quarter, when lockdowns began to hit all global economies, but added: “We are confident that businesses will keep coming to the Kingdom as investor activity gains momentum and adapts to the post-COVID-19 era.
“Saudi Arabia remains open for business,” he said.
Investor licenses were granted to 348 international companies in the quarter, with a surge in interest from Indian and US companies, especially in “emerging sectors” such as education, finance, tourism and the pilgrimage business.
Al-Falih said: “The first quarter of 2020 was Saudi Arabia’s strongest period for investor interest in 10 years. However, the economic effects of COVID-19 began to be felt worldwide toward the end of this period, and this becomes evident when we compare the rate of new investment on a month-by-month basis. January and February saw strong momentum, but growth began to slow in March.”
The figures were revealed in a special report by the ministry’s Invest Saudi arm, which also included an update on the Kingdom’s measures to combat the pandemic.
“Investors are the most important enablers of Saudi Arabia’s ongoing transformation through Vision 2030, and in recognition of this the ministry has been tasked with safeguarding the stability and security of the Kingdom’s full investment ecosystem. This is the central aim of our COVID-19 business continuity initiatives,” Al-Falih said.
“By acting swiftly, we have been able to have a direct impact through our COVID-19 Response Center. We have spoken to investors about how and where they need support and taken their queries directly to our government partners, ensuring that the regulations needed for companies to continue to operate across vital sectors are put in place.”
The Saudi government has implemented stimulus packages and funding relief programs for the private sector worth $45 billion, aimed at helping the Kingdom’s local and international businesses, and citizens and residents, to mitigate both the immediate and long-term impacts of COVID-19.
Support is accessible to companies and individuals across a number of industries, from SMEs through to multinationals. Measures range from tax exemptions and discounts or postponements on utilities, energy and labor costs, to loans and income support.
Most of the new foreign investment came in the form of full foreign ownership licenses, which accounted for nearly three quarters of the total. About 27 percent was in the form of joint venture partnerships with local investors.
The two biggest investing countries were India and the US, with 41 and 37 launches, respectively, followed by Lebanon, the UK and Egypt. Chinese investors opened 11 new businesses in the Kingdom in the quarter.
After the emerging sectors, which attracted 125 projects, the most popular investment destinations by sector were industrial and manufacturing and information technology, followed by transport and logistics, and retailing and e-commerce. Investments in energy and water were unchanged from the same quarter in 2019 with six new projects.
In a survey of 1,823 investors by the ministry, some of the challenges of the pandemic period were highlighted. Nearly half said paying salaries and covering other expenses were issues, while a large number said generating income was a challenge.
But a large majority — about 86 percent — said they would be able to continuing operating their businesses, while a similar number were confident they would be able to repay loans under the government’s stimulus packages.
About 94 percent said they were loan free, while 85 percent said the banks and government had responded positively to requests to grant or restructure loans.