RIYADH, 30 April 2003 — The Saudi Arabian General Investment Authority has since its inception in April 2000 issued licenses valued at over SR51 billion for 187 projects. Of these, 26 percent were issued for joint venture projects and 74 percent for wholly owned ones.
The licenses were awarded for projects in sectors including engineering, food processing, construction, chemicals and services. The biggest of them was the $1 billion Jubail Chevron Phillips Petrochemical Project between the US firm Chevron Phillips Chemical Company and the Saudi Industrial Investment Group (SIIG).
This was announced at a press conference by Prince Abdullah ibn Faisal ibn Turki, governor of SAGIA, who said tax on foreign firms should be further reduced to promote investment. The Kingdom has already brought down the rate of tax on corporate profits above SR100,000 from 45 percent in the past to 30 percent. It was further reduced to 25 percent on Monday.
Prince Turki was launching SAGIA’s new logo, the “Welcome Arch,” to project it as the gateway for investors in the Kingdom. The blue and green arches are meant to signify SAGIA’s determination to improve the investment climate for all private investors, foreign and domestic. To this end, it has set up one-stop shops or investor service centers in Riyadh, Dammam and Jeddah, with similar units planned for Madinah, Hail and Qassim.
Asked to comment on the slashing of tax on profits for foreign companies to 25 percent, Prince Abdullah stressed the need for a uniform taxation regime for overseas and domestic businessmen to stimulate the level of investments. Even so, he pointed out, it was a welcome decision to slash corporate tax in the interest of foreign investors.
Other investment laws in the pipeline will target the mining and capital market sectors. The new capital markets law is also expected to attract significant foreign and domestic portfolio investment in the Saudi stock market, currently capitalized at $75 billion, making it the largest in the Arab world.
In reply to a question from Arab News regarding International Monetary Fund’s call to the Kingdom to speed up economic reforms, Prince Abdullah said he expected new laws to come out soon that would seek to rev up the pace of reforms. The IMF, while endorsing the Kingdom’s reforms policy, has warned that under an “unchanged policy stance” the Saudi economy would remain vulnerable over the next five years to a drop in oil prices.
Prince Abdullah agreed that transparency in governmental operations — cited by potential investors as one of the bottlenecks on the road to investment in the Kingdom — could go a long way toward boosting investor confidence.
He said the Iraq war had an adverse impact not only on the Kingdom’s investment climate but on the global economy as a whole.
Prince Abdullah said any decision whether new players would enter the telecom sector following privatization would be left to the Supreme Communications Commission, the regulatory authority. The SCC has granted permission for the launch of a new company providing mobile phone services in the Kingdom by 2005.
